Start a conversation with Tom Sacco, the CEO of Happy Joe’s Pizza & Ice Cream, and you never know where it will lead. But you’ll learn a lot. Our conversation with Sacco for the January-February 2025 issue ranged so far and wide, there wasn’t nearly enough print space to squeeze it all in.
After all, while he only took the reins at Happy Joe’s in 2021 (after reluctantly coming out of retirement), Sacco brought to the brand many decades of experience with stalwart non-pizza companies like Bonanza Steakhouse, Ponderosa Steakhouse, Red Robin Gourmet Burgers—even a stint with McDonald’s, where he oversaw regions from Southern California to Texas, Pittsburgh, Atlanta and New York City.
The January-February story focused on Sacco as an advocate of servant leadership. In this Q&A, we’re revisiting that conversation to hit on other topics of interest that didn’t make it into print, from last year’s wave of pizza chain bankruptcies to menu innovation, AI and robotics, and why discounting your prices isn’t a bad thing when your customers are struggling to make ends meet. As always, he was candid, wise and engaging. Here are some of the highlights:
PMQ: We saw a bunch of midsize and small pizza chains file for bankruptcy last year. What do you think is going on there?
Sacco: Number one, the ERTC (Employee Retention Tax Credit) money ran out. When you received that ERTC money, it could bolster your bottom line. If you kept employees on during COVID, the government gave you a credit. I think it was, like, up to $20,000 or something per year per employee that you kept for fulltime employees. A lot of the bigger chains got that, but we didn’t get as much because we’re smaller, and we only have three company stores. But for some of these chains with corporate stores, we’re talking millions of dollars. So that’ll keep you afloat for a long time, but when it runs out, if you’re not making money, you hit the ground—really, really heavy. And then it doesn’t take long for stuff to come apart. And while I haven’t seen anybody’s books, I think that [ERTC money] bolstered the cash flow for a while, and maybe they didn’t really pay attention to what was changing with the economy and their consumers.
It’s not [a problem with] the pizza segment [itself]. I mean, how come Mountain Mike’s is still growing? It’s how the business is being managed and what their objectives are. Maybe the other pizza brands or the large franchisees that are having trouble have too much debt—maybe there’s too much leverage on them. And now, when times are tight and you’ve really gotta watch your margins, maybe there’s not enough falling to the bottom line to do that.
For us, ERTC wasn’t going to change our world. Changing our world was growing our business and getting ourselves refocused on the things that [Happy Joe’s founder] Joe Whitty’s built the business on, which was taking care of the kids and making Happy Joe’s a special place.
PMQ: And those changes to the economy have meant a lot more discounts on pricing, right? That’s something a lot of pizzeria operators prefer to avoid, but you’re not averse to it.
Sacco: We’ve made a conscious effort there. You know, my CFO said to me [in late 2024], “Tom, our discounts last month were the highest they’ve been in, like, 20 years.” I said, “How were sales before that?” She said, “Well, they were pretty lousy.” I said, “Well, that’s why we discounted, because people don’t have money to spend.” If you want to keep them coming, you’ve got to give them a reason, and maybe that means we’ve got to take a little bit of a higher cost of sales so they don’t change their dining patterns.
I’m just gonna make some numbers up here…but I don’t want somebody saying, “I’m going to pay $24 for a taco pizza at Happy Joe’s, but I can get a taco pizza at Taco John’s or at Casey’s convenience stores for 14.99?” I don’t want them changing their dining patterns, because we know [those other] products aren’t the same as ours. If you want to make sure your children can eat and that’s all you can afford, you’re going to do what you have to do to make sure your kids can eat, right? So, in my position as a servant leader, I ask: What do we have to do to help these people through these difficult times?
PMQ: At the same time, your customers get value for their money. So many family-friendly pizza brands stick to the basics. They don’t really get innovative with their menus, but Happy Joe’s certainly does. Can you talk about that?
Sacco: We’re so creative with our food. We’re introducing Happy Joe’s to the southern part of the U.S. now. We do a BBQ Beef pizza, BBQ chicken, BBQ Canadian bacon. But BBQ up in our neck of the woods (the Midwest) is meat that’s tossed in barbecue sauce. It’s not like BBQ down south where you smoke it, right? So I went to a place a few months ago called Sadler’s Smokehouse in Henderson, Texas, and I found out that their BBQ brisket comes from the same meat company as this chipotle product they’re running right now. So when we open up these restaurants in Navarre, Florida, and in Arizona and Texas, we’re going to use that BBQ brisket. We’re doing a brisket queso, a brisket pizza, we do a Sloppy Joe pizza.
We try to put comfort food into a pizza format. We’ve got a half dozen Mexican pizzas. We’ve got a half dozen breakfast items that we serve on pizzas, like a Denver omelet. All these different kinds of things. We look at the pizza pie as an artist’s blank canvas, and we paint it to be whatever we want, right?
