From Mechanical Engineering to a Pizza Franchise with Shahpour Nejad

In this episode, we’re joined by Shahpour Nejad, CEO and Co-founder of Pizza Guys, a popular West Coast pizza chain. We discuss some of the pandemic challenges he's faced, leadership skills he's honing in on, and the power of decision-making.

Key Takeaways

1. It's important to let new hires know that you may not know everything as a leader. A team should work together to bring new, fresh ideas to the table.
2. You will have short-term decisions for some items and long-term decisions for others. 
3. If you have a passion for the business and the community you serve, success and profit will follow.

Transcript

Shahpour Nejad: Fall fast, fall forward. You have to be able to find a problem if there's a problem. If the decision was not correct, correct it immediately and move forward.

Matt Levin: Inspirational stories, actionable business tips, and real-world strategies. Join us as today's guest shares 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 Shahpour Nejad, CEO and co-founder of Pizza Guys, a popular West Coast pizza chain. In this episode, we discuss his background and love of pizza, some of the pandemic challenges he's faced leadership skills he's homing in on, the power of decision-making, and his future restaurant industry predictions.

Journey to Pizza Guys

Matt Levin: So Shahpour, thank you so much for joining us today.

Shahpour Nejad: Thank you for having me.

Matt Levin: Can you give us a quick overview of your background and history, and a little bit more about Pizza Guys and the history there as well?

Shahpour Nejad: My background goes a long way, but if I want to make it short, it started actually back in my college years, back in Cleveland, Ohio.

While I was going to college, my first job working at a pizza place. I was a hard-working person at that shop and the owner liked me so much, he made me a partner. Eventually, we opened two stores. And then subsequently — not liking the weather in Cleveland, Ohio, being too cold, and I have relatives in California — I moved to California in 1984 after I graduated in Cleveland.

I've been in the industry since then. Even when I moved to California, I couldn't leave the passion that I had built with the pizza business. Started the Pizza Guys chain in California in 1986. So I go a long way and I think I can easily say that I don't know anything else but pizza and pizza restaurants. So this has been a blessing.

Pandemic in Perspective

Matt Levin: Well, I'm sure you've forgotten more about pizza than most people will ever know. For someone who has had such a long perspective, where does the pandemic fit into that series of ups and downs for your business, and more broadly the restaurant hospitality business?

Shahpour Nejad: I guess the biggest problem when the pandemic happened is the misinformation and also uncoordinated effort from the government, the CDC and stuff, to tell you exactly what we're supposed to do. And everybody was confused and there was a lot of panic.

I believe that was the biggest challenge, that I had franchisees calling me direct on my cell phone, afraid and shaken and saying "Hey, are we supposed to shut down?" And from the contacts that I had with the health department and stuff like that, they're saying, "No, you guys are essential business. You can stay open as long as you do these procedures and protocols."

And then you ask, "What is it?" And then you get all confusing answers: oh, it is this, it is that, and none of them were a hundred percent. So that was the biggest challenge to deal with: what are we supposed to do to stay in business?

And our goal was, okay, let's do the first thing first. We have the employees; we need to make sure that they feel safe coming to work. We need to make the customers feel safe that their product is coming, it is not contaminated, and it is safe, and then show them the procedure that we're doing and stuff like that.

So, first of all, I had to build the confidence in the franchisee saying, "Hey guys, according to the health department, CDC, this, that, we are totally okay, and we are essential business. People have to eat. So we have to stay open. We still have plenty of inventory. The vendors are saying that we're OK. So don't worry about that. So let's go ahead and make sure that we provide sanitizer, we provide gloves and masks and stuff like that so the employee feels safe," because we have a lot of young people that work and then the parents are saying, "Hey, you might get COVID. I want you to stop working.”

So we cannot have a business without employees. So we have to first take care of our employees. And then immediately after that, we have to say, "Okay, why would a customer buy from us if they don't feel safe?" So we have to make sure that the customer feels safe.

