Tombstone Pizza Corporation History

Address:

101 Harlem Avenue
Glenview, Illinois 60025
U.S.A.

Telephone: (708) 646-2000
Fax: (708) 646-3901

Wholly Owned Subsidiary of Kraft General Foods Inc.
Founded: 1962
Employees: 1,600
Sales: $190 million (estimated)
SICs: 2038 Frozen Specialties; 2013 Sausages and Other Prepared Meats

Company History:

"What do you want on your Tombstone?," an executioner asks a condemned man. "Cheese and pepperoni," the man replies in a memorable television commercial for the fastest-growing frozen pizza manufacturer in the United States. Tombstone Pizza Corporation, a subsidiary of Kraft General Foods Inc., grew out of the hit product of a northern Wisconsin tavern to become a national phenomenon. In 1995, Tombstone announced that its product had earned the number one ranking in a year-long Nielsen poll of frozen pizza consumers nationwide.

Tombstone's history was as unique and humorous as its name. In the 1960s, brothers Joseph "Pep" and Ronald Simek ran a neighborhood tavern called the Tombstone Tap on the outskirts of Medford, Wisconsin. The local watering hole, which sold beer at a dime a glass, was so named not because of any occult interests on the part of its owners, but rather because it was located across from a cemetery. One night, while letting loose to the "Peppermint Twist," Pep got a bit carried away and fell, breaking his leg. For the next six weeks, he hobbled about on crutches and was confined to the tavern's minuscule back kitchen. With nothing better to do, Pep relieved his boredom by experimenting with various pizza recipes as a snack for Tombstone Tap's patrons. Remembering some delicious pizza he had tried during a recent visit to the Windy City, Pep decided to produce a Chicago-style pizza and experimented with crust thickness, spices, sauces, and toppings until it was just right.

By 1962, 35-year-old Pep had perfected his pizza with a secret slew of spices, tangy sauce, real Wisconsin cheese, and lean meats. Once the pizzas were served at Tombstone Tap, customers could not get enough. Word quickly spread about the terrific pizza at Tombstone, and by 1963 other local taverns commissioned the Simeks to make pizzas for them to freeze and serve later. Pep and Ron, along with their wives, Joan and Frances, began making pies in earnest from the living quarters attached to the Tap. Folks referred to their products as "Tombstone's" or "Tombstone" pizza, and the unlikely name stuck.

From the beginning, the Simeks went about their enterprise with a singularity of purpose: to create the tastiest, best pizza possible, whether it was served to the tavern's customers or frozen for delivery. Even their method of delivery was unique and stylish--packed in dry ice, the handmade pizza pies were delivered in a snazzy 1959 Cadillac. Yet demand quickly exceeded the car's capabilities, and the Simeks took out a $5,600 loan to buy their first refrigerated truck in 1966. The truck had the capacity to carry up to 1,800 frozen pizzas to neighboring taverns, campgrounds, gas stations, bowling alleys, and other clients.

The following year, the Simeks faced a daunting decision--whether to continue with their burgeoning wholesale pizza business or concentrate on running the tavern. They decided on the former and converted the rooms attached to the back of the Tap into a small factory, where they produced pizzas until clients from distant counties began calling with orders. Once again, demand overtook supply and the Simeks' back rooms-turned-factory would no longer suffice. They built their first large-scale manufacturing facility in 1968 and set their sights on conquering the entire state of Wisconsin by way of Milwaukee, the nation's highest seller of sausage-topped frozen pizzas, some 250 miles away.

By 1970, frozen pizzas had become a $100-million industry. Within three years, Tombstone Pizza's reputation had once again exceeded its manufacturing capability and Pep and Ron needed to enlarge their factory in northern Wisconsin. The pizza-making business continued to grow unabated, and the Simeks found themselves putting additions on the Medford facility practically every year. In addition, the brothers found it increasingly difficult to control some of their independent distributors and to closely monitor sales and receipts. In 1975, Pep and Ron hired a 32-year-old named Grant White, who had previously tended bar at the Tap, as Tombstone's salaried sales manager. Another former bartender, D. David "Dewey" Sebold, also 32 years old, was hired to realign the company's field sales team. Sebold, who had organized and run a sales force for pharmaceutical giant Ciba-Geigy, convinced the Simeks that they would regulate their deliveries more easily by replacing the varied distributorships with their own specially trained sales force.

Taking Dewey's advice, Tombstone commenced its direct-store-delivery (DSD) service in 1976, taking pizzas directly from the manufacturing plant to designated distribution points, where the Tombstone sales force took over by driving the refrigerated trucks to supermarkets, convenience stores, and other retail customers. By delivering its products in this manner, Tombstone ensured that its pizzas were fresher, plus it carried lower inventory and saved money by reducing out-of-stock situations and labor costs. Tombstone was in control of the entire process from start to finish, which insured quality pizzas and prompt distribution. The practice was reminiscent of the early days, when Tombstone Pizzas arrived at the customer's door from the back of the Simeks' 1959 Cadillac. Although refrigerated trucks replaced the Cadillac and drivers with a regular route replaced Ron and Pep, the personal touch survived.

