Entrepreneur Tom Potter, who founded the Eagle Boys pizza chain nearly 30 years ago, has compared the collapse of the business – placed in voluntary administration last Thursday – to the demise of Dick Smith Electronics earlier this year.
Potter left school at 15 and was jobless at 23 when opened his first pizza shop in the NSW border town of Albury in 1987. It grew to become the country’s third biggest pizza chain via franchising, with around 340 stores, before he sold a majority stake to Queensland private equity firm NBC Capital in 2007.
Last week the board of Eagle Boys Dial-a-Pizza Pty Ltd, as head franchisor, placed the business in voluntary administration with SV Partners.
“This does not extend to franchisees; all Eagle Boys stores remain under the control of individual franchisees and will continue to operate normally,” the company said in a statement.
The administrators will look at the restructuring and sale of the business, which has shrunk to just 120 stores over the past decade as the likes of Domino’s have pushed aggressively into the market.
“For Eagle Boys customers, franchisees, employees and suppliers it’s ‘business as usual’ while the Administrators’ review is underway,” the company said, adding that the management team “is looking forward to the prospect of growing the brand under new ownership”.
It’s a far cry from plans three years ago to open stores in the Middle East.
Last year, the business was seeking to raise $20 million to pay down debt as it continued to push towards an IPO.
But the head office had souring relationships with some of its franchisees in recent years, including threats eight months ago of a class action by up to 30 store owners, with some claiming they were made bankrupt or insolvent due to the action of head office, including reductions in marketing.
Today, Queensland’s Courier Mail says the company’s estranged founder, Tom Potter “ripped into the firm for a litany of alleged strategic mistakes, including raising prices, changing the brand positioning, gutting advertising, and allowing revolving-door management”.
Potter revealed his relationship with the company also fell apart, despite his offers of help, and he was threatened with legal action if he contacted the board or senior managers.
The Courier Mail’s Citybeat column says “Potter noted, there are some disturbing parallels with the recent crash and burn of the Dick Smith electronics chain after it too was snared by private equity players”.
One observation by Potter shows that his former business was ahead of the curve against rival Domino’s — the Eagle Boys guarantee of pizza within two minutes of a customer getting to the store for pick up.
Domino’s recently launched an app to ensure the pizza is ready just as customers arrive at its stores.
Potter says scrapping the pledge for guaranteed pizza within two minutes of arriving in store “spelled the beginning of the end”.
Retail Food Group is among those reported to be interested in acquiring the Eagle Boys brand.
You can read more on Potter’s blast here.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.