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turning point

This is Boston Pizza’s Rustic Italian pie. As a result of the company’s appearance at Expo 86, its brand strengthened and it opened an additional 114 stores in Western Canada over the next decade.Matthew Sherwood/The Globe and Mail

The first time British Columbia-based Boston Pizza International Inc. tried to expand into Eastern Canada, it didn't work out. At all.

The company opened three restaurants in Southern Ontario in 1989, but they didn't gain traction. The company had no leadership on the ground to control the franchises, and the stores floundered and closed by the mid-1990s.

"We licked our wounds and decided we had to do it differently, and better," says co-chairman George Melville.

He and co-chairman Jim Treliving still wanted their chain to go national, so in 1997 they re-entered the Eastern market. This time, though, they set up a regional office in Mississauga and hired Mark Pacinda to run it, while Mr. Treliving temporarily uprooted his life and moved to the area as well.

That worked out a little better: Boston Pizza is now Canada's largest casual dining chain. Its combination of family restaurant and sports bars captures the most traffic and highest revenue share in the full-service dining sector. And there are no plans to stop growing, either, having opened restaurant No. 351 on the Queensway in Toronto this month.

The company exemplifies the importance of being there. Boston Pizza approached its eastern expansion like a startup, with local management, an updated store design and a local corporate training store.

"If you do the same thing over and over again and expect a different result, that's the definition of insanity," Mr. Pacinda says from the Ontario headquarters, which are nestled next to the Square One shopping complex in downtown Mississauga. "The two owners ... said we need to change the way we go into that market, and it worked."

Mr. Treliving certainly has no regrets. "The world changed after that," he says.

Mr. Pacinda, now Boston Pizza's president and chief executive officer, says that since the successful expansion – 107 stores in Ontario, 25 in Quebec and 19 in the Atlantic provinces – the suburb-centric chain is wading into urban cores, airports and underserviced smaller communities.

The company, founded by a Greek immigrant and with a U.S. moniker, has come a long way from its pizza-and-spaghetti house origins in 1964. Founder Gus Agioritis named it after Boston because of the authority he felt the city lent to brands. Mr. Treliving, then an RCMP officer, got involved in 1968 when he opened his first franchise in Penticton, B.C., with consulting help from Mr. Melville, an accountant.

The pair eventually opened 16 restaurants in British Columbia and bought the company outright in 1983 from owner Ron Coyle, who'd earlier scooped it up from Mr. Agioritis.

In 1986, Mr. Treliving and Mr. Melville oversaw Boston Pizza's first major turning point as it became the official pizza supplier of Expo 86 in Vancouver. "They took a huge gamble, and probably spent money they didn't have to get involved," Mr. Pacinda says.

But sponsoring the expo alongside Coca-Cola, General Motors and other big brands garnered Boston Pizza significant attention.

"We were able to build our brand awareness and grow quite dramatically after that," Mr. Melville says. They opened an additional 114 stores in the West over the next decade.

Canada's restaurant industry grows only about 1 per cent per year, meaning that "you need to literally be stealing [market] share from competitors," says Robert Carter, who heads the Canadian food services division of retail market researcher NPD group. His company's surveys indicate Boston Pizza is Canada's No. 1 full-service dining brand.

Boston Pizza became the industry leader by keenly seeking new revenue, Mr. Carter says: "As they grew in the West, they had a good formula, and rolled that out across Canada, targeting rural areas where there wasn't a lot of chain concentration."

By establishing leadership in Ontario – and in Quebec, with a Laval office – Boston Pizza was able to blend local restaurant trends into its corporate culture. Extending this culture is important when exploring new frontiers, says Becky Reuber, a strategic management professor with the University of Toronto's Rotman School of Management. "Without anybody there, that's just really hard to do," she says.

These days, Boston Pizza's key leaders are based across North America – Mr. Melville in Vancouver, Mr. Pacinda in the GTA and Mr. Treliving in Dallas, overseeing U.S. expansion when he's not investing in new Canadian businesses on CBC's Dragon's Den. The market to the south, with 50 locations, including one in Mexico, is still ripe for expansion, but the company is being cautious as the U.S. restaurant industry slowly comes out of recession. They're aiming to have 100 stores south of the border in the next couple of years.

In Canada, though, the company is still focusing on growth and its franchisees' profitability, as well as the Boston Pizza Royalties Income Fund, a trust Mr. Treliving and Mr. Pacinda started a decade ago to collect royalty payments from franchisees. Last quarter, the restaurants in the fund's royalty pool reached their highest-ever franchise sales, at $186.3-million.

"We've got lots of growing in Ontario and Eastern Canada to do, yet," Mr. Treliving says. "We're not slowing down by any stretch. This is a time in our lives that we think we can drive the company even higher to better things."

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