Jeremy White

Cristy's Pizza owner offers sage advice for operators.

How many 18-year-olds can come up with $10,000 of their own money to buy a fledgling pizza operation? For that matter, how many 18-year-olds would spend $10,000 on a business instead of a car in the first place?

Not only did Jason Biggs manage to work and save $10,000 by the time he graduated high school, but he had the foresight to take that hard-earned cash and turn a $260,000 pizza parlor into an eight-store, $6 million pizza company in a 13-year period.

Not too bad, is it?

"I knew from the time I was five or six years old that I was going to own a business," says Biggs. "I didn't know what that business was, but I knew one day the opportunity was going to come along and that I'd better be able to step up and take advantage of it."

Biggs may have taken the risk, but he didn't take the step alone. Chris Hammack, a buddy who helped him get a job as a delivery driver when he was in high school, has been with him every step of the way. From managing a store for Biggs early on to serving as his vice president today, Hammack has been an integral part of the growth at Lancaster, Ohio-based Cristy's Pizza.

"We made a lot of mistakes along the way," Biggs recalls. "I'd say one of the main reasons for our success has always been (that) we were never happy. No matter how good we were, we wanted to get better. Plus, we were smart enough to realize how dumb we were. We weren't doing everything right. We didn't have the answers to everything. Over the years we were willing to check out books and go to seminars and pay consultants to come in. We were willing to stick our necks out and take a chance on something, even if the only thing that ended up coming out of it was an experience."

Lessons Learned
The pizza experience has been a profitable one for Biggs. Among others, here are some of the more important things he says he has learned in the business:
- Performance incentives work.
- Opening your books to employees can be a good thing.
- You can afford to raise prices.
- You can afford to charge for delivery.
- Get a retirement plan now.

If Cristy's sales are any indication, learning these lessons sooner than later will allow a lot of operators to sleep better at night. Here's what Biggs says about each of these business lessons:

- On performance incentives - "Every store manager and his management team is paid a monthly bonus based on the profitability of their individual location. It is certainly to their advantage to control these costs and be interested in these costs. We bonus all salaried employees." That, Biggs says, leads to tighter cost-controls by managers, which, in turn, boosts the bottom line.

- On showing your numbers - "The profit and loss statements have always been open to the employees. I feel like that's a double-edged sword. They could take a look at it and go 'My God, he's making a killing. Why aren't I getting more of it?' But I also try to point out that this doesn't reflect anything. When I go out and pay $40,000 for a new oven, that doesn't show up anywhere on a profit and loss statement. That shows up on a balance sheet they don't see. The numbers have always been open to the management, and I think the good has outweighed the bad. How can you expect them to respect turning off lights that aren't necessary or not wasting towels without showing the effect? That type of constant pounding over the years has really produced some fanatics when it comes to managers."

- On raising prices - "Any pizza shop that's out there struggling along and is wondering can they raise the prices and charge for delivery, I would say to them that you can't afford not to. You owe it to your customers to stay in business. Are they going to be getting their favorite pizza from you a year from now if you're out of business? You've got to do it. You owe it to your customers, you owe it to your employees and you owe it to yourself to not work for free. There's enough sacrifice you make owning your own business. Busting your butt all day long for free shouldn't have to be one of them."

- On adding delivery fees - "If you've got to advertise free delivery and cheap pie as being your best feature, you're in trouble.

"For years we had touted free delivery. But anyone who's in the business knows very well that there's no such thing as free delivery. It's either built into the price or it's taken out of the product. I didn't think it was a very honest way of doing business. I felt better about not saying 'Free Delivery,' because it was just a lie."


- On having an exit strategy - "There's also something to be said about not putting all your eggs in one basket. These folks who had 90 percent of their money tied up in Enron stock are no different than the small business owner that is expecting to cash out when he's 60 years old by selling the business and retiring on the proceeds. The larger you get and the more successful you become, the harder it is to get rid of. I'd find it a whole lot easier to sell one little pizza shop across the street than I would eight or 10 of them at this point. Who's going to step up with $3-4 million to take me out? Not very many people. So, now we're looking at it as more of a long-term thing, something that will continue beyond when we're going to be here (in terms of day-to-day management).

"We're not putting all of our eggs into this pizza shop. What if one day (something disastrous occurs)?...You better have something else planned out. Most people...don't do that, especially...small business owners. They're working for the business instead of the business working for them."

Raising Prices
The decision to raise prices came when Biggs grew sick of using discounts to draw customers in. He knew there had to be a better way to make a living and took a leap of faith by turning his advertising over to an experienced firm that steered him away from coupons and towards radio and billboards.

"Quite frankly, I got tired of having to always put out a piece of paper with a coupon on it," he admits. "I wanted to do some sort of advertising that sunk our name into the public consciousness and didn't come along with a discount. I went through a period of time where I was looking at the profit and loss statements and thinking, 'We're busting our butts and not
making the money that we ought to, what are we going to do?' I came up with a three-pronged approach: We gave a good, hard look at our food costs. If we needed to raise prices, we did. In some cases, we raised the price of an extra large pizza by two dollars, all in one shot. That's pretty drastic. But we put the prices where we needed to, and we did away - for a period of time - with all coupons and discounts. Plus, we ended 10 years of free delivery and started charging for delivery."

Was he crazy? A price hike, delivery fee and no coupons?

"For the first two or three months sales dropped off and there was a bit of a lull there, but it's not like we quit advertising. We kept advertising hard. We kept promoting service and the product, and after two or three months the hangover wore off and they realized this was their favorite pizza and they were going to keep on ordering," says Biggs. "I wouldn't look back."

Jeremy White is editor-in-chief at Pizza Today.