Hell spawns budget outlets

Pizza the action: Stu McMullin and Warren Powell are picking there's room at the budget end of the market.

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The boys from Hell are about to turn up the heat on pizza chains Domino's and Pizza Hut.

Hell Pizza co-founders Warren Powell, Stu McMullin and Callum Davies, along with Hell franchisee Glenn Collins, are opening a chain of budget-priced pizza outlets which will trade under the name Spawn.

Powell, Davies and McMullin opened the first Hell outlet in 1996 and grew the business into a national chain before selling out to TPF Group for about $15 million in December 2006.

In May the trio bought Hell back from TPF for an undisclosed price that was believed to be considerably less than they sold it for. Powell said Hell would continue to operate at the gourmet end of the market, where it appealed to more discerning customers who typically had higher incomes. However he also believed there was room for another player in the budget pizza market, which is dominated Pizza Hut and Domino's, where pizzas are priced around $10.

The first Spawn store was due to open at Remuera in Auckland in two weeks and Powell said he expected the chain to grow to about 30 outlets. The prices it would charge were still being finalised but Powell said he hoped to be able to hit the $10 mark and the pizzas would definitely be priced under $12.

However Spawn would also be aiming to offer higher quality pizzas than were currently available for $10. Because Spawn would appeal to a broader market than Hell, it could operate in towns and locations that were too small to support a Hell outlet.

Like the Hell stores, Spawn outlets would be franchised and Powell expected many of the new Spawn franchises to be picked up existing Hell franchisees. Some locations were not big enough to support two Hell stores, but they could support a Hell and a Spawn outlet, so some Hell franchisees would take the opportunity to grow their business, Powell said. Spawn would operate on a different business model to Hell, so the cost of buying a Spawn franchise would be about half as much as a Hell franchise.

- © Fairfax NZ News