BWSmallBiz -- Growth

Want to Expand? Pay Attention to Detail


Marco Lentini has analyzed his all-natural eatery's profitability down to the dollop of apricot honey mustard that goes on each turkey breast sandwich. He knows he could save $2 on each of his crowd-pleasing "Panini Prosciutto" sandwiches if he'd switch to domestic prosciutto from imported, which he has no intention of doing. Using a point-of-sale system, he can increase or reduce inventory levels based on the likelihood of warm weather—which increases foot traffic and typically boosts sales about 15%. Impending spring break at nearby University of Pennsylvania produces salad days—literally. As Lentini puts it: "Everyone turns into rabbits."

The 34-year-old entrepreneur never intended to open "just" a sandwich shop—he wants a chain of his Giá Pronto shops stretching from New York to Washington. The original Giá Pronto, now six years old, has been joined by a second, opened in 2006 in downtown Philly, and a kiosk at a hospital near Penn, with two more outlets to launch in the city in the next 12 months. Revenues topped $1.8 million last year, but getting there required far more standardization of food prep, employee training, and inventory control than Lentini imagined. "The single biggest thing I underestimated was the time and energy it takes to create those systems so you can replicate your stores like a Starbucks or McDonald's," he says.

For any entrepreneur hoping to open multiple locations, those systems are crucial, says Dennis Campbell, assistant professor at Harvard Business School. With one location, a founder can be there to ensure that product is well-stocked or to enforce a culture of top-flight customer service. But, Campbell says, "Once you go to two stores you can't be in two places at once. You need systems and standards to make that happen." It's worked for Lentini: His near-obsessive attention to detail boosted margins to 61% from 55%, cut labor costs to 5% of sales from 8%, and got Giá Pronto into the black in late 2004.

Lentini started thinking of Giá Pronto as a chain as an MBA student at Penn's Wharton School, where he studied Wal-Mart's distribution system. That led him to open a central commissary where vendors drop off supplies and a team cooks or slices all the ingredients (which are preservative- and hormone-free) for each store's salads and sandwiches. Initially, the commissary tried to predict demand from the stores two days ahead of time, but its shipments rarely matched what stores actually needed. Now, store managers fax an ingredients list to the commissary each morning for delivery at 6 a.m. the next day. Managers use a point-of-sale system, installed in 2005 at a cost of $20,000 per location, but Lentini says he's now considering a high-end register system that should be able to do the same thing more cheaply.

Lentini also spent about 18 months developing training manuals for the four areas of his store: the back room, where sandwiches are assembled; the station out front, where food is grilled; the counter, where custom-made salads are ordered; and a coffee bar. He also gets advice on training his 45 employees from his sister Jessica Legatie, an investor in Giá Pronto with Starbucks management experience. When learning a new task, employees are first told how to do it, then they're shown how to do it, and then finally they're observed as they perform the work. "You can't just tell someone to wipe down the bar," Lentini says. "You need to show them exactly how it should be done. You have to inoculate them with your system." Employees also need to pass a written exam. The manuals include rules on everything from greeting customers (must be done within 30 seconds) to how often the condiment station needs to be wiped down (every 15 minutes).

Lentini pays just as much attention to detail when he scouts sites for new restaurants. He keeps an eye on desirable neighborhoods, and looks for students or professionals carrying shopping bags from stores such as Banana Republic. His customers need to be willing to pay up for a "speciality sandwich"—that Prosciutto Panini costs $7.95—and they seem to match the apparel store's demographic. He once nixed a site when he saw too many people toting Dollar Store bags. Lentini was quick to inquire when he noticed that an Asian restaurant near the Philadelphia Stock Exchange (now part of NASDAQ) was no longer operating, and was able to grab that space before a For Lease sign ever had a chance to go up.

In 2003 , Lentini hired a design firm to come up with the chain's look of stainless steel, light woods, and natural stone. "Not that there's anything wrong with a mom-and-pop store," Lentini explains. "But this is more than that. We are creating a brand." After six years, Lentini says, "We have the ability to really crank these out." And now he has the systems to make them hum.

Return to the BWSmallBiz June/July 2009 Table of Contents

Barrett is a senior correspondent for BusinessWeek SmallBiz.

Amy_barrett
Barrett is a senior correspondent for BusinessWeek SmallBiz.

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