Blimpie

Blimpie International, Inc. is a submarine sandwich chain in the United States. The company is based in Scottsdale, Arizona.

The first Blimpie store opened in 1964 in Hoboken, New Jersey. By mid-2002, there were about 2,000 Blimpie outlets in operation, located in 47 U.S. states and in 15 other countries. Unlike most restaurant chains, Blimpie generally does not operate "company stores". Virtually all its income is derived from the various fees associated with franchise arrangements. In addition to freestanding outlets and locations in shopping malls and store clusters, Blimpie can also be found in a variety of nontraditional sites, such as inside convenience stores, gasoline station food marts, schools, office complexes, hospitals, and sports arenas.

A key area of growth is in the development or acquisition of other brands. In 1999 the company launched Pasta Central, a franchised chain within the "home meal replacement" category featuring Italian-style pasta and pizza; the concept was exclusively a vehicle for co-branded Blimpie/Pasta Central outlets. Two years earlier, Blimpie International acquired majority control of Maui Tacos, a Mexican quick-service restaurant with a Hawaiian flavor. Maui Tacos in 1998 launched Smoothie Island, a chain offering blended fruit-based beverages.

1960s through mid-1970s
The first Blimpie sub shop opened in 1964 in Hoboken by Tony Conza, Peter DeCarlo, and Angelo Bandassare, former high school buddies and classmates at Saint Peter's Prep in Jersey City. Inspired by the successful Point Pleasant operation Mike's Submarines (later Jersey Mike's Subs), the three speculated that a similar restaurant would do well in Hoboken. The store's name came about because Tony Conza preferred not to call the sandwiches subs, which he felt sounded like a greasy spoon. Conza preferred the term Hoagies, but Hoboken residents were unfamiliar with the Philadelphia term. He scanned a dictionary until he found "Blimp", a word that sounded to him most like a sandwich. The original Blimpie store was a hit, and, before long, customers began asking about franchises. The first franchise was sold to a friend in western New York for $600 during the company's first year of operation.

In 1965 Bandassare left the company and Conza and DeCarlo expanded into New York City with a store on 55th Street in Manhattan. By 1967 there were 10 Blimpie restaurants in the chain, four of which were owned by the founders. In spite of the chain's rapid growth and good sales volume, profits were difficult to make, and the partners sold the four stores they owned and began to concentrate primarily on franchising. By the mid-1970s, Conza felt the time was ripe to introduce Blimpie subs to the South. DeCarlo was against the move. This disagreement led to a split between the two. In 1976 Blimpie was divided into two entities, with both retaining rights to the Blimpie trademark. DeCarlo became head of a new, completely independent company, Metropolitan Blimpie (later Blimpie's of New York, Inc.), which controlled franchising rights in New York, New Jersey, and other parts of the East Coast. Conza retained control of the original company, which was incorporated in 1977 as International Blimpie Corporation. Conza remained chairman and chief executive officer of Blimpie through January 2002.

Late 1970s through 1989
During the late 1970s, Conza sold franchises anywhere he found an interest. Blimpie began selling franchises both for individual stores and for territories. Unfortunately, many of these new franchises were rather isolated from the rest of the chain, and some benefits of franchise arrangements had little effect in those locations. Although the chain was growing rapidly, several of the newer stores failed. By 1983, International Blimpie's annual revenues were approaching $1 million, and Blimpie's franchises totaled 150. Conza took the company public that year, with an initial over-the-counter offering of 90 cents per share.

Conza felt that there was no future in submarine sandwiches, and in 1984 opened Border Café, a tablecloth restaurant serving southwestern cuisine on Manhattan's Upper East Side. Although the Border Café did reasonably well at first, this shift in focus was a mistake. While Conza was turning his attention away from subs, competitor Subway, which was founded a year after the first Blimpie's was opened, was beginning an expansion drive that would push it far ahead of Blimpie as the world's foremost submarine sandwich chain.

