Costa Anastasiadis

Gourmet pizza chain Crust has been growing at a rate of knots over the past couple of years, opening up its 100^th store this month 10 years after the first store was rolled out in Sydney.

Founder and managing director Costa Anastasiadis expects Crust to open another 50 or 60 stores, but says international expansion is the next big thing and a deal in the US has just been signed.

Crust has raised the bar in quality pizza, Anastasiadis says, and despite the dual challenges of high food and labour costs, turnover is tipped to reach $14 million this financial year, up from an estimated $13 million in head office turnover this year.

Anastasiadis also expects Crust’s online portal to double in revenue over the next few years.

Last time SmartCompany talked to you was in 2008, when you were planning to open 40 stores through to 2015. You’ve just reached 100 – how did that happen?

Is that what I said?

Yes.

Well, we travelled a little bit quicker than we anticipated. It’s been a great journey and there’s been a lot of growth over the past 24 months. It’s just been phenomenal. What happened is we’ve evolved from organic growth, friends and family, people who knew us and wanted to jump on board.

You’re talking about franchisees?

Yes, that’s right. And we’ve had enquiries from all over the country, multiple enquiries from overseas, and the food court concept is also gaining a lot of traction.

We started off as a bunch of local stores, and we want to maintain our principles; we initially wanted to be the local pizza bar that everyone knows.

We still want to do that, and we want to grow big.

What companies do you look at that have managed to do that?

In the retail food sector, we don’t compare ourselves directly but we like Grill’d, Boost, Sumo Salads – those newer retail concepts, I think it’s a generational thing. We classify ourselves in that group. All those retailers have definitely got a niche, the way the brand is perceived, the way the stores are rolled out, the way their customers perceive them.

And what’s the breakdown in your stores in terms of franchise store and company stores?

The majority are franchisees; there are just a handful of company-owned stores.

And our aim is always to have a small portion of company-owned stores where we can still maintain training; we can try out different things, innovate, and keep our finger on the pulse.

We all started off in stores, so there’s always a danger when you go corporate and get out the store, so we’ll always have company-owned stores.

You spoke before of your food court model, tell us more about that.

The idea for us is to maintain integrity of product and give people an offering of quality pizza during the day. Nobody owned that space in the market. So we thought, this is a perfect opportunity for us to leverage the reputation of brand, so we’ve got Westfield, then the Macquarie Centre and Sydney Airport International.

We’re starting to see real interest in the model, so it’s definitely a growth avenue for the company. Potentially we could have 30-40 outlets across the country, in CBD locations, airports.

There’s not one in the Melbourne CBD, I noticed.

It’s coming. We plan to increase our store numbers in Melbourne, as well as Brisbane, Perth, the major airports.

Do you think you’ve been able to exceed your store number expectations because gourmet pizza is more popular these days?

I think when we came into the picture, the industry was growing tired and complacent, and when I talk about we, I mean the pizza industry.

I think we really defined what quality gourmet pizza is. I think people relate with the brand really well, especially young people. And I really believe that we’ve maintained true to our core principles. From day one, the vision was to entice the customer visually. And when you aim to do that in a food arena, you cannot skimp on quality. And then there have been other innovations, like the heart foundation tick of approval.

I think that we own the healthy space within the pizza market in Australia; people consider Crust as a healthier alternative and these days, people are more educated about what they consume.

So when you consider your competitors, you think about “healthy” fast food stores rather than other pizza stores?  

This might sound arrogant, but we believe that industry is quite reactive to what we do. We targeted the healthy space long before our major competitors did. So that’s part of what we do, but it’s not the only thing. We back it off with a great offer.

And technology is a big part of what you do.

Well, the traditional retail model at the moment is at 100, but at saturation it’s probably 150 or 160. International expansion is the next big thing; we’ve just signed a deal in the US.

But probably one of the biggest growth avenues for the company is the growth in online. At the moment, 20% of revenue comes from online ordering. We’ve invested heavily in that, and within two or three years we expect it’ll go to about 40%, so that’s a significant increase in the online portal.

It’s a big exercise, so big resources are involved at the moment.

Are you still family-owned?

Yes, we are.

And how are your costs at the moment?

The costs of goods have been a significant issue over the past 18 months in the food sector, and unfortunately we see food costs continuing to rise. And that’s an issue and quite a challenge, particularly if you own company stores.

Another concern is the cost of labour; it’s an issue for everyone in QSR [quick service restaurants] and we’re no different, but we’re working on strategies to deal with that.

What are they? Through technology?

That’s one part of it.

Thanks for your time.