Lean/Six Sigma thinking, repeat customers, and building a social media presence…

We’re now three week into our markets, and inevitably, lots of changes to our work processes at the market.  I’m a firm believer that in order to improve and get better at our operations at the market, it’s important to de-brief what happened each day with volunteers and co-owners so that we can analyze and correct mistakes while become leaner and more efficient as a whole.  Can you tell I’ve been trained in the six sigma/lean process methodologies?

So each week that I”m at the market, I have the owners and volunteers that worked for the day come back to my house and we discuss the mistakes (e.g., pizza had to be scrapped because it stuck to peel, customer waited nearly 20 minutes for a pie, excess ingredients left over, we gave out free pie to someone that wasn’t a kickstarter backer, dealing with rain, etc.), how to avoid them in the future through process flow changes, and other ideas for improving our efficiency and reducing waste.  It’s important to recognize that every suggestion, comment, or idea should be examined and explored, for two reasons:

1.  Everyone’s input on the team makes a difference.  You do not want to alienate someone’s thoughts, as that can create a cycle where they no longer want to submit suggestions, volunteer, etc.

2.  You never know what the comment/suggestion/idea will evolve into, and could be one of the most beneficial things ever done.

I’ll dig more into the Six Sigma/Lean methodologies in different posts later on, but for now, those that will be kicking off a business, just remember:  always look for room for improvement, and involve your staff that are doing the work to seek improvement suggestions.  Obtaining feedback after each experience, especially if your business is part time, is an important part of the process.  From our first day at market, we probably met for 2 hours discussing changes to the workflow from ordering, to dough stretching, to topping, to oven management. And it showed, as we became more efficient in week 2, and reduced our mistakes more by week 3.

For example, in week 1, we had to scrap six pies of 49 due to mistakes (12.24% error).  Very high from a percentage perspective, especially for a day that we sold out of pies by 12:30 PM.  But this past week, thanks to learned experience, discussing errors, and making changes to our processes, we had to scrap only three pies out of 47 that were ordered (6.38% error) , which is a nice improvement over the first week.  While we didn’t sell out (we had 48 pies ready), it’s still good to see the error rate drop significantly.  But as always, there’s room for more improvement…

There’s practically always another way to became more efficient from a work/cost perspective, improve output from a quantity and quality standpoint, and strategies to help make life easier for your team.  And no one knows how to better improve the process, than someone who’s actually doing the work… whether it’s preparing ingredients, working the oven, sanitizing cookware, etc.  the person in the job will likely best understand how to improve the workflow for themselves, which in turn can help the overall process.

But enough about process improvement for today.  Onto some fun stuff!

One of the most exhilarating things that I’m sure any food establishment owner enjoys is repeat customers.  Repeat customers, to me, means a lot of things:

1.  The product was good (or great?).  If I’m anything like the majority of the population, people will only visit a restaurant more than once if the food was tasty.  To me, seeing repeat customers means that we’re making a good to great pizza that people want to come back for.

2.  The experience was enjoyable.  I’ve definitely been to places where the food was great, but the service was just terrible… and really, it only takes once or one important occasion.  One of EyeDoc and my very first dates was at Grand Lux cafe, a place that I had frequented often as a college student, med student, and grad student.  I’ve always enjoyed the breadth of menu, decent quality, and somewhat reasonable prices.  But on the day I proposed to EyeDoc, we went there for brunch to celebrate and had possibly the worst customer service experience ever.  That one bad experience basically drove us away, and we’ve never been back since.  I know that the Soup Nazi and Sushi Nazi trend is out there, and some people love to flock to it due to just how great the food quality is, and I’d like to think that it somewhat of a minority, and somewhat due to the concept of people wanting access to what’s high demand/limited access (think long lines for limited iPhone releases on opening day).  But for the vast majority, you have to create at the very least a neutral, if not enjoyable experience for them to come back.

3.  The price point is reasonable.  Repeat customers also lets us know that your price point is within reason for what you’re selling.  In a world where you can by mass produced over processed cheese burgers from McD’s off the dollar menu, having a $7 Margherita pizza may seem like a splurge… but it’s fresh ingredients, handmade dough, handcut toppings, made to order in front of your very eyes in our hand built oven (yes, we use our hands a lot)…  Yes, you’ll always have a few folks who believe that $7 for a pizza is high (especially when Domino’s, Pizza Hut, and Little Caesars offer their pizzas up often for as low as $5), but I would point back to the quality argument.  We do it fresh, and I personally think we have a better product.  Don’t get me wrong, I still enjoy the dollar menu at McD’s every once in awhile, but not everyone understands/tastes the difference in quality of food.. for some, food is just food.  And those are folks that will be tough to win over, if you’re even trying to win them over.

