Nick’s Pizza & Pub:Employees in Charge
“I think what needs to happen as technology and artificial intelligence and all those things grow is that humans need to be more human, right? There’s an opportunity there. That’s when organizations realize that being more human is going to be their competitive advantage in the industry.” —Nick Sarillo
A Brief History of a New Kind of Pizza Joint
Countless businesses across the United States were started out of a garage and many are still run out of one. Some of these ventures will only last months, while others may be sold for millions of dollars. Nick Sarillo, the owner of the Chicagoland pizza mini-chain Nick’s Pizza & Pub, didn’t start his first restaurant in his garage, however. When he couldn’t find a family restaurant that catered to his entire family, kids and adults, he literally built it board by board from old barn wood.
Nick is a lapsed carpenter by trade, so he has the look of a guy accustomed to working with his hands, and he’s fit, clean-shaven, and focused. Although he grew up working in his father’s hot dog stand, which later morphed into a pizza place, he’d had enough of it by the time his high school graduation rolled around, and he decided to be a carpenter. But, after a few years working at McCormick Place, Chicago’s premiere trade show venue, Nick got bored despite the hefty union paycheck. When a friend offered him a few side jobs in residential construction, he jumped at the opportunity. Then, as often happens, serendipity struck: his brother graduated from architecture school, and he and Nick decided to strike out on their own building houses. As time passed, Nick got married, started a family, and began building in Crystal Lake, Illinois, where he still lives.
It was at this point that he began to feel that the construction industry was increasingly prizing speed over craftsmanship, so he did a 180-degree turn and went back to the restaurant business. He saw a niche after noticing that if he and his wife wanted to take the kids out to dinner, they had to choose between a place where the food was good, but kids weren’t welcome or the opposite—a place where the food was so-so, but all the bells and whistles made the kids happy.
“That’s what gave me the idea to build this. It was really to have a place where kids could be treated as first-class citizens, like parents, and the family could come together and have a great time. And the neighbors could come together and have a great time. That’s what initiated the business,” he says, proudly.
So, Nick and his brother designed the restaurant, and Nick started building it from scratch on nights and weekends after he got home from his regular job. Little did he know that the old barn wood he was using to build the restaurant because it was so cheap would be all the rage today. Proudly showing off the wooden front door of the original Nick’s in Crystal Lake, which has antique hinges that he built himself, he explains that his goal was to construct something that looked like it had been around for one hundred years so customers would immediately feel at home. And in 1995, that’s exactly what he did. The result is a warm, homey space.
You’ve Got to Have Beliefs
Like Ari Weinzweig, whom Nick considers “a brother from another mother,” Nick credits the success of his ventures to aligning his beliefs with concrete actions. This didn’t happen right away, however. “There’s been a learning curve for sure,” he says, smiling ruefully.
He recounts the early days, when he started implementing processes intuitively, “with a good heart and good passion” but not necessarily business smarts. “What I found is this process of systems I started implementing. Intuitively, I started with a lot of good things. I had a good heart and good passion, just wasn’t all that smart.” Nick credits Rudy Miick, a nationally known leadership consultant, with completely transforming his business and his life. He hired Miick in 2001 when he wanted to open more restaurants, but didn’t want to “implode” like many others who got too big too fast.
“Rudy helped us define our purpose and our values. To me, that was a transformational part of my personal life too. I thought, ‘This is how I’ve been searching for a way to create meaning at work.’ I wanted to have work be something meaningful in people’s lives. That’s the key. That’s the secret recipe. Those processes and all those things that I put in place, I became super focused on making sure that our purpose and values were alive and vibrant in the behaviors of our team.”
Talking with Nick, I realized that pizza is only a means to an end, the vehicle the team uses to connect with one another and the community. Nick says maintaining the company’s purpose and values are the foundation of everything. You can even see them for yourself on the company’s website. Although they are somewhat reminiscent of Zingerman’s guiding principles, Nick’s guidelines place more emphasis on internal relationships, which he believes lead to external success:
• We treat everyone with dignity and respect.
• We are dedicated to the learning, teaching, and ongoing development of one another.
• We have fun while we work!
• We provide a clean and safe environment for our guests and team members.
• We honor individual passions, and creativity at work and at home.
• We communicate openly, clearly, and honestly.
