BiggerPockets Business Podcast

BiggerPockets Business Podcast 59: A Sweet Deal: Buying a Chocolate Company With No Money Out of Pocket With Ryan Novak

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Have you ever thought about taking over an existing business? Would you like to purchase a business with no money out of your pocket? Have you ever considered what it would take to expand a local business nationally?

All these questions—and more—are answered on this week’s podcast.

Ryan Novak, owner of ChocolatePizza.com, graduated college and then went back to buy the small, local chocolate shop that he had worked in since he was 14 years old. He negotiated a no-money-down deal that left him as the sole owner of the shop—and an opportunity to grow the brand nationally.

Using the power of the internet, Ryan has grown ChocolatePizza.com to a seven-figure company, shipping chocolate treats and gifts all around the United States. And at the same time, he has grown that local shop into a successful business in and of itself.

On this episode, Ryan talks about how he acquired Chocolate Pizza, how he used what he learned in business school to grow and expand with over a dozen employees, and how he is now using the circumstances of the coronavirus pandemic to extend his brand even further. He tells us how he’s evolved his product offering to surprise and delight his customers and get people talking about the company to expand his reach.

In addition, Ryan tells us how he’s giving back to his community. And specifically how he is using a local mentorship program he’s created to build a win/win for his business—hiring local high-school students to train them in business, while at the same time getting the benefit of low-cost employees, who are excited to learn and work.

Check him out, and subscribe to the BiggerPockets Business Podcast so you won’t miss our next show!

Click here to listen on Apple Podcast.

Listen to the Podcast Here

Read the Transcript Here

J:
Hello to The BiggerPockets Business Podcast show number 59.

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Ryan:
I went back to the owner and we worked out a deal where I’d pay for her out over three years, and then if at any point I couldn’t make a payment she would take the business back and all the money I had paid her, but then if I can’t pay she gets what’s she wants and she knows it went to somebody who really knows Chocolate Pizza, and can expand the vision she started with.

J:
Welcome to a real world MBA from the school of hard knocks where entrepreneurs reveal what it really takes to make it. Whether you’re already in business, or you’re on your way there, this show is for you. This is BiggerPockets Business.
How’s it going everybody? I am J Scott. I am your cohost for The Bigger Pockets Business Podcast, and I am here once again this week with my amazing cohost and wife, Mrs. Carol Scott. How’s it going today, Carol?

Carol:
Doing really well, and I really love today’s guest. It’s not often that we talk with somebody who ended up purchasing the very first place at which his ever even had a job. How cool is that? Seriously, spoiler alert everybody. Our guest today was 15 when he started working at his company, and he ended up buying it, and we’re going to talk with him today, and he’s going to tell you all about his adventure.

J:
Yeah, it’s a great story. Our guest today, his name is Ryan Novak. Like Carol said he started working at, I guess at the time it was a chocolate shop called A Touch of Spice. By the time he graduated college with an entrepreneurship degree he went back and he bought the business. He bought the business actually with no money out of his own pocket, and he tells us how he did that.
And by that time the chocolate was called chocolate pizza, and for the last 10 years Ryan has run Chocolate Pizza, and has turned it from a little local chocolate shop in Upstate New York into a behemoth. He has gotten his chocolate into Wegmans, he’s gotten his chocolates into The Hallmark Store, he’s been feature on CNBC, and The Today Show, and Forbes magazine. He ships all over the country. It’s just an absolutely amazing story of what basically a young kid was able to do with a lot of motivation, a lot of determination, and a lot of hard work.
The best part is he tells us not only about all his business accomplishments, but also how he’s giving back to the community in which he grew up. This is just a fantastic story, and for anybody out there that ever doubted your ability to purchase a business with not a single penny out of your own pocket, well, Ryan’s going to tell you how to do it. If you want more information about today’s show or anything we talk about on the show don’t forget to check out our show notes at biggerpockets.com/bizshow59. That’s biggerpockets.com/bizshow59.
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J:
Thanks so much to our sponsor. Okay. Without any further ado let’s bring Ryan Novak onto the show. How are you doing today Ryan?

Ryan:
Good. Thank you very much for having me today.

Carol:
Thank you so much for being here. So Ryan, I’ve got to tell you, J and I are already huge super fans, even before this interview. We have a lot of amazing listeners on this show and everyone, not everyone, but lots of people send us amazing little thank yous and all kinds of gifts, and so on, and so forth, and I don’t know a month or six weeks ago we got a new gift we had never seen before. It was something from your company, Chocolate Pizza, and we are huge fans already.
And listeners, I’ve got to let you know we’re going to talk a lot more about Ryan’s amazing product, but we started digging into Ryan’s story and just said we have got to have this man as a guest on our show. We love what he’s got to say and we are confident listeners that you will too. So Ryan, thanks again for being here with us. Before we jump into the backstory can you give us just a quick overview to kind of set the stage for everybody, what is Chocolate Pizza right now? What is your company?

Ryan:
Yeah, so Chocolate Pizza itself is a gourmet chocolate that we blend an English toffee into it and then top it with a variety of different candies, anywhere from gems, putter butter cups, drumstick stuff we do, we do caramel nuts. Just a wide variety. We offer about 50 different varieties of chocolate pizza, so for a product as itself that's kind of our main staple item is a chocolate pizza. It's just a gourmet gift that's fun to give, that's unique to give, and it's just kind of something that people have never seen before, so when they get a chocolate pizza they're wowed by it.

Carol:
Totally, very cool. So where did Chocolate Pizza come from? I’d love to learn all about what is your backstory in getting to where you are with Chocolate Pizza? What was your world before Chocolate Pizza was part of Ryan Novak’s life?