However, DSD service was difficult and costly to implement. For example, within the year Tombstone went from 20 independent route salesmen with complete discretion and autonomy to over 140 routers with 20 supervisors, 19 district managers, and 4 regional managers. And to make the Tombstone brand of customer service clear, salespeople underwent a five-week training program headed up by White, who traveled the state for months looking for recruits. Moreover, not all customers were impressed with DSD service, and some refused to carry Tombstone products because of the company's insistence on direct delivery. One case in point was the Dominick's supermarket chain, which operated through independent brokers and maintained its own storage facilities. Dominick's management believed DSD created undue congestion, ample opportunities for theft, and unfair brand positioning. Yet after dodging Tombstone's sales proposals for two years, Dominick's relented because of consumer demand. "Customers wanted Tombstone real bad," Larry Nauman, vice president of advertising and public relations for Dominick's Finer Foods, told Inc. in 1982. "We were losing action without handling it."

In the remainder of the 1970s, Tombstone entered several new markets, including Denver, Minneapolis, St. Louis, and Chicago. In 1979, the company diversified a bit by bringing out a smoked beef product called Tombstone Beef Sticks. The onset of the 1980s found Tombstone evolving from state to regional to national pizza supplier. By 1981, sales had mushroomed to $62 million in the billion-dollar frozen pizza market, a 27 percent increase from the previous year's $49 million. Tombstone's success, the result of its superior products and homespun philosophy, allowed it to take business away from its large and well-established competition one slice at a time. Big names like Pillsbury and General Mills offered dozens of frozen products, including pizza, in a dizzying array of brands. "We're basically a single-product company," Sebold, now Tombstone's executive vice president and general manager, told Inc. in 1982. "We don't have the luxury of bringing out a new specialty product each week, and we can't compete with larger companies by cutting prices." White, director of the sales force, concurred: "Being a one-product company can sometimes be a negative, but it's also a plus," he explained, "because it's hard to lose perspective on what we're selling."

Tombstone pizzas sold like hotcakes in 17 states, and not as an inexpensive commodity, but as a high-quality specialty product worthy of its purchase price. Tombstone's premium products included only 100 percent real cheese (other brands often used artificial or cheese substitutes), and the company made its own Canadian bacon, pepperoni, and sausage. In a 1982 Quick Frozen Foods editorial, Sebold blamed the industry's decline in shipments of 15 million tons from the previous year on the widespread use of bargain-basement selling tactics: "The pizza industry must upgrade itself considerably to be in position for the upcoming economic recovery. It must offer quality, not price; convenience, not confusion; service, not lip service; merchandising expertise, not forced distribution; innovative products, not me-too products; and profit, not margin-devastating deals." At the time of Sebold's comments, Tombstone's primary competitors, Jeno's and the Pillsbury-owned Totino's, were engaged in a messy court battle many felt undermined the industry itself.

Since food stores now accounted for a majority of its business, Tombstone hired Charles Stoeringer, a former marketing manager for the Green Giant Company. Stoeringer convinced the Simeks that it was more important than ever for Tombstone's sales force to maintain its edge over competitors. Though many companies adopted "quality" as a buzzword, Stoeringer helped Tombstone earn the distinction. For example, Tombstone goods were packaged in clear plastic instead of boxes, Tombstone drivers personally arranged products on customers' shelves rather than simply dropping off sealed cartons, and salespeople were encouraged to offer demonstrations to clients. Under Stoeringer's tutelage, Tombstone hired the Minneapolis-based Campbell-Mithun Inc. advertising agency to help coordinate its marketing efforts in the traditional venues of newspapers, television, and coupon promotions.

From 1976 to 1983, Tombstone grew by more than 25 percent each year. This growth led the company to acquire and customize a new manufacturing facility in Sussex, Wisconsin, and to install an on-line computer system for marketing forecasts, reports, and sales figures. Both the Sussex plant and the new data processing system added dramatically to Tombstone's capabilities, just in time for the company's penetration of the Columbus, Ohio, and Kansas City frozen pizza markets. In 1984, the year a Gallup poll ranked pizza as the favorite take-out food in America, Tombstone's revenue surpassed $100 million.