Having executed on three markets, I’d have to say one of the highlights of my day is seeing our repeat customers come back for the same pizzas, or even ask us for recommendations because they trust our judgement.  It’s akin to asking the sushi chef at a restaurant for omakase, simply because they trust in your tastes and abilities to prepare the food.  The other highlight is to talk with those who are hesitant to try our pizza, only to come back the next week or even a few hours later to order up more because of how much they enjoyed it.  Really, it’s these moments that make me realize we’re making some great pizzas.

And just for kicks, I wanted to share this picture of my nephew eating his first pizza crust ever:

He’s got two teeth (I think), just past six months old, and is chewing away at the crust!  Per my sister, it took him a few minutes to figure out that the crust was food, and once he got it in his mouth, he wouldn’t stop eating!  (My sis tried to take it away, only to have him cry).  It’s really an honor to have his first pizza experience as a pizza we made.

So while we’re building fans of our pizza as we meet more and more people at the market, we constantly feel like we just haven’t promoted ourselves properly yet.  We’ve established a Facebook page, have encouraged people to find us and follow us for more updates, but we’re not quite sure what the next step is to help get our name out there.  Part of why we’re able to offer such a low cost for our pies is because we purposely made the decision to keep our price point low… which means that we have to make it up on volume.

We’ve made profit at each market from an operational standpoint (gross revenue – costs of opening each day = positive value) but we’re definitely not making much.  From our initial estimates, we need to sell about 30 pizzas per day to break even.  And while we continue to look for ways to reduce our costs (installing a trailer hitch to a car we own as opposed to renting a Uhaul, improving efficiency in the kitchen to reduce our rented kitchen time, etc.) ultimately we still need to increase our volume and customer exposure to have this succeed.

So in the world where social media is free and dominates the landscape, how can we go about improving our social media presence and create more exposure for our pizzas?  Readers?  Any thoughts/advice?

 

And finally, a picture of one of pizzas from market.  We’ve been so busy getting pizza orders out that we haven’t had a chance to snap any photos of the pies we’ve been making!  Here’s the second to last pizza we sold for the day:  Bianca – Drizzle of olive oil, fresh garlic which roasts to a nice sweet flavor in the oven, and fresh mozz.  Simple, elegant, and tasty.  Notice the beautiful leoparding/char spotting that our oven man, Gambit (aka Charizard) was able to accomplish!  While the crust is a bit thicker than I would’ve liked, I’m told the pie was delicious.

 

The cost of manual labor and our first day at market!

I’ve been remiss in updating, but I have an excuse!  (Yes, I’m like that kid that forgot my homework but have a great reason for it…)  I cut my middle right finger and both thumbs on the finger tips, and thus was unable to type effectively.  It still hurts a bit now (anyone feel sorry for me yet?  No..?  Moving on then…) but I’m able to at least just wince when I type instead of not being able to touch anything at all now.  How did this happen?

We had decided early on that we should spend a bit more money to make our oven exterior a bit more rustic.  So instead of just plain stucco, we picked up some veneer stones to add to the face to add to our “homemade” feel.  Over Memorial Day, I spent 8.5 hours putting on an external finishing stucco layer, along with trying to attach veneer stones to the face of the oven.  Notice I said “trying”.  The finishing stucco layer was easy enough, but the stones, oh the stones… I’d attach one, hold it in place for 3 minutes (really just sit there and hold it for 3 minutes!), and then tentatively let go to see if it would stay or fall.  70% of the time, it would fall.  So I resorted to using my bare hands to help push finishing stucco into the cracks behind each veneer while I was holding it so that there would be more surface area that would stick to each back.  Using my bare hands to push stucco clay across dried stucco and into veneer stones basically is what tore up my fingers…