After the Border Café's initial success, Conza opened two more of them in 1986, one in Woodstock, New York, and the other on the Upper West Side of Manhattan. Unfortunately, the Border Café idea was a money loser. Despite $4.5 million in revenues for 1987 (its largest total yet), the company showed a net loss of $347,800 for the year. That year, only 30 new Blimpie restaurants were opened, and company stock was in free fall, bottoming out as low as 15 cents per share. Conza's interest in his core business began to return. Over the next couple of years, Atlanta became the company's biggest target for new Blimpie's franchises. In 1987, the company celebrated the opening of the 50th Blimpie's store in the Atlanta area by giving away 25,000 free sandwiches to customers there.

By 1988 Conza realized the error of his ways, and he exited the Tex-Mex business. Seeing the tremendous success of Subway, Conza redoubled his efforts in the hoagie arena. He began to address the Blimpie problem with a more systematic approach than he had used before. The first step in Conza's revitalization program was to identify four fundamental problems plaguing the business: a lack of goals, poor use of financial resources, low employee morale, and procrastination. He then assembled a group of managers and drew up a list of "101 Small Improvements." Delegating to his senior staff much of the day-to-day managing he had always done himself, Conza went on the road in an attempt to open up the long-closed channels of communication between Blimpie and its franchisees.

Next, Blimpie launched a quality-control program aimed at cleaning up its 140 New York restaurants, which had long been sources of embarrassment to the chain. At the same time, Conza continued in his efforts to improve relations with franchisees, many of whom had become disgruntled over the last decade. In addition to visiting dozens of cities to meet restaurant owners, Conza formed a franchisee advisory council to keep him apprised of important issues; he launched a newsletter called 'No Baloney News' and a toll-free hotline to get important information to franchisees; and he gave franchisees more control over advertising through the formation of regional advertising co-ops.

In 1989 Blimpie began testing a new low-calorie menu in the hope of attracting a bigger share of the increasingly fat-conscious American public. The new menu, called Blimpie Lite, included a variety of tuna, crab, chicken, and turkey-based items, in both salad and pita-bread sandwich form. The following year, the company launched another test: gourmet salads sold under the name 'Blimpie Fresherie'. Blimpie began tinkering with its prototype restaurant design around this time, incorporating the company's signature lime-green and yellow colors into a sleeker look for new outlets. By 1990 the Blimpie turnaround was well underway, with system wide sales reaching $120 million per year.

1990 - Present
The Blimpie chain continued to grow steadily through the early 1990s. Much of this growth was fueled by the company's area developer program, in which franchise rights were sold for an entire area to a developer, who then subfranchised those rights to individual operators. The company continued testing new products throughout this period. In 1991 Blimpie unveiled its 'Quick Bite' menu. The company also began testing pizza at a handful of locations in an effort to expand its dinner business. Conza's attempts to improve franchisee relations continued as well. The company's first annual franchisee convention was held in 1991.

By the beginning of 1992, there were Blimpie restaurants in 27 states. That year, the chain passed the 500-unit mark and the company changed its name to Blimpie International, Inc., reflecting the renewed focus on the sub brand. In the spring of 1993, Blimpie began trading its stock on the NASDAQ exchange. Around this time, the company began to sink more resources into advertising than it had in the past, doubling its marketing budget to about $2 million per year. A new advertising campaign was launched, including television, radio, print, and point-of-purchase. This campaign marked the introduction of the chain's new tag line: "Simply Blimpie for fresh-sliced subs." Some television spots featured people on the street struggling to repeat the tongue-twisting phrase, "Simply Blimpie."

Blimpie system sales reached $132 million by 1993, and Blimpie International earned $1 million on $12 million in revenue. By autumn of that year, the chain had 670 outlets. Improved marketing support from the parent company reduced the rate of franchise failures from 10 percent to 3 percent. In some cases, such as in the Chicago market, Conza allowed franchisees to divert their 6 percent annual franchise fee to advertising.

As the 1990s continued, Blimpie devised a new concept that accelerated the chain's growth. Blimpie's franchises began appearing in nontraditional locations. First was convenience stores. As convenience store proprietors began to seek ways to compensate for declining cigarette sales, they turned to fast food. Blimpie's was the natural choice for many, for two reasons: a real kitchen was not required, and startup costs were relatively low (as little as $35,000) compared with other fast-food operations. Among the early nontraditional sites for Blimpie's outlets were the Des Moines, Iowa-based Kum & Go convenience store chain, Texaco Food Marts in Mississippi, and the food court at the University of Texas. Blimpie's also became part of the first Home Depot superstore restaurant section, located in Atlanta.

