By building trust, restaurateur builds a business

Filed under Management

From our archives

This story first appeared in the Chicago Tribune April 11, 2005.

 By Ann Meyer

Workers at Nick's Pizza & Pub

At Nick's Pizza & Pub, employees are privy to the company's financial results. Photo by Taylor Smith courtesy of Nick's Pizza & Pub.

Like a big family, everyone who works at Nick Sarillo’s restaurant knows everything about the place, including how much Sarillo pays himself in salary, how much the cheese costs, how customers rate the service and even how many napkins on a table is too many.

They’ve also learned the values Sarillo’s Italian restaurateur parents taught him: Treat your customers like guests in your home. Give them the same quality and service you would deliver if they were your own family.

The mix of contemporary open-book management and old-world service has proven to be a winning formula for the $3.7 million Nick’s Pizza & Pub in Crystal Lake. And with the opening last month in Elgin of a second Nick’s Pizza location, Sarillo is out to prove his success is repeatable. Building one thriving restaurant is hard enough for most entrepreneurs, but learning how to take the business to the next level is a task business owners in all industries struggle with, experts say.

Opening the books

“Most people don’t manage proactively. They’re reacting and putting out fires,” said Rudy Miick, president of Miick & Associates, a Boulder, Co.-consulting firm. But open-book management changes that because it encourages planning based on hard data. Using open book, companies share financial results regularly with employees and encourage workers to take an active role in boosting that performance.

“It’s one of the things we really promote,” said Mary Corbitt Clark, then executive director of Winning Workplaces, an Evanston-based non-profit that strives to help small businesses improve their workplaces.

“Being entrusted with the information conveys a kind of respect and sharing that employees take very seriously. It’s precisely what they want,” Clark said. The concept of empowering staff is a growing trend among restaurants, said Hudson Riehle, a senior vice president at the National Restaurant Association in Washington, D.C. It often involves a pay-for-performance component and can be effective at boosting profitability and employee retention.

While Sarillo credits consultant Miick for suggesting the open- book approach, the restaurant’s culture is all Sarillo’s. He grew up in his family’s restaurant business and learned firsthand the value of hard work and customer service.

“By the time I got out of high school, I thought, ‘I’ve had enough of pizza,'” he said. He turned to building custom homes for a while, but when he couldn’t find an appealing family restaurant in Crystal Lake, he decided to start his own. He opened Nick’s Pizza & Pub in 1995, with his family’s pizza recipe and a rustic atmosphere. He built the restaurant with barn beams, then decorated it with antiques, mounted animal heads and put peanut shells on the floor.

Old-fashioned work ethic

In the first seven years, the restaurant grew to more than $2 million in annual sales. But with employee turnover hovering at more than 100 percent annually, Sarillo knew something needed to change before he could expand further. “I was a pretty driven, hard worker coming from that old Italian neighborhood where we couldn’t understand if everybody didn’t come to work and bust their butt for you,” he said.

When he came to realize other people “have a different understanding from their upbringing of what hard work is,” he learned to motivate employees by telling them clearly what his expectations were and promising higher wages when performance improved.

Sarillo’s instincts were better than most, Miick said. “His personal coaching was pretty darn effective,” he said. Now, with the help of Miick, Sarillo has turned his business principles into a codified system that he can implement at multiple locations. He plans to add three new locations in the next three years, he said.

With the Elgin eatery projected to bring in about $5 million in sales its first year, the company could hit $9 million in sales by the end of the year, Sarillo said. What’s more, the Crystal Lake restaurant has achieved a profit margin of about 18 percent, nearly double its level three years ago and well above the industry average, Miick said. And annual employee turnover has dropped to less than 30 percent.

“Coaches, not cops”

Besides posting the company’s financial results for all workers to see, Sarillo has adopted a “coaches, not cops” training mentality, where workers are encouraged to try new things without fearing failure. Employees at the new Elgin location spent 30 days in training, including five full days devoted to the restaurant’s culture. Training also includes learning how to read a profit and loss statement, which Sarillo posts daily. Employees can earn bonuses each four-week period depending on the business’ performance in five areas: sales; food and beverage costs; labor costs; employee retention; and customer satisfaction. Bonuses have ranged from $9 a period to as much as $100. Sarillo said.

Sarillo has set the bar high. To earn a bonus in the customer- satisfaction category, 99 percent of comment cards, distributed to all customers every sixth day, must have a “satisfied” rating. And the restaurant’s sales must climb 5 percent from the comparable year-ago period to earn a bonus in that category.

But the approach often takes on a life of its own. “It’s amazing,” Sarillo said. “Rather than just myself saying, ‘Don’t put a huge stack of napkins on the table,’ they’re coaching each other by saying, ‘There are only two guests at the table, four napkins are enough.'”

What’s more, the system is proving easily transferable. “What has taken three years in Crystal Lake, we’ve done in three weeks in Elgin,” Miick said, because the groundwork was laid from the get-go.

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