2009 September: Where Do We Go From Here

Darryl ReginelliLess than a year ago, I was an independent pizzeria owner on top of the world, but today’s “recession conscious” media suggested imminent doom for my business. When I watch headline news and read the newspaper, I am inclined to believe the ground may fall from under my feet. Although the sky is not necessarily dropping on the pizza industry, the current economic state should be seen for what it is –– a wake-up call. With less clarity in my vision of the future, I am left guessing if the growth I once projected for Reginelli’s will actually happen. So when the big boys at Pizza Today called inquiring what Reginelli’s was doing to improve its business during the recession, I knew a self-evaluation was in order.

As I always do in averting crises, I pulled together our team of the sharpest and brightest talent over the years –– a well-rounded group, I would say. There’s the fi ery Italian girl with a competitive edge that would challenge Pete Rose; our petite and professional conservative who someday soon will manage to buy out of all of this; the dark and gloomy guy whose glass will always be half empty; our workhorse who gets everything done but still feels he never does anything; a disciplinarian who answers the door with a gun if it’s too early in the morning; and then there’s me –– the one who is always in denial in the face of adversity. Times can’t be that tough, right? As we talked, we agreed that the one thing that is most important for our future growth is that we stay true to the core of what we are: quality pizza. We need to move forward with the same purpose and direction in bad economic times as we have done in good, by fi rst and foremost covering the basics. Staying true to our brand, heightening our leaders’ awareness of the stores’ finances and regulating our labor budget has enabled us to improve our bottom line despite the economic downturn.

I have always tried to avoid investing resources in shortsighted trends that may lessen the value of the Reginelli’s brand. As an independent, we need to reinforce our brand as one that people can always trust. For years I have watched so many trends come and go in this business, such as altering menu content to promote the latest fad diet and beefing up the appetizer menu with low cost fi llers. Low-carb pizza crust, for example, is always on the wish list of a handful of our customers; however, without the tools or strong desire to jump right in and change our focus to whole wheat, it will never be the route for us. I feel that now, more than ever, I have to defend our brand. Others can do whole-wheat crust, but that’s just not us.

The Reginelli’s focus is consistently serving great pizza. Our customers understand who we are and appreciate our commitment to the quality food that has made our brand successful. They can count on us for that in both good economic times and bad.

Secondly, I have made it a priority to stick to our financial standards regardless of the economic circumstances. I have always felt we held high expectations for our locations with regards to food and labor costs. All of our managers understand that control of these numbers is crucial to Reginelli’s future success. But with our vendors tightening their belts and our customers adapting to more fi nancially prudent lifestyles, we are forced to look at the bigger picture. Knowing the importance of having good food and labor numbers just isn’t going to cut it. Our managers need to really understand the situation we face, because the time for excuses and poor performance has come and gone. There isn’t breathing room to leave the water running in the sink, because we can’t afford it. We now expose our managers to the full P&L for their location when monthly financials are received.

At first, I was hesitant because I have never before provided them with such detailed information; however, I feel that for them to really understand where the stores stand, I need to show them the bottom line and everything that leads to it. They have to see the big picture in order to appreciate the importance of the small details. Going line-by-line shows that all decisions have a financial impact. Once we all understand where we are falling short, we are able to set goals for these areas. With clear goals set, we can make specifi c plans to achieve them. Every new financial period brings a new struggle, but at least now we have the tools we need to fight the battle.

Finally, I have become more conscious of where we are investing our labor dollars. Maybe it’s a New Orleans thing, but I pride myself on “keeping it casual” and avoiding too much formality in the way I deal with my managers; however, as the economic “slump” turned into an all-out “recession,” our starting rates and rate increases didn’t take into account what individual locations could realistically afford. The need to evaluate people’s performance has become more important than ever. So now we use a grading system for our management performance that ties rate increases directly to the scores managers earn for themselves. This allows high-scoring managers who meet budgets to see the increases they deserve, and prevents increases at lower scoring stores who can’t afford them. Additionally, we began limiting management and employee rate increases to one per year. These increases are pre-scheduled and incorporated into performance evaluations, so that everyone knows where they stand across the board. We have made it our focus to find the most qualified applicants for the price that each store can afford. If an applicant can’t settle for what we have to offer, then our only option is to keep looking. While keeping our payroll numbers under control, our more structured approach has offered our employees a payment and benefit system that is transparent and gives them the security of knowing what they can expect for their efforts.

Today, the alarms are sounding as the current economic crisis looms like a Cat-5 over the Gulf. As New Orleanians, we got an early wake-up call in 2005 with Katrina. Our parents got theirs in ’69 when Betsy came. Their parents endured World War II, and their parents suffered the Great Depression. There’s a natural ebb and fl ow to life, and many people today haven’t encountered such life-altering events. As history continues repeating itself, new generations must adapt, new ideas must spring forth. Some will succeed where others will fail. Faced with this new world, weíve entrusted and empowered our staff with the knowledge and tools to help us weather the changing times. 09.09.09