Let me tell you, I definitely had moment I was about to just give up on completely on the veneer stones… particularly when I had 80% of the stones done, was installing a piece near the top of the oven, only to watch it fall off, hitting the stone below it, and watching a domino effect of knocking out another 6 pieces below it.  (4+ hrs of work wasted).  I was literally ready to tear all the stones off and call it a day.  But I took a deep breath, turned the music on louder, and eventually we ended up with this:

 

After showing my wounds to EyeDoc that night, I recounted all the injuries I had sustained (minor carbon monoxide poisoning, various cuts/scratches, knicked my leg with a hand axe, getting fiberglass insulation all over my arms, etc.) we talked about whether it was worth it or not… At the time our team kicked off this project, we decided to build the oven ourselves and pick up the trailer so that we could save around $6000.  Was all the man and woman hours (EyeDoc really spent a lot of time helping and staying up to help build this, even on her birthday!) worth it?

My answer given our current situation is always going to be a resounding “yes”.  Let’s take a look at the situation:  We’re a new business with the idea that our partners wanted to invest minimally ($1000 each) to reduce our cost of entry and risk.  We raised good money through Kickstarter, but really just enough to pay for the trailer, fees for licenses, market applications, some ingredients, equipment, building materials, etc.  (our personal investment went into the oven).  We’re doing this as a side job for now just to get our feet wet in the market.  What would $6000 mean?  Some numbers to toy with:

Assuming we make a $5 profit per pizza we sell, that’s 1200 pies we would have to make/sell to cover the cost.

Assuming a day job makes $4000 a month after taxes/savings, that’s 1.5 months of work AND not saving it in order to pony up the cost of hiring out.  Let’s say we had each partner pay equally to cover it and we all made the same amount?  That’s still a minimum of two weeks of post tax pay AND saving it (meaning you can’t pay for anything with it, going out to eat, paying for bills, etc.)

Simply put, we were not in a position to just casually “drop” $6000.  And personally, I think this is part of the reason why a lot of new business don’t make it past the first two years.  Small business owners with the mindset that you should just “hire out” all the things you don’t want to do would have easily said “yes” to spending the $6000 in our situation.  But then you’d be $6000 in the hole, with 1200 pizza to sell to cover that cost of equipment!  That’s a lot of pizzas…and that’s not assuming any other overhead costs…

People have taken the message of Tim Ferriss (notorious author who’s claim to fame is how to create a 4 hr work week by hiring out other folks to do the work for you) and skewed it to convince themselves that you should hire out all the time.  That, and potentially the new generation of workers that just want things handed to them on a silver platter.  Don’t get me wrong, Tim has some great ideas and concepts, but it only makes sense to hire out if you can use that time to generate more success/wealth/progress in your business.  If you’re not able to actually use the time you have to generate more income in some aspect, then it’s really just wasting your money to outsource.  A brief and likely unfair model of Tim’s main premise is that you use cheaper labor to manage your work to generate income that is greater than what you’re paying your labor.  (He uses personal assistant to help advertise his products, grunt work essentially).  And from there, the idea is that you use your revenue to hire more workers to do more advertising, which generates more revenue, etc.

Tim’s book is inspirational, but in many ways, his greatest success is the release of his concept: Four hours of work a week.  Who wouldn’t want to buy into that dream?  That’s like saying you can be fit and in model shape while eating whatever you want, as long as you  just be eat this one pill a day.  We all know (at least I hope so) that being healthy and in shape requires working out hard, eating right, and making good decisions… there is no magic pill.  (Though GNC and other pill pushers have a billion dollar some market that is still successfully fooling many people otherwise).  Similarly, financial success has no magic pill that everyone has access to… (we’re going to leave the arguments of getting some fluke financial windfall off the table). It’s not simply four hours a week of work to make a business succeed.  It’s take focus, hard work, determination, perseverance, vision, etc.  all those crazy buzz words that really do mean something.  But it’s funny, people are always looking for the easy route: taking a pill, or hiring someone out to just do the work.

Yes, there may come a time when you can coast on 4 hours a week of work and have great financial success, but no one gets there without building the empire first… and once you’ve built it, do you really want to coast?  Coasting just means your competitors will outpace you…

Could I have hired someone locally at a more reasonable price to do some of the oven build work?  Possibly… but I’ve also been a firm believer that to fully understand a business, you need to understand all aspects of it from the ground up. Hiring someone to do the work would have just excluded me from the knowledge process and I would be no better.  I’m also a firm believer in continuous learning to be a better person… by being a jack of all trades, you aren’t necessarily a master of none.  You just have more skills to pull from than the person next to you.

