By Ann Meyer
This time the cause is his own.
Nick Sarillo, the owner of Nick’s Pizza & Pub in Crystal Lake and Elgin, who has frequently extended a helping hand to employees and customers is now holding out his own hand for help.
Sarillo, who grew up in the restaurant business and learned from his parents the importance of treating customers like guests in his home, also held frequent fundraisers at his pizza pubs where he donated the company’s profits for a day to charities that publicized the event. When gas spiked in 2008, Sarillo surprised 1,600 restaurant customers one Tuesday by giving them free meals — to the tune of $27,000. He came up with the idea after spending $60 to fill his own gas tank and thinking of the impact the higher fuel prices had on area families.
Giving 5 percent back
Year after year, Sarillo donated 5 percent of the company’s net sales to charitable causes, he says. The events also produced goodwill — and traffic — for the restaurant. But through October of this year, it wasn’t enough. “Ever since 2008, it’s been hard. We’ve done a lot of things and a bunch of things that worked out well,” Sarillo said.
But the tough economy, poor weather and road construction near both locations pushed sales down 30 percent from a year ago, and the business was in danger of folding. So Sarillo turned the tables and instead of asking customers to support a charitable cause, he sent out a mass e-mail Oct. 3 asking for their patronage. In the e-mail, Sarillo explains that while his restaurants are busy, their revenue hasn’t been covering the mortgage and other expenses associated with running two large facilities. “So my final request is for each of you to come dine at Nick’s Pizza & Pub and tell all your family, friends, co-workers, and neighbors to come now, too. We want to continue on as a part of your community and aren’t ready to tell you goodbye yet.”
The first week after the e-mail, sales doubled, he says, then rose 45 percent the following week. Publicity in local papers and on “NBC Nightly News with Brian Williams” also has helped. “We must have struck a chord,” he says. “We got a huge response. It was amazing….It was inspiring.”
Sarillo, who uses an open-book management approach disclosing financial results to employees to encourage them to take an active role in the company’s performance, has posted a barometer on his website gauging sales performance this month. So far, the company has added $100,000 in sales, he says.
Sarillo estimates annual sales at about $5 million, down from $6.8 million in 2007, while overhead at the two 9,000-square-foot locations remains steep. Sarillo says now that the company overbuilt and overspent, but he is reluctant to close a location because each serves a community need. “If we wanted to abandoned ship, we’d be more profitable. That’s not our purpose,” he says.
A new Walmart is slated to open Oct. 26 across the street from his Elgin location that will likely drive customers to his pizza pub. “I believe we’ve gone through the worst of times,” says Sarillo, noting that asking the public for help wasn’t easy. “The things I’ve done to the community, I didn’t expect anything in return. I just did it because I thought it was the right thing to do,” he says. “It’s tough to ask for help.” But during the past few weeks, Sarillo says, he learned that he should have asked for help sooner to avoid putting pressure on his vendors. “What I could have (done) better is do this a month sooner.”
Locally, Sarillo’s e-mail caught the attention of Judy Hogel, director of the Family Business Council at the University of Illinois at Chicago, who sent it to the council’s members. UIC benefactor Jim Liautaud, who is the father of Jimmy John Liautaud of the Jimmy John’s restaurant franchise chain, sent his own e-mail, offering to buy a pizza for the first 25 people who went to the restaurant with a copy of Sarillo’s story published in the Daily Herald or Northwest Herald. “This is a classic first-time-ever appeal that is so honest–so straight forward, it deserves the attention it gets,” Liautaud says.
Sarillo’s Oct. 3 e-mail is below:
An Uncertain Future
I have never understood why owners or management of a failing company usually don’t give others close to the company–especially customers–fair warning about what is going on. In many instances, the team, the core family that built the business, has showed up to work and found the doors locked. I have always said I would never do that to the people I truly care about and owe my life to.
I realize that sending an e-mail like this is risky and unorthodox, but I don’t care because I don’t have anything to fear or hide. We run our business with totally open books, and the core team that shows up to our weekly fiscal huddles will not be surprised by what I’m writing. I truly care about our team and each guest who has blessed us by choosing to eat at Nick’s instead of any of the many other places available to them.
As of the beginning of this week, the hard reality facing us has become glaringly apparent to me. We overbuilt and overspent, and then we didn’t cut fast enough or hard enough when sales started to go downhill. The issue is primarily with our Elgin restaurant, but because we are one company, the failure of Elgin will likely impact Crystal Lake as well, depending on the choices our bank makes. This failure is not the fault of our team members; on the contrary, I am extremely grateful to them for their incredible contributions, including accepting salary cuts, taking on more responsibilities, and volunteering to market us on their own time. The whole responsibility for our troubles is mine for making the bad decisions that got us into this mess.
I realize that many of you out there see a busy restaurant and don’t understand how we cannot be profitable, or as many of you have expressed, how we could not be “rolling in cash.” We do bring in a lot of revenue, but unfortunately that is not enough to cover our mortgage and the other expenses that accrue from having such large facilities. In 2008, sales at our Elgin location began to drop, causing that location to lose money.
Fortunately, Crystal Lake was profitable enough to cover both restaurants most of the time. As of this year, that’s no longer true. The sales drop in Elgin alone has been 30 percent since last year and close to 40 percent since 2007, thanks largely to the bad economy and our location next to the road construction.
We thought that the opening of a new Walmart across the street from Elgin on Oct. 26 would bring enough new traffic to save that location and our company. Unfortunately, the bills that we have been pushing back this year are catching up with us now, about four weeks short of the finish line.
Barring some sort of miracle, we are going to run out of cash to pay our vendors and team members over the next couple of weeks and will have to close. Believe me, I have already tried everything possible and would not be writing this if the amount we needed was not many thousands of dollars more than I personally could come up with. I really did believe we were going to make it to the finish line and pull through this, but I have nothing left that I can sell, pawn or promise–just my business, which now is on the table.
I do have one last hope for me and the 200 team members of Nick’s. If within these next four weeks we could see a large increase in sales at either of our restaurants, we could still pull through. So my final request is for each of you to come dine at Nick’s Pizza & Pub and tell all your family, friends, co-workers, and neighbors to come now, too. We want to continue on as a part of your community and aren’t ready to tell you goodbye yet. If you wish to contact me with investor ideas or any ideas or questions at all, you can email me at email@example.com, call me at 815.356.5557, or simply stop by and talk in person.
Thank you for reading.
Founder and owner of Nick’s Pizza & Pub
See related story from our archives at https://smallbizchicago.com/2011/10/by-building-trust-restaurateur-builds-a-business/.