Start Small Finish Big. Fred DeLuca

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Start Small Finish Big - Fred DeLuca

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Pete would open a three-ring binder that he brought with him to every meeting. Like the good scientist that he was, Pete kept a journal to track our progress. He charted our weekly sales on a graph in his notebook, and he recorded observations that he considered important. We talked about every aspect of the business—sales, products, customers, employees, marketing ideas, and even the bills we had to pay that week. My parents participated in these meetings because they were involved in the business, even though they had other jobs. My mom knew all of our suppliers and both she and my dad helped out in the shop, particularly when I couldn’t be there.

      We didn’t know it at the time but we were at a tremendous disadvantage during these Monday meetings. We were like travelers without a roadmap, or scientists without measuring tools. The purpose of our get-together was to observe, calculate, project, and analyze the business. But we were painfully slow arriving at good conclusions. More sophisticated businesspeople would have had a variety of reports and an occasional financial statement from their accountant to measure their progress, and enlighten them. But we were years away from having these tools. We didn’t have an accountant. We kept our own books, and we didn’t know how to produce a financial statement. Without business experience, we really didn’t know what to observe, calculate, project, or analyze.

      For example, when we spoke about serving the customer, or the quality of our product, we weren’t able to make a good assessment of how we were doing. Obviously we wanted to serve a quality product and keep our customers happy, but we didn’t know enough about what customers wanted to adequately discuss the components of those issues. We simply didn’t know the right questions to ask.

      Funnier yet, none of us necessarily had answers! Pete didn’t show up on Monday nights with all the answers. Sometimes, frustrated by slumping sales, tight cash flow, or a problem we just couldn’t solve, Pete would jump out of his chair, run to the back door of our apartment, and shout, “What’s wrong with you people here in Bridgeport? Get over to our restaurant and buy some subs!” As business neophytes, we were all inadequately trained to understand the business.

      Nonetheless we plodded forward, somehow sensing that we were doing a good thing by meeting every Monday night, taking a step back from the business to conduct these conversations. And, of course, we were doing a good thing. We didn’t make great strides from week to week, but over a long period of time the cumulative knowledge we gained about our business was invaluable. Without a network of savvy advisers, or even one who had owned a sandwich shop, these meetings yielded the information we needed to build our business. The meetings presented an opportunity to learn and to prepare, to try and to try again, and to continually improve. No matter what challenge we faced, Pete and I were proactive. We looked for solutions, and we were always ready to give it another try. That was another major benefit of the meetings. They fostered a successful partnership by giving Pete and me time to calibrate our thoughts. We didn’t always agree, and we were often frustrated by the various challenges we faced, but there was never tension between us personally. There were no loud, knock-down battles or arguments of any kind. If Pete’s Super Submarines was going to succeed, we had to depend on each other to come up with the solutions and get the job done.

       The Plummeting Graph

      After a month or two of Monday night meetings a pattern emerged on Pete’s sales chart. The shop was busiest on Fridays and Saturdays and slowest on Mondays and Tuesdays. Sunday was an odd day. Business could be dead until 4:00 p.m. and then we’d get a surge of customers until 7:00 p.m., and then it would be dead again until we closed. The more interesting pattern emerged after several months, however, and it was neither pretty nor encouraging.

      With each passing week since the opening, we sold fewer sandwiches. In other words, our sales chart was headed downhill! That record of 312 sandwiches sold on opening day had quickly faded, not to be seen again. By November, 100 sandwiches sold was a big day, but it was far from adequate. All the more disappointing, and worrisome, the numbers continued to fall.

      One Monday night in late November our “brain trust” decided the restaurant lacked exposure, so we invested in the Jingle Bell Special, an advertising promotion sponsored by a local radio station. It cost us $550, an enormous sum of money, but an insignificant amount if the special could improve our December sales. The radio advertising rep convinced us that people would be out Christmas shopping all month and they’d hear our promotion and stop by for a sandwich. Indeed, people were out shopping, and certainly they heard the radio spots for Pete’s Submarines, but they didn’t stop for a sandwich. Our sales continued to fall in December, and January, too. The low point didn’t occur, however, until one cold, dreary Monday in February.

      “How’s business?” Pete asked when he arrived at World Headquarters on this particular day.

      “Seven,” I said.

      It didn’t take the genius of two Monday night quarterbacks to know that Pete’s Super Submarines was in trouble. Even at our top price of 69 cents, sales of seven sandwiches wasn’t enough money to pay our employee for seven hours’ work, let alone cover the cost of food and rent for the day. Anyone else probably would have closed the business that night. In fact, that was the first option Pete considered, but not until after dinner.

      As we began that night’s meeting, Pete picked up his notebook and I watched him print the letters: LTDATATK.

      “That’s our first option,” he said.

      “What does it mean?” I asked.

      “Lock the door and throw away the key,” he responded.

      But as soon as he said it we both decided it was a bad idea. Closing the location wasn’t what we wanted at all. It was only six months old and it was too soon to give up on it. No, there had to be other options, and there were, of course.

      “We could advertise the restaurant,” Pete said.

      However, as we talked about that option we remembered the Jingle Bell Special. If anything, that was proof that we didn’t know how to advertise effectively.

      As our discussion continued, and we evaluated various options, we eventually settled on an idea that most people would have said was absolutely crazy.

      We were pretty sure the problem was the location, and so we thought we ought to move it. We batted around the idea of finding another shop and relocating. But the more we discussed that strategy, the less we liked it. The shop was losing money. Moving it didn’t make sense. Let’s close it, we said, and just find a new location and start all over again. But that strategy didn’t appeal to us, either. If we closed our first location before we opened a second location, we might never get started again. Now that we knew the challenges of operating a submarine sandwich shop, we might not be as brave the second time.

      Our meeting was running late and we thought we had exhausted our options when Pete suggested that we keep the first location and open a second shop. I’m sure that if we had consulted an accountant or a board of directors they would have said Pete’s suggestion was outrageous if not irresponsible. We had not proven that we could operate one successful submarine sandwich shop. And now we wanted to operate two?

      Why?

      For several reasons it made perfect sense. If we moved the current restaurant we’d have two investments. We’d have the expense of leasehold improvements in the new shop while we abandoned the leasehold improvements we had already paid for in the first shop. And then there was the equipment. It wasn’t worth moving our old equipment, especially if we had to pay to install it a second time. If we had to buy equipment all over again to relocate, then why not buy it for a second shop?

      And

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