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Review Summary
Company. TSP
Management Group
Industry. Restaurants
Key. An engineer's approach to efficiency can improve restaurant operations.
What's a mechanical engineer doing in the pizza business?
Chuck Senatore knows how to build racecar engines. The company he founded and later sold, Muscle Motors in Lansing, Mich., built a world-champion drag-racing car in 1997. Later this year, Senatore plans to race a truck in the Baja 1,000, an off-road endurance race in Mexico's Baja California peninsula.
So when Senatore teamed with Michigan natives George Kurajian and Tony Sacco to open a chain of pizza restaurants, he used his skills as a mechanical engineer to design the most efficient business.
Together, they opened the first Tony Sacco's Coal Oven Pizza in Estero four years ago. Today, the Bonita Springs-based franchise chain called TSP Management Group has opened six Tony Sacco's restaurants and it's building another six. Six more are scheduled to open in the next 18 months.
“I'm the co-founder of the chain and I didn't have experience” in the restaurant business, Senatore acknowledges. But, he says, “I have a gearhead mind.”
Take the kitchen, for example. A coal oven is the restaurant's only cooking equipment, making it more efficient than traditional kitchens. “The less complexity you have, the easier it is,” reasons Senatore.
There are no fryers, heaters or even microwave ovens. If you have to warm up a cup of coffee or a sandwich, it's done in the $50,000 oven.
“It's just like electronics,” says E.L. Fox Jr., who runs a successful electronics manufacturing business in Fort Myers called Fox Electronics. Fox, who with friend Lori Vitello-Summers acquired the Tony Sacco's restaurant in Fort Myers, says he was struck by the way it was so efficiently engineered.
So far, the restaurants are averaging about $1.2 million in annual sales each. To be profitable, each restaurant should notch about $800,000 in annual sales, Senatore says.
Cars, arcades and pizza
After he sold the racing-engine business in 2001, Senatore moved to Florida and got involved in various businesses, including real estate, video arcades and family entertainment centers.
After he moved to Florida, Senatore met fellow Michigan natives Kurajian and Sacco and agreed to start a restaurant franchise that would be named after the latter partner. They settled on pizza because of its popularity and profitability.
The partners also figured there was a niche for traditional coal-oven pizzas that wasn't filled by the large chains or local family-owned Italian restaurants. “This isn't a pizza parlor,” says Senatore. The 120-seat restaurant includes a liquor bar and granite table tops.
But Senatore and Kurajian built the restaurant without too many preconceptions about how things should work. “George and I didn't want bad habits,” Senatore says.
Senatore had no restaurant experience and Kurajian retired from a restaurant-supply business. Sacco, the only one with restaurant experience, left his partners before the first restaurant opened.
Senatore built Tony Sacco's much as he would have an engine-manufacturing facility. Raw ingredients come into the restaurant much like engine parts come into the plant, he says.
While the pizza at Tony Sacco's has a distinctive artisan flavor that only a coal oven can produce, Senatore says staffing is the key to the restaurant's success. “Customers judge a restaurant by the server,” Senatore says. “That is the key thing that makes it a different business.”
When they open a new franchise restaurant, the corporate staff trains all the employees, not just the managers. “Good people can make a mediocre product rock and roll,” Senatore says.
Besides finding qualified employees, the restaurant is designed efficiently around the centerpiece coal oven. “One person can make all the food,” says Senatore.
If the restaurant gets busy, the food-preparation employee has cross-trained to help the pizza chef. The bartender also runs the take-out operation. The open floor plan and exposed L-shaped kitchen makes it easy for employees to communicate and help each other when the restaurant is full.
The ability to staff the restaurant properly is especially important in states such as Florida, when it's busy in the winter and slow in the summer. “In the summer, we have to be able to survive,” says Senatore.
Data junkie
Senatore's training as an engineer shines through when he talks about managing expenses. For example, when the company started offering a lunch buffet, Senatore had one employee count the exact number of pizza slices customers ate. “I had them give me reports every day,” he says.
Likewise, Senatore measures his food costs based on what comes out of the oven, not when suppliers deliver them to the restaurant. For example, he calculated the cost of green peppers only after washing and cooking them because they lose volume in the process. “The real cost is the finished product,” he says.
Senatore says one of the weaknesses of restaurant owners is they don't track sales of each item. Because they are emotionally attached to their recipes, they fail to get rid of unpopular menu items. Many don't have point-of-sale software that can deliver this valuable information.
For example, he says the restaurant chain quickly got rid of the Don Senatore, an Italian steak sandwich named after him that bombed. The ingredients were expensive and sales weren't high enough to justify keeping it on the menu. “I'm a data junkie,” he says.
When he first started the business in 2008, Senatore plunged into it by working in the Estero restaurant and listening carefully to his customers. One lesson: make the menu simple to read. For example, he added the words “no tomato sauce” on the white pizza. “People don't read the menu carefully,” he says. If there's a miscommunication, the customer isn't happy and is likely to send the food back, which leads to waste.
This is the kind of information that is crucial to operating a successful business, Senatore says. “We have spreadsheets that let the restaurant know the costs on a daily basis,” he says. “The business tells you what it needs.”
Franchise control
Senatore says he and Kurajian never intended to franchise Tony Sacco's. “We were going to build 10 of our own,” he says.
It's only when prospective entrepreneurs began asking them for franchise rights to other areas that Senatore and Kurajian decided to sell franchises. But even then, they don't advertise the business. “We've never solicited any franchisee,” Senatore says.
The franchise fee costs $32,000 per store, plus 5% of annual sales. It costs about $500,000 to build out a store.
Despite his attentiveness to data and responsiveness to customers, Senatore is surprisingly nonchalant about what's in store for the future his restaurant chain. “I don't believe in goals,” Senatore says flatly. “I've never done a pro-forma.”
How many restaurants does he plan to open in the next two years? “The maximum,” he cracks. When pressed, he estimates the chain could have as many as 20 restaurants in two years. “We'll be in six states by the end of the summer,” he notes.
Clearly, having at least 10 restaurants gives the chain the buying power it needs with restaurant suppliers. Senatore has whittled down the list of ingredients to boost that further. “We use one dough for everything we make,” he notes.
Still, Senatore says he's picky about the operators he chooses for franchises. “We turn down more people than we accept,” he says. “We're taking our growth slow.”
For example, Senatore doesn't want a new franchisee to open too soon. He'll require new franchisees to serve only friends and family for five days before opening to the public. “We will decide if your staff is good,” he says.
Senatore prefers to sell a regional franchise that includes multiple restaurants instead of selling one restaurant at a time. “I don't want to train the owner to cut onions,” he says.
Senatore says he's leery of people who fancy themselves as entrepreneurs after they leave the corporate world or those who think the restaurant business is easy. “Only 1% should get near to owning a business,” Senatore says.
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