Wetzel's Pretzels founders, Rick Wetzel, 42, and Bill Phelps, 45, opened a store in the Century City neighborhood of Los Angeles partly in the hopes of bagging a Hollywood-type investor. The surrounding neighborhood -- erected on what was formerly a studio back lot in Century City -- is awash with famous tenants. ABC, Bear Stearns, and SunAmerica have offices there. So does Warren Christopher, the former secretary of state.
"It's no joke," says Phelps. "A lot of lawyers and entertainment people work in that area, and we chose that location in part because we thought we might happen across a financial investor." That strategy of putting yourself in fame's way worked for Lana Turner when, as legend has it, she was discovered at Schwab's Pharmacy. That scheme has been almost as successful for Wetzel's Pretzels.
Despite its affluent workforce, Century City is short on fine dining. So when the pangs of hunger hit famous Hollywood producer John Davis, he usually heads next door to the Century City Shopping Center, where Wetzel's is located. On one such excursion in 1996, Davis fell into the trap that had been carefully set by Wetzel and Phelps. A woman proffering a tray of plump, warm pretzel pieces accosted him. Davis sampled one -- and became a devotee of Wetzel's Pretzels and a regular patron of that outlet. "A hot, fresh pretzel is my favorite kind of treat," Davis says. "I like things that are healthy and not that fattening. I'd rather have a pretzel than a Krispy Kreme doughnut any day."
Over time Davis's hunger turned into curiosity. "I wondered who owned this company and if I could get a piece of it," he recalls. "It was the classic Warren Buffett/Peter Lynch thing of 'invest in what you know and love." Eventually, the location trap paid off for the founders of Wetzel's: In 1997, Davis put together a team of 11 investors and bought 33% of the company for $1 million.
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