Ryan:
Chocolate Pizza’s been part of my life for pretty much as long as I can remember. Growing up in a small town in Upstate New York there was a little Chocolate Shop called A Touch of Spice that was across the street from my house, so I would go over there, I would chat with the owner at the time when I was a little kid. My mom was friends with her. They were a gift basket business, so they did a lot of different little gift basket items, and they created a chocolate pizza. They poured chocolate into a pan, and then sold it as a pizza.
It was kind of the first of its kind back in the 1980s when they first did that first pizza, and then it just started to grow, so whenever I was five-years-old I was eating that chocolate pizza from way back then. And then, as I went to high school, I went there for my first job. It had then turned to the Chocolate Pizza Company, and I got a job mopping the floors, doing the dishes, just doing the little cleanup stuff around the place as a teenager. There was probably four or five employees total at the time so it was a pretty small business.
I had told the owner when she was ready to retire I really thought this concept of a gourmet chocolate was something we could really take national. I thought there was something really neat about the concept of a chocolate pizza. It’s gourmet quality chocolate but it’s served in a fun idea rather than just a truffle bar, or a candy bar that you see anywhere. So going through high school I worked there, learned about the business, and then went off to Syracuse university. I was in their entrepreneurship program at the Whitman School of Management.
I was a placekicker on the football team, so I walked on my freshman year and had a great time playing football up at Syracuse. And then, going into my senior year at Syracuse I had the opportunity to purchase the business.

J:
Just to give us a little bit of context. What year was this?

Ryan:
This was 2010. I was 21-years-old. I was going into that summer of my senior year and we negotiated a deal where I bought Chocolate Pizza from her, so from there we were just kind of off and running. I finished my year at Syracuse while running Chocolate Pizza, sleeping on the little couch in the little store we had there, just pretty much working nonstop trying to finish my college homework while trying to run a business as a 21-year-old who had really no idea what he was doing.

J:
That’s awesome. I love that story. So give us a little bit more background, so at the time Chocolate Pizza’s … 2010, was it still just like a small town little chocolate shop? Was it just local customers? Were you shipping pizzas out?

Ryan:
Nope. There was really no online business. There was really no shipping going on. It was really just servicing the local Marseille, [inaudible 00:08:47], Syracuse area for chocolate, so we had really not grown much larger than that. It had a great following of people but I knew there was a lot more out there who would be interested in this fun concept.

J:
So when you decided to take it over did you have a business plan, did you have a marketing plan, or was this just, hey, I’m going to give this a try? You had gone through an entrepreneurship program at Syracuse, so I imagine you had at least started to think about these things, but what was your plan back in 2010 when you first took it over?

Ryan:
I was fortunate being at The Whitman School. There were some great advisors and a couple great professors that really helped me out, and we crafted a plan that we said here’s my vision for what I can do with Chocolate Pizza. We want to start with this, and then move into other retailers, have other people sell our products, and kind of grow like that.
So we did have a plan put together of what we wanted to do which was definitely helpful. Obviously, a business plan is very important for growing our business, and being at the business school was a big part of having the ability to write that and be ready to go with that.

Carol:
Very cool. I would love to learn more. Here you are at the ripe old age of what? 21? 22?

Ryan:
Yeah.

Carol:
You’re in college, and you decide you want to buy this business. You have this opportunity. The owner is retired. How did the funding work for that? Did you have a lot of capital? Did you strike a deal with the owner? I mean, how does that happen?

Ryan:
So no. I think I had about maybe $1,500 to my name, so I had absolutely nothing that I could purchase the business with. I went to a couple banks and said “Here’s my plan. Here’s what I think I can do with Chocolate Pizza, can you lend me the money and I’ll pay you back?” And then, every single bank told me, “No.” They said, “You’re 21, you have no assets. You really don’t know how to run a business. You’ve never done it before. We’re not going to give you any funding.”
So from there, I went back to the owner, and we worked out a deal where I’d pay her out over three years, and then at any point I couldn’t make a payment she would take the business back and all the money I had paid her, so it gave her the security of knowing if I couldn’t pay she takes Chocolate Pizza, and can sell it to the next person, but then if I can pay she gets what she wants, and it she knows it went to somebody who really knows Chocolate Pizza, and can expand the vision she started with.

J:
And you know, this is something we've talked a lot about on this show, especially over the last couple of months now that more people are getting interested in potentially buying businesses. We've talked a whole lot about the fact that you don't just have to buy a business with cash, and you don't necessarily have to go to a bank and get a loan. They're other ways, and one of the most popular ways, especially these days, is through seller financing, and it sounds like not only did you take advantage of that, you took advantage of that to the extreme.
You basically were zero dollars out-of-pocket. You took over an existing business that sounds like it had a revenue stream, it was making money, and basically the agreement was I’m going to pay you over three years, and if for some reason you don’t pay you lost the shop, but it doesn’t destroy your credit, you’re not out-of-pocket a bunch of money. It’s basically you’re just risking your time, and you’re risking some not really investment, but you’re mostly just risking your time, and from the other side of the equation the seller isn’t risking anything. Basically, she’s getting her money over three years and if for some reason you can’t pay she gets the shop back.
So it’s just a good reminder to our listeners that seller financing in the business world is actually a very viable model that can be a win/win for both sides.

Ryan:
Yeah, I’d say without a doubt. There was not other path for us to do it, so just being able to work with the seller, and say, “Listen. Let’s make a deal. We know we both want to make this transaction work.” Banks are not always apt to lending money to people who are 21 with no business experience, so just let’s figure out a way we can do this, and it was perfect, just what we needed.

J:
Great. Did the business have any employees at the time?

Ryan:
Yeah, there was about three or four employees at the time.

J:
Okay, so it was a small business but you still had employees, and I assume that meant you weren’t working around the clock 24/7, which was nice, so it was a real business but there was opportunity.

Ryan:
Big opportunity, yes.

