The Secret Sauce to Building a Successful Business

From wrecking his car during his first pizza delivery at 17 to founding and growing his own multi-location bar-restaurant, Nick Bogacz, Owner and Founder of Caliente Pizza and Draft House, takes us through everything he's learned. He discusses the secret formula to opening restaurants quickly, the cause of labor shortage, and recommendations operators should lean into.

Key Takeaways

1. Understanding the market, your labor costs, your food costs, and what makes a good brand will set you up for success.
2. Don't be afraid to raise prices in order to offer employees health benefits, 401k's, and vacation days.
3. Technology will continue to move at a fast rate and it's crucial to have an open mind about it.

Transcript

Nick Bogacz: And somebody's got to win this thing at the end. Why can't it be the little guy?

Matt Levin: Inspirational stories, actionable business tips and real-world strategies. Join us as today's guest shows how you can make your business more resilient in an unpredictable world.

Hi everyone, I'm Matt Levin and you're listening to The Resilient Restaurant podcast. Today. I am joined by Nick Bogacz, owner and founder of Caliente Pizza and Draft House, podcast host, and book author. From wrecking his car during his first pizza delivery at 17 to founding and growing his own multilocation bar restaurant, Nick takes us through everything he's learned. We discussed the secret formula to opening restaurants quickly, the cause of the labor shortage, recommendations that operators should lean into, and more.

Thank you so much for joining us today.

Nick Bogacz: Glad to be here. Thanks for having me today.

Lifelong Career in the Pizza Industry

Matt Levin: So can you tell us a little bit about your background and how you got into the pizza business originally?

Nick Bogacz: Yeah, so I started delivering pizzas at age 17. Just wanted to make a little extra money. I was washing cars and sat down at the lunch table, one of my friends said, "Man, you really want to make some tips? You've got to go and deliver pizzas."
So I went down to the local pizzeria, told them I could work three to close every day. They said, "You're hired," they said, "One more thing. How old are you?" And I said, 17 and they said, "Hell no, buddy." Because you couldn't really deliver pizzas under 18. First Friday, two days later, got hired on a Wednesday, took my very first delivery and wrecked my car on my very first pizza delivery. So I came back, gave the guy my money. And you think that would have been the end of my pizza career, but I somehow talked my mother into letting me go ahead and use her car. So I used her car while mine was getting fixed for the next month and a half. And about five weeks in, I wrecked my mother's car.

So after that happened, I just fell in love with the team atmosphere of the pizza business, the way that somebody was taking the phone call, and then somebody would stretch the dough, somebody would put the sauce on it, then somebody put the cheese on it. Then the oven tender would pay attention and really make sure the pizza looked perfect, give it to the driver who would take it to the door, and then the family would be so happy to see the pizza. And I just fell in love with that.

So after I wrecked the second car, decided to move inside and started to learn the whole space. I just worked my way up to management and at 19 I decided, who needed college? Because I was the shift manager; I'd made it. I just worked my way through the pizza industry for really the next 16 years.

And then 16 years in, I finally got a little shot to open my own op and that's what happened. Nine years later, we're sitting with five restaurants going on seven, we'll have two more opened up here in the next two months.

About Caliente Pizza and Draft House

Matt Levin: So tell us a little bit more about, Caliente Pizza and Draft House. You said five, going to seven. My understanding is that you have a different model when it comes to opening up new locations.

Nick Bogacz: Yeah, I do. I appreciate that question, Matt. A lot of what we've done, it's just my wife and I, we've never had any partners, so it's really not like there's a big money tree somewhere or anything like that. In the beginning, going to a bank for a loan is pretty much an impossibility.

So a couple of things have happened. I've gotten really, really good at owner financing. Being able to put a little bit of money down, then have the person that we're buying it off of hold the note for the next five years, then pay them a little bit each month. And then we own, sometimes the property, sometimes just the business, sometimes the business with the liquor license. And at the end of five years, we're all paid up. There are no more debts.

And the other thing that we've done really interesting is, it costs the restauranteur so much money to open a restaurant. So really what you want to do is you want to get that cashflow coming back as quick as possible. In the beginning, I was watching a ton of Bar Rescue and I'm sure a lot of that is really for show and more television produced, but I took the idea to heart.

And we flip our restaurants as quick as five days in some cases, some cases, nine days, some 15 days, but we've never had these ones where they go on forever. We're all focused on being the general contractor. My wife goes in, she's the GC. She gets electricians lined up, plumbers lined up, the painters. The whole idea, right now we're about two weeks away from opening.

