Getting A Bigger Slice Of The Pie

Black-owned food chain buys Pizza Hut franchises

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Milwaukee-based V&J Foods Inc., a BE 100s company, has acquired an even larger slice of the fast food franchise market. In mid-July, the restaurant operator purchased 61 Pizza Hut franchises in Rochester and Syracuse, New York, from the corporate restaurant unit for an undisclosed amount. The transaction is expected to generate an additional $35 million in revenues for V&J, which grossed $36 million in 1996 from its chain of Burger King outlets in Detroit and Milwaukee to emerge No. 58 on the BE INDUSTRIAL/SERVICE 100 list. The new deal has nearly doubled the company’s employees from 1,385 to 2,700, making it the fourth largest African American employer in the nation.

Looking to increase their share of the fast food franchise market, V&J chairman John Daniels and his sister, Valerie Daniels- Carter, V&J’s president and CEO, took more than nine months to close the deal. The siblings sized up the $25 billion pizza market and settled upon $7.4 billion Pizza Hut for its brand identity. The new stores will enable V&J to continue to grow annually by 25%.

Such entrepreneurial zeal is sorely needed. Despite being the world’s largest pizza restaurant company, Pizza Hut has been dealt major competitive blows from delivery chains like Ann Arbor, Michigan-based Domino’s Pizza Inc. With domestic revenues at Pizza Hut down 4.1% last year, PepsiCo, its parent company, recently announced plans to combine the fast food franchise with its other two restaurant units, Kentucky Fried Chicken and Taco Bell, to create a new company, Tricon Global Restaurants Inc. Such a move would leave the restaurants to fend for themselves without protective corporate cover.
The affiliation with Pizza Hut will position V&J to grab market share by leveraging a collection of brands. “We see significant co- branding opportunities and the development of outlets that can bring together the Burger King and Pizza Hut brands under one roof,” says Daniels.