From the brink of bankruptcy

In the past three years, I have had the privilege of hearing some outstanding stories of success and some tragic stories of failure in the pizza business. Every once in a while I come across an operator who was on the brink of bankruptcy and losing nearly everything, but managed to turn things around and become an inspirational story of success.

These are the stories I like to hear, not just because they are heartwarming, but because these are where lessons are learned and ideas can be found.

I have known Jim and Ann Reichle for a couple of years through their participation with the Mid-America Pizza Show (now NAPICS). I was familiar with their story through conversations we had at the show and over dinner and drinks, but never the details. They almost closed the shop a few years back, but now have two locations in the Cleveland area. I always wanted to learn more about how they turned things around, but just never could find the time to get to Cleveland. Ann, who is a regular in the Tuesday Night Chat Sessions, mentioned one night that she was about to expand her pizzeria to include a deli, so I made the time and drove to Cleveland to see what was going on. I got more than I bargained for, in more ways than one. Not only did I stumble across a tale of two pizzerias, but also I stumbled into the Blackout of 2003 that hit the entire East Coast.

Jim and Ann Reichle are the owners of Angelina's Pizza in North Olmsted and Olmsted Falls, suburbs of Cleveland, Ohio. They started out with one location, almost lost their business, turned things around, eventually opening up a second location, and have now expanded their concept to include catering and a gourmet deli in one location. They are a husband and wife team and have two pizza stores, but each have a unique way to run their locations. While Jim runs his store and handles marketing and labor for their company, Ann is a major driving force and tends to catering, menus, products and product development and is the most visible.

Stumbling at the Starting Block

It all started in October of 1994 when they took everything they had and opened a pizzeria with the help of a friend in the business. When I say that is when it all started, I mean that is when it all started to go wrong. Within the next six months of working excruciatingly long hours and under intense pressure of not getting paid very often, they were hit with a lawsuit alleging trademark violations.

"After contacting our attorney, thousands of dollars of signage, menus, promotional materials and uniforms went into the dumpster. New recipes had to be formulated. I was on the phone for months to our suppliers and the Ohio Restaurant Association for help in areas I was totally unfamiliar with. Dollars flew out of the restaurant faster than they ever had before. We were living on as many credit cards as I could get approved for," said Ann.

As we sit and I listen, Ann says, "It was terrible because we couldn't do anything – we couldn't answer the phone and say we used to be (name omitted) Pizzeria or even tell our employees what was going on. There was even a period when we were operating without a name. People were hanging up on us thinking they had dialed the wrong phone number. We lost our manager and half of our staff, whom we'd always had very open relationships with, because we were prohibited from discussing the case.

"My advice is to research all aspects of your concept before you start. Make sure you don't have anyone else's name or logo, and use your own recipes. Have a corporate attorney to protect your new company's interests and file all the proper documents, but if you have a partner, hire your own personal attorney to protect your interests. In a small business, your own interests and your company's interests are not always the same. You can check with state restaurant associations and the National Restaurant Association (NRA) for procedures to start a business. The NRA has recently developed a book on what you need to do before opening a restaurant."

The Turning Point

Anyone who goes into the pizza business thinking they are going to get rich quick is sadly mistaken. You usually work twice as many hours for half the pay in getting started. While your pay may get better, you still work long hours – if you want things done right. "Even after the lawsuit and distancing ourselves from that, we still had problems," Ann says. "There were many times where after we paid the bills and employees, we didn't get paid. The turning point was when we decided to enter the Pizza Pizzazz competition at the Mid-America Show (now NAPICS). That was our last chance. We couldn't have gone on for another two months at that point.

Incredibly, Jim took first place in the gourmet competition. The next day, Jim contacted all the local news media. Business doubled overnight! It saved us. We went on to win or place three more years. A total of five plaques hang on our walls. Each time business increased in the slowest pizza sales time of the year. By the fourth year, the newspapers were saying it wasn't news anymore because, "we did that every year." Initial Mistakes

"Business was tough at first," Ann continues. "One of the first mistakes we made was to accept all competitors' coupons. Accepting the coupons wasn't so much the problem; it was the way we did it. If someone wants to do this, it is very important to make sure you word your offer right. We had one competitor whose regular offer was a three-for-one pizza offer. This was a regular menu offering, but he ran ads that were like coupons stating the three-for-one offer. It almost broke us. The first lesson there was to make the offer only valid for coupon offers and not for any of our specialty pizzas. Also, let people know that if the coupon offer was for a large pizza that is 14 inches, then match it with the same diameter pizza on your menu, even if it's referred to as a "medium." Some pizzerias' large pizzas were the same diameter as our medium. Use this as an opportunity to educate your customers."

Ann goes on to say, "We developed charts to cross reference our sizes with other pizzerias, but it was a maintenance nightmare. We inherited a whole lot of new customers who ordered nothing but the coupon specials. When the offers went away, so did they. You have to be careful and watch out for some independents because they can hurt you with lowball offers."