Taking ownership, so once we take ownership, we'll go in and then take nine days to open it. So right now, my living room is full of so many Amazon boxes and different boxes everywhere, actually. Somebody was at the house last night delivering something, wanted to know if we're moving, are we coming or going? Nope. We're just opening a new restaurant. The whole first floor is filled with boxes for the new restaurant. So we get everything ready so that we can go in. We can just pop the sucker open as quick as possible.

Opening New Restaurants Quickly

Matt Levin: It sounds like you've cracked some sort of secret formula for opening a restaurant fast. It's just like five to seven days versus five to seven months and maybe someone's been dreaming about it for five to seven years. What's the secret?

Nick Bogacz: Secret is I know that it costs money. Like it just kills me to sit there and be paying the electric, gas, everybody else. So we go at it. We literally just get in there, we go non-stop. We'll have 18 to 30 people in there working all day, pretty much sometimes through the night, if we're doing overnight painting and stuff like that. We line everything up ahead of time. So at this point I have contractors pretty much on standby. I just call them up and say, "Hey, this is when I'm ready to go in."

We do full flips, too. We're not just going in and bringing our menus in and then making another restaurant. We go in and we'll put floors in, paint ceilings, put new bar tops in, tables, chairs, tap systems, ovens, redo the kitchen, everything. Light fixtures, paint the outside of the building sometimes. Every one's a little bit different.

We buy existing restaurants. That's our niche, I guess. I think those guys that get into nine months and years and two years, they buy buildings to then do the build up from the ground. We haven't done anything like that. I have no interest in that. We want to go take over somebody's restaurant that was failing and then turn it into something that can be real vibrant for the community again.

Common Mistakes to Avoid

Matt Levin: You've written a book on how to build a successful pizza business called "The Pizza Equation: Slicing Up How to Run a Successful Pizza Enterprise." My big question for you is: now, you've laid out the blueprint for running what looks like success, can you take the inverse of that? Can you take a look at a business that exists right now and identify and say, yep, these guys are just absolutely doomed to fail?

Nick Bogacz: Yeah, I think you can, unfortunately, and I think some of it is being naive. I think a lot of times when you get people that are very naive about it — and what I say by being naive is there's people that when you talk to, they'll literally take your advice. They listen, you can hear them listening. They ask the right questions. They maybe take notes. They want to learn. They make improvements after you give them advice. And then there's people that you give them that advice and then they tell you why that won't work.

Right there, you can figure out who's going to be successful and who's not going to be successful. Is it the guy that found me out and realizes I'm successful — so they ask me all these questions and I'm honest and give them the answers and they go ahead and they take that and then they improve their business — or is there somebody that just wants to validate themselves and say that they've tried everything? So they find me out and they find me through whatever, Facebook or however, and they DM me. And then they ask me all these questions, then when I give them the answers, they say, "Oh, we tried that, it didn't work" or "Yeah, that sounds like a good idea," but then they never do it. So yeah. Which guy do you think is successful?

Matt Levin: So what are the top two or three mistakes that you see of those, beyond just, not listening or taking advice, but the actual execution or operational mistakes that you see in those people that you know are failures just around the corner.

Nick Bogacz: I think the big one not being humble. And that's exactly what I'm talking about: when you give somebody the answer and they don't really think that's the answer. They just don't believe it.

The other ones, sure, not being able to understand the numbers, that will put you out of business pretty quick. If you can't understand your labor, your food costs, even what a good brand is versus what a bad brand is. Understanding things like what a triple net lease is. Those are all things that'll doom you for failure pretty quickly.

I think the other part is when you get into just the actual overall marketing of your business, are you trying to figure out how you can actually bring people in, people that don't understand that this is a digital age and you have to pay for things like Facebook advertising and Instagram advertising, and that you actually do have to advertise. And I can't stand the guy who says, "Oh, I never advertise. I don't have to advertise at all." To me, it's just stupidity, but that's just my opinion on it.

I think those couple of things: not understanding the numbers, not knowing how to market and not being humble.

Dealing with Labor Shortages

Matt Levin: Question for you, you hit upon this managing labor costs, right? So obviously, one of the top headlines we've had since earlier this summer has been around the labor shortage and the inability to find good people. And of course the big bet that when pandemic unemployment ended, we would see a surge of returnees to the workforce in the restaurant industry.

With the labor numbers that just came out earlier this month, we just haven't seen that. And I think talking to a lot of operators, they're really in crisis mode and they're not sure what's going on. What do you think's going on? What's your diagnosis of the problem in terms of the shortage?

