Multiconcept Operators: Orion Belts It Out

Think Orion Food Systems doesn't compete for restaurant chains' dollars? Think again.

By Christine Zimmerman, Contributing Editor -- Chain Leader, 5/1/2003

A quick-serve franchisor with over 1,400 units, Orion Food Systems might best be known as an institutional foodservice company. After all, the company supplies convenience stores, military bases, and colleges and universities (70 percent, 20 percent and 10 percent of business, respectively). But Orion could also be classified as one huge multiconcept QSR company.

“Were definitely in the fast-food business,” says Orion President and CEO Jeff Okerlund. “We just aggressively target non-traditional channels.” He notes that the company has developed cooking technology that allows its brands to fit into “extremely small” spaces like the counter at a bowling alley, as well as spread out in large food courts.

Privately held Orion has a franchised concept in most major fast-food categories, including pizza, Asian, Mexican, burgers, sandwiches, barbecue, chicken and bakery/coffee. Chains include Mean Gene’s Burgers, Hot Stuff Pizza, Cinnamon Street Bakery, Smash Hit Subs, Asian Creations, MacGregor’s Market, Chix Chicken, Nap’s Alabama BBQ, Moose Bros. Pizza, Stone Willy’s Pizza, Uncle Angelo’s Fresh Foods, Graham’s Grill and Eddie Peppers Great Mexican Food.

“I don’t see us as much different than McDonald’s, Pizza Hut, Taco Bell, KFC and Subway,” says Mark Elliott, executive vice president of marketing for Orion.

Win Davis, president of Win-Formation Ltd., a consultancy that advises Orion, agrees. “Orion is under the same state statutes and must maintain compliance regarding franchising as any other QSR chain,” he says.

Counting the Differences
There are some distinct points of differentiation between Orion and traditional QSRs.

Flexibility is one, according to Arlene Spiegel, president of consultancy Arlene Spiegel & Associates. “They can do a single brand, or they can bundle brands. They are a very good solution when a host environment is looking for variety.” She notes that national chains can offer one or two brands bundled, at most.

“The only one close is Allied Domecq with Baskin-Robbins, Dunkin’ Donuts and Togo’s. But they don’t offer the burgers, pizza and deli needed in a full-service food court,” says Spiegel.

Davis provides an example of Orion’s flexibility: Mean Gene’s relationship with West Virginia University.

Orion worked with WVU to create a signature concept using school colors along with neon signs and a graffiti look. The concept is known as X-Treme Mean Gene’s Burgers. Davis says the unit’s first week yielded $35,000 in sales. Overall, says Okerlund, the X-Treme concept has 35 percent better sales than the Wendy’s that previously occupied the space at the university.

He says, “Flexibility has to be the name of the game when you pursue nontraditional markets.”

The company is also more flexible with it licensees than other chains, Spiegel says.

Okerlund explains that the company charges franchisees no royalties or licensing fees. “We generate revenue solely from food sales to franchisees,” he says.

Orion manufactures the foods in Kimball, Tenn., and Sioux Falls, S.D., and ships it to units.

“Unlike most chains, Orion makes money on the food,” Davis adds. “So it behooves them to get into the units regularly to make sure the chain is selling lots of food.”

Force Field
And that is exactly was Orion does. The company has an extensive team of “territory consultants” working closely with franchisees.

“My consultant comes out every two weeks and audits my stores, showing me where I need work and where I’m doing well. I don’t have time to do that on my own,” says David McLaughlin, Hot Stuff and Cinnamon Street franchisee and operations manager of Kwik Stops in the Northeast.

He points out that if his territory consultant fails to show up when scheduled, he receives a $1,000 check from Orion. The territory consultant’s boss also visits McLaughlin every four to five weeks.

Orion trains franchisees on location. “For the first five days, morning to night, we are training,” says Elliott. Before a unit opens, the franchisee invites family and friends for a critique. Then the territory consultants begin their watch, helping franchisees deal with all aspects of their businesses, particularly in-store marketing programs. Orion contractually guarantees ongoing service and support.

Elliott acknowledges it is expensive to have such an involved team in the field. “We know every time a territory consultant steps in the door it costs $500,” he says.

Pizza Power
Hot Stuff Pizza, found in 1,200 c-stores alone in the United States, is Orion’s top-grossing brand.

This year Orion will add another pizza concept: Mean Gene’s Pizza. The possible venues for this brand include bars, nightclubs, pool halls, bowling alleys and other “low investment” entertainment spots. The working area for the typical Mean Gene’s Pizza will be about 40 square feet, Elliott says.

Okerlund says new products like prepared frozen dough disks will help the tiny units create enough output to meet consumer demand.

Hot Stuff offers plenty of pizza toppings including the usual favorites, plus some less conventional varieties like barbecue beef or chicken, Hawaiian, bacon cheeseburger, Philly cheese and taco.

Having Orion as the food distributor for everything including those toppings leads to built-in consistency.

“The quality of our products is phenomenal,” says McLaughlin. “It’s a key factor in our success.”

Lack of Limelight
Orion watchers like Spiegel and Davis point out that the company needs more than good food to build brand recognition; it needs marketing. “Orion does not invest a lot of resources in national advertising,” says Davis. “So they would not attempt to compete with big chains off the interstate where familiar signage is prevalent or in a city’s restaurant row where top-of-mind awareness is essential to draw customer traffic.”

Elliott agrees that national advertising is not an Orion priority.

The company does have a unique program with The Weather Channel called “geo-targeted” marketing. Consumers checking the weather on cable stations in their area will see ads inviting them to Orion brands in their specific locales.

Elliott says that since the geo-targeted marketing began, hits on the Orion Web site have risen from 2,000 a month to 50,000 a month.