So immediately we went out, my whole corporate staff — everybody that I had at the corporate office and then some, family members — going to the store, one by one, installing the plexiglass that protects the customer, protects the employees.

And then our corporate staff, we sat down and had a great meeting, "So what else we have to do?" We have to go ahead and make sure the customer feels safe by providing what we call curbside pickup. So that means that they don't even have to get out of the car. They order a pizza, they pay for it online, a cashless transaction. You know what I'm saying? And then we go out and take the product to the car, put in the trunk, have a nice day, is done. Or if they want delivery, we have to do it in a sealed plastic bag and keep it sanitized and then text the customer, say, "Your product was just delivered. Please come to your door and get it."

And all of these things could only happen again because I'm a very technology-savvy person, having the right POS system, having all the infrastructure, then you can go ahead and do this ahead of time. If you didn't have it, you couldn't have done it.

So I'm very proud of my team and all the effort that we put in years before to try to have all these systems ahead of time to make it happen. And that was a blessing. And I think we are blessed to say that we had that to begin with. So when this thing happened, we were in the right position at the right time to be able to not have our customers run away and not have our employees feel unsafe, and pizza being a hot food and deliverable food, it just worked really fine for us.



And nobody was ready for this challenge, but on a weekly basis, sometimes twice weekly, we had webinars with our franchisees explaining to them, "okay, all these procedures and protocols that you have to do, what you should do, what you shouldn't do," that kind of stuff.

We are very close with all of our franchisees, and they listened because, again, this is not something that anybody had experienced before. They were getting it from the right source. We tried our best to provide the right information so we can go ahead and continue to do business.

And I always say, we could have been a totally different business that had to shut down, but we were blessed, and we took advantage of that, and we were already going up in sales and opening more stores. And when this thing happened, we just had that confidence in ourselves and then the customers had confidence in us. We just dealt with the challenge and here we are.

Matt Levin: Were you getting new processes, new food-handling procedures, new packaging, did this take a couple months, was this a couple of weeks? How quickly were you able to move here?

Shahpour Nejad: As soon as this thing hit, immediately we had an internal meeting over here and we said, "Okay, we can't just sit still. We’ve got to do something," and we brainstormed and immediately changed. So I am very proud of my corporate staff, everybody on my team. Not only that we came up with a decision right away, we actually implemented it by personally — I'm talking about even myself — going to the stores and trying to install plexiglass and delivering masks and stuff like that to the stores.

And one of the other blessings that we have is that we are long-term customers for all of our vendors. We really have a good relationship with them and we are top priority to these vendors. So when we asked for sanitizers and we asked for gloves and masks or whatever, we got them really quick, or we had our people at the office source them out really quick.

I can tell you that we were the first ones to implement all of these changes that I just talked about. And I'm very proud of my team. I'm telling you, within a week, that's how quickly we did that. Within a week that we did that. I don't think any other restaurant beat us to this because we took every resource that we had, as far as manpower goes, to try to go ahead and get these things to the franchisees and I'm very proud of my team to do that. I don't believe anybody else got to do the things that we did that quick. I really don't think so.

Preparing for Future Challenges

Matt Levin: I'm curious about how you've positioned yourself over time to deal with challenges?

Shahpour Nejad: Well, it's an interesting question because I don't think that you have anybody that predicted this pandemic that can say, "Okay, I will be prepared for it." Truly, that wasn't the case. So if that wasn't the case, then what's left is having some infrastructure to be able to handle if something like that came.

We always had our POS system from early on, when people were taking orders by hand, we jumped on the POS system and going online with the digital this and that. So we're always in front of all these events that's happening. That's a long-term commitment that I have that we cannot be behind the curve ball. We have to be ahead on a lot of this stuff.

One of the blessings that I have also is because my team is very young. When you have a young team, they deal with relevant issues on hand and things that are new and fresh and things that also people are expecting in the near future. So because of that, these things make us always on the edge of new technology and hungry for new stuff and procedures and even trends of new food items, trends of new ways of doing things.