Nick Bogacz: I believe it is a crisis. It's an epidemic right now. It's as bad as we've ever seen it. If you think back to before COVID, it was always hard to hire. You have to be honest about that part. You can't not be honest that at that time, there were still people that weren't showing up for interviews, and it was hard to find a good person to work for you. But now that's amplified.

I think the thing that it definitely has forced restaurateurs to do is to really look at the way that they pay their employees, to look at the benefits that they probably don't offer because they're smaller, and start to think should they offer things like health benefits? Should they offer things like 401ks? Is there a way to work vacation days in?

Then the next question, of course, becomes well, how do you pay for it? I think all restaurateurs, for the most part, are always scared to raise prices, but now's the time when you can raise prices and you can get away with it because everything's going up. It's not just the cost of food. But when you sit there and watch the news at night, and they talk about whether it's lumber that's up or it's another commodity or it is the beef prices or whatever it is. So your menu prices should be going up so you can afford to go ahead and keep the employees you have and bring on new employees.

And a lot of times, if you're just focused on bringing in the new employees. A lot of times, you see all these brands that are out there offering signing bonuses and stuff like that. But what are you doing for the employees that work for you right now? Retention has to be a huge focus for you. When you start to focus on retention, I think that's when you're going to start to get the results that you really crave.

Matt Levin: Do you see that there's a cultural component here in terms of the lack of labor in the workforce, or do you think it's really just a pure economic thing?

Nick Bogacz: The reason I fell in love with the pizza industry in the beginning was the team atmosphere of it and the part that you do feel like you're part of something. I still feel like that's true today, that there is a team atmosphere there, especially when you have a full staff. And I believe that people like that.

I don't think it's the atmosphere that you see on a Hell's Kitchen TV show or something like that. I think the pizza industry has always been fun. People love that pizza be that food that people celebrate with. So it's always been a fun food. So the kitchen's always been a really fun atmosphere. I really can't think of too many times over my 25-plus-year career where there's been kitchens where the whole time is screaming.

So I can't really see that. I personally think it's all economic right now. I really do believe that there's ups and downs with what the restaurant industry has been through since March of 2020. Sometimes these things don't last just 14 or 16 months. I think from the beginning, I've been saying that it wasn't going to be COVID's three months long or even 14 or 16 months long. This is like a three-year, four-year thing, the ups and downs. All you're seeing now is maybe the middle of what we've been going through with the pandemic. And it's still got to play out.

If you look back at things like 1987 when Wall Street crashed, or 2008 when the housing market crashed, and now you're into 2020 when really we're going to look back and say, the restaurant industry crashed. They don't turn around really quick.

So we're in the middle of this thing. If you're a restauranteur out there, you've got to really realize that you're not at the end of it. You're at the middle. You've got to hunker down and get tough again. Remember why you did this in the first place. Really figure out your why. Keep going. Don't stop. And really be innovative in the way that you do things. And somebody's got to win this thing at the end. Why can't it be the little guy?

Be Prepared for Post-COVID Opportunities

Matt Levin: What do you think that restaurant operators of all stripes should be thinking about, be on the lookout, in terms of opportunities? If we're in the middle of this and big chains are going to struggle with labor in a different way. Is this the time to get really aggressive about opening new locations? Is this the time to be experimenting with prices and menu or new suppliers? What would you recommend people lean into?

Nick Bogacz: I think they can lean into themselves, first. They got to understand why they got into this, like I mentioned. They have to really dig deep and figure that out. And ask why to yourself for a few minutes so you really get down to the answer. And then when you've got that reason why you wake up every morning and why you work so hard, that's what keeps you going.

And then there's the other things like, yeah, you need to be changing your prices right now. You need to be talking to your distributors. There are so many ways that you just can't stop right now. You've got to be operating on all cylinders and really going at it from all different directions, because every day is a challenge.

That's what COVID was like in the beginning, and I think everybody got a little lax when they heard, oh, there's not going to be any masks or now there's the vaccine. So everyone's assuming that this is over. It's not, there's so many different things going on. That supply chain issue that's going on is a big thing. And the labor shortage is, like I said, it's a crisis. There's a lot of things that are going on. If you're financially stable and you're fiscally conservative, yeah, you can beat this thing out.

And we're opening two more restaurants right now. My goal is — we're at five — we're going to have 12 by 2026. Is that for everybody? Probably not. Why do I think we should do that? I think that there's going to be great deals out there, but you've got to be in a position where you can actually take advantage of them. Because if you've been through those things before, you've got an empty pocket, And you're beat up and battered, you're not going to be able to take advantage of those great deals.