Carol:
Great. So you had mentioned that part of your plan that you shared with the owner was to expand this brand on a much bigger level, so what were the main things that you did to make that expansion happen?

Ryan:
The first thing we did is we went out and we built a nice website. We knew that people, they shop with their eyes, so not having a website where you could purchase our product was obviously not a great way to get Chocolate Pizza off and going, so we put some time and money into building a great interactive website so customers could go on, place their orders, and can from there.
And then, our second realization was in order to get Chocolate Pizza into as many places as possible, I couldn’t open a store up in every state, or every city, to expand our brand, so we targeted a couple big chains where we thought that Chocolate Pizza gourmet high end theme fit well with what other products sold, so we started with Lori’s Hospital Gift Shops out of Texas, and they had a network of 300 hospitals. We sold them some of our chocolate covered cookies, and pretzels, and just to kind of get the name going, give us some sales record of, hey, here’s 300 stores where we sell our products in, and then we could take it from there.
From there, we took it to Hallmark and sold in 1,400 Hallmark stores, corporate stores nationwide, and then from there we became one of their top selling cash wrap items, and from there our success really just took off, because if you’re successful in Hallmark that was a big thing back in … That was probably 2012, 2013, that was all going strong.

J:
Okay, so you’re a 23, 24-year-old kid for lack of a better term, and you’ve now sold into a 1,000 plus Hallmark stores.

Ryan:
Right.

J:
How did you do that? Clearly, Hallmark didn’t just call you up on the phone and say, “We want to buy your product.”

Ryan:
No.

J:
So what was the process to get your product into hundreds of hospitals and thousands of Hallmark stores? What did you have to do?

Ryan:
It was very persistent. We put together sample packages, and we’d find the right buyers, and we’d send them samples, and the good thing with our product is when the buyers taste our chocolate it’s not like they’re getting a T-shirt or something that they can’t really enjoy, when they get our chocolate they taste it, they enjoy it, they really like it, and then we work out a deal where, listen, just give us 10 stores. Give us a trial, or we’ll pay for 10 stores to be fully supplied with product, and we can show you that this product sells.
So we’ll take on that cost of we’ll give our samples to 10 of your stores, but if the product sells and you see success let’s roll it out to your other stores, so it was just kind of a back and forth of give us a try, we’re a local up and coming company but we really have good vision for what we want to do. We have good product and we have a fun name that we can play off of, let’s see what we can do with your stores. It started with 15 hospital gift shops, and then it went to their 300, and then same for Hallmark. I think we did a test of maybe 12 stores, sold out pretty quickly, and then we just continued to roll it out to nationwide.

J:
That's awesome, and I'll tell you Carol is probably thinking this and not saying it, but it's so funny, I'm a little bit jealous, when we left the corporate world in 2008 and we were looking for a business to start we ended up in real estate, but my big idea at the time was to start a gourmet chocolate shop. I mean, it's always been a passion of mine, so it's nice to see somebody that actually executed on my passion. I'm a little bit jealous.

Ryan:
Very cool. Very cool.

Carol:
He’s a lot jealous. Let’s be clear, as am I. We’re very envious of your situation, Ryan.

Ryan:
Thank you. Thank you.

Carol:
It’s very well deserved, and very, very cool. And PS, on a side not, I’m loving the fact that you have this amazing product where your plan for scaling was … I don’t want to say simply, because I don’t want to minimize it, but because of the product was to send samples to people. That in and of itself it shows the viability of your product, and that’s a really fantastic thing. Very cool.

Ryan:
Awesome.

J:
It is great.

Carol:
Very cool. It sounds like … I want to take a little bit of a step back, so it was a small chocolate shop. It was called … What was the original name of it before you became chocolatepizza.com.

Ryan:
It was A Touch of Spice.

Carol:
A Touch of Spice, great. So you took A Touch of Spice, when you bought it is that when it became Chocolate Pizza? When did you realize there was a whole branding situation that needed to happen?

Ryan:
It had been Chocolate Pizza for probably I would say eight to 10 years before I bought it.

Carol:
I understand. Okay, so it was, and then the brick and mortar was called A Touch of Spice.

Ryan:
It was.

Carol:
I understand. So now, you’re in these large stores, so it sounds like I would suspect that perhaps your team of three or four employees at that point wasn’t quite enough, right? I would also suspect that the production capacity before you purchased this business wasn’t quite enough to support what you had.

Ryan:
Right.

Carol:
So how did you scale that up? What kind of efforts and resources did you take?

Ryan:
When I took over everything was hand dipped, so it was all done by hand. If you had a chocolate covered cookie you’d take it by hand, you’d dip it in, and then you’d let it sit overnight to cool, so we knew that there was no way we could service 100,000 cookies by doing them all by hand, so we looked into automating some of the processes. Before I bought the business they did about 9,000 chocolate covered cookies total, and with some of our new equipment we purchased we could do 9,000 cookies, in a day, so it really allowed us to ramp up our scale, and be able to really produce at a level we needed to for these larger companies.

J:
And so, at this point were you basically focusing the entire business on scale production and sending stuff out, or were you still servicing foot traffic, and focusing on having a retail shop as well?

Ryan:
Yeah. A big thing we want to do is we wanted to dominate the CNY market. We wanted to by Central New York’s chocolate company, so when you thought of a chocolate gift you wanted we wanted you to think of Chocolate Pizza, so we really did a large outreach going to a lot of different local shows, and different promotions, and working with different schools and companies just so we could just put our brand on.
If you’re thinking Central New York, and you’re thinking chocolate, we want you to think Chocolate Pizza, so it was a big thing for us to go from a smaller chocolate company at the time to now we are Central New York’s largest chocolate company. This is our home, so we wanted to make sure that we put our stamp on this area that when you think chocolate you come to our retail store. In 2015, we built a brand new manufacturing facility, so there’s a retail window from the retail store where you can look in, you can see the chocolate being made. We really wanted to have that impact as well as having a presence here as well, not just shipping out nationwide.