There's a lot of things like that. I was trained that if you open a franchise, you have to have everybody in uniform. Everybody has to have a hat, shirt tucked in, this, that, very strict policy, like a military thing. And then after talking to the team members, the corporate office to the employees, the employees said, "You know what? We love to be comfortable. We love to be in T-shirts,” and stuff like that.

And then you say, okay, what's the purpose of this? You want to have the employees to feel good coming to work and be comfortable, but not sloppy. Definitely not sloppy. So we changed our attitude. We said, "Okay, now you go ahead, you're allowed to do that. No problem."

Now we see that lots of employees love that and they thank us for making their lives much easier in a hot kitchen environment. You know what I'm saying? Instead of having everything tucked in, like military clothes on, you know?

So things like that. That's one example, but there's a lot of things that we do because our team is pretty young and very relevant to the new and upcoming stuff. So we were ready for this, and we had all this infrastructure in place as much as we could to help us during this pandemic and be relevant, to be honest.

Becoming a Teachable Leader

Matt Levin: You've taken this approach, like you said, you've got a young team and people that you can learn from. That can be challenging for someone to say, "Hey, I've been doing this for years, but I don't know everything. And I've still got a lot to learn. I need to tap into folks. I need to not just listen to my employees, but really have a process where they can teach me things, educate me on things."

How do you develop that skill? And do you feel like that's something that you've actively focused on as a leader?

Shahpour Nejad: Yes. As a matter of fact, I'll give you a secret: when I hire people for positions, if I hire an IT person, I tell them, "You know what? I know a little bit about everything, but I don't know the whole thing. The reason that I have to know a little bit about everything is that I have to understand when you sit down in a meeting and talk to me about this POS system or phone system or this system and stuff, how these things work and this and that, I have to understand. I have to have that very good comprehension in how these things work. So I can ask intelligent questions and instead of what if, what if, what if, you know what I'm saying?

"So when I hire you, I don't want you to be a yes person that you take orders from me. I want you to bring in new information, new things, then you say, 'Hey, Shahpour I think we should do this way because of this. I think we should bring in this equipment because,' and you have to convince me to do these things. I don't want you to be afraid of improving stuff as long as you went from A to Z and you found out exactly what is it that you're presenting or you're asking, you're requesting and what is it that changes the cost, this, that, that."

So every position that I hire, I talk to them the same way. I say, “I know a little bit, but if I hire you as head of IT, I want you to be a lot more intelligent than me, because if I wanted to do it, I would do it myself. So I want you to bring fresh ideas, new changes, all that stuff."

So I think this is the approach that I had from the very beginning. Also, like I said, I am the kind of person that is like a sponge: hungry for information, no matter what kind of information it is. So for that reason, the people that I hired, they respect me because they know that every time they talk about it, I understand it. And then also they know that they have the freedom to bring in fresh ideas and they won't be rejected. They will be accepted if they do their homework correctly and they really check it out and have a good presentation and good knowledge.

And believe it or not, all of my career, I have used that. And this is where we are, like I said, because of that reason that we have infrastructure that is well ahead of even some of our biggest competitors, because I have listened to my people. We go to a lot of expos and webinars and seminars and conventions to try to learn how we can do things better and my people always bring me fresh ideas because they know their stuff better than I do because I hired them to do that.

Every single thing that people bring me is not necessarily successful, we have some failures, but I tell them "Hey, fall fast, fall forward." You have to be able to find a problem if there's a problem. If the decision was not correct, correct it immediately and move forward.



Life is not always about winning. Sometimes you lose, sometimes you will make a mistake, and it's okay. It's okay. These are all the investments that you do in your business. The sooner you get over it and move forward, the sooner you're going to succeed in something else that you're going to change. So that's, again, building confidence in my employees that they shouldn't be afraid to bring me new ideas because if they fail, what happens? They're not going to get fired.