• We honor the relationships that connect our team, our guests, and community.
• We take pride in our commitment to provide quality service and a quality product.
• We celebrate and reward accomplishments and “A+” players.
• We support balance between home and work.
• Health: We are a profitable and fiscally responsible company. We support the physical and emotional well-being of our guests and team members.
• Our team works through support and cooperation.
For employees, these values are as important to internalize as the pizza recipe, which is also very specific: “The recipe of our sausage pizza is sixty pieces of sausage, nickel sized, finger-space apart, and has got to be done in sixty seconds. I mean, really six ounces of sauce. It’s really, really specific.”
According to Nick, there is a reason for the level of detail. It’s not just about the sausage. “In order to get certified in orientation, you have to know our values. You don’t have to memorize them word for word. You have to understand the behaviors behind them. We put a lot of intention into making them just as important as a recipe for our food.”
That sounds nice, but if you’re like me, you may be wondering how these values work in the real world, and if it’s even possible to measure values and purpose. I was skeptical until he told me about numerous instances over the past several years when tips of over $1,000 have been given to servers in his restaurants.
“I’m a big fan of metrics and tracking data and measuring, whether it’s financials or behaviors. I believe we can measure purpose, how it’s showing up. To that point, our customers and our sales continue to grow. About a month or so ago, we had a server, Imelda, get a $2,500 tip. Servers getting over $1,000 tips has happened four or five different times in both restaurants, not just one restaurant. That’s the data.”
Remember, we’re talking about local pizza restaurants in suburban Chicago, not fancy, three-star Michelin chophouses in New York or Paris.
To see how this could happen, let’s go back and explore the ways the company’s beliefs are put into action. It all starts with the job application, which lists the values of the organization on the first page and makes it very clear that applicants will need to buy into the system. The weeding out process starts there: 10 percent of the people hand the application back, explaining they’re just looking for a job, not a new system of values or a new purpose.
Communication is Key
Once someone has been hired, two equally important company values, communication and training, are emphasized. Nick’s motto is “Trust and Track,” a nod to the concept of “open book management,” a management philosophy first articulated by John Case, a writer at Inc. magazine, and then promoted by Jack Stack of SRC Holdings in his book The Great Game of Business: The Only Sensible Way to Run a Company.
Employers who subscribe to this philosophy—a cohort that also includes Ari Weinzweig—believe in transparency, so they give employees a huge amount of responsibility not only over their own fate but also the entire company. They do this by teaching them how business “success” is measured before ensuring they understand the financials and other data critical to success. Employees, not managers, are responsible for improving their status and performance within the organization and have a direct “stake in the outcome,” whether it turns out to be the company’s success or failure.
Since communication is paramount in this style of management, Nick shows me the Communication Board, a place where employees write the “value of the day,” things like being kind to others, along with the sales forecast for lunch and dinner. There is also a Results Board, which meticulously tracks cost, sales, and guest retention, and even how many people ask for specific servers.
This tracking is particularly important due to the way the profit sharing works. If you take a class (pizza making, for example) and are “certified” by your peer trainer, you are eligible for profit sharing. The more classes you’re certified in, the more profit sharing you’re eligible for. It’s not a lot of money we’re talking about here—when I visited, profit sharing totaled $7 per person for a period spanning the previous four weeks—but it can slowly add up. Plus, it changes the way employees think about the company.
“What’s really cool are the conversations,” says Nick. “One period it’s $75 and the next period you get $7. They say, ‘What happened?’ I say “I don’t know. You tell me what happened.’ Now, we’ve created these ownership conversations.”
Those “ownership conversations” lead to people working toward their own raises. The more certifications or levels they pass, the more money they earn. Managers don’t decide when or what classes an employee takes; it’s all up to the employee. Obviously, this type of system requires a significant amount of trust and transparency.
I can see the appeal of this approach and how this type of enthusiasm can be a self-perpetuating system. Nick is so persuasive and likeable that it’s clear the people who work for and with him “buy in” to his approach 100 percent. Unlike Richard Coraine of Union Square Hospitality Group (one of the “Pragmatists” profiled later in the book), Nick doesn’t think of his businesses as “cults.” But his belief in what he espouses is rock solid and completely genuine. I don’t know if this type of management could work for everyone, but it certainly works for him and his team.