Carol:
Very cool. It sounds like you really had a two pronged approach then. On one hand, you were going after these national accounts to grow, and then at the same time it sounds like you were simultaneously creating not only a local product, but a local experience it what it wounds like, by having this shop where you could see this all happening, and so on, and so forth.

Ryan:
Right, exactly.

Carol:
Very cool. I love that. So at this point, what year are we in? You said about five years ago when you built the new shop, 2015.

Ryan:
Right.

Carol:
How many employees did you had at that time?

Ryan:
We were at about 22 people we had coming through, so we had a pretty good amount of people working for us.

Carol:
That is really cool. And you mentioned earlier that when you started at the shop you were in high school.

Ryan:
Correct, yes.

Carol:
And has that practice continued through all these years even with all your growth?

Ryan:
Absolutely. Yeah, we’ve continued. We still work with the high schools in the area, so we still hire about six to eight high school kids that come in, they’re usually their junior year, and we work with them for two years just like the opportunity I got, so it’s fantastic to get these young kids, give them their first business experience, cleaning, doing dishes, doing all the stuff I used to do.
But it really gives them that sense of what a local business is like, and really getting to see the operations of working with major customers, and working with shipping, and UPS, and getting a whole feel for small business because that’s not an opportunity that a lot of kids get to get at that age, but it really helped transform me and give me a love for the business committee getting to work with that being a young kid.
We love doing that with the local schools. It’s fantastic.

J:
I really love that, and if you think about it, it’s such a win/win. I mean, you’re getting high school students who presumably will be a little bit less expensive, and also more malleable. I mean, they’re going to take instruction well. And so, you’re getting benefits at the same time the high school students are getting this invaluable experience in working in a small business that’s growing, learning all aspects of the business.
A business like this is nice because if you’re working in the business you’re touching every aspect of the business, so it really is a win/win, and it’s a good reminder for all our listeners out there who have small businesses that there are ways to do this that you don’t have to go out and hire Fortune 500 CEO’s, and expensive people, especially if … And this is one of the things hearing your story that I love, especially if one of your goals is to give back. You’re not just about making money. You’re not just about growing the business. You’re about actually using your business, using your expertise, using your experience, and using just everything you’ve learned to give back and help others, so it’s fantastic.

Ryan:
Absolutely, and that’s a big part of who we are, and what we do, is just being able to give back. It gave me such a great opportunity so getting to see these kids work for us all the time it’s great. It’s something I really enjoy.

J:
So how do you handle things like your product line? I assume from 2010, we’re now in 2020, as you’ve grown, as you’ve gone from being a local chocolate store to a national distributor essentially how’s your product changed? Have you scaled back the number of products you sell, or ramped up the number of products you sell? Do you have to design your products differently based on the fact that your products have to be shippable?

Ryan:
Right. Yeah, day-to-day. When I first took over there was really only two options. You could get a milk or a dark pizza, and then it would come with nuts, or without nuts, so there was really no color, no pop to the product. It was just the standard with nuts, without nuts pizza, so we came in and we designed some ideas of people want to see colorful, they want to see fun, they want to see something different when they come into our store.
So for the 10 years before I took it over the people who came in saw the same products, bought the same products, that they’d always gotten, but there was really no innovation or anything new with the products, so we added color. We started scripting on the chocolate, so we’d take a white chocolate and we’d script, “Happy Birthday,” or we’d write, “Thank you,” or personalized messages on them, so giving people those abilities to personalize their gift on top of just the uniqueness of a chocolate pizza really helped expand us into the corporate gift giving market, and to the holiday market, in changing up what we do, adding new things.
We’ve definitely added a lot of products since when I took it over, probably too many, so we are trying to pair back some of them. As we grow we see it’s tough to give too many products, you get stretched too thin, so that’s something we are trying to work on, especially after this online season we’ve seen during this time of year.

Carol:
Excellent.

Ryan:
So trying to pair back a little bit.

Carol:
I’m curious, Ryan, how does that innovation process work within your company? Do you have outside focus groups? Is it your high school employees? What is that process for introducing and trying new products?

Ryan:
We’ve got a couple different things, so with all the young kids coming through they’re always giving us different ideas for … We did a pretzel rod with peanut butter dipped in chocolate, our Peanut Butter Sparklers became a huge seller. We did a big deal with CVS for those, and that was just somebody’s idea of, hey, I love pretzels, I love peanut butter, let’s put this together on a pretzel rod and see what happens.
We’re fortunate where we have our retail store so we do put the new products we try in our store, we can see from there if they start to sell, how things go. If we see some traction then I can start putting it on a larger scale, and trying selling it to some of our larger customers. And then, we interact with social media. We did a post a couple years ago, “Hey, give us an idea for a chocolate pizza you’d like to see.” We do a drumstick which is a pretzel rod with caramel and nuts dipped in chocolate. They wanted to see a drumstick pizza, so we came up with a pizza that had the same toppings of a drumstick on top, and we’ve sold tens of thousands of them. It was a huge selling pizza.
It’s just using our resources, using the people, and then what we like. We don’t have any outside focus groups besides asking Facebook fans what they think they want to see their next pizza be.

J:
Yeah, but that’s still so much more than so many small business owners do, and I love the fact you’re doing your A/B testing, you’re testing in smaller locations, and then expanding the things that are working, you’re going after social media. It’s funny, the dichotomy, you think, okay, it’s a small local chocolate shop that’s sending chocolate out, but really your managing it like a veteran entrepreneur.
So it’s again just a good reminder that even the most simple concept with good management, creativity, the entrepreneurial spirit, and just a lot of hard work that simple concept can really pay off.