Ann also says they have learned that expiration dates are also important. "We printed 25,000 menus with three coupons on the flap that didn't have expiration dates on them," she says. "The coupons continued to come in two and three years later. Prices change and something like this can cost you money. I would also recommend not making a blanket offer for pizzas at a set price without specifically stating that the offer isn't good for specialty pizzas unless you want it to be. People aren't dumb and they will find a loophole if there is one. Coupon wording is important."

Jim says that identifying marketing that didn't work put a lot of money back in their pockets. "We always thought using the large marriage mail companies was good marketing," Jim says. "We changed the price slightly on the coupons we were using with one particular company and discovered that for our $1,200 each month, we were only getting six returns. We couldn't believe it. We were running the same offer with other companies and never checked the source of returns. I immediately stopped using that company and started using the money I was spending there in other ways."

Marketing-The Elements to Their Success

I spent several days with Ann and Jim learning what it was they did that turned a failing business into a success story. The identifying factors were: catering, marketing through involvement with the schools, and some creative thinking. Angelina's spends about 2 percent (approx. $2,500) each month on marketing, most of which is for printing. They do their own artwork. Let's go through some of the things they are doing.

Angelina's Roulette-

Here is an interesting promotion. Their VitalLink POS numbers each order and each day, every 20th order gets 20 percent off. On Mondays, the winner starts with ticket #17 and every 20th order after that gets the discount even if they use a coupon. Tuesdays the winning ticket begins with ticket #19 and each day the winner begins with a different number. This is a great way to get word-of-mouth advertising going and say thanks to customers. And no, they don't give out what ticket number they are on when customers call.

Working with Realtors-

Ann went to a local Century 21 office and pitched the idea of offering new homebuyers free meals when they purchased a home. The idea was to not only sell to the agents, but also turn new residents into new customers. To pitch the idea, she catered a dinner for all of the agents so they could try all of her food. Now the agents purchase the meals at full price and give it to homebuyers as a move-in gift. The meals aren't pizza, but items from her catering business and feeds four. The agents now order catered meals from her when they have meetings, too.

Schools-

Many schools have credit unions. Angelina's offers a 10 percent discount to any faculty member who shows their card when ordering, but Angelina's has other marketing aimed at the group, too. "I like to zero in on kids because they decide where parents eat 90 percent of the time and they also spend money on pizza," Jim says. "We give a lot of money to the schools to keep programs going and they remember us for it, but you have to be sincere in what you do and really dedicate yourself to helping the kids. It took about three years to figure out how to do it all. It is scary to write out so many checks to the schools to keep programs going, but it is worth it and you have to give ideas time to mature."

Fund Raisers-

One of the promotions Angelina's has done with the schools went to help the wrestling team raise money. They put together a coupon good for a large, two-topping pizza (face value: $12.50) and the team had one month to sell them. The team sold them for $10 and paid Angelina's 60 percent of the face value. After 15 days, the team came back and asked for 500 more because they had sold the original 500. "I was getting $7.50 for each one they sold," Jim says. "They were making money, and so was I. It generated tons of new customers. The advantages were great word of mouth that began spreading and I had no distribution expenses. The coupon was valid for one year and there was about a 90 percent redemption rate."

Merit Rewards for Students-

Anyone making the Merit Roll (B or higher) on their report cards gets a coupon good for a free small, one-topping pizza from Angelina's. Angelina's provides the coupons to the school and they distribute them to the students. The offer is free for pick-up orders, but can be delivered when the minimum purchase is met for delivery (see example).

School Newsletter Sponsorships-

Angelina's gives the school $500 each month to help offset the cost of printing its newsletter. In return, they get a half- page ad and a thank you comment from the principal in the newsletter, which goes out once a month. Every kid takes one home each month and elementary kids have one mailed to their home. As a perk, Angelina's information is also printed on the back of each assignment sheet the kids take home each day. "It all cost me $500 to be in their homes every day on the assignment sheets and in the newsletter once a month," Jim says.

Customer Appreciation Day-

Ann says they do a customer appreciation night at least once a year, occasionally twice if sales need a boost. On this day, they offer medium cheese pizza, cooked or take-and-bake, for $4 each (limit 20). "The first time we did it we had five or six customers order 20 pizzas," Ann says. "We always do it on a Saturday and in the spring. If we need a boost in the fall, we do it again. It is only marketed to existing customers and we start promoting it a week before it happens. This promotion is offered for pickup orders only, between 9 a.m. and 5 p.m. because we don't want to cannibalize our dinner sales. We usually sell 300 to 350 pizzas during the promotion of that size alone! For more information, see Big Dave's Customer Appreciation Article at: https://www.pmq.com/bigdave_winter-fall-1998.shtml

"To promote it, we have our employees call our best customers to say thank you and let them know about it. We also boxtop with flyers to customers we know order from us regularly and put a banner in the window the day of the promotion. For this day, we pre-make pizzas and staff extra employees. We do not advertise charging for extra toppings, but we do allow it. Most just get the cheese pizza though. The regular menu price for this pizza is $6.50, so it is a $2.50 discount for them. We did it twice this spring and both times take-and-bakes sold the best."