In 1994, the company launched several new concepts to further its drive for nontraditional venues. The "Blimpie kiosk" was a movable, condensed restaurant that could fit into a 100 sqft area. The kiosk, which could serve four types of sandwiches, drinks, and side orders, was designed for use at stadiums, fairs, and other events. Other new concepts included a special refrigerated case for convenience stores (Blimpie's fastest-growing market), and the 'Blimpie Bakery', offering a variety of baked goods aimed at boosting early morning business.

Blimpie reached two major milestones in 1995. Largely on the strength of its nontraditional location push, the chain passed the 1,000-outlet mark that year. Blimpie International also lived up to the second word in its name for the first time in company history, with the opening of a location in Stockholm, Sweden. As the 1990s continued, the company looked for more new ways to sell Blimpie sandwiches, including vending machines, outlets in supermarkets, and new types of carts and other mobile product-delivery systems.

With the opening of new outlets in the US slowing and with overseas growth occurring at a slow pace (there were only 61 overseas locations in 15 countries by 2001), Blimpie launched a new diversification effort in the late 1990s. The first such initiative came late in 1997 when the company acquired a 75 percent stake in Maui Tacos, a fast-food chain with six units in Hawaii. This concept featured traditional quick-service Mexican food, such as burritos, tacos, and quesadillas, but with a Hawaiian twist, such as meat marinated in pineapple, lime, and other Hawaiian flavorings. Under Blimpie's majority ownership, Maui Tacos was soon introduced to the mainland, and by 2001 there were 15 such units in nine states and the District of Columbia.

After almost two years of in-house development, Blimpie launched Pasta Central in 1999. Unlike Maui Tacos, Pasta Central was not a standalone concept but was created as a co-branding vehicle that would be coupled with Blimpie Subs & Salads. Co-branding emerged as a hot growth vehicle in the late 1990s and involved the placement of two (or more) restaurant brands within a single unit. There were a number of rationales behind co-branded units, including the idea that the additional choices that they offered customers made them more attractive to groups of people, but for Blimpie International it was the desire to increase dinner revenues that propelled the creation of Pasta Central. Because sandwiches were largely considered lunch fare, Blimpie Subs outlets made the bulk of their sales from 11 a.m. to 2 p.m. Pasta Central, by contrast, with its Italian-style pasta dishes and its pizza offerings, was designed to generate traffic during dinner, making it complementary to Blimpie. In addition, Pasta Central was also created with a home-meal-replacement component built in – a selection of prepared refrigerated and frozen entrees and prepacked foods for preparation at home. By mid-2001 there were eight units cobranded with Blimpie and Pasta Central, with the units located in Puerto Rico, Georgia, South Carolina, Texas, and Wyoming.

A third new concept was 'Smoothie Island', which was launched through Maui Tacos in 1998. Smoothie Island's menu featured beverages blended with frozen yogurt and fruit. In addition to opening standalone units, including such nontraditional locations as airports, health clubs, and grocery stores, Blimpie also planned to co-brand Smoothie Island with both the Maui Tacos and Blimpie concepts—both in dual-branding and tri-branding formats. By mid-2001 there were 80 Smoothie Island units located in the United States, Puerto Rico, and four other countries.

By the turn of the 2000s, Blimpie International was struggling. Net income had fallen steadily throughout the second half of the 1990s. A main factor in this decline was that the subfranchiser rights to the Blimpie Subs chain had largely been sold by the mid-1990s, thus bringing a halt to what had been a steady stream of income. As Blimpie's struggles continued, investors showed little interest in the company, and the price of the company's stock sagged. Seeing little benefit in being a publicly traded firm, Blimpie joined the growing ranks of restaurant companies fleeing the public market. In October 2001 a private investor group led by Jeffrey K. Endervelt, owner of the 44-unit Blimpie of California subfranchise, agreed to buy Blimpie International for $25.7 million. The transaction was completed in January 2002, whereupon Endervelt took over as chairman, president, and chief executive officer, and Conza, a partner in the investor group, remained in an advisory capacity.