Ryan:
It does, and we’re fortunate too. You know what? If it doesn’t sell, it’s chocolate. We’ve got 20 people who work for us, people love to take chocolate home. My neighbors love us because we bring them chocolate that wasn’t as good as we thought it would be, and everybody’s happy.

J:
Actually, just curious, what’s the shelf life of a typical product? Can you batch stuff, and do stuff months in advance, or do you basically have to be within a couple days of shipping?

Ryan:
No, no. The shelf life on our product is nine months, so the chocolate has a pretty long shelf life. We’re kind of unique, and we’re really a just in time manufacturer, which in the chocolate industry’s very rare. The big chocolate companies produce cases and cases of stuff, store it in warehouses, and then ship it from there. We do it a little bit differently where we’re very heavy intensive of when we get the orders that’s when we start to fulfill them, so that when people are eating our chocolate it’s really the very freshest chocolate they’ve ever tasted, so that’s something we work hard on.
It does put some stress on our system where you can be ready for some things, but then you get a pretty large order that’s got to go out fast, you’ve got to call more people, and you’ve got to work overtime to get those orders out, but we’re not big on making a lot of stuff, and just having it sit there, and then shipping it out. It was something when I took over we said we’re going to see what we can do with this just in time manufacturing and give people the freshest chocolate, the best tasting chocolate, they can.

J:
What was the evolution in terms of … It sounds like you probably have three distribution channels now. You have your local chocolate shop, you have your resellers … I don’t want to call them distributors, but your resellers like the Hallmark stores, and then you have the people direct-to-consumer through online I assume. I’m guessing those are your three big sales channels. How would you say pre-coronavirus, because I know things have probably changed the last few months, but pre-coronavirus what were the percentages break down in terms of how much chocolate you were selling, your revenue, in each of those three streams?

Ryan:
Sure. Our retail accounts for probably about 30 to 40% of what we do for our retail store. Another 40% is our wholesale distribution network with like the Wegmans, the Hallmarks, stores like that, and then 20% was our online business. We’ve been really trying to ramp that up so we can grow that online side.

J:
That’s great, and it sounds like you must be getting a lot of foot traffic if 35% is your retail store.

Ryan:
It is, and it’s a little skewed because we do a lot of corporate business, and that gets run through that same side, we call it retail sales, but it’s really … Disney’s a big customer of ours, so I mean that counts as a retail sale. That’s really a corporate sale, but just how we broke it down.

J:
Got it. That makes sense.

Carol:
Cool. So speaking of that with these different channels, and these different large customers, I’m really curious what your organization looks like now. So it started with a few people back in the day, you have all these different functions, what is your organizational structure right now?

Ryan:
We’ve got a retail side, so we have Allison who runs our retail section so she takes care of anything that comes through, people coming through the door, keeping the store stocked, just our front facing side. I handle all of the sales side, and I oversee the shipping side as well, and then we have a production manager who manages everything that has to do with the production of the product.
That’s the three big pieces who keep everything moving, and then under that we have pieces who move back and forth, and fill the need as needed. We’re definitely not overstaffed so people do a little bit of everything in a small business.

Carol:
Very cool, and how many people total?

Ryan:
I think we’re at about 18 right now.

Carol:
Oh, wow. Okay, so that’s a sizable business. And talk to us about, of course with COVID everything, we’ve mentioned a few times, we’ve alluded to, we suspect that business has changed at least a little bit. How has it impacted your business?

Ryan:
In March, we got the order, we closed our retail store, so right off the bat since March there’s been no retail traffic. Because we’re a food processor we are allowed to continue to manufacturer food, and we can do curbside takeout, and then we can continue to ship online. Our online sales have just gone through the roof that last months as more people transitioned to they can’t be with someone for their birthday, or they can’t be there for an anniversary, send them a chocolate pizza, and we’ve seen an incredible uptick in online sales.

J:
And have you don’t anything particular to get the word out? I’ll be honest, so Carol and I, again, about six weeks ago we received a gift from one of our listeners from you, from Chocolate Pizza, and let me tell you something when I received the box, I looked at it, and I said, “Chocolate Pizza?” I’m thinking if this is a bomb, and someone’s just trying to assassinate me this is the absolute best thing they can put on this package to get me to open it.
But I had never heard of it before, Carol had never heard of it before, so did you start doing something differently during COVID to get the word out, or was it just natural marketing?

Ryan:
No, we haven’t. The last two years we put a strong focus on our SEO side, so we’ve really been working to get our rankings up there, to rank in the top first page for a lot of the different keywords that we can, that we’re already primed for. And then, I think just with people being home we see huge online usage up, mobile phone usage up, and just being prepared for that, so two years ago we did a full website redesign where we completely destroyed the old site and just built a brand new site on top of it that was ready to handle large volumes of traffic.
We had our CNBC appearance, our Hallmark appearances. We wanted to be prepared for the traffic that it would bring, and then just having that in place is just what we needed for being able to grow. A couple of other competitors and friends of ours that we know they didn’t quite have their websites ready to go, and then when COVID struck and they could only do online it was very tough, so we were fortunate that we already had the system in place where we could just fully transition to an online business right now.

J:
And you mentioned a CNBC appearance, you mentioned a Hallmark appearance. Weren’t you listed in Forbes? And so, you’ve gotten a lot of great press. Is that something that has just occurred naturally, or do you have a marketing team, or a press person that reaches out? How have you done that?

Ryan:
I do have a PR agent who works with us for getting some of those bookings, and then it's a lot of the things where you're on one appearance, somebody sees it, they need somebody to fill in. We did a show on CMT for Pickler & Ben where they had a guest fall through, and they said, "Hey, can you fly out and do a segment of chocolate for us?" They could see that I could talk, and I wasn't afraid of a camera, so I said, "Sure. I'll come out." That was a huge appearance. It was great for us, so just being able to have a couple good appearances like that really helps grow the brand.

