Building A Perfect Pizzeria

For the past 10 years, Marge and Bob Quinn, both 62, have shared an onion and mushroom pizza (with tomatoes and spinach on his half) every Friday at Nick's Pizza & Pub. Their regular server, Lisa Fisher, knows them so well that she automatically puts in their order when she sees them. The Quinns watched former construction worker Nick Sarillo, now 43, build his first restaurant out of a century-old dairy barn in Crystal Lake, Ill., about an hour northwest of Chicago--and curious, tried it out as soon as it opened. From their first Friday, the Quinns loved the pizza and the ambience. Sarillo himself "comes around and says hello to everybody," says Bob Quinn. "And those young girls who are greeting people are always smiling. You can see that they've been trained to do that. Today that's not normal."

Both construction and the restaurant business are in Sarillo's blood. His Italian dad ran a beef stand, a pizzeria and an aluminum siding business. Sarillo enjoyed construction but was "physically getting beaten up," he says. And he wanted to create a restaurant where his kids, now 12, 14 and 16, would feel welcome. "People were crappy toward them, or it was expensive," he says. "I thought I could provide the community a fun place. That's what I set out to do: build a fun family restaurant." He got his pizza recipe from his dad's good friend, "Pizza Bill," who still operates a restaurant in Mundelein, Ill.

Nick's business recipe--a simple, affordable menu, rustic-looking restaurants built from rescued Midwestern barns, and unusually friendly staff--is also a winner. This year Sarillo expects $3.75 million in sales at his Crystal Lake location and $4.5 million at his new place in Elgin, where the restaurant is on a busier street with more nearby homes and lunch business. His sales typically increase about 3 percent a year, and his profit margin is a healthy 18 percent--far above the industry average of 6.6 percent. It's easy to see why. Nick's Pizza & Pub looks more like an Aspen hangout than a fast-food pizzeria. Each restaurant boasts a 26-foot floor-to-ceiling field-stone fireplace, decorated with a stuffed moose, a bison and a fox. Freshwater aquariums separate the bar and restaurant. Lamp shades are deer skin, and antlers wrap around light fixtures--"antler chandeliers," says Sarillo. On a typical Friday, about 1,500 "guests" (as Sarillo calls his diners) come through each restaurant. Often, they wait an hour to get one of 320 seats while munching on free peanuts and buying drinks from the bar. Sarillo sells about 800 pizzas (a quarter of them to carryout customers). The high volume is possible because customers typically stay just 40 or 45 minutes. After all, it takes only seven minutes to cook a plain cheese pizza at 550 degrees. With six stone-shelf ovens, Nick's can (and often does) bake 66 pizzas at a time.

Sarillo rarely changes his menu. Due to popular demand, he recently started offering his first-ever dessert: a giant cookie topped with ice cream. He has no plans to begin serving coffee. It requires china, it's too hot to transport safely around kids and it's too expensive. "We're a simple place," says Sarillo. "I can't see charging people $3 or $4 for a cappuccino." Nick's charges $5.45 for his Italian beef sandwich (his best seller after pizza), $10.50 for a medium cheese pizza, $15.75 for the signature "Nick's Special," and $1.65 for "pop" (soda in Midwestern vernacular) with free refills. A typical tab: $9 per person. "We're really affordable, especially for a sit-down restaurant," says Sarillo. "I feel recession proof." Even in bad economic times, "they [families] are still doing stuff with their kids."

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Unlike many restaurant owners, Sarillo refuses to raise prices more than once a year--or to switch to cheaper ingredients when prices go up. "I think that's the kiss of death," he says. "I strongly believe in a consistent product." That means Nick's is susceptible to volatile meat, cheese, lettuce and green pepper prices. Last year, the Crystal Lake restaurant went through 90,000 pounds of mozzarella, which skyrocketed to $2.20 a pound instead of its usual $1.80. "It was a bad summer for cheese," says Sarillo's business partner, Christopher Adams, who came to Nick with a solid background in managing chain restaurants like Baja Fresh and The Cheesecake Factory. Currently, mozzarella is just $1.85 a pound, but lettuce is up because of higher gas and shipping costs. Fortunately, high gas prices usually matter very little because Nick's doesn't deliver. In fact, when gas prices are high, people are less likely to travel out of town and are more likely to visit his restaurants, says Sarillo. Weather affects business. "When it rains on the weekend, it helps us," says Sarillo. Then people don't do much barbecue. "Snowstorms will hurt us," he says. Sarillo keeps his cleaning costs low by using three-cent black Styrofoam plates. His only glassware is at the bar. (Unlike plates, disposable cups are expensive.)

Sarillo celebrated his first restaurant's 10th anniversary last week. (The stuffed North American animals on his walls wore party hats.) Now he is working on his three-month-old second restaurant in Elgin, Ill. Sarillo calls the half-hour drive between the two a "great excuse" to ride his Harley. And, he is scouting locations for a third restaurant to be 9,000 square feet, like his others, which he plans to build next year. His goal: five locations by 2010. Sarillo's construction know-how helps keep the construction costs for each new restaurant to $3 million. "I know what can be built economically," he says. He built his first restaurant himself, with just a couple laborers, and he still keeps a tool belt in his car.

For a macho-looking guy, Sarillo runs a touchy-feely operation. "We're not cop kind of leaders. We're coaches," he says. Sarillo trains servers to create "moments of magic." "Greeting a guest within five steps. That's a moment of magic," he says. The smiles pay off: several servers have made $500 to $1,000 in tips in one night. So far, his management approach has worked too. In an industry with a typical employee turnover of 150 percent a year, Nick's is just 20 percent. Next month, Sarillo will return to NEWSWEEK's Business Edge discuss how he copes with his two thorniest managment issues: staff disputes and the training of 230 employees in two locations. He will also let us know how the development of his third restaurant is coming along.

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