This is illustrated by the passion with which he recounts his feelings when he realized his first restaurant was “going to make it.” “You know, I think what all this comes down to for me is the first year I opened my restaurant, it was twenty hours a day, sleeping in the parking lot, getting up, coming in, and mopping the floors and that kind of stuff. Then I realized, ‘Okay I’m going to make it. Now how do I build a big company?’ That, to me, is what flipped the switch. I wanted people to enjoy coming to work every day. When someone walks out the door, I want them to say, ‘You know what? That wasn’t so bad. I’m looking forward to coming back tomorrow.’ Because so much of our awake life is spent at work, why not have it be something meaningful and something you care about?”
Millennials: Lead the Right Way and They Will Follow
Like his “brother from another mother,” Ari Weinzweig, Nick also disputes the notion that the millennial generation is different from the ones before it, arguing, “I don’t think this generation is different from our generation. I mean, people are people. They’re different and human. Everything is trainable. I believe people are good. Naturally they’re all good inside.”
The company motto, Trust and Track, allows his employees, many of whom are high school students and millennials, to steer their own destinies within the confines of work. For example, an employee can choose to stay in the same position for months, or receive more training and become an expert in it, or advance to a new position, moving from expert pizza maker to salad beginner. It’s up to them, not their manager. This autonomy matches nicely with the ethos of the millennial generation. In fact, according to research by Espinoza and Ukleja—authors of the book Managing the Millennials, which I discussed earlier—the style of management at Nick’s Pizza & Pub rewards many of the values millennials prize: self-expression, achievement, and, most importantly, meaning.
Unlike some people—okay, many people—Nick is incredibly upbeat about the millennial generation, believing they will initiate transformational change. “This generation is a great generation,” he says. “They’re going to make some great changes in our society. It just requires a different type of leadership, more authentic leadership. More transparent leadership. That’s the nuance I think a lot of big organizations miss. They say ‘Well, why aren’t people engaged?’”
Nick says millennials need a purpose, as well as ways to demonstrate it within a measurable framework. That’s why there’s so much emphasis on communicating goals and measuring success, or as he calls it, “Trust and Track.” Because employees understand the framework, they don’t have to wonder about a yearly review or how they’re doing. This approach cedes control to the workers and challenges them to solve their own problems within very specific boundaries.
“I’m not working to treat people with anything but respect. Then the other piece that I think really helps this generation is that we kind of get away from a control culture.”
He goes on to explain that in a traditional company, when employees have a problem, they go to their manager, who tells them what to do. Problem solved. Nick argues that if you do that, then the employees don’t understand the values that were used to make that decision, so that’s not how it works at his restaurants. If an employee of Nick’s Pizza & Pub has an issue and approaches a manager, this is what happens: “We’re going to walk over to one of the places that we have our values all over the walls. Maybe he doesn’t have them memorized yet. I’d ask him, ‘How would you solve the problem? Which value are you going to use to solve that problem?’ By the way, the more values you integrate into solving the problem, the more effective the solution.”
While this kind of problem solving may be preferred by the millennial generation, that’s not necessarily true for baby boomers and gen Xers who grew up working in top-down organizations. But in the new model, leadership is just as accountable as everyone else. And, according to Nick, this is far from a bad thing:
“It’s got to be reciprocal. If I can coach them, they can coach me. A lot of old guys are resistant to that. That’s the difference in today’s leadership. That’s the expectation of this generation. They can’t trust authority, right? Look what they’ve been brought up with. All the scandals. They can’t trust the teacher or a politician, any of this stuff. The way I was brought up with authority, my boss told me what to do. I just did it. Nowadays, they’re like, ‘I want you to model. If you’re telling me to do something, how are you doing it?’ They have a different expectation of leadership. That’s why it’s got to be reciprocal for this work and for this generation, which is great.”
Nick is a big believer in confronting issues when they happen. This makes sense, given that resolving conflicts offers another opportunity to put the company’s values into action. “If we have a disagreement, instead of avoiding the conflict and saying, ‘Let them cool off. Go work somewhere else and tomorrow will be better,’ we say, ‘We want you to actually step into the conflict and use these values to work through that conflict and come through the other side of it and feel safe.’ That’s how we create safe space. That’s how we create trust. It’s core.”
