You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. The next company we're gonna talk about was founded in nine headquartered in Toledo, Ohio. We're talking about Marcos Pizza and now has over a thousand stores in thirty four states, locations in Puerto Rico and the Bahamas. The company recently notes that it officially crossed the one billion dollar market annual sales.
So let's get more on the business, the growth. What's next. Let's bring in Tony Lobarti, his president co CEO of Marcos Pizza. He joins us on the phone from Florida, Florida. Excuse me, Tony, how are you? How are you? I'm doing well. I'm doing well. Tell me a little bit about the business and and this achieving our achievement of one billion dollars in annual sales. Why is this so
significant for your story and your story going forward? Well, really, Marco, the Marco's brand is doing incredibly well during some very difficult times the last two and a half years. As you know, it's has been challenging, but we continue to grow. Um we continue to see same our sales growth, unit growth, average unit volume growth year after year, and we're pretty excited about it. And really by crossing the billion dollar threshold, we're really now concentrating on what more can we do
and be as a brand in our community. So we're establishing our new Marko's Foundation, which is really a charity foundation for our franchisees and team members to really be a positive difference in our communities, focusing on things like school and education, hunger prevention, and nutrition. Very slowed down for a second, So I want to go You've got a lot going on. I want to go back to the growth in the business. Um, what is it? Is it?
Just because if I think about fast food, fast casual, there's a lot of choices out there, and you know they're not all alike. I feel like the pizza sector, in addition to your local, you know pizza places in various towns and cities. We certainly have a lot in the city. There are some really well known chains that you know, and newer ones entering. So why do you think you're growing? Is it price point, is it your demographic? What is it? Well? I think it's all of that.
We we've had an opportunity just recently to become the fifth largest pizza chain. Um congratulations to our franchisees. We've seen about a thirty six percent sales growth in the last two and a half years. Um uh. And really it started with our national advertising. We we became a national brand on TV this year as an example, or
on TV for thirty two weeks. Uh. We really focused on our digital footprint by rolling out a new app and working on our web page, and and we were able to take our digital our digital orders from twenty five percent just three years ago to now sixty today. Um uh. And of course we've got a great product and we're really the brand that very few people knew about.
But as as we continue to tell our story and we're out there with a great value proposition getting people to try our pizza, we seem to be winning the fight. And let's talk about delivery a little bit more. I've seen the notes that you passed over that you've made big bets on the future with a third party delivery platforms. Talk to me a little bit about that decision to go that route. Yeah, we we actually were earlier adopters of the third party we felt pretty strongly that that
was a creative to our business. Those were different customers. When somebody was deciding whether or not they were gonna have lunch or dinner and they went to a door dash or an uber each, they weren't thinking about Marcos UH, and so we thought that it would it would help us, and it has. In fact, we've grown that part of our business by six percent between one UH and it's up thirty six percent this year, so we'll do over eighty million dollars and thirty part third party aggregated sales
and UH. It's been a big win. It's introduced our brand to a whole set of customers that didn't know who we were. Hey, I gotta ask you, um Tony. One of the big things that we talked about with anybody who runs a company, UH, and certainly in your space inflation. We did see inflation prints that were much more positive, coming in less than expected, but they're still high. What are the inflation pressures that you're seeing when it comes to labor costs and to food costs, Well, we're
seeing what the rest of the industry is seeing. When we rolled through Q two, we had about increase in overall food cost in in in Q two and P seven at peaked at pent and you're right, we didn't see it go higher here in the recent uh P eight, but but is still too high. It's about five basis
points pressure on the bottom line for us. And while we've been taking some pricing to try to mitigate UH the inflation, we've really been focused on trying to just take modest increase increases to ensure that we continue to grow our market share and that that that's been difficult, trying to balance the two of staying profitable for our franchisees, but at the same time trying to be there for our customers in our communities as a real value for them.
During sometimes well, let's talk about the franchise e. Like Carol said, you know, you have many stores across the US thirty three states, so you really see a lot of the country there. And I'm curious, what is sort of the common denominator when you think about what the biggest UH sort of issues for your franchise ease or I'm going to mispronounce that for the franchisees and what
is the biggest problem right now? Well, you know, it's funny um uh it every year is challenging, but two is proven to be a more difficult year than one. If you remember we started with COVID. That was challenging just getting stores open being essential, trying to keep your team safe, and and and and and keep keep the business moving. In one we had great, great resignation period.
We're trying to find help through the summer months and through the through the fall and winter was extremely challenging, just again to keep normal operating hours. And so we've rolled that into two. And then here we go with wage increases and and and in inflation. And I would tell you that the two biggest challenges for our franchise dase today, one is retaining and finding good help to help them continue to grow their businesses and then again managing their p and l um UH to a point
where we can continue our growth. And we've got about two hundred and forty years so news stores and development as we speak. We got about another hundred and fifty of those right behind it, and so we'll be at store brand and no time. So really we need people and and UH we focus on that every day, both UH our recruit efforts and our retention efforts are cultural efforts, all those kinds of pay. Tony just got about twenty
five seconds here. Uh. We often talk about recession no recession, based on what you're seeing and what consumers are doing. What would you say, um, in terms of consumer spending, what the economy looks like here in the US, Well, I would tell you that they are, uh looking for value. I will tell you that they are trying to feed their families on on fewer dollars, and pizza is a
great place for them to do that. Uh, They're they're being discerning in terms of number of items they're putting in their basket when they're purchasing, and so keeping a lid on price will mitigate the loss in the in the item sold, and and and people are just really trying to make ends meet. I didn't hear recessions and no recession. Well, just quickly, we're in one. If we if we believe we're in one, then yeah, it's coming. But but pizza tends to do okay recession, so it's
not necessarily huge concern for us. All Right, we gotta run, Tony, Thank you so much. Tony Lobarti, President and co CEO at Marcos pizza,