Flexibility in Decision-Making

Matt Levin: Do you have some heuristics or some sort of methodology that you use to balance decisions and frame them and go, okay, this is a short-term decision, this is a long-term decision, or this needs to be made quickly, or this needs to be made with more deliberation? Is there any kind of techniques or tricks that you've used over the years?

Shahpour Nejad: These kinds of decisions, of course it was much harder when we had a smaller number of stores because when you're much smaller, your dreams are big, but you're really thinking short term. So you're not thinking long term.

But after so many years in business, now it is definitely every time we make a decision, we have to think about the long term, but nevertheless, we are still making short-term decisions. And the short-term decisions would be like food items and stuff, things that can change or trends that can change.

For example, I'll give you an example. When gluten free came up, it was really hard for my franchisees to understand there is a demand for gluten free and I had to make a decision saying, okay, we'll bring in this gluten-free product and if it doesn't work, we'll go ahead and take it off. It's as simple as that. That was a short-term decision, which became one of our bestsellers because a lot of people have family members that are gluten free.

It worked for us at that time, but we have other products that we brought in, and it didn't work. So what? We'll take it out. That’s short-term thinking, and those are not a big issue. We don't have to think about long term because the trend changes, the flavor profile for people changes.

One day, right now, for example, we have the Impossible plant-based food. Do I know how long this fad is going to stay? Or is it going to be here for good? Right now, customer asks for it, we bring it in. If they stop asking for it, we'll take it out. So that will be a short-term kind of thinking, wherever it takes us, it doesn't make a huge difference in our operations. Just an item.

Point-of-sale systems is definitely long term. Equipment that we have in our kitchen is long term. For example, we have state-of-the-art new ovens that can cook in less than five minutes. Can we buy secondhand used ones that are not cooking as well? We think if you're in a business long term and if these ovens have to work every day, from open to close, these are main items. You have to think long term to be able to say, okay, I need to get the best equipment, best refrigeration, best this, that, because those things cannot break down, you know what I'm saying?

So yes, you have short-term decisions for some items, and then you have long-term decisions. And now, because we have over 70 stores, most of our bigger decisions are long-term decisions for sure. And it's much easier to do that right now, rather than when we were small, that we wanted to save a penny here and there whenever we could. And we convinced ourselves that this is the right thing to do. It has been really good for us because all of a sudden, on a Friday night you don't have any equipment break down or something break down because you used the cheap stuff. You know what I'm saying?

Investing in a Community

Matt Levin: Why do you think you've been successful when others have failed?

Shahpour Nejad: I know a lot of my competitors, they look at a franchisee as an investor that comes in, invests in your business. They're looking for franchisees that can open multiple locations really quickly, even if they don't have the passion for the business.

What was different about us is that when I interview a franchisee, I don't care what color he is, I don't care what background, religion, anything. I don't care. I want to see if he has the passion for the business and he is going to be going to a community that gives back to the community, takes care of the community by hiring their kids, their sisters, moms, whatever, the people that are in that local area. And also giving back to the community by helping the schools on fundraising, this, that, whatever it takes to give back to the community whenever they need them.

And don't look at the business like an ATM machine. I don't want them to think, "Okay, I'm going to put a manager and I'm going to make this much money." No, I want people to have passion for the business. Of course every franchisee wants to be successful and make money, but I really believe if you have the passion for the business and you care about your community and you care about your employees and you care about the environment, you care about the quality of the food and what you serve to the customers, the rest just comes in. The success just comes in. The profit just comes in. It's a no brainer.

I know that for a fact, after so many years, if I knew everything I knew at the very beginning, somebody told me these things that I'm telling you, I'll have my thousandth store open now, to be honest. So all of this stuff, it took me a while to understand. It took me a while to understand, and then I have to go ahead and convince the franchisees that this is what they have to do.

