restaurant would give us the opportunity to experiment and compare results. We could accelerate our learning curve in the business by keeping one restaurant as a control unit for measurement purposes. Plus—and this was a major benefit—two shops in the same market would be like advertising. People in Bridgeport might get the idea that we were so successful we were expanding, and that alone would help sales rise again. We even joked about creating a promotional flyer that said, “Thank you Bridgeport for making us so successful. We’re now opening our second restaurant!” We figured no one would know we weren’t successful because hardly anyone was coming into the restaurant!
The one negative thing about our decision was continuing to carry the burden of the original, unprofitable restaurant. How much would that detract from the success that we might achieve in our second restaurant? It was an unknown, but in the final analysis, we decided the second restaurant was worth the risk. As it turned out, it was one of the best decisions we ever made.
Blessed Be the Vendors
We needed little more than $1,000 to open a shop, and strange as it may seem, money wasn’t an issue when we decided to find a second location. Sales had plummeted in February, but due to the help of our vendors, which I’ll explain in a moment, we were not out of money. We weren’t flush with cash by any means, but I held tight to the purse strings, a practice that helped us then and has helped us many times since.
Since we didn’t have much money to start the business we never allowed ourselves to build up big expenses. We avoided buying anything that required a hefty payment on a weekly or monthly schedule. After paying the rent, the utilities, and a couple of employees, our only expense was the cost of supplies, primarily the paper goods, plus the meat and cheese, vegetables, and bread that we used to make our sandwiches. Of course we also sold soda and chips, and we paid for these products when they were delivered to our shop.
My salary was skimpy and I didn’t collect it all at once. As management, I earned $1.35 an hour, 10 cents over the minimum wage. That worked out to $67.50 for my usual workweek of fifty hours. However, after I quit my job at the hardware store, I calculated that my personal expenses amounted to only $13 weekly. So when we opened the first shop I told Pete that the business should pay me a weekly allowance of $13. Then, when tuition was due at the University of Bridgeport, about $600 a semester at that time, the business would pay that, too.
As part of the routine during our Monday night meetings we subtracted my allowance and any tuition payment from my accumulated earnings and most weeks the business owed me money. This may not sound very attractive to someone who’s thinking about starting a business, but in reality most new business owners can’t collect all of their salary at the time it’s earned. Our microbusiness remained open partly because I was willing to stick with it, to figure out how to make it work better, to work for a low salary, and at the same time delay collecting my salary. There was always the risk, of course, that the money would never be there, but that was part of the gamble in starting a business.
The real reason we didn’t run out of money, however, had less to do with delaying my salary than with the special relationship we developed with our vendors. Every Friday morning I would look at the bills to be paid and, depending on the amount of money in our checkbook, I would decide how much we could afford to pay each vendor. In the early days, we could never pay as much as we owed, which is why bills started piling up. But I always wrote a check for each of the four main vendors. Then, instead of stamping envelopes and mailing the checks, which would seem to be the efficient thing to do, my mom and I visited the suppliers with payment in hand. It was an unusual procedure. Somehow, though, it felt better visiting the suppliers, and it was good that we did because otherwise we would not have been in the position to expand.
It took about two hours for mom and me to visit the vendors, and we got a terrific return on our investment of time. Since they were all small businesses, there was a good chance the owners would be on site when we arrived and we’d have the opportunity to talk with them. We always started with a quick update about our business. Sales were slow this week, the big snowfall hurt us. But overall things are going great. And here, we brought you a check for $100. I don’t think the vendors were particularly interested in our story, but we told it anyway. Then we’d give them some unsolicited feedback about their product. With years of experience handling food, mom was particularly good at this. The bread formula was perfect this week, keep making it that way...Be sure we always get this brand of ham, it’s really high-quality...These paper products didn’t hold up. Can we try something else? Ten minutes and we were finished. However, we had one other critical point of business to handle. We didn’t leave until we placed the next week’s order, which was usually for more than the check we had just given the vendor.
By the time we decided to open a second location, we owed our suppliers several months’ worth of bills, altogether amounting to more than $3,000. It was rare that we owed them less than two months’ worth of invoices on any given Friday. In spite of that, none of the suppliers ever pressured us for money. I can only assume this had something to do with our track record. We never failed to give them at least a small payment every week. We never missed a week, and we were always up front with them. If nothing else, we had earned credibility in the eyes of these suppliers, and consequently they were willing to do more for us. As it was, we financed the construction of our second shop, and even subsequent shops, with the credit supplied by our vendors. Blessed be the vendors!
The Excitement Mounts
I had a good feeling about our second shop in neighboring Fairfield, Connecticut. It was just as bad as our first location, with poor visibility, but the rent was only $85 a month, and no sooner than we had agreed to take it, sales began to climb at our original shop. I took that as a good omen. We opened the shop on Saturday, May 21, 1966, and once again a record crowd turned out to purchase Pete’s Super Submarines. Within a few weeks sales were so strong in both of our shops that we patted ourselves on the back for the fortitude to not only remain in business, but to expand our business. The fact that the seasons of the year had more to do with our increased sales than the opening of a second shop had not yet occurred to us!
One Monday night three weeks later, as Pete and I reviewed his impressive sales chart, which was now climbing uphill, we agreed that two shops were better than one. That led us to the logical and immediate conclusion that three shops would be better than two. That night before Pete left for home, we decided to open a third location.
I found a third shop at 1212 Barnum Avenue in Stratford, Connecticut. Two vacant storefronts were next to a parking lot and I had the choice of renting the inside storefront for $85 a month, or the more visible outside section for $100 a month. The lower rental fee was tempting, since we didn’t have a penny to spare, but I decided to pay the additional $15 monthly just for the visibility. Since we had no visibility in our other locations I had a hunch visibility was worth the extra money. Fortunately, I was right.
So on July 22, less than a year after we had opened our original shop, we opened our third location, which initially was as successful as our first two. For the next six weeks, through early September, we had a thriving business, and the mood of our Monday meetings was even more high-spirited than usual. Sales were up at all three locations, proving our theory that it was better to have more restaurants than to have fewer. We were far from thirty-two restaurants, but we still had nine years to hit that goal.
But then, one Monday in late September, that ugly downhill pattern that had appeared the year before on Pete’s sales chart showed up again. Sales in all three locations had begun to follow the first-year pattern of our original restaurant. September’s sales were lower than August’s. And the downhill trend was back in force. By the winter of 1967, instead of owning one low-volume, money-losing shop, we owned three of them!
That’s when we suspected the seasonal
