Donatos founder Jim Grote started making pizzas at a time when Americans were just beginning to fall in love with the pepperoni-and-cheese-topped pies.

Donatos founder Jim Grote started making pizzas at a time when Americans were just beginning to fall in love with the pepperoni-and-cheese-topped pies.

"My first lesson was, make a good pizza and be nice to the customers, and they'll line up out the door," Grote said, recalling his first pizza job as a teenager: cutting pepperoni sticks at a pizzeria on the South Side of Columbus.

Grote's thin-crust pizzas made with provolone (not mozzarella) and cut in squares instead of wedges, as well as his friendly, generous nature, have made Donatos a favorite in the Columbus area and beyond.

His Gahanna-based company, which is celebrating its 50th anniversary this year, is poised at the top of the fast-casual pizza industry, and it's using market research and product innovation to make sure it stays on top.

CEO Tom Krouse said he'd like the company to stay on top by being "a principle-based, prosperous company built to last for 50 years and beyond."

"Donatos is one of the more original fast-casual pizza players," said Darren Tristano, executive vice president of Technomic, the Chicago restaurant- and food-research firm, acknowledging the company's pioneer status in the pizza industry. "But today, we're seeing a real redefinition of fast-casual pizza."

"Fast-casual" restaurants offer fresh, made-to-order, innovative food that costs a bit more than fast food, according to Technomic. Chipotle and Panera are examples of the restaurant segment that grew throughout the recent recession, unlike other segments, which shrank.

Donatos was the leading pizza chain last year in Technomic's Top 150 Fast-Casual Chain Restaurant Report with $166 million in sales and 153 units, even though the local company's sales fell 9 percent from 2011.

Wolfgang Puck Express was a distant No. 2 in the fast-casual pizza category, with sales of $63 million, according to Technomic.

However, Donatos sees its real competition as Pizza Hut, Domino's, Papa John's and the like, which Technomic puts in the separate class of fast-food pizza.

The top three fast-food pizza companies dwarf Donatos with 2012 U.S. sales of $5.7 billion, $3.5 billion and $2.4 billion, respectively, according to Technomic.

But there's no doubt that a new generation of fast-casual pizza competitors - including Pies & Pints Pizzeria, which has a Worthington location- will pose some challenges to the hometown pizza chain.

"There are 15 different, made-to-order, individual pizza concepts in fast-casual," Tristano said. "How Donatos chooses to acknowledge the trends and move forward is going to be critical to its success in the future."

The Donatos story began in 1963 when Grote (pronounced "grow-tee") paid insurance salesman Donald Potts $1,300 for his pizza shop on the South Side.

Loosely translated from Latin, donatos means "to give a good thing," said Tom Santor, executive director of brand marketing and public relations for the pizza company. That fit Grote's philosophy, so he kept the pizzeria's name.

By then, the Ohio State University sophomore had learned pizza operations and marketing. He also had developed his mission: create a superior product, hire good people and "treat others the way I would like to be treated," he said.

Grote developed a "system" for making each pizza the same as the last. "I was after consistency," he said. "We put 100 pieces of pepperoni on our 14-inch pizza. Still do."

Doug Whitmer, an owner of the Donatos franchise in Raleigh, N.C. - one of two new markets in the past month for the company - appreciates that system.

"We've got a process for everything from the dough and the crust right down to how you cut it."

In 1974, after more than a decade of getting the system just right, Grote built his first Donatos store in front of his family home on Thurman Avenue. All four Grote children - Tom, Jane, Kate and Kyle - as well as several other relatives, have worked in the business over the years, though only Jane Grote Abell works there now.

Grote Abell, Grote's daughter who is chairwoman of the closely held pizza company, led the effort to franchise Donatos pizza stores in the early 1990s. Now, the company has 101 franchised locations in seven states.

Donatos recently opened the Raleigh and Newport News, Va., markets with new franchisees, and the company expects to open five stores in their markets this year.

"Next year, we will build on that," Krouse said. "We are growing in geographic regions in the Midwest and Mid-Atlantic, working out from our core versus crisscrossing the United States."

Grote Abell also led the 2003 effort to buy back Donatos from McDonald's, which had purchased it in 1999 as a way to get into the pizza business. A handful of years later, the fast-food giant sold Donatos and other companies, such as Chipotle, to focus on its namesake business.

During its McDonald's stint, Donatos grew too quickly and began operating in the red. But the pizza company also hired Krouse, formerly Wendy's marketing vice president. Krouse was named chief executive officer in 2010, the same year Grote Abell became chairwoman of Donatos.

Meanwhile, founder Grote, 69, shows no signs of slowing down or retiring. "I think we have the perfect combination of family and non-family" leadership, Krouse said.

Now, Donatos is growing slowly, adding franchisees and tapping the potential in the specialty-products arena through its Jane's Dough Foods unit. That division is named for Grote Abell and was started in 2008 to make pizzas for grocery, natural-food and convenience stores, as well as institutions.

Efforts also are focused on differentiating the Donatos product from its competitors' and staying current with the demands of the marketplace.

"We're the only ones who have fresh mozzarella balls, Asiago cheese, and toppings like cinnamon and almonds," Krouse said. "People's tastes are getting more demanding," he added, so Donatos is working on more fresh, unique toppings, as well as a whole-wheat crust.

The ordering process is another area of attention for Donatos."We have Web and mobile now, and we are working on enhancements to the process to make it even easier to order online," Krouse said.

The company is constantly trying to improve its pizza-making system. Through a recent collaboration with OSU engineering students, Donatos was able to shave 12 minutes off its kitchen production time and cut its inaccurate orders in half at test restaurants, Krouse said.

More growth is coming from its Jane's Dough business, which grew to 1,400 retail accounts by 2010 under Krouse's watch. The unit makes Fresh Bake pizzas, often sold in grocery store deli departments, as well as Fast Break pizzas for convenience stores and vending machines at universities and other institutions. Donatos engineered the Fast Break packaging to yield a crispy crust when the pizzas are heated in microwaves.

The unit's Sonoma Flatbreads, sold at natural-foods grocers such as Raisin Rack in Westerville, start with multigrain or gluten-free crusts, and are made with ingredients free of hormones and preservatives.

Krouse expects Jane's Dough, which sells products in more than 26 states and Japan, to expand to as many as 40 states by the end of the year.

Donatos' efforts in innovation are particularly appreciated by families such as the Fullens of New Albany. Dominic Fullen, 8, no longer consumes gluten, the protein in wheat that can trigger food allergies. His family stopped eating out because Dominic didn't want to call attention to his special diet.

"Gluten-friendly" crusts made by Donatos, as well as certified gluten-free crusts made by partner Udi's Gluten Free Foods, enabled Dominic to again eat pizza with friends, said his mother, Katina Fullen.

"I think it's a really big deal for families to have options, particularly for working parents," she said. "Now, we order the gluten-free pizza because we like it."