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Nick's Pizza & Pub back from the brink

Caption
(Sarah Nader - snader@shawmedia.com)
Nick Sarillo, CEO of Nick’s Pizza & Pub, makes a pizza at his Crystal Lake restaurant. He recently wrote a book about his business and management style.
Caption
(Sarah Nader - snader@shawmedia.com)
Nick Sarillo stands outside the original Nick’s Pizza & Pub in Crystal Lake.

CRYSTAL LAKE – Facing bankruptcy, Nick's Pizza & Pub owner Nick Sarillo sent a plea to the 16,000 people on his bulk email list in September 2011 urging them to patronize his restaurants in Crystal Lake and Elgin.

Sarillo, of Crystal Lake, sent the email over objections from a public relations firm he had hired while trying to get his business back on track. After over-borrowing to expand just ahead of the recession, he found his company on the verge of collapse with the jobs of more than 200 employees on the line.

"If within these next four weeks we could see a large increase in sales at either of our restaurants, we could still pull through," Sarillo wrote in the email that he credits with helping to save his business. "SO MY FINAL REQUEST IS FOR EACH OF YOU TO COME TO NICK'S NOW AND TELL AS MANY PEOPLE AS POSSIBLE TO COME NOW!"

Sarillo, 50, tells the story of how he clawed his way back with help from the community in his book "A Slice of the Pie: How to Build a Big Little Business." Portfolio, Penguin Group's business book imprint, published the 272-page book in September.

Since then, it has gotten attention in the pages of the New York Times and the Economist. It held the Amazon.com Best Sellers Rank of No. 16,664 at the end of October.

Sarillo worked in construction after graduating from Barrington High School. He never went to college. He started looking for a different career after he chipped his elbow falling off a ladder at a construction site in 1993.

Following a bad experience out to eat one night with his three children, Sarillo was convinced he could build a better family restaurant. He opened Nick's Pizza & Pub in Crystal Lake in 1995, modeling it after the pizza place his father, Nick Sr., had owned in Carpentersville. His Elgin restaurant opened in 2005.

The business was successful.

Sarillo's two 350-seat restaurants each brought in $3.5 million in revenue in 2007. They had margins that were more than double those of the average pizzeria and significantly less employee turnover.

According to a 2010 article in "Inc." magazine, Nick's Pizza & Pub had net operating profits of 14 percent, twice the 6.6 percent industry average. Measured by per-unit sales, Nick's Pizza & Pub was among the top 10 busiest independent pizza chains in the nation.

In the book, Sarillo explains that his success wasn't due to the pizzas cooked up daily at his restaurants. He credits his "track and trust" management style, community fundraisers, and business culture for elevating his business above the competition.

"We read so much about Southwest Airlines, Zappos, and all those big companies with great cultures and there's a misconception that you have to have millions of dollars to have a company like that," Sarillo said. "I wanted to share that it's possible to do that here at everyday businesses."

Because he's a business owner and not a writer, he hired a professional ghostwriter to help with the book, he said. The process took two years, including 10 months of writing and interviews.

"One of the great things about writing a book was I found that I learned a lot about myself and my company on a [different] level," Sarillo said. "That was a big benefit."

The book goes deep into the details of how Nick's Pizza & Pub operates, from the company's mission statement and employee training courses to management style and the cost of employee benefit plans. It also touches on Sarillo's personal life, including his divorce, struggles as a father of three, and the time he fell asleep while driving 90 mph on the interstate and crashed his new $100,000 Mercedes Benz after staying up all night.

Sarillo said he isn't expecting to make money from book sales, at least not for several years.

"My purpose in writing the book is to share with other small- and medium-sized business owners a way that we can run our businesses and have great, high-performance while we use our values and good ethics and a purpose," he said. "We have a choice. It doesn't have to be what [is] taught in colleges and MBA programs."

For years, Sarillo's company had given back 5 percent of net sales to local community groups, largely through fundrasiers held at the two restaurants. Because the company doesn't advertise, it could afford to give back, Sarillo said.

That good will toward the community helped save his business in 2011.

In March 2011, Sarillo discovered he was losing $30,000 a month. Sales dropped 30 percent, and by September he was worried he wouldn't be able to make payroll. That's when he sent out his plea to customers.

They rallied to save Nick's. Sales doubled in the following week, increasing by $50,000. Media outlets got wind of the story and spread the word. Though sales dropped off after the first week, they remained up about 80 percent in the following month before leveling off. Even so, sales were up 5 to 10 percent over pre-email levels, according to the book.

"If we had been just another restaurant, I seriously doubt the community would have done what it did," Sarillo wrote in the book.

But saving the business required more than a boost in sales.

Employees came up with ways to cut costs, giving up perks such as free meals and Nick's won $25,000 from a local business contest sponsored by Intuit. Those efforts helped, but Sarillo needed to convince his lenders to offer better terms on the money he had borrowed.

Jim Nixon, owner of Orion Real Estate Services in Crystal Lake, learned about Sarillo's situation after a friend forwarded the email. He emailed Sarillo and offered to assist with the books and bankers free of charge. After meeting, they struck up a friendship.

Though Sarillo's email to customers brought an infusion of cash, "it was clear [Nick's] wouldn't be able to continue with that level of overhead and debt," Nixon said.

Together they came up with a business plan and were able to renegotiate the terms of the company's bank loans, enabling Sarillo to make payroll.

"Nick has done a lot for the community, and I had the time and experience to help, so I kind of adopted him," Nixon said. "It's been a rewarding experience."

Nixon and Sarillo continue to meet monthly to review the company's finances and are working on longer-term plans for the business, Nixon said.

Though sales have fluctuated at the company's two restaurants this year, Sarillo said the business remains viable.

In recent weeks, Sarillo has been promoting the book by giving interviews and blogging for various outlets, such as "Fast Company" and American Express's www.openforum.com.

So far, the response from readers has been heartening.

"It shows that people are ready for a different way to run a company," Sarillo said. "They're sick of the dishonesty."

"A Slice of the Pie" is available online and at bookstores. Sarillo will hold a book signing at 2 p.m., Saturday, Nov. 17, at the Crystal Lake Public Library, 126 Paddock St.

The lowdown on Nick SarilloOccupation: CEO of Nick's Pizza & Pub Age: 50Family: Three children, Michelle, 23; Nick, 21; and Danny, 19Book: "A Slice of the Pie: How to Build a Big Little Business" (Portfolio, 2012)Website: www.nickspizzapub.com

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