Philly Pretzel Factory this year is continuing the aggressive expansion plan its officials laid out years ago. The company — which has outgrown its Northeast Philadelphia headquarters and moved to the suburbs — will enter new U.S. markets, and it will continue expanding in its home turf.
Philly Pretzel Factory earlier this month quietly moved its corporate headquarters from Mayfair in Northeast Philadelphia to Bensalem in Bucks County.
The pretzel company moved into the space vacated by Rita's Italian Ice, which took its corporate headquarters to Trevose in the same county back in 2007.
"It's perfect," said Tom Monaghan, chief development officer. "We can build a training center and have our corporate staff in one spot. It's just one more piece of the puzzle for world pretzel domination."
Philly Pretzel Factory's previous headquarters in Mayfair wasn't really a corporate office as much as it was a "hodgepodge of other offices," Monaghan said, where employees were scattered throughout different buildings and spaces the company acquired over the years as it grew.
Altogether, the "hodgepodge" added up to about 1,000 square feet of space, but it got to the point where Philly Pretzel Factory had to bite the bullet and move its headquarters.
It's new HQ in Bensalem is about 20,000 square feet.
It was time for the company to "blossom and put everyone under one roof," Monaghan said. Along with its staff, the new Bensalem headquarters will house a training facility, and it will eventually house the company's commissary, in which its food trucks will park.
"It's a whole brave new world," Monaghan said. "It's time for us to put our money where our mouth is and invest in infrastructure."
Growing domestically
Founded in 1998 by CEO Dan DiZio and college roommate Len Lehman, Philly Pretzel Factory has grown to about 167 locations in 19 states across the United States, and it's continuing to expand.
There were plans in 2015 to make an international push, including an expansion to Europe and Asia, but those plans were put on hold to focus on the domestic market.
There's potential for the brand to slowly expand outside of the United States as early as 2018 in the Canada and Mexico markets, Monaghan said.
Philly Pretzel Factory had lofty goals of opening 500 U.S. stores by 2020, DiZio told the Philadelphia Business Journal in 2015, when the company opened its first supermarket location in a Philadelphia ShopRite. There are now 31 so-called "store-in-store concepts."
Philly Pretzel Factory is on pace to hit that goal, said Monaghan, who was brought on board in 2015 to handle and plan the company's U.S. and global expansion.
The company will add 50 new locations this year with franchise owners across the United States, and about 17 of those locations will open in the first quarter of 2017.
In Philadelphia, the company continues to expand in Philadelphia proper, including a small, recently-opened outpost at 8th and Chestnut streets.
Philly Pretzel Factory will replace the three Auntie Anne's pretzels locations at 30th Street Station, Monaghan said. These are in the planning stages, but they're set to change brands and will be operating this summer.
The company's domestic expansion includes locations in new markets outside of the East Coast. The company signed multi-unit agreements to break into the Midwest market, with locations planned this year for Indiana, Illinois and Missouri.
At least three stores are in the works for and around Notre Dame, Ind.; and a Drexel University graduate will open at least three stores in the suburbs of Chicago, the first of which will open in fall 2017.
"We've spent 18 years since the company was founded, finally getting to the point where we can make investments to do this," Monaghan said of the time it took for the company to expand to the Midwest.
"Second, it's the way we're operating. We're not targeting a market; we're targeting franchise partners," he said. "When you do that, it takes a little more time."
DiZio in 2004 started Soft Pretzel Franchise Systems Inc. to franchise and expand the Philly Pretzel Factory brand across the United States.
The company now gets between 200 to 300 applications a month for franchise opportunities, Monaghan said.
The soft pretzel did not originate in Philadelphia or on the East Coast, but it's become a regional food, and it has become a food iconic to Philadelphia itself. The concept, however, should have no trouble translating to other parts of the United States.
"Authenticity in food products is growing in importance and popularity," said Julie Ruth, professor marketing and associate dean for graduate programs at the Rutgers School of Business-Camden.
"Philly pretzels speak to authenticity that comes with regionalism, and food associated with regions and cities are attractive for millennials," Ruth said.
That's a boon for Philly Pretzel Factory.
The popularity of authentic food historically goes through ebbs and flows, but the rise of social media today has created a growing awareness and openness to things that wouldn't have been popular otherwise, domestically and globally.
"From an operational standpoint, they don't require a huge physical footprint in retail stores, so their cost of expanding may be somewhat advantageous," Ruth said of Philly Pretzel Factory.
National Pretzel Day & its business implications
Philly Pretzel Factory locations — traditional and Walmart locations — on Wednesday, April 26, will offer a free pretzel to every guest who enters the store for National Pretzel Day.
This will be the company's 10th year participating in National Pretzel Day, which began in 1983 when Philadelphia Rep. Robert S. Walker said the pretzel, his favorite food, deserved its own holiday.
"This is our Super Bowl," Monaghan said. "We're going to give away 150,000 pretzels on that day alone. That is so exciting for us, because not only does it generate a boatload of future customers that come back ... but it will also be one of the biggest sales day for us."
It also helps with franchise development.
More often than not, first-time customers during National Pretzel Day have become franchisees, or at least show interest in becoming one, Monaghan said.
This is not surprising. Promotions, particularly ones that come with free products, have large impacts on a company, said Ruth of Rutgers School of Business-Camden.
"With a free product, any inhibitions people have go away. It makes it easy for people to try, especially for a food product," Ruth said.
National days like National Pretzel Day bring attention to certain products and product categories.
"With the free product, they're getting people as far down the purchase chain without getting them to buy it," Ruth said. "That's the closest to getting the behavior you're looking for as a marketer. You want to get people to want to buy it."
That's particularly important with the rise of social media.
"People talk about things they're motivated about, so marketer has to figure out how to take something like Philly soft pretzels and make it something worth talking about," Ruth said. "For something like the Philly soft pretzel, you're working with product with so much potential."