J:
Awesome. And did you see that immediately move the needle, like you do an appearance like that, and then overnight obviously-

Ryan:
Yes. Our largest single online day was that CNBC day. It was on the money, Saturday morning. I think the show was at 7:00 AM. I wasn’t sure what to expect, and it was just insane. Just our largest single online day ever. It was just incredible, so that national media really does move the needle for us.

Carol:
That’s really cool, and you’ve mentioned several times throughout this interview that a big part of your not even necessarily strategy, but just part of who you are is giving back, and I believe I saw something recently speaking of press that you really took that to a whole new level through the whole COVID crisis. Can you talk to us about what that looked like, and how everybody is benefiting from that?

Ryan:
Yeah, definitely. I have a younger brother who works for me. He’s going into his senior year in high school. He’s looking to go to Cornell, and he wanted to do a program where … He’s friends with some of the local kids who work for us here, so they said, “If we donate our time, and you donate the chocolate, can we create chocolates and then give them to the local food banks, and the local food shelters?” It was for Easter at the time. They could get some of our good chocolate that they may never of had before, so we said, “Of course, be happy to do that.”
They came together for a couple days, made a bunch of Easter chocolates, Easter eggs, Easter bunnies, and then we went and dropped them off at some of the local food pantries, and it was picked up by a couple local stations, and then Fox News did a little digital segment on it. It was neat to spread the word, but just a great thing to do where we had some excess chocolate we were happy to use, and then the kids loved coming together and doing some community service of course.

J:
That’s great. Do you expect that the whole coronavirus crisis … I know obviously it’s changed your business over the few months, do you expect there to be permanent changes, or do you think it’s basically going to get back to business in the next couple weeks or months? Where do you see that impacting your business longer term?

Ryan:
I think longterm retail side I think that’ll be changed for a long time. I think having this certain number of people in the stores, the certain flow in our retail store, the checkout process, I think that will be changed for a long time to come. Outside of that, I think we will eventually get back to normal with a vaccine coming out hopefully at the end of the year or so. I think that’ll have a big relief on people getting out and about, and feeling comfortable going out.
But retail wise, I’m very fortunate that we have a strong online presence because retail, I’m not sure how long it’s going to be until that’s back up to full capacity like it was pre-corona.

J:
Cool.

Carol:
So Ryan, speaking of business getting back up to a more regular capacity, and so on, and so forth, I know that you’ve mentioned that part of your overall strategy, and part of your giving back, and part of just growing your business, and talking about helping your brother get all of these other kids onboard.
I think you've mentioned that part of your world is also mentoring other people in their entrepreneurship journeys, so can you tell us more about that and the other types of people that you've helped mentor and inspire in getting on their entrepreneurial adventures?

Ryan:
Yeah. I mean, I’m all about sharing my story, and sharing what I’ve done, and how I jumped in the entrepreneurship world. Letting people know too that you don’t have to start a business. You can take a business that already had a foundation of people, and has a small start, you can take that, and grow that, and it’s just as much entrepreneurship as somebody starting with just an idea and going from there.
So definitely working with the kids who work for us and giving that idea that you don’t just have to come up with a fresh idea. I give them my story of there was already chocolate pizza, I just had a vision for something more than what it was, and then giving them that experience, and help, and really helping them go into the world and take their ideas and go.
I mean, I’m always happy to work with them, and it’s fantastic seeing them come back, and have their ideas, and working for other companies, and take the entrepreneurial experience that they learn here and do it in the job that they’re in, because not all of them go out and start their own business, but if they can take the idea of here’s a small local company, here’s what I learned, and they can share that with their workforce that’s a big thing that they can share.

J:
That’s great.

Carol:
That’s really cool. I’m liking hearing this information especially about these kids coming right out of school, because I feel like there’s so much negative press about people of this new generation, and it sounds like you’re seeing something very different.

Ryan:
Day-to-day.

Carol:
Can you talk more about that?

Ryan:
Yeah. The kids who come work for us are just some of the hardest workers. They always show up. They do a fantastic job. The kids who work from us go to the Naval Academy. We had a couple go to West Point. I mean, they’re just great kids. I mean, there’s tons of good workers out there. Some of them get a bad reputation just for their generation, but man we love working with these kids. They do a great job, and they’re the backbone of what we do, so it’s fantastic that they do work like that.

J:
That’s great.

Carol:
Love it.

J:
So tell us, what is next for either Ryan, or Chocolate Pizza, or both? What can we expect to see from you and the company over the next couple years?

Ryan:
Sure. We just want to continue to build our online presence. It’s having the ability to have a chocolate pizza to anybody in two days is really the goal we want to work for. We want people to go on, we want them to think, hey, I have a birthday for somebody I can’t be with, somebody I can’t see, let’s send them a chocolate pizza. They’ll be thrilled with it.
So just building up our brand name so that when you think of birthday, thank you, anniversary, any type of gift you come to chocolatepizza.com, and then you go from there, and you look at our products, and ship it. We've pulled back on some of our wholesaling just because the margins are tight, it's large volume runs, but the margins aren't always as great. We really want to pump our online sales, and that's what we've taken the last two years, and really put a big effort into building up that website presence.

Carol:
That’s cool, and I also find that really fascinating because we hear from so many different people that the best way to grow in scale is by doing all these wholesale accounts, is by doing these large orders, and it sounds like you’re experiencing really good results, and a lot of growth, by doing these one-offs as an online presence-

Ryan:
Exactly.

Carol:
-being able to ship in two days, and so on.

