Every business can use a rainmaker, those Energizer Bunny-like strategic advisors who are blessed with visionary gifts, but Rich Ciurczak is literally a profit-maker. Just ask CEO Peter Robertson, the man who belatedly recruited Ciurczak to join RP’s Pasta Co., a Madison-based fresh gourmet pasta maker.
Ciurczak hasn’t been with RP’s for very long — he started on Jan. 4, 2009 — but his bottom-line impact could have lasting benefits. In his role as president, he has helped RP’s take a good, long look in the mirror, and see that it had strayed too far from its core business. After adding a few too many low-selling pasta products, and even opening a cafe and a store at its East Wilson street facility, Robertson was beginning to suspect as much, but it took an economic jolt, a strong sales pitch from Ciurczak, and some spousal encouragement to convince him to change direction.
Even in a recessed economy, the resulting strategic adjustments will double RP’s profits this year, with the promise of even better business performance to come. The top-to-bottom review led to the jettisoning of the restaurant, a retail store, and a couple of product lines. “What Rich brought to light was the need to get back to core efficiencies in cost and product selection,” Robertson said. “There is no one silver bullet where you can reduce your cost of goods, then you’ll be more profitable. The business was looked at as a whole, from labor, cost of goods, materials, which accounts were profitable, and which avenues were profitable.”
RP’s finished 2008 with about $25,000 in net income on $1.2 million in sales. Since it topped the $1 million mark, the sales figure generated more excitement than it was worth, but company heads are legitimately in the clouds these days based on a new forecast. RP’s anticipates a $50,000 profit in 2009, even though annual sales are down by 11%.
Ciurczak has streamlined the business to focus on improving core pastas. Gone are calamari olive tortelloni and pesta tortelloni, but remaining are the four-cheese tortelloni, the pumpkin tortelloni, egg linguini, and others. Although there is one new introduction — Forkmates (microwavable entrees) — most of the focus now is on refining existing products.
In addition to a slimmed down product line of about 15 pastas for large-scale distribution, RP’s has a renewed its commitment to buying local. With the exception of one parmesan cheese from Italy, that means using Wisconsin cheese with its ravioli, and rather than settling for something from a can, that means dealing directly with an area farm, Tietz Family Farm, for its pumpkins.
Personnel-wise, RP’s went from two shifts to one shift and got the same volume of product out the door. One person was moved to first shift as the company saved on utility expenses and personnel and its overall staff was reduced from 22 to nine (most of the restaurant employers were part-timers).
Ciurczak, who ran an educational catalogue company before joining RP’s, compared the streamlining program to an 80:20 process, both on the sales side and on the cost side. “We worked with them to put a program together where we are selling the highest volume products in every store, getting the fast-movers on the shelf, and getting with a distributor that can get it into more geographic areas,” he said.
That now includes Whole Foods in Austin, Dallas, and Houston, Texas, plus Little Rock and New Orleans. Whole Foods is an ideal sales channel for RP’s, but before expanding geographically, Robertson wants to make sure the distribution network can maintain the quality of the product when it’s shipped that far away.
It’s part of a more deliberate, incremental, and even questioning approach that Ciurczak has brought. “Part of what has worked well is that I respect that it’s Peter’s business, and he respects that I’m willing to play devil’s advocate,” Ciurczak said. “So when an order would come in for something unusual, and he’d get all excited, I would very respectfully say, ‘Does this make sense, business-wise, to take that order?’”
Pasta Passions
Robertson, whose mother cooked a great deal, has been curious about food all of his life. Out of college, he joined a theater company that toured around the world, including northern Italy, which he considers the Mecca of fresh pasta. “I fell in love with pasta there,” he recalled, “and I continued make it on my own.”
Robertson worked for Electronic Theater Controls, which allowed him to bring a pasta maker to work, when he first moved to Madison. When the business day was done, he often found himself making fresh pasta for neighbors, so he continued to get plenty of practice before taking the entrepreneurial plunge, opening RP’s in 1995.
Now completing his 15th year, the hardest business lesson he’s learned came recently. Business has always been pretty good in terms of sales, but Robertson didn’t have his pencils sharpened for profitability. He’s always been enthusiastic and creative in pasta making, but after finding himself working 12 to 15 hours a day, he craved more work-life balance.
A gathering storm also called for change. In 2007, prices for wheat, pasta’s raw material, quadrupled from about $10.50 for a 50-pound bag to more than $40 for the same sized bag, eventually causing several price hikes for gourmet pasta that came with higher price points to begin with. Add rumblings of a recession to the mix, and the fact the company had taken on more debt to finance a new facility, and more than a few alarm bells were going off. The Earth had moved, and Robertson openly wondered how to position the business for a changing world.
His old mentality of, “I’ve got another big account, let’s hire another person” became a thing of the past. A business owner who was accustomed to letting the good times roll was about to undergo restructuring, and he needed a sharp business mind to execute it the right way.
Enter Ciurczak, who had called Robertson with an offer to help RP’s. Since small businesses occasionally field such calls, “we kind of blew it off,” Robertson said. Ciurczak finally finagled a lunch date, where he posed a simple question: how are things going?
Robertson assured him that everything was fine, but when he got home and told his wife about the conversation, she questioned why he would be dismissive, especially when he was concerned about working long hours. At that point, Robertson realized that RP’s had no end goal, and he decided to bring on Ciurczak as company president.
He arrived in the nick of time. RP’s began to feel the affects of the recession last January, when consumers’ food-purchasing decisions changed. The company was banking on people who typically spend more for dinner, including steaks, trading down to RP’s gourmet pastas. While that did occur, people who had been buying RP’s pasta were trading down to dry pasta and other lower-price alternatives.
RP’s countered the loss of the restaurant by more than doubling its revenue at area Farmers’ Markets, which was largely attributable to the closing of the retail store. Since RP’s had a retail location at the point of manufacture, it was limited to selling at only 25% of the Farmers’ Markets in Dane County.
RP’s pasta is distributed to grocery stores, but the Willy Street Co-op, Woodman’s, and Sentry were the only stores to give RP’s all the room it wanted to sell its products. It had only eight pastas in a lot of stores, so the key was getting its stores to understand product rankings. “If you only have so much space and you can only put so many products in, these are the products you put in,” Robertson explained.
With plenty of plant capacity to scale up, Ciurczak added: “While we adjust to the economic times, we’re really preparing to produce a lot more product. We’ve been preparing for growth at the same time, so it wasn’t just about adjusting to economic issues.”
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