And this is what I preach at the office. So every time they come in, they know I say the exact same thing. I say, "Hey, it's all about quality and quality is not just a word. It has to have a consistency that you do it no matter if it's Monday afternoon when it's not busy, or if it's a Friday night, that is line out of the door. You have to have the same consistency and that's what makes us successful.”

The quality of the product, if you have quality stuff on Monday afternoon, and then you have a really bad product on Friday night because it's busy, you cannot handle it, that's not good. People want to come into a restaurant or buy products that they remember that good feeling that they had the last time they ordered. So they want to have that.

And then, when employees feel good about the owner and the operation and the quality of the things that go into making pizza, they brag about you to their family, to their neighbors, to everybody that they know. So again, that just compounds, and people would know what a quality place you are, what a quality team you have and all kinds of good things you do in the community and things like that.

It is picking the right franchisees that have the passion for the business and have the same philosophies that I have in order to succeed. And I think if they do these things, the success is natural. It just comes in. And I think that was the difference between us and somebody else, that we always look for that kind of quality in people when we opened the store. Again, I'm blessed to have those kinds of people and most of my successes are from that.

Future of the Industry

Matt Levin: If you were to predict out into the future 3, 5, 10 years, what do you think is going to change in the restaurant industry? What do you think is going to stay the same?

Shahpour Nejad: Definitely the demand for delivery and people getting their food away from the restaurant is going to be more and more because people much more easily order stuff on their phone and not have any interaction, have this stuff come to them. So this delivery phenomenon, the third party and having food delivered to them is going to be more often.

The other thing is that there's going to be a lot of automation in the industry. As much as possible there's going to be automation in our industry because the shortage of labor and stuff like that definitely is going to affect us. That does not mean that the quality of our product goes low, because I have seen a lot of automation already, which I'm not going to even touch, because to do that, you have to reduce the quality. So that means that people have to try and it's going to get better and better. And so the automation's going to be part of the future of our industry and that's going to come up.



At the same time, I talked about delivery, I think pretty quickly we are going to have autonomous small vehicles that deliver food. That is going to be happening. I know that the technology exists there, it's just getting the regulation and all that stuff done. Shortage of employees, the population growing up and the demand for delivery, that's going to happen.

So one of the things, again, that we have already jumped on that wagon, is what I have done at least for last 10 years or more: on any of the items that we have, if it's food or anything else, if you have to change that item for any reason, the new item has to be as good or better. Definitely better or as good.

And then the price. So I never negotiate price first. I have to make that product better, especially the food. The food definitely has to be better. And by better, I mean that I am changing whatever we have to a healthier product as far as organic and naturally sourced and no pesticides and this and that. So whatever shape or form, that product gets better, as far as the quality and stuff. I'm changing every product one by one, removing all saturated fat, this and that. And all of our chicken is all natural. We have a lot of products that we changed because of that.

So that trend is also the thing that is happening. We cannot go on to be in the industry that gives products to people that is not good for them. We have to be responsible for that and we have already taken steps. We're doing a very good job in picking the quality, organic this and that, whatever, all natural, all kinds of good stuff as far as selecting the food items and everything else. I'm talking about paper, plastic containers that we have. Everything that we have, we try to make it better for the environment, green sourced, and this and that.

These are the things that are going to make a difference in the future. That's what I see, that the restaurants that are committed to do that, they're going to be here to stay. And the people that are behind the curve ball, they cannot survive. They cannot survive. Definitely cannot survive. So the trend is going to be food that is good for you, all natural and fewer chemicals that you can't even say their names, you know what I'm saying?

Outro

Matt Levin: If people get a hankering for pizza after listening to this, where should they find you and your businesses online?

Shahpour Nejad: We have our website, www.pizzaguys.com. They can reach me directly on our website. So any time, no problem.

Matt Levin: Shahpour, thank you so much for joining us today. This was packed with 40-plus years of insight and wisdom, and I really appreciate you taking the time to share that with the audience today.

Shahpour Nejad: Thank you so much for having me. I'd be happy to sit down with you again and thank you so much.

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