"I had the sense I could do my own business and not spend a lot of money."
--Mark Andrus
Initially, production was low-tech and, no surprise, low budget -- except for what they spent on ingredients, the Andruses say, an area in which they never scrimped. Orders came in on a fax machine at home. Following a chance conversation with a pushcart pretzel vendor, the pair rented space at the Boston Pretzel Bakery, getting the space cheaply by using it during the other company's downtime. After finishing each day's sandwich sales, they cut, seasoned, baked, bagged, and labeled their pita chips entirely by hand. Their sole piece of equipment was a heat sealer that, Stacy says, resembled a 19th-century sewing machine driven by a foot pedal. "You insert the bag in the sealer part, push the pedal, and hold it for 30 seconds to seal the bag," she says. With a top production rate of about seven cases of chips per 10-hour day, it was no wonder the Andruses' take for that first year barely hit $25,000. But as they grew more efficient and began investing in automated packaging equipment, sales grew steadily. They gave up the sandwich cart in 1998, and in early 1999, Stacy's brother, David, joined the couple, quitting his private practice as a psychologist for a $7-an-hour job and a share of the profits. Later that year, with chip revenues exceeding $450,000, they moved their business into its own headquarters inside a contracting company's suburban warehouse.
However, the Andruses still faced cash-flow headaches. "With the cart, we were getting paid in minutes," Mark recalls. As a manufacturer, he says, "you're getting paid in 30 days -- if you're lucky." So in true Stacy's style, the founders cleaned, stripped, painted, and caulked the new 10,000-square-foot factory space themselves, using supplies they hauled from Home Depot. Stacy and Mark shared the only existing office; David, who now oversees sales, built his own cubicle from plywood that he salvaged from a shipping crate for a packaging machine.
The couple had no track record; their sole business education was that Stacy had taken a few classes in a local college's entrepreneurship program and Mark had read From Kitchen to Market: Selling Your Gourmet Food Specialty, by Stephen F. Hall. Meanwhile, of course, there were all those expenses.
Not missing an angle, the pair initially made Stacy the majority owner so that they'd be eligible for funding for female-owned companies. That decision paid off quickly. In 1998, when they began buying automated packaging equipment and supplies, they discovered that BankBoston had a Small Business Administration-backed loan program to assist women in business. Stacy requested -- and received -- $60,000. Six months later she applied for an additional $500,000. The bank balked a bit; for that amount its loan officers wanted equity in Stacy's. The Andruses didn't want to share. So they settled on $300,000 -- still no small change. How did they get the loan? Stacy cites just two ingredients. "I had a good, solid business plan," she says. "And we also had demand." As proof she included with her application a letter from an airline executive saying his company would happily buy a million bags of pita chips if Stacy's could make them. As it turned out "we couldn't do the job or meet that price," Stacy admits. But according to the Andruses the airline's interest was enough for the bank to approve more than half the amount she had requested.
The loan brought two unexpected bonuses. First, Fleet Bank (which had bought BankBoston) named Stacy and Mark its Entrepreneurs of the Year. Then one day in 1999 Stacy arrived home to an answering-machine message from a honey-toned White House social secretary who said she was calling on behalf of President Clinton with an invitation to attend a small-business-awards ceremony in Washington. "I thought it was a joke," Stacy says. "We started going through a list of our friends" trying to figure out who might be perpetrating a hoax, Mark adds. "I said, 'It could be my friend Bob ...."
But the call was no joke. A few weeks later, Stacy attended the well-publicized ceremony and met Al Gore. To this day she keeps that voice-mail message on her computer so she can listen to it whenever she wants; she still laughs uproariously when she hears the secretary say, "The number here at the White House is ..."
Meanwhile, the Andruses continued plowing their revenues and their borrowed money into the company. When the business got too brisk for cutting pita bread by hand, they looked for an automatic slicer. They couldn't find one. Nor could they afford the $100,000 to have one custom designed and built. Before spending even a quarter of that amount, Stacy says, "I'd have had 100 people out there cutting pitas with knives." They spent a year calling manufacturers and haunting used-equipment auctions before they found a carrot-cutting machine that had been owned by the Campbell Soup Co. for nearly 40 years. Even that wasn't exactly a bargain, Stacy says: "$18,000, and the machine's older than I am."
At first the chopper -- a squat, industrial machine -- didn't perform perfectly either. Its blades had been spaced to cut carrot chunks, not pita chips. The bread "just shot right through to the other end and came out as dust," Stacy recalls. But Mark modified the machine by spreading the blades and slowing the slicing action; today every Stacy's Pita Chip passes through that machine.
After moving into their own factory, the Andruses found themselves in the market for an oven. And not just any oven: one with a conveyer belt and adjustable temperature, velocity, and airflow controls. That's because not all Stacy's chips are created equal; Parmesan Garlic & Herb chips, for instance, require more time and heat than Cinnamon Sugar. Again, they couldn't find the right used equipment. And they couldn't afford the $150,000 to $160,000 price tag to build something from scratch. So they came up with a deal a Boston-area oven company couldn't refuse. They paid $80,000 for an engineer to build two new ovens to their specifications. They took one. The oven company kept the other, using it as a prototype for its own future sales.