So you've got to really be smart without you're spending your money right now. There are times to make money, times to save money, and times to spend money. You've got to know which cycle you're in right now.

Restaurant Industry Constants

Matt Levin: If you were to pull back out and you were to go and look at the view of the industry. Thinking in contrast all these things that are changing, maybe the way we interact or hire labor. What are the things that you think are just timeless, consistent characteristics of the industry that are not going to change, regardless of what happens with COVID, regardless of what happens to supply chain and labor?

Nick Bogacz: Yeah. You're going to have to work hard. That's it, right there. There's not a restauranteur out there, a successful one, that won't tell you that they worked their butt off, that they absolutely have missed everything that you can think of in your personal life. I always pride myself, I try to make sure I was at my kids' things. But like, that cousin's wedding that, friend's wedding, all that stuff, missed it all. There's nothing that, you've just got to look back and say, at some point you can try to even that out.

But that's what will never change is that you've got to work hard in the restaurant business. That's probably the one thing, no matter what, it won't change. This isn't one of those industries you can get in and you're like, "Oh, I'm going to have passive income. I'm just going to go ahead and get a restaurant open and then take my income, take my profits at the end of the month, let somebody else run it."

It doesn't matter. There are weekends, but those weekends are busy. They're not weekends to take off and enjoy. They're weekends that you've got to still be running your business. And everybody wants to eat dinner with their families, and the thing is in the restaurant business, we're there making those dinners. So it's not like we're with our own families at dinner time. We're there providing family meals for everybody else.

Integral Skills in Restaurant Ownership

Matt Levin: If you would think about just some functional business skills that operators need, and you look around and you talk to people that most of them don't have, where's the biggest area of improvement? Is it in financial knowledge? Is it managing the books? Is it hiring people? Like where do you think the biggest gap is right now in the industry?

Nick Bogacz: I think you're right. It is when you're talking about, all these mindset-type areas. That is what everything is all about. I'm not one of those business-plan-type people or square-footage guys. I'm just a get in there and do it, and I'm not going to fail no matter what. If I've got to sleep there for three years, I will. You can't teach that. You can't train that. That's in you.

So the other stuff that you're asking about, all the teachable stuff, the marketing. The marketing's so important, you have to be able to bring people in there. You've got to read your numbers so that you can understand a P&L and you can understand food costs and really know how to do an inventory. That's the kind of stuff that restaurateurs fail, because they don't understand how to price a menu, how to go ahead and figure out which marketing they want to do, what works, how to see results, how to negotiate like when you're negotiating everything from your lease to your distributors to the wages you pay your employees.

There are so many different skills, I think, but at the end of the day, you just gotta bet on number one. And that's what it comes down to. You've got to realize that no matter what, you're going to do everything you can so you don't fail.

New Trends and Tech

Matt Levin: When you pull back and you look at trends happening in the industry. Are there some pieces of technology or types of solutions or other types of trends that you're seeing play out that you think are, either technology that isn't adopted now but will wildly be adopted, or other types of changes in how people use technology? Do you have any predictions for the next three to five years?

Nick Bogacz: I think we saw a big one just happened. I think third-party technology integration with POS, all that stuff. That's definitely shaped the way where we sit right now in the restaurants.

There's good technology out there. There's bad technology out there. There are people out there that understand restaurants and then they go ahead and they bring in someone who understands software and they make a product around that and it becomes good software for a restaurant.

And then there are software companies out there that do all kinds of research and think they can come in and bring good technology to the restaurant business when they really don't understand how a restaurant works. And there's bad technology. So you have to really make sure that you're using the right kind of software and you're asking those questions and the POS systems are more important today than they ever were.

I remember being real young, probably early twenties, working at Papa John's, and my back was turned. It was late at night. I was sweeping the floor and all of a sudden out of the make line, I heard ding, ding, ding. What the heck was that? And it was like 2001, and I looked up. It was an online order. You look back 20 years ago. That was the first online order I ever remembered. Now it's so common to have online ordering.

Yeah, I always believed technology has a place in our industry and it's going to be ever-changing, and you have to go ahead and have an open mind to it.



Matt Levin: Do you think the rate of technology adoption is going to speed up in the industry? Do you think it's going to stay the same as it's been in the last few years? Any predictions there?

Nick Bogacz: I think if you look at the overall way that technology has really shaped society, it moves faster now than it moved five years ago, moves faster than 10 or 20 years ago. So I think you're going to keep seeing it move at a fast rate. And that's where I think it's going to go.