It’s clear that Nick’s leadership style requires active engagement with employees, and he greeted each employee on a first-name basis as we walked through one of his restaurants. But, even though Nick provides first-person examples, it’s equally clear that all his managers employ the same tools and tactics. In this way, his organization is not dependent on Nick to be the leader. According to Nick, the system actually works best when he is not required to be in the center of every decision.
Training the Next Generation Their Way
As you might imagine, the training at Nick’s is an intense process and one that’s unique as far as I’m concerned. It starts with orientation, a two-day, ten-hour process centered around the company’s values and culture. Then everyone, from full-time accountants to part-time hosts, goes into the kitchen for the next class, “101,” and makes the most popular item on the menu, sausage pizza. After eating a piece of homemade pizza, they taste the other items on the menu, just like employees of Lettuce Entertain You, the iconic Chicago restaurant group that’s the focus of Chapter Seven. Finally, after all that, employees break off into groups with their trainer for “201,” which is job specific. In 201 they learn what they’ll have to do and how they’ll be held accountable.
Nick describes their training system as both an art and a science. “It’s cool because again, we’re going to put someone in side-by-side training for our first 201 class. Then we have a 1 to 5 scale. They have to get all 4’s to be fully certified in their job. Then they’re on their own. Now, if they want to, anything else they want to learn and do, their whole career development is right here. So many people on their first day of hire or in the interview ask, ‘What’s my career path like in this company? How do I move up in the company?’ Here it is. It’s right here on the wall. I think more companies could do that. After that first certification, anybody that wants to can become certified in another job. If a pizza maker wants to learn salads, they just sign up for Salads 201. They get a trainer and they train on salads one day instead of pizza making.”
Many organizations have formal training procedures, but few allow the employee to take the initiative and move to a different position with more pay. At Nick’s, after the first certification, an employee receives a 50-cent per-hour raise. And, after three certifications, the employee moves from “rookie” to “pro” and receives an additional raise. This pattern continues until the employee makes it to the “gold star expert” level. The key is that the career path for each employee is transparent and clear, and compensation is based on performance, not tenure.
As a result, it’s not up to a manager to decide what an employee earns; it’s up to the employee. Employees sign up for the next 201 class on a sheet posted in the back. If there isn’t a class scheduled for a while, an employee can get one more person and then ask a trainer if he or she is available to teach the class, which can run anywhere from one hour to two days. Needless to say, that’s not the way it works in a traditional restaurant or company.
This approach to giving direction to the millennial cohort has been validated by Espinoza and Ukleja. In Managing the Millennials, they write about the most effective ways to oversee younger members of the workforce. As the authors explain, “Millennials are super-like. Not unlike the man who wears the big red ‘S’ on his chest, they too have their kryptonite—it is called ambiguity. They hate ambiguity more than being micromanaged.” The authors continue that giving good direction to this age group requires “flipping the attending to authority bias to authority tending to employee development needs,” which is probably the reason the training at Nick’s fits the group so well.
Although Espinoza and Ukleja’s research deal more with traditional managers, their findings undoubtedly apply to peer managers or trainers too. “The effective managers in our study shifted the focus from perform for me to let’s partner for performance. It is important for manager and employee to find agreement about what is helpful to develop both parties’ competencies. Partnering for performance requires that consideration and balance be given to the manager’s goals, the millennial’s goals, and the organization’s goals,” they write.
It’s uncanny how closely Nick’s management and training philosophy reflect the desires of the millennial generation, at least as articulated (accurately, in my opinion) by Espinoza and Ukleja. I believe this is a big reason why his restaurants have been and continue to be so successful.
“Most of our team is above average because they’ve earned it themselves,” Nick says. “It’s not because a boss gave them a raise. We don’t have to do reviews. Again, all that stuff is off the plate of a manager. The team is getting their own raises from rookie, pro, expert. There are different color hats that signify rookie, pro, and expert. Everybody knows what everybody else is making simply by looking at the chart on the wall or looking at what color hat they’re wearing. It’s pretty simple. If they want to be full-time, add a dollar to this, to whatever they’re making, they get a dollar more.”
It’s not as if managers at Nick’s have no role whatsoever. They’re aware of what certifications people are getting because they’re marked in the training folder everyone receives during orientation. It’s up to the peer trainer, however, to certify them.
