A piece of the pie: at TelePizza, every employee is an entrepreneur

A piece of the pie: at TelePizza, every employee is an entrepreneur – Global Entrepreneur

Niklas Von Daehne

It started as a hobby, Leo Fernandez was Johnson & Johnson’s director of marketing in Spain when he decided to open a pizza delivery store, the country’s first. That was just the beginning. As the 47-year-old Cuban-American puts it, “the hobby got bigger and bigger.”

In its third month, Fernandez’s store in Madrid netted $10,000. So he opened a second. Half a year later, it was bringing in a net $30,000 a month. The time was ripe to abandon corporate life and become a fulltime entrepreneur.

Six years later, Telepizza remains sizzling hot. By the end of 1994, the company will have 210 stores — 60 percent franchised — and a presence in seven foreign countries (Portugal Belgium, Greece, Poland, Mexico, Chile, and Colombia). Systemwide sales are projected to reach $110 million, with net profits at $5 million.

Fernandez came to the United States in 1960. After high school and college, he served in Vietnam for a year. He returned in 1972 and spent the next 15 years in the corporate world, first selling bar soaps for Procter & Gamble, then marketing surgical instruments for Johnson & Johnson in the United States, Panama, Guatemala, and Spain.

While in the U.S., Fernandez witnessed the fastfood craze. “I knew it was going to happen all over the world,” he says. “Why waste that opportunity?” So he took a good hard look at the industry’s movers and shakers. “Many of the things that McDonald’s and Burger King did successfully, I copied,” he admits, referring to the giants’ cleanliness, customer service, and uniform processes. “If the wheel has been invented, why reinvent it?”

Second, from working in two of the world’s paramount corporations, Fernandez learned a few lessons about human resources and direct marketing. “Because I grew up in an organization that put an awful lot of emphasis on hiring high-caliber people, I have implemented the same in Telepizza,” he says. A full 90 percent of the stores’ supervisors are college graduates — an industry rarity but a key to the business’s rise. “The more capable your people, the better your team and the easier it is to fend off the competition,” he adds.

Hard-driving Deliverers

In a business traditionally plagued by high turnover and rampant fraud, Fernandez has turned his frontline people into a band of highly motivated entrepreneurs. All of Telepizza’s delivery boys work part-time — between 10 and 20 hours a week, depending on their study schedules — and each has direct responsibility for a small geographic area. But they don’t only zoom through rush-hour traffic on mopeds in order to deliver smoking-hot pizzas (and ice cream, soft drinks, and beers). They also get paid to build new business, so they hand out coupons and fliers at least two hours per week.

Fernandez tracks revenues to make sure a delivery boy doesn’t dump the promotional materials in the nearest trash bin. If sales for a certain geographic area are off, chances are the delivery boy has been skipping his direct marketing obligations. Fernandez also limits the temptation to snub these secondary deliveries by giving bonuses to the person responsible for a thriving area.

“We are empowering everybody to make sure that entrepreneurship is fermenting throughout the entire organization,” Fernandez says.

Gerry Durnell, executive director of The National Association of Pizza Operators in New Albany, Ind., says the basic difference between Telepizza and its competitors is that Fernandez has given up a slice of his pie in order to motivate and reward employees. “The entrepreneurial approach all the way down to the lowest levels of the company is the singular reason he’s done so well,” Durnell adds.

With competition from Pizza Hut, Domino’s, and Spain’s own Pizza World heating up, one of Fernandez’s tallest orders is to keep Telepizza in the customers’ spotlight. To that avail, the 4,000 mopeds are branded with the company name and function as mobile billboards, and the pizza boxes are redesigned every time a new Telepizza shoots up.

“Now people are looking at the bottom of the boxes to see how many new stores we have opened,” Fernandez says. “Success breeds success.”

COPYRIGHT 1994 Success Holdings Company, LLC

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