I think there's going to be things that we look back and 10 years from now that we never really thought of, and you're seeing more and more technology just really shape our lives, shape our industry. So yeah, I think if you don't get ready for it, you're just going to be left behind. It doesn't matter if you're young and understand it, or if you're older, you can learn it.

Matt Levin: Are there any pieces of technology you've seen recently that you think are really interesting and worth sharing?

Nick Bogacz: There's a bunch of things that come through, I guess. One that comes to mind is I was on Craigslist last week and I was looking in other markets trying to get a feel for maybe what they're doing with hiring ads and stuff like that.

And there was, I want to say it's HireNow. And it basically is technology that pretty much will take all your Indeed, your Craigslist ads, your Facebook ads and has software that'll put it all in one place. And that way you've got all the information in front of you.
We always wonder, "Okay, we put all this money in the Craigslist, all this money in the Indeed, money on Facebook for advertising. And we may have like applications at the store. We've got word of mouth. We've got a referral program to get people to get a job here. We've got some ads on the radio to get jobs here, but how do we really know where the heck they're coming from? What's working?"

So this HireNow, what they do is they've got the software design that you put in like a specific link to each one of those places and then it'll keep track of okay, for June, you've got 52 came through Indeed and five came through Craigslist. So you can look in July and say, okay, maybe we should put more money into Indeed because that's where we're actually getting the hiring from.

And then the other part of it is they've got a text program where, sure, the text programs have been around for years where you get something that says, "Oh, here, get 25% off tonight if you use the discount," but now there's ones where it's like, "Hey, apply here. Text this number if you're interested in a job." You text that number and next thing that comes back is a short application that captures all their information.

And then right then and there, somebody can go on from your company and call them and really set up an interview and you've actually set the interview up for it from your phone, you never have to call them. You send them a Calendly link, they set it up, they have the interview and it's all online. So there's a lot of great technology out there.

Remember Your Why

Matt Levin: There's a question I like to ask all the guests. And you may have answered it already in some form or fashion. If you could only give one piece of advice to restaurant operators out there, the one piece of advice you think that would have the highest level of impact on their business, what would it be?

Nick Bogacz: It's a tough question because everybody's a little bit in a different spot in their restaurants, in their restaurant journey, but I think if we're talking about right now, somebody is listening to this right now and they're like, "Okay, I just listened to Nick. He's hitting these things all over the place and comes off as a guy who just is going to figure it out matter what, but I'm really struggling. I'm in a bad spot." If somebody out there is like, "Geeze, I don't know how I'm going to pay the bills. I don't know. I'm going to do this and is it time to wrap it up or is this COVID just that's killed us?"

I think the thing I would tell them is, it gets back to the reason that you did it in the beginning, because a lot of times what happens is you get into the restaurant game, into the journey and you're four or five years in, or maybe you're three years in, 10 years in, 20 years in. And you forget why you started in the beginning. In the beginning, you worked harder than anybody, maybe at some point you got lax, but you just have to remember what drives you and how to go at it.

So I would really challenge somebody listening to this to figure out: why are you still in the restaurant business? You've got to understand the why. When I started this, I'm like, "okay, I got a car with three donuts on it. No heat in it. Windows don't go up or down. Can't even give my kids school lunch money. I'm not failing. This is my one chance," like I said, "I'm not going to fail. I don't care if I sleep in this restaurant for three years. No matter what, I'm going to make it."

And then, you make it and you get successful and then you forget that. You get comfortable and then something like COVID happens, or maybe there's a crisis that happened in your restaurant, or maybe you get figure you've made some mistakes that you shouldn't have, and it catches up with you. You've got to remember that why again, and your why changes over time, but don't be afraid to really get personal with yourself and ask those questions. And when you get that real reason why you're doing this and why you're going to put up with the long days, and the stress of employee problems, and all the other stuff that comes with it, when you realize why you're really pushing so hard, it comes a lot easier.

Matt Levin: Nick, it's been an absolute pleasure having you on the podcast, many words of wisdom rapid fire. And I hope to catch a slice with you at some point in the future.

Nick Bogacz: Sounds good. I appreciate it, Matt. You can catch me over it on NickBogacz.com. WorldsBestPizza.com. That's our website for Caliente Pizza and Draft House. I have a weekly podcast called The Business Equation. Catch me there and social media everywhere: Caliente Pizza and Draft House or Nick Bogacz.

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This podcast was produced and edited by MarketMan. Music by Joseph McDade.