Bottom line:  Don’t overestimate how much your time is worth.  $6000 is a lot of money that would have taken us a long time to recover from.  Would I do it again in the future if we were to order another oven?  Well, if we had $6000 available and steady income that could cover that cost, probably not…  I’d probably hire someone or just pay the $6000 flat out to have the finished product delivered.  But given we’re at the start of our business, it only made sense to take on the project ourselves, save a boatload of money ($5000+ after building equipment costs), and learn what it really takes to build the oven.

Finally, as an update, we had our first day of our market yesterday!

 

It was a great day, the bad weather held off until we got home, we made 49 doughs and sold out (lost six due to quality assurance e.g. too much burn, dough broke into oven due to thinness, etc.) so with 43 pi’s sold, we made a small profit!  A couple lessons we learned by the end of the day:

1. We need a queuing system to track order at the market.  People often come by, order up a pi, and then go shop around at the market.  It’s very easy to forget who you owe a pizza to if you don’t have it tracked somehow and have two in the oven and two more on deck being made already, while three more orders were placed.

2.  Make excess dough.  The reason why I said it was a small profit was because overhead really brought down a lot of our net revenue (costs of renting a truck, costs of ingredients, etc.) Dough was our limiting factor for our first market, (and tomato sauce it seems) as people continued to come by to order more pizza, and we had plenty of extra ingredients (which we cannot re-serve), so really it would have been pure profit.  And dough is one of our cheaper ingredients, so we could have easily made another ten-twenty doughs and really turned a healthier profit.

3.  Expect that things won’t go smoothly, and learn to roll with it.  Much like your wedding day, not everything will go as planned.  Gambit was stopped by the police due to inactive brake lights on the trailer.  Our commissary forgot we were going to pick up the dough and ingredients at 6:00 AM, and didn’t get our calls until 7:30 AM.  We forgot our dough scraper to pull the dough out of dough boxes, and had to resort to using a pizza cutter and my hands to gently pull out the dough… not everything will be perfect, especially with so many working pieces…but it’s important to take a deep breath, level head, and roll with it.

4.  Talk it up with customers.  Even with a five minute time period from ordering to a finished pizza, not all customers wanted to go into the market to shop.  Many just wanted their pizza!  It’s a great time to talk about what kind of pizzas they like, whether they live in the area, how often they come to market, etc.  Get to know them, because these are the folks that will help spread the word, and come back for more!  We used this time to introduce the specialty voting system to them, have them sign up for a potential free pizza, and let them know they could follow our schedule and special on the all important Facebook.

5.  You can’t please everyone all the time, so stabilize your customer base.  We had plenty of customers who loved our pi’s, and a few that had some suggestions after eating them in terms of how to improve.  Some of the best advice I received before starting into this business was that it’s more important to get a consistent product than continually changing the product based on advice of customers.  Yes, it’s important to take feedback and tweak, but if you’re constantly tweaking your recipe/process/etc., then your repeat customers will basically be trying a new product every time.  McDonald’s, while terrible, succeeds in part due to consistency of product.  You walk into a McDonald’s and expect a very similar menu, similar quality, similar taste each time you go.  Your business product needs to be the same.  You can’t continually tweak all the time or else you’ll never stabilize your customer base.  It’s important to take feedback on how to improve, but it’s also important to know that you can’t please every customer all the time.  Want to improve and truly get feedback?  Due a larger scale study of your customer base to really understand 100+ opinions on the product… don’t take one-two comments and change it up.

All in all, it was a great first day with lots of lessons, a small profit, and plenty of great family/friends/kickstarter backers who came out to support us!  We even had repeat customers on our first day, which was extremely gratifying to see as it just signaled that we’re making some good pies and our price point was right.  (Someone came back after a few hours to order another pizza because their daughters liked it so much!)

And after a nice long nap in the afternoon, I got up to get in a workout, eat some arrachera, and catch up on some DVR’ed TV while I took notes on improvement for next week.  Here’s a shot of me at the end of our clean up, while our team ate the “mistakes” that didn’t make it past quality assurance…

 

 

One day down, twenty-one more days to go.  Can’t wait to get to my next market!