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Click here to listen to audio interview with Rolf Wilken
Longtime readers of PMQ may remember a story from our very first issue about Rolf Wilkin in Fayetteville, Arkansas (see http://www.pmq.com/eureka.shtml). Knowing Rolf is such a savvy businessman, PMQ thought it might be interesting to check back in with Rolf and see how things are going a long ten years after he first appeared on our cover.
Like many operators who go on to have success, Rolf knew nothing about pizza when he borrowed money to buy a failing pizza store in 1992. Although he didn’t know pizza, he knew plenty about selling, advertising and marketing. Rolf got his start by selling advertising for a coupon book to pay his way through college. After graduation from LSU, with a degree in finance, he decided to start his own coupon book in Fayetteville Arkansas where the University of Arkansas is located.
Wilkin knew how well his coupon book worked and thought it would be a great way to sell pizza. He also remembered a book that he had read a couple of years earlier that had really impressed him. The book was "Pizza Tiger" (available at amazon.com) The story was about Domino’s Pizzas’ Tom Monoghan. If Tom Monoghan could be successful in spite of all of the bad luck he had in the early days of starting Domino’s Pizza, with any luck at all Wilkin felt he could be successful too. In March of 1992 the doors opened under the new name of Eureka Pizza. Wilkin decided to learn about pizza from the ground up and attend Tom Lehmann’s pizza courses at the American Institute of Baking in Manhattan, Kansas.
He soon developed a much improved pizza crust. Then he tasted and tested sauces and cheese products until he settled on Stanislaus and Leprino for the quality he was seeking. He also purchased conveyer ovens. Since most of Eureka’s business is delivery, Rolf always paid particular attention that aspect of his business. After being in business for five years, he switched from B-flute boxes to E-flute and saved over $100,000 dollars in packaging.
“Each of our locations sells an average of 2,300 pizza per week,” Rolf says. “I actually found the E-flute box to be a better insulator. We ran a test where we put pizzas in both the B-flute and E-flute boxes and let them sit for 20 minutes because that is how the customer gets it. Then, we inserted a probe thermometer and discovered the heat to be higher in the E-flute. But the box is flimsier, so we use lid supports to support the cover and protect the pizza. However, even with the additional costs of the supports, it still saved us money to switch.”
PMQ: When we first interviewed you Rolf, you had one store. How many do you have now?
Rolf: We have 15 stores now, in Arkansas, Missouri, Oklahoma and one in Kentucky. After the first one, I built the second probably sooner than we should’ve but it turned out to be a great success. An ex-employee wanted to clone my pizza place just right up the road. Instead of being mad I just decided to built another store and block him. I had a little more experience than he did at that point, I beat him to the punch and his never really took off. I discovered it wasn’t that hard to have a second store so I just kept building stores.
PMQ: What would you say has helped the most in your expansion?
Rolf: It comes down to operations. If you document training procedures and if you have a method to train people, that’s the whole key. Without a good manual on training procedures, we couldn’t grow at all. We have what we call a pizza college. This is a specially designed classroom that we use every six months. We have a class of manager candidates that we take through a week-long curriculum. It’s attached to a store but it’s in a separate room so it’s like a practical lab. We can teach more in detail of what we do.
PMQ: What’s the break down on your sales, carry out versus delivery?
Rolf: About a third of our business is delivery and the other two thirds is carry out as opposed to say, Dominos, who might be 90 percent delivery. On Friday nights I might have five drivers, then on weeknights, maybe two. Most of our customers come in and pick up their pizzas. We’re running about 30 percent foodcost, our controllable labor is about 18 percent. You’ve got to cross train to achieve those numbers.
PMQ: Being in business as long as you have, you’ve certainly had to raise prices. How do you go about raising prices?
Rolf: It’s all based on cost. When costs go up, we pass that on to the consumer. In my career, we haven’t had to deal with much inflation until the last couple of years. It’s one of the biggest challenges I face, is all of our costs have gone up; insurance, energy, the cost of food, payroll and you name it. No costs have gone down except maybe telecommunications. I’m not good at raising prices but you have to do it sometimes. An essential part of business is doing it at the right time and doing it well. We usually wait too long and then kind of annoy our customers by having too big an increase. We’ll wait too long and try to catch up and then your customers think you’re trying to stick it to them. You can lose a ton of money by waiting too long.
PMQ: What’s the biggest change you’ve seen in your business landscape the last ten years?
Rolf: There’s more national chains and there’s more units. The grocery store certainly has a better line of frozen pizza these days. It’s relentless. Everything is more competitive that ever and I think that’s just America business in general. Banking has gotten more competitive, transportation, food service. I think it’s the mark of a healthy economy and we’ll see more of that. Business is supposed to be challenging.
PMQ: What’s the best marketing tool you have?
Mailing our customers, instead of going after non-customers. We spend about five percent of our revenue on marketing, and mailing is a portion of that. It seems like when we mail our current customers we get a higher response than if we blanket mail certain zip codes. We always like to go after new customers but if you can get your regular customers to come back more a little more frequently, I think you’ll be ahead of the game.
PMQ: What’s the future look like for Eureka Pizza?
Rolf: We’d like to double the company in five years. I learned you have to think big, it’s easy to say and hard to do sometimes. We’ve got to find the right opportunity to grow and the right place. We’re getting better about finding the right place for our stores. We’re working on figuring the right opportunity. My business model shows that going into smaller towns is a risk. We’ll definitely look at going into larger-sized towns. Also in the past, we kind of ignored our competition. Life is all about supply and demand and if there is a lot of pizza places it’s going to make it tougher to make a living. If you can find a place that has fewer pizza places, it’s not going to be a guarantee by any shot, but certainly that might be a better opportunity.