Manage Your Enterprise and Resources to Achieve Your Goals - Start With a Business Plan

Case Study

Gourmet Kitchens/Last Minute Gourmet
Chicago, Illinois
Lisa Johnson, president
Year formed: 1987

As college sophomores at the University of Missouri-Columbia, Lisa Johnson and her boyfriend vowed they would start a business together someday. They grew more serious about their plan as graduation approached. But they needed money. They decided to work after college until they could save enough to get started.

They got married and he landed a job in Chicago as a civil engineer helping design nuclear power plants. She had a degree in education, but Illinois was laying off teachers in the mid-1980s, so she found work as a customer service representative at a 80-employee site of a corporation that sold engineering supplies.

The couple lived on her paycheck and saved his. They started working on their business plan, visiting the library to research what it should look like and what kinds of information to put in it. The goal: to start a healthy fast-food restaurant in downtown Chicago that they could develop into a national chain and franchise.

The hardest part for them was writing the financial portion, Johnson says. "Before you start a business, no matter how much research you've done, no matter if you've been in that business prior, it's really difficult the first time. Until you have some experience under your belt, it's hard to figure out all the costs and to judge how your sales are going to work."

Neither of them had experience in the food industry, although he had washed dishes at a Red Lobster for three weeks. But he was passionate about food and she liked the idea of having a storefront where they could greet customers.

In her job, Johnson received three promotions in her first few months and then hit the top of her pay scale. There was nowhere for her to move up. Restless after a year, she applied for a receptionist position at an entrepreneurial software company with about 20 employees. The owner looked at her resume and hired her for his marketing department instead, where she soon became the director.

About two years later, Johnson and her husband had saved start-up capital and back-up cash of about $300,000 between their savings and their credit card limits. It was time to start their restaurant, the Two Minute Gourmet. Johnson was enjoying her marketing job, where the software company owner had become her mentor and offered his support, coaching her on how to establish and operate a business. But the plan called for her to quit and start the restaurant full time while her husband kept his job until the venture was making a profit.

Her husband was laid off unexpectedly, so they switched roles. In her excitement Johnson couldn't help but dive into the restaurant anyway. She'd start at the software company at 6 a.m., leave in time to work the lunch rush at the Two Minute Gourmet from 11 to 2, stay at the software company till 7 and then go back to work at the restaurant. She was putting in 20 hours some days, sleeping only a few hours a night.

After three weeks, her boss asked her to make a decision. He offered to double her salary if she'd stay. Otherwise, he said, she should resign. As an entrepreneur, he understood her passion. Johnson said goodbye.

"I loved my job when I left," she says. "I absolutely loved it. It was actually really difficult to quit because I was going out into these foreign waters. I had a very comfortable living and really enjoyed what I was doing.

"It had a little bit to do with age. I was young. I had no children. I didn't own a house. It's always in the back of your mind that you could fail. And if you fail, it's easier if you don't have any commitments. If I got thrown out on the street, that was OK because I could get back up."

Johnson dove into the restaurant full time with her husband. She was proud of what they were building. The restaurant had a grand feel to it, and customers often assumed it was part of a well-established, well-funded chain.

However, it wasn't making money.

"We were 27, and our idea at the time was that neither one of us had ever failed at anything before," she says. "A 'B' was considered failure in school. So we refused to admit we had failed and said, 'Let's just keep trying for a little while longer and if it doesn't work out we can always go back to corporate America.' We knew that worst-case scenario, it might take us a month or two to find a job."

At the same time, they went back to their business plan and revamped it - radically. In her job at the software company, Johnson had noticed how difficult it was to get catered food brought in for breakfast or luncheon training sessions. She had called all over town, but no one delivered what she wanted. She asked some of her former clients and even her former employer whether they'd use a service that delivered gourmet take-out for business meetings. She heard a resounding "yes." Their new plan called for closing the restaurant and focusing on food delivery only.

Johnson and her husband sold the restaurant when it was just 10 months old. They got out on a Friday and opened their catering business the following Monday, calling it Last Minute Gourmet.

"For the first business we had a big, long business plan," she says. "We researched everything. For the second one we put some thought into it, too. It looked like we shut down and reopened, but we had tried to figure out how we could save everything. We ended up shutting it down."

They relocated to a less expensive location. With $10,000 in previous month's receivables from the restaurant, they put a rent deposit for their new site, turned on the power, bought some food and started over. The business took off. They paid off their maxed-out credit card debts from the restaurant in two years.

"We made a lot of mistakes our first time," Johnson says. "As much as we studied, neither of us had ever been in the food business. We did a lot of research, but we didn't have a lot of practical experience. We underestimated a lot. We had a bad location. We underestimated how much employees would cost, what the labor would be. Our food cost was high. We made every mistake in the book."

Today, their company has expanded under the name Gourmet Kitchens and trucks food to six states. With 170 employees, it has the largest staff Johnson has ever worked with. That has its good points and bad, in her eyes.

"Before we moved into our current space, three years ago, I knew all of my employees by name and I knew a lot about their families. Now we have about 170 and there are probably 50 or 60 people here I don't know. That's a really weird feeling. I could pass them on the street and not even know they work here. That's the part of the corporate culture I didn't miss at all."

Johnson and her husband still update their business plan annually or more often if they're seeking financing.

"Things change. Things are dynamic," she says. "We'll change focus, which is one of the reasons small businesses tend to be successful and grow so fast. They're more flexible. If we're doing something wrong, we can shut that down and change course in a matter of days rather than having to go through a row of different layers to get it done."

"By the same token, if we're doing something and it's working well, we can put more energy into it. But I already see where some of that is changing just because we're growing. The reason I wanted to go into business for myself, especially when I was getting antsy to start it, was I hated meetings and memos and politics. And now, 17 years later, we have meetings and memos and politics."

The company has come a long way in 17 years. It has evolved many times.

"What hasn't changed is I always wanted to have a big company," Johnson says. "A lot of people ask me, 'Did you ever think you'd be where you are today?' My answer is, 'A lot sooner.' Where we are today I thought we would have been 12 years ago. I thought we could be where we are after 4 or 5 years. It takes a lot longer.

"The first two or three years, when you're plodding along, it's important to know that people who are successful have the same problems you do. It doesn't come easy. You have to keep pushing. You have to keep working at it. Don't give up. You might have to change direction, you might have to do a 180, but don't give up."

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