Operation: Solid Business, Plan. From last FORM 10-K
Our Operations
We currently offer two restaurant concepts in our three Company owned restaurant locations including:
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A full-service dining room menu comprising a Carmela's Pizzeria and including a limited pizza buffet and alcohol and a Sports Grill.
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A smaller Carmela's Pizzeria with full menu dining room including limited pizza buffet, delivery and carry-out; as well as a drive-thru in certain locations.
In addition, our locations may offer a "Carmela's Treats" walk-up window offering ice cream style dessert treats offered to both diners within the restaurant or patrons looking for dessert only offerings.
Each concept is designed to offer quality meals at affordable prices with an emphasis on efficiencies in food ordering, preparation and service. We believe that the overall configuration of each concept results in simplified scalable operations, increased efficiency and improved consistency and quality of our food products. Our restaurants may be configured to adapt to a variety of building shapes and sizes by utilizing the restaurant concept that best fits the individual location. This offers the flexibility necessary for our concepts to be operated at a multitude of locations.
In addition to offering New York style pizza for dine-in, carry-out or delivery at select locations, our buffet menu offers a variety of pizza toppings and special combinations of toppings. Stores offering full buffets also offer pasta, salads, comfort foods, and in a family-oriented atmosphere.
During 2015, we added a catering division offered through our stores for everything from simple pick up to full services weddings and other occasions. The catering menu presently offers five different price points ranging from $4.50 per person for salad, pasta and breadsticks to $12 per person for a full meal including roast beef with au jus. Customers can also order from a variety of appetizers, salads, entrée's and sides in portions designed for 8, 15 and 25 plus people including Italian classics and other non-Italian items.
During 2014, we announced and have been working on creating a franchising concept presently planned to involve three separate business elements including:
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A full-service dining room menu comprising a Carmela's Pizzeria and including a limited pizza buffet and alcohol and a Sports Grill.
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A smaller Carmela's Pizzeria with full menu dining room including limited pizza buffet, delivery and carry-out.
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A Carmela's Pizzeria delivery and carry-out model similar to those of the leading pizza delivery chains and drive-thru access in some cases.
In addition, the catering division is envisioned as a separate business unit that prospective franchisees may add to build sales and profits. A Carmela's Treats walk-up window concept may also be added providing a separate profit center offering ice cream desserts. While we began working on the initial phase of the national franchising program, the cost and complexity of beginning the franchising concept has caused us to move more slowly on this initiative than initially planned. We intend to continue exploring franchising opportunities as a means to expand the Carmela's business.
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Franchising will require development of the Franchise Disclosure Document ("FDD"), the legal document presented to prospective franchise buyers in the presale process. In addition, candidate review and screening for a national franchise director commenced in 2015 but not yet been completed as of the filing of this report. The Company identified a franchising partner to complete the franchise operating system, collateral marketing materials and other supporting legal documentation, however these plans were put on hold pending further review of the costs and actions involved in creating the franchising concept. The Company feels it is important to perfect the Company's business plans and processes in order to establish a viable franchise concept.
One of our long-term objectives is to selectively expand through franchising along with adding a small number of Company-owned restaurants by identifying appropriate opportunities. We believe that developing a domestic network of franchise and Company-owned restaurants will play an important strategic role in a predominately franchised operating structure. In addition to generating revenues and earnings, we expect to use domestic Company-owned restaurants as test sites for new products and promotions as well as restaurant operational improvements and as a forum for training new managers and franchisees. We also believe that as the number of franchise and Company-owned restaurants increases, they may add to the economies of scale available for advertising, marketing and other costs for the entire system.
Food and Supply Distribution
We currently purchase our restaurant supplies from local wholesale food distributors in the Dayton, Ohio area. If we are able to expand through franchising, we will identify a suitable partner for outsourcing our warehousing and distribution services to a reputable and experienced restaurant distribution company. There are many regional and national companies to choose from that we believe will offer significant choice to tailor a program necessary for our specific needs. We may also choose to outsource our product sourcing, purchasing, quality assurance, franchisee order and billing services, and logistics support functions. These decisions will be made as we move forward with development of our franchising program in the future.
Advertising
We presently advertise locally in the Dayton, Ohio area mainly through direct marketing. As we move to create our franchising concept, we will be required to communicate a common brand message at the regional, local market and restaurant levels, to create and reinforce a strong, consistent marketing message to consumers in order to create successful franchise start-ups and garner sufficient market share. It is typical to require franchisees to participate in, and contribute to, an advertising program as part of their franchising fees. Once again, these decisions will be made as we move forward with development of our franchising program in the future.
Government Regulation
We are subject to various federal, state and local laws affecting the operation of our restaurants. Each restaurant is subject to licensing and regulation by a number of governmental authorities, which include health, safety, sanitation, wage and hour, alcoholic beverage, building and fire agencies in the state or municipality in which the restaurant is located. Difficulties in obtaining, or the failure to obtain, required licenses or approvals could delay or prevent the opening of a new restaurant or require the temporary or permanent closing of existing restaurants in a particular area.
We will be subject to Federal Trade Commission ("FTC") regulation and to various state laws regulating the offer and sale of franchises once our planned franchising program commences. The FTC will require us to furnish to prospective franchisees the FDD containing prescribed information. Substantive state laws that regulate the franchise or franchisee relationship presently exist in a number of states, and bills have been introduced in Congress from time to time that would provide for further federal regulation of the franchisor-franchisee relationship in certain respects. Some foreign countries also have disclosure requirements and other laws regulating franchising and the franchisor-franchisee relationship.
Reviews Online seem favorable.