Ryan:
Yeah. We learned growing, it was fantastic, you’d get an order for $400,000 and it’d be an incredible experience. It’d be like, holy cow, here we go. We made it. But then, you realize all the work that goes into fulfilling an order like that, and the time, and what it takes away from other things. That order comes down to a lot less money than that when the check comes, so dealing with some of those major customers we realized we can’t compete with the major, major companies who can give away tons of stock, and can give away free cases to every 2,000 stores across the country to get their products out there.
So we have to work with specialty customers who fit with us, and understand that we’ll provide a great product, but we’re really seeing great growth in that online business, and corporate gift giving business as well, so we’ve hammered those the last two years. We still have a solid 20, 25% of our business in that wholesale market, but we really are focusing on not going all in on that wholesale market, and exploring the online world as well.

Carol:
That’s cool.

J:
Yeah. I was going to say one of the nice things about that wholesale market, even if you’re moving out of it now, in the intermediate years as you are growing it builds name recognition.

Ryan:
Exactly.

J:
It gives you brand recognition. People walk into the Hallmark, or they walk into Wegmans, or whatever store it is, and they see your product, and that gives you credibility, and if that product disappears from the shelves at Wegmans, well, people are still thinking, “What happened to that product?” Jump online and they find that they can order it themselves, so even if you’re moving away from it now I have to imagine that the hard work, and those really big orders, paid off just in terms of building the brand over the intermediary few years.

Ryan:
It built up a big base for us. We did a 35,000 pizza order for BJ’s Wholesale Company a couple years ago, and even now people still say, “Hey, I saw you in the store,” and then they’re buying from us online, so while that was a one-off that we did for them at the time it was still great that people recognized our brand with a national company, and it’s definitely paid off for us.

J:
Quick question. I’ve wondered this, because we got ours I guess about six weeks ago. We were towards the end of winter, beginning of spring, and so it wasn’t too hot here in Florida. I imagine it wasn’t hot at all where you were. Any precautions, or things you have to do during the summer to deal with the heat? I have to imagine shipping product in the heat is difficult.

Ryan:
We do. We’re very fortunate in that our main seasons really run October through Easter, so that’s when we’re going to 75% of our business, so when it comes to the warm shipments we do have specially designed insulated containers that we do that have thick foam around the outside, and then we have a nice ice brick that gives us three days worth of transit, so that’s what we do for the summertime, and the warmer temperatures, but it does get expensive, so that does raise our price of shipping.

Carol:
Interesting. Cool. And I’ve got a follow-up on that because it’s just so fascinating to me. How did you figure all that out as far as the shipping, and the insulated packages? Was it trial and error? Did you learn from someone else in the industry? Tell me more about it. I’m so curious.

Ryan:
It was a lot of trial and error. When I took over we had no experience in ice shipping, so we started with thin bubble liners that went on the side that lasted maybe six hours in the sun, so after a few melted pizzas for that then we evolved and found a local company who cuts styrofoam, and we just designed a custom piece that fit for us. We’d ship it down to some relatives in Florida, and everything worked out pretty well, and then we just rolled it out to a national scale where we can ship to California.
We do ship a few to Hawaii for a couple customers out there, and we can get there as long as it gets there within three days.

J:
Got it.

Carol:
Really? Cool. So it sounds like you had this business planned from the beginning but so many components of this business were just figuring out what worked as you went along the way.

Ryan:
Yeah, exactly. It’s funny, because they always say, “How did entrepreneurship school help you?” And I always say, “It gave me a little bit of understanding of all the pieces of running a business, but what I’ve actually learned has been so much hands on, so many mistakes, errors here, things that you learn as you go, that they can’t teach you in school. You just have to do them.”
So I’ve got a little bit of knowledge from all the different areas of finance, and shipping, and supply chain, but nothing beats hands-on experience.

J:
I’ll tell you, if you ever need to test any new packaging, and ship it down to Florida I’m happy to give you my address, and I will give you as much feedback as you want. Awesome. Ryan, this has been fantastic. At this point, I would love to jump into the segment of the show that we call Four More.
This is where we ask you the same four questions that we ask all of our guests, and then we give our listeners a little bit more information about how they can find out more about you, your company, and get in touch with you. Sound good?

Ryan:
Awesome.

J:
Okay. I’m going to let Carol start with question number one.

Carol:
Okay. I’ll take the first question. So Ryan, what was your very first, or your very worst job, and what lessons did you learn from it?

Ryan:
I’m kind of unique. I’ve really only had one job. I played football at Syracuse, which was wonderful, because it was just the experience, and the hard work it taught me playing Division I football, and then my only other job has been working at Chocolate Pizza, so I have to say that it’s been fantastic. I’ve been very fortunate. I really haven’t had a job that I haven’t liked. I’ve only known two things, football, and Chocolate Pizza.

Carol:
Very cool.

J:
I have to ask you at this point, do you think this is the rest of your life, or do you have other businesses that you want to transition to? What are you thinking?

Ryan:
When I first started, the Whitman model was build something for five years, sell it for tens of millions of dollars, and sit back for the rest of your life. Now that I’ve done it for 10 years now I love what I do. We’ve designed a great business model where we’re really busy during the snowy months of New York, and then when summer comes around we’re slower, we can take time off, we vacation, we enjoy life, so I’m in no rush to get rid of it. We’ve built a good life around it, so I think I’ll do this for a little while longer.

J:
I love that.

Carol:
It’s so cool.

J:
Question number two. I don’t know if you’re much of a reader. I know a lot of entrepreneurs are readers. Are there any great books out there, business books, or entrepreneur books, or any other types of books that you think our listeners should be reading if they haven’t already?

Ryan:
Yeah. I am a good reader. I’m not a great reader. I’m big on audiobooks, so I listen to a lot of audiobooks while I’m doing shipping, and doing other tasks, so I can keep some background noise going, and learn a little bit. I’m somewhat biased, my dad wrote a best selling book Conquering Adversity that was a top, top seller for him, so that’s a book that’s really been in our life for a long time that details my life growing up, and what’s happened to us. That’s been a big book that’s really helped out in our life for sure.

