The founders of Pie Face, Wayne Homschek and Betty Fong, tell Real Estate Business’ Jessica Darnbrough how a simple business plan has been crucial to their success
When most Australians think of the humble meat pie, they tend to associate it with the footy rather than with images of couture fashion and catwalks.
But then again, most people don’t know the story of husband-and-wife team Betty Fong and Wayne Homschek.
The founders of fashion label Paablo Nevada were inspired to make the leap from paisley to pastry in 2003, at one of their runway shows.
The show was hosted by Roy and HG and based on footy, so Fong and Homschek thought they would serve pies to the audience to get them in mood.
The pies were so well received that the entrepreneurial couple began to question whether they wanted to continue earning their crust in the fashion industry.
“We had owned Paablo Nevada for about 10 years and were getting burned out,” Homschek recalls. “The brand was quirky and expensive, but it only appealed to a niche market.
“We wanted to build a company that appealed to a much larger demographic. We wanted to build a business that was high volume and could be seen on every street corner.”
And so Pie Face was born.
THE RIGHT APPEAL
Homschek and his wife had seen a hole in the ‘pie market’.
“Coming up with the idea was easy – we saw a great opportunity to sell pies. Coming up with a catchy brand, however, was not as easy,” he says.
Having worked in the fashion industry for the past decade, the importance of branding was something with which the couple were very familiar.
“If you don’t have the right brand, you don’t have the right legs to stand on. We knew the branding was critically important to the future success of our business, and we knew it needed to be fun, light and humorous.”
After struggling for months, however, the brand seemed to come out of nowhere: “We were out to dinner one night when it just occurred to us – pie face,” Homschek says.
“We started drawing faces on the tablecloth and decided there and then that we would put faces on each pie to represent the flavours inside.
“The idea was brilliant – it seemed to be a really strong brand, and I guess you could say it gave us the conviction to push forward with our dream of opening a food franchise.”
Eight years later, that dream is a well-established reality, with 57 stores now operating around the country.
“We have plans to open more than 140 stores in Australia within the next two years,” Homschek adds. “We are also just about to open our first store in New York.”
America was always on the couple’s radar, according to Homschek, and featured heavily in the first Pie Face business plan.
“From the moment we drew faces on the tablecloth, we knew we wanted to have an international presence,” he says.
“We have a unique offering and an innovative brand that we truly believe could work on an international scale.”
That unique brand would, however, be worth little without the right execution.
“Branding is really important, but at the end of the day it will not work if you don’t have the right products, the right buzz, the right marketing strategy and the right staff,” Homschek says.
For this reason, Homschek and his wife are personally involved in all major recruitment decisions.
In fact, when The Adviser spoke to the couple they were in New York recruiting for their newest store.
“You can’t turn a brand into a successful international franchise without a good team behind you,” Homschek says.
LOOK BACK TO LOOK FORWARD
Another prerequisite is a good amount of business savvy, something Homschek possesses by the truck load thanks to his experience in a previous role as an investment banker.
His background in finance has definitely left the couple – and Pie Face – in good stead for the future.
“I don’t think we would have got to where we are today had I not had a background in finance,” he says. “Thanks to my previous job, I knew how to raise capital quickly and effectively and the fact of the matter is, if you can’t raise capital, you can’t grow as a business.”
In the past eight years, the couple has managed to raise more than $24 million and they are currently signing off on another $12 million.
How did they manage to raise so much so quickly? According to Homschek, the company’s success lies largely in its business plan.
“The best business plans start simple,” says Homschek, adding that when writing a plan, the key is to start with just 10 blank pieces of paper.
On those 10 pieces of paper, Homschek says business owners should craft 10 slides that explain the business goals in a succinct way.
“When you meet with potential investors, you are lucky to have 30 minutes with them to explain why this business model will work – so keep your business plan as simple as possible,” he says.
Homschek believes the best business plans do three things: highlight what the company’s competitive advantage is; indicate how the business will grow; and show how value can be attached to the business model.
“The last tip is really the most important,” he says. “When selling a business to others, most small business owners greatly overvalue or undervalue their business. If your pricing is out of whack, no one will want to buy what you’re selling because you will look ill-informed.”
CHEATING THE GFC
The company was able to grow right throughout the global financial crisis (GFC), a feat Homschek describes as Pie Face’s “greatest achievement and greatest hurdle”.
But while selling meat pies might appear to be recession proof, Homschek says good sales on the ground weren’t enough.
“We were enjoying good results at store level, but we weren’t making any money at the group level because of the various infrastructure costs and overheads.”
Investors had also been scarred by the GFC and weren’t willing to part with their hard-earned dollars.
The challenge was considerable: “Our business model is designed in such a way that we need critical mass in order for everything to run smoothly,” he says.
In other words, Pie Face needed 30 stores to break even, but had only opened 20 when the GFC hit.
“It was like a perfect storm,” Homschek says. “We had no money and still had to open 10 stores to get out of the red.”
But get out of the red they did. In fact, the company managed to double the number of its stores during the GFC – and come out stronger.
“Surviving the GFC and growing throughout was not only a massive achievement for us, it also proved to be an excellent sales tool to use with investors.
“We could show them that our business was in it for the long haul.”