From Thanksgiving through Christmas, we’ve got a pizza that starts with cranberry sauce, and then we put dollops of dressing, mashed potatoes, shredded turkey and brown gravy on it. It’s a turkey dinner served on a pizza pie shell. And it’s delicious and mouth-watering. I’ve had some people say we’re converting their family over because it’s a lot easier to order that turkey dinner from Happy Joe’s than it is to slave in the kitchen (over the holidays). So it’s just these little things where you don’t know if they’re ever going to hit. But a lot of these ideas come from the franchisees or from the staff that have been working for us all these years.
We continue to roll out products that are price-sensitive without compromising on the quality, so they don’t have to trade down…Our pizza is a pricy product. We put a lot of protein and high-quality cheese on our products.
PMQ: But another thing you’ve done as CEO, as I understand it, is to bring back some classic Happy Joe’s recipes that were abandoned over time.
Sacco: The franchisees give me feedback on stuff, you know. We were talking one day, and I said, “What are some things you used to do that were really popular but that we don’t do anymore?” They said we used to mix 50% cheddar and 50% provolone, and that was the blend. But that was changed to 10% provolone, 80% mozzarella and 10% mozzarella that’s colored orange to look like cheddar. The reason it’s so heavy on the mozzarella is because mozzarella is the cheapest cheese we put on our pizzas. So it’s a way to cut the cost of the product.
Well, they had completely—pardon my bluntness—bastardized the flavor profile, and virtually every pizza, or all of the big-selling pizzas, got topped with that blend. That’s the only cheese it got.
So, a month or so later, we had another board meeting, and I told them we were going to bring back that original blend. They said, “Are you kidding us?” I said, “Why is that an issue?” They said, “Because unless [founder Joe Whitty] was still alive, nobody would ever have done that. His kid, Larry, wouldn’t do it because he said we’ve outgrown that recipe. It’s just too expensive.” So I asked Jenny, my head of purchasing, “Jenny, why don’t you tell them how much lessexpensive it is than what we’re currently buying?” She said, “Yeah, I don’t know if it’s going to be like this forever, but the first-year contract is 40 cents a pound cheaper.” And they’re going, “Oh, my God, it’s 40 cents a pound cheaper, and it’s 100% real flavor, as opposed to 10% provolone and the rest mozzarella!” So our pizza doesn’t even get mozzarella now. It gets provolone and cheddar because the flavors are much more robust.
PMQ: How is Happy Joe’s integrating technology to improve the bottom line?
Sacco: So there’s two pieces that I think have potential. One is AI ordering. That’s been a herculean effort. Our products are so much more complicated than the basic pizzeria. I mean, we offer quarter pies that are completely different [in terms of toppings on each section). The AI company we’ve been using is Voicify—they’re great partners, but they say they’re getting a Ph.D. in AI ordering by working with us. We have such a complicated menu.
When you have a kid on the phone that has been doing it for a while, it’s just natural. “Do you want this? Do you want that?” But with AI, you’ve got to write the algorithms to do that, so that’s one challenge. I think it’ll play a role for us eventually, but we’re always going to have people, real people, answering the phone.
But on Thursday, Friday and Saturday, because of costs, we usually only have three or four lines [for orders], but we sometimes have people ten-deep in those lines. Since I came here, we’ve now got an app so people can order that way, which they couldn’t before. We’ve had online ordering for a long time. But sometimes people want to call in because what they’re trying to order is more difficult than just hitting a couple of buttons on a computer screen.
So a [robotic] assembly line is the other technology that I think could have more potential and be easier to implement and integrate. We put 80 slices of pepperoni on every large pizza. So I can guarantee you, if you punch that into the computer, then it’s going to give you 80 slices of pepperoni per pizza. I can also promise you that on any given night, I can walk into one of my stores and count the pepperoni slices the kid is putting on a pizza. And there’s 84 pepperonis on this pizza or 72 pepperonis on that pizza. And the kid says, “Is it supposed to be 80? Oh, I didn’t know that.” Now I’m not there to challenge them, I’m there to coach, right? So I tell them I have to do that to remind myself that it’s always 80 pepperonis. But we hire a lot of high school kids, and they’re just flipping that pepperoni like a blackjack dealer flipping cards. We want to make sure that the guest sees [80 pepperoni slices] because there could be somebody out there that counts every pepperoni. And I don’t want to get a phone call or email that says, “Oh, you’re downsizing the amount of pepperoni, but you’re increasing the price that you’re charging!”
PMQ: So what robotics systems are you working with now?
Sacco: We work with Picnic on the assembly line procedures. We’re also working with Middleby Marshall—that’s a pizza conveyor oven that we’re using. That’s one we’re hopefully going to be able to put to the test [soon]. Picnic, because they’re smaller, has been able to kind of adapt on the fly. Middleby Marshall is more like John Deere—they’re big, and they’ve been around for a long time, so they’re not as nimble. But they want to get it right from the beginning. A lot of [these companies] like working with us because we’re a challenge.
For me, it’s been interesting to realize that the algorithms for AI voice ordering has been more challenging than the assembly line process. We’re not ready to roll either one out yet, but we’ve made more progress on the assembly line process than we have with the AI process. And both partners have been great to work with.