The Deli-

Around December of last year, Ann decided that she would add a deli to her location. "I wanted to add a line of high quality items," Ann said. "There is about a 40-45 percent food cost on the deli and I can price these meats and cheeses below grocery store prices. Turkey and Swiss cheese are the best sellers, but we also have Black Forest and honey ham, salami, pepperoni, corned beef and other meats and cheeses.

"We also offer several produce items, like sweet corn that is purchased directly from local farms and are picked the morning they are delivered. Like any other supplier, we have to keep a list of purchasing records for the Health Department. By not purchasing from a distributor, the restaurant owner takes a bigger risk if they don't know their suppliers' handling procedures."

To launch the deli, Ann ran a "Free half pound of turkey with any pizza delivery" promo. For delivery orders from her Olmsted Falls location, customers ordering any size pizza for delivery got a free half pound of sliced turkey. "That let people know the deli was open and gave them a taste of our products," Ann said. "It worked really well in kickstarting deli sales."

"In order to add the deli, we had to purchase coolers, slicers, a scale, wraps for the meats and packaging. There were a few items, like proscuitto, that we have pulled because they didn't sell well. It's all part of learning your market.

"It sounds like a lot to add, but now we slice our own ham and other items for the pizzas, which cuts our costs.

I also use the cheeses and meats for catering and deli trays. All in all, the deli has been a positive addition, but something like this works in my location because of the community, which is more upscale. It wouldn't work in Jim's location because his is more of a blue-collar area."

Ann also offers several types of salads in the deli section. Antipasto salad is the best seller she says. "I use leftover meats and cheeses for the antipasto salad," Ann says. "I start with a hot pepper salad base and add pepperoni, salami, cappicolla, hams and cheeses. Potato salad and bowtie pasta salads also sell well."

Catering- The catering business has been a big asset for Angelina's. Since starting to cater, Ann has learned many lessons about what to do and what not to do. "It was by accident that I got into catering," Ann says. "The first catering job I did, I didn't take into account things like napkins, utensils, my time and paying an employee to assist. After one or two, I learned to price it for profit. Now, I get catering jobs for weddings, parties, office parties, PTA meetings, realtor meetings and such. With the deli, it has really added to our value.

"One of the things I do for the realtors is when I cater one of their broker meetings, I get a chance to talk to them and give them a catering kit. In it I have a business card, a catering menu and an offer to get a free Sandwich Ring and a five-pound bowl of potato or pasta salad ($44.95 value) when they spend at least $100 dollars for any catering job. This turns into a lot of orders."

How to Change Your Name

Something I hear quite often is "How does a pizzeria owner overcome the identity of a former owner or restaurant when they buy an existing pizzeria and want to reopen it?" Ann came up with a good solution. When they decided to open the second Angelina's, they bought an exiting pizzeria. To let people know there was a new owner and a new menu, they created a fictional character named Angelina. They ran small ads in the paper each month and created a story about Angelina traveling the world. Each month a special pizza was created to represent the country she was visiting. (Example: while in Hawaii, the special was for a Hawaiian Supreme.) In the end she marries a character whose name was the name of the former pizzeria and the name changes as a wedding gift from her husband. Their grand opening was a mock wedding reception with a live radio remote, and items from their entire menu being served, buffet-style to over 600 curious customers. Real wedding invitations had been mailed out as their monthly ad to invite people to the reception. Angelina's got a lot of attention from the locals wondering who was writing the stories (it was Ann) and some wanted to know what happened to her after the name change took place. Now, that is creative thinking.

Like many pizzeria owners, Jim and Ann got off to a rocky start, but they never gave up. After almost losing everything, they got a second chance and learned from their mistakes. With some creative marketing and willingness to take chances, they have established themselves as supporters of the community. They looked at what was and what was not working and found ways to monitor and improve ways they were spending money on marketing. Their plan is to grow the Angelina's concept to about 10 locations, but that will come in due time, according to Jim and Ann. Great people and a great story. There was a lot more they told me, but I don't have the space to tell all of it to you. If you would like to talk with them more about Angelina's, be sure to drop in for one of the Tuesday Night Chat Sessions. Ann is almost always there learning something new or sharing an idea.

A Tale of Two Pizzerias

While Jim and Ann are husband and wife and each runs an Angelina's location, each have a different market. Jim's is more of a blue-collar neighborhood, while Ann's is a little more upscale. "The deli idea would never work in Jim's area," Ann says. "He has a completely different market there."
Ann's Location

45 percent delivery

2-4 percent take-and-bake

51-53 percent deli and take-out
Jim's Location

75 percent delivery

25 percent take-out