When marketer-turned-restaurateur Florian Pfalher developed the concept of Hannah’s Bretzel, a healthy yet quick alternative to the traditional fast food chain, he did so with customers in mind. Inspired by the Whole Foods approach, Florian spent time at the organic grocery store to learn if his idea would resonate with people. And soon enough he found out that it did. Since launching in 2005, Hannah’s Bretzel has grown to five locations across the city, and according to Crain’s, the German native has plans to expand the über sandwich chain beyond Chicago. We reached out to Florian through email. Here, he shares his thoughts on the challenges he’s faced over the years, what it takes to build a strong company, and being prepared for those “what if” scenarios.
Full Disclosure: Hannah’s Bretzel is a program sponsor for Impact Engine’s 2013 class.
What inspired you to start your company?
FP: I was inspired by Whole Foods and the lack of interesting lunch options in the Loop. When I moved from New York to Chicago to join Leo Burnett, I was introduced to the grocer. There was no Whole Foods in New York at the time (1999) so this was a new experience that dramatically impacted my way of looking at business, particularly [around] food and healthy living. [Being the] marketer and foodie that I am, I became a frequent customer and started to do what any solid marketer [would do]: I talked randomly to customers (still the best market research there is) to find out what they were thinking about food, health, and living, and what motivated them to shop there. Based on that information, the idea of creating a fast, casual restaurant based on the Whole Foods model started to take shape. Simply put, if consumers enjoyed shopping there with ardent loyalty then they would do so as well for a like-minded fast, casual restaurant—obviously an assumption at the time, but a fairly certain one. When asked today for my “back-of -the-envelope” business introduction I say, “Hannah’s Bretzel is a very high-end Subway based on the Whole Foods model.”
What problem is your company trying to solve?
FP: [Creating] healthier food on the go that consistently tastes good, delivered in an environment that benefits all stakeholders, is our challenge. Healthier food means a move toward organic ingredients, nutritional transparency, education towards a balanced diet, introduction of new flavors, and ingredients made and packaged with as minimal an environmental impact as possible at a reasonable price. Growth that is responsible and that benefits all stakeholders: customers, team members, community, environment, investors, vendors, and partners.
Can you tell us about any significant challenges you faced getting your company off the ground. How did you overcome them?
FP: Challenges are many at different stages. We look at our business like a house you wish to build. If the foundation is strong and solid on all four sides, we will be able to build the building we wish to grow for the long-term. First, [we had] to figure [out] if anybody cared about our offerings and brand. Then [we had] to establish a solid and reliable vendor relationship based on mutual trust and reliable delivery. The third major challenge [was to become] financially profitable to finance growth out of cash flow. The final major challenge was to implement a well thought out career and training and development program to attract and retain talent. This led us to define our culture and our purpose—the reason why we get up every morning and care—care with a passion about what we want to do.
What do you attribute your success to: blood, sweat, and tears, luck, or good ideas?
FP: The success of Hannah’s Bretzel is built on a great team [that] cares deeply about what we stand for and [is] proud to deliver on our brand’s promise each day. We try to attract people with an intellectual curiosity and a passion for food, innovation, and progress. We believe that innovation and marketing are the drivers of business—innovation equals leadership on many levels—and innovative companies are attracting that kind of person. This is the path we will continue to take: innovative food, design, and management practices, balanced to all stakeholder’s needs.
All of the above, but [to] varying degree[s]. Instead of “good idea,” I would suggest “unique idea.” It is [a company’s] unique selling proposition that is critical when starting a venture. It is better to be first in a new category than second or third or fourth in an existing one. Unique means “one of a kind” and in that lies innovation. Innovation means new. New means newsworthy, which guarantees PR. PR is the test for any brand, and brands are built by PR and word-of-mouth, not by advertising (and that’s coming from a former ad man!). That’s most important, directly followed by passion for what you do. That leads to good partners, connections, and people. Paired with a little luck—or good timing—will avoid most of the “blood, sweat, and (hopefully very little) tears.”
Did you have any happenstance moments, serendipitous introductions for instance, that made a difference?
FP: When I built Hannah’s Bretzel, the timing was perfect in hindsight. Many things fell into place, which was amazing—may I mention I had never worked in a food business before—which actually I believe was an advantage. I met the right architect through talking to restaurant owners, I met my director of store operations, Richard Kruczak, who has worked with me for more than eight years now, through the people and friends around me. We found our first location, right in the Loop next to Corner Bakery at the right size after about 12 months of searching. Yes, there are these moments when you look back [and see that] it worked out right and that is beautiful. But many times these things happen when an idea is innovative, well-planned, and communicated with passion—it creates a “lighthouse-effect” that attracts and motivates talent.
What advice do you have for someone starting an impact-focused business?
FP: Go for it. Plan it well. Think it through—really through. Go for uniqueness and innovation. Speak to a lot of people. Find consumers in the category and chat them up, and follow them around to see how they “behave.” Create 10 negative “what if scenarios” to be prepared for the eventual negative environment (particularly as it relates to finances). Plan to fail quickly to be able to move on. Always be proud that you had the guts to build something. That alone is an accomplishment.