“At the end of every training shift, we have what we call a ‘back loop.’ Trainers pull the folders out and ask themselves, ‘What’s one thing you did well today? If you could replay the tape, how could you enhance your performance for both the trainer and the trainee?’ Then on the other side, they get a 1 to 5 scale. They have to get all 4’s before they get certified. If they want to move and do something other than what they were hired for, they have to get all 5’s. They have to prove mastery in their job.”
To show me a nuts and bolts example, Nick leads me over to the bar, where the bartender, Mike, is setting up for the day. To guide every task he’s doing, Mike has an “ops” card, his own Trust and Track checklist that he has to follow. There’s no manager checking his work, but Mike knows he must complete each and every item on the list. Tasks are so specific that in theory anyone could walk in the door and open the bar even if they’d never been there before. Once every item is completed, the ops card is flipped over as a signal to the other employees that Mike has completed his responsibilities and is accountable for his work.
Recently, Nick has begun teaching his Trust and Track system in a series of workshops with the goal of “inspiring leaders to influence transformation in their organizations by providing life-changing leadership education.” The students range in age, occupation, and experience. Everyone who participates in the workshops—from the sixteen-year-old high school sophomore to the fifty-year-old business owner—has the same task: learn how to coach, handle conflict, and create a feeling of safety and accountability within an organization. Nick says it’s all about experiential learning and emotional intelligence. If they complete the workshops successfully, they get certified, which means they can use the training at one of Nick’s locations or at their own workplace, wherever it may be.
Culture: Intentional Excellence
All of this was fascinating to me, but I also wondered if the Trust and Track system could truly be replicated in other places. I ask Nick if the company culture was diluted when he opened his second restaurant and had less control.
“Actually, the opposite happens when we’re really intentional about the culture and we define what we mean by excellence,” he says. He then pauses and adds, “We define the culture that we want to have really clearly and then all the systems, support, and behaviors of that culture from top down, sideways, every which way actually influence the culture of the community that we’re in.”
As an example, he cites what happened when he opened his second restaurant in 2005. One hundred people were needed to staff it. In the first six months, they only lost four employees, an astounding retention rate considering a typical restaurant loses 50 percent of its staff in the first six months.
I ask him the reasons for this. Was it simply smart hiring or culture?
He smiles and answers in one word: “purpose.” He adds, “From a restaurant perspective, it’s like, how do I bring this to more communities in America? You know, this kind of environment. This kind of community feel. All these families and neighbors coming together, which is what I intended in the beginning. I think America needs more of that in our society.”
When Nick and I spoke he was chomping at the bit to bring his leadership philosophy back to his hometown. Not long after, he opened a third restaurant in Chicago’s busy Lincoln Square neighborhood, a part of the city already teeming with pizza restaurants and a world away from the sleepy suburbs. Speaking from personal experience, I know how difficult it is to instill a cohesive culture in a city as busy and complex as Chicago, but I'm betting Nick can do it.
Nick’s Pizza & Pub’s Recipe for Success
Nick Sarillo is a passionate leader. But he has learned, through trial and error, that passion alone does not create a great company culture. In fact, given the size of Nick’s business, the level of detailed leadership tools the company uses is astounding. Nick’s vision and values are as concretely inserted into the culture as the eight-foot wooden door at the front of the restaurant. And, in the end, Nick focuses on a few key elements.
1. The proof is in the details. Platitudes and praise are nice, but Nick has done the work to demonstrate to his employees that the company “says what it means and means what it says.” You can see it in the Track and Trust structure, in the color-coded hats, and in the ops cards at each workstation.
2. Strong leadership = accountability. Again, “accountability” sounds good, but it’s meaningless unless managers walk the walk every single day. If accountability is baked into the culture, then the hourly employees understand the expectations and perform their tasks with enthusiasm and energy. That’s how you can walk out of the restaurant with a $2,500 tip.
3. It cannot be stressed enough that Nick believes transparency, accountability, and authenticity are the keys to good leadership. Although these values were intuitive for him, research on millennials backs him up, demonstrating that those values motivate and inspire them.
4. Love what you do. You’ve got to believe in your vision. There is no room for lip service at Nick’s Pizza & Pub. If you don’t believe in the value proposition, Nick’s is not the place for you. As a result, new employees are self-selecting, so embracing the company’s vision is as fulfilling as one of the famous sausage pizzas.