J:
That’s awesome. I’ll make sure that gets into the show notes.

Carol:
Excellent. Okay, next question Ryan is, what is the best piece of advice that you have for small business owners or young entrepreneurs that you haven’t already mentioned today?

Ryan:
I mean, the biggest thing is persistence. I mean, when I was 21-years-old trying to get Chocolate Pizza off the ground so many people told me it’s just not going to work, “Why don’t you just go get a regular job? You don’t have to do this. You’re going to put a lot of work into this and it may fail.” But I really believed in what we were doing, and I knew that if it did fail I’d have a Syracuse degree behind me, and I could go do something else, but if it succeeded it would really open up our opportunities, what we could do, and we could really build something that didn’t exist before.
So just really believing in what you do, and don’t let people tell you no. If you believe you can do it I truly believe it’s possible, and we’re living proof of that. We had lots of people tell us we couldn’t do it, but I really believed in Chocolate Pizza, surrounded ourselves with good people, and here we are today.

J:
I love that.

Carol:
Excellent.

J:
I love that. Okay. As usual, I went the wrong direction and I should’ve started with the first question because question number four Carol needs to ask because this is her favorite question.

Carol:
Okay. I’ll ask him another one. So our fourth question Ryan is what is something along the way in either your personal or your professional life that you’ve splurged on that was totally worth it?

Ryan:
So I think a good thing is vacationing. I did a big splurge. Last year, we took a big three week trip to Italy, and just forgot about work for a couple weeks with my wife and I. I’m a big history guy, and we just went up and down the coast of Italy, and ate the food, enjoyed, stopped at a lot of cool places, and just let go for a little bit. We get so wrapped up in business 24 hours a day while you’re here, just taking that time to get away and splurging on a nice vacation out to Italy was just incredible.

Carol:
I’ve got to tell you Ryan there are no words right now, if he wasn’t already envious before of you being a chocolatier the fact that you spent three weeks on the coast of Italy with your wife just eating all that amazing food, and seeing all the amazing sites, just put you in another whole echelon. That’s all there is.

J:
Chocolate in Italy. It’s all I want in my life.

Ryan:
It was perfect. It was amazing.

J:
That’s awesome. Okay, so that’s our four. Now, let’s jump into the more part of the Four More, and this is where you tell our listeners where they can learn more about you, where they can get in touch with you, where they can learn more about Chocolate Pizza.

Ryan:
Yeah, so you can find us at chocolatepizza.com, and then you can follow us on Facebook as well, just type in Chocolate Pizza, you’ll see us, we’re the first one that pops up there.

J:
Awesome. Great. Well, Ryan, this was awesome.

Ryan:
Yeah, this was great.

J:
Congrats to you in all your success. I hope when this whole pandemic is over that you have a good shift in the business, and I look forward to checking back in, in a year or two, and tasting some of the new products.

Ryan:
Awesome. I’d be happy to. Love you guys.

J:
Thanks so much, Ryan.

Carol:
Thank you so much, Ryan. It was so great chatting with you.

J:
That was a fantastic episode. I loved the fact that literally he’s 31-years-old now and he has worked in the same business since he was 15-years-old. He started out by sweeping floors, being the janitor, and now owns the business, and has grown it into a seven figure enterprise. I just absolutely love that.

Carol:
Me too, and you just got to love the fact that he started it at age 21 when everyone told him you can’t do this, “Why would you do this? Go get a job? You’re going to fail.” Banks turned him down and laughed at him, and he’s like, “Whatever. What’s the worst that can happen?” And again, just an awesome reminder that if you have a great idea, if you’re going to work hard, if you believe you can do something you truly can make it happen, so I loved it.

J:
And here's the crazy thing. We never got into this, but he purchased the business in 2010, which was pretty much right in the middle of the 2008 major recession, so I'm guessing that added some additional difficulties to really getting the business off the ground, and he was still successful.

Carol:
Yeah. I agree with you. It is interesting that we never touched on that, and I think the interesting thing now is that you fast forward these 10 years, and we’re still in the middle of this crisis and it sounds like his business is at another challenging turning point, so there’s something to be said about that. Maybe it’s this whole chocolate is therapy concept. It can’t hurt anybody.

J:
It is for me.

Carol:
Let’s wrap this up, baby.

J:
All righty everybody. Thank you once again for tuning in. Everybody have a fantastic week, stay safe, stay healthy. She’s Carol, I’m J.

Carol:
Now, go take a chance, and believe in yourself today. Have a good one everybody.

J:
Thanks everybody.

Carol:
Thank you. See you soon.

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In This Episode We Cover:

  • The unique real estate strategy of lending and pitching to developers
  • How the recession helped him become an entrepreneur
  • How he developed a plan for a hotel restoration
  • How he focused on building a franchise prototype
  • How he coined the company’s core values
  • How he communicates the core values during the hiring process
  • How he created a syndication that is more than just about real estate
  • And SO much more!

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Connect with Ryan

What does it take to start, scale, and sell your own business? Every Tuesday, J and Carol Scott ask this question to entrepreneurs of all stripes and delve into stories that go beyond the launch. F...
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    Don Spafford Investor from Idaho Falls, ID
    Replied 29 days ago
    The most delicious episode yet
    Amy C. from Philadelphia, PA
    Replied 29 days ago
    A small complaint for BP...please don't refer to this time as "post-Covid" in your descriptions. We are still in the midst of this public health crisis and will be for probably at least another year (I have a master's in public health, so I do have a bit of history working in the field). Unfortunately, cases are rising in at least 20 states and we all need to practice vigilance and diligence in mask-wearing and physical distancing. Thank you for letting me vent a bit. Be safe and be well, all!