Yet consumers' tastes were not restricted to frozen pizza products, but also included pizza from restaurant chains and local pizzerias as well as the newest craze, do-it-yourself pizza kits with crust, sauce, and cheese included. Discussing the competition between frozen suppliers and pizza chains, Sebold told Quick Frozen Foods, "I think they're great for business.... You have to recognize what business they're in; they're in the franchise business, not the pizza business. At Pizza Hut, pizza is one of their mainstays, but they have everything from lasagna to sandwiches.... So you're measuring a certain dollar volume that isn't solely pizzas. You're measuring restaurant sales." As the pizza craze continued, even supermarket delis joined the fray by offering their own freshly prepared pizzas for customers to simply pop in the oven.

"Frozen pizza is a mature category," Sebold admitted to Quick Frozen Foods in 1985, "but with good marketing--not giveaways and short-term strategies--there's plenty of growth left in the industry." To take advantage of this growth, Tombstone introduced another beef stick product under the "Snappy" brand, followed by Tombstone Beef Jerky, the "DoubleTop" 12-inch pie, and revamped packaging that included a toll-free consumer hotline. Also in 1985, the Medford fleet service facility was opened to maintain Tombstone's trucks, and the company entered two far-flung new markets, Dallas (the nation's top-selling area for frozen pizza) and Phoenix. By this time, Tombstone serviced 45,000 retailers in 22 midwestern and western states and was closely chasing the nation's top frozen pizza suppliers, Totino's and Jeno's, which were both now owned by Pillsbury.

In 1986, the $7 billion Kraft General Foods corporation made the Simeks an attractive buyout offer which gave the company the potential for almost unlimited growth. All of Tombstone's 1,000 employees, including management, were assured of their positions--only Pep and Ron would no longer be a part of the company under the acquisition's terms. The brothers ultimately decided they were ready to leave the pizza-making business and entrust their company to Kraft's considerable power and expertise. Tombstone Pizza became "a freestanding operating unit" of Kraft and its parent company, Dart & Kraft Inc. Tombstone marketing specialist Cathryn Pernu told the Wausau Daily Herald that this time the Simeks, who had turned down several buyout offers in the past, "felt they had paid their dues. Selling just seemed to be more attractive than before." When Pep stepped down as chairman and Ron as president, Dewey Sebold, formerly executive vice-president and general manager, took the helm of Tombstone as it became Kraft's newest subsidiary. For its part, Kraft had recently bought about 30 companies and was in the market for a premium pizza manufacturer after its own boxed brand failed. Kraft's media relations coordinator, Paul Johnson, said Tombstone's "amazing growth record" had impressed Kraft. Kraft also welcomed the opportunity to use its own cheeses on Tombstone's pizza varieties.

By 1987, the Medford factory was renovated to add 10,000 square feet of productive capacity and its equipment was brought up to speed with the latest technology. A similar renovation took place in Sussex, as the four-year-old facility tripled its size. Both factories braced for the flood of orders from the company's latest product launch, the first Tombstone microwave pizza. The next year Tombstone ventured west all the way to Seattle, the biggest market for frozen pizza with Canadian bacon in the United States, and conquered Texas with the addition of the Austin and San Antonio markets. At this point Tombstone occupied markets in 23 states. Also in 1988 came the news of Kraft General Foods's merger with Philip Morris, the huge tobacco corporation.

Still coming up with new ways to serve its consumers, Tombstone added a crispy 12-inch thin-crust pizza to its line in 1989, the same year the company's headquarters was moved from Wisconsin to Glenview, Illinois. Tombstone added Portland and North and South Carolina to its ever-expanding market in 1990. As Americans became more concerned about the calories, cholesterol, and fat in the foods they ate, Tombstone introduced the health-conscious 12-inch Tombstone Light pizza. Later that year, the Chicago advertising agency Foote, Cone & Belding introduced the witty "What do you want on your Tombstone?" commercials, startling and amusing viewers nationwide. The campaign was so successful that it spawned several variations as well as imitations over the next several years.

Due in part to its creative television advertising and local and regional marketing efforts, Tombstone maintained its spectacular growth into the 1990s. In 1991, the company launched another new variety, the 12-inch Tombstone Special Order Pizza, to compete with carryout and delivery pizzas from local restaurants. The company also expanded its markets throughout the United States, including Detroit, Roanoke, Richmond, Baltimore, Washington, D.C., Birmingham, Memphis, New Orleans, and Little Rock.

By 1992, with its expansion into major metropolitan areas in Florida, Pennsylvania, New Mexico, and California, Tombstone's sales areas encompassed about 70 percent of the country's households. By 1994, Tombstone's distribution pushed into the remaining East Coast states, completing its national network. That same year its latest innovation, the Tombstone For One pizza, made its debut. As the company entered the mid-1990s, sales maintained their upward swing and Tombstone Pizza's brand recognition continued to grow. The tasty pizzas from the Tombstone Tap had come a long way to reach homes across America.

Tombstone Pizza Corporation History

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