DO NOT UPLOAD A PICTURE OF ANSWER. PLEASE TYPE I CANNOT READ CERTAIN HAND WRITING

Read the following mini-case, then answer the questions that follow.

The pizza business is nothing new; in fact, it's a very crowded industry with about 75,000 establishments in the United States alone. It's hard to find a town that doesn't have a pizza parlor and most have more than one. It's one of those businesses that hasn't seen a lot of innovation or creative thought since Dominos started the pizza delivery business, so it's ripe for something new and exciting.

Enter Nick Sarillo who grew up around pizza. His father owned a pizza restaurant in Carpentersville, Illinois, so it wasn't surprising when Nick opened his first restaurant in Crystal Lake in 1995. Although he did use his father's recipe, he decided early on that he was going to build a culture in his company that would set him apart from his competitors. One of the biggest problems in the pizza industry (and the fast-food restaurant industry in general) is high employee turnoverabout 200 percent annually. That means higher costs and time spent in training new workers. The industry also averages 6.6 percent net profit and most establishments find themselves competing on price. Sarillo was determined not to play that game.

Sarillo adopted a form of management known as "trust and track," which is essentially the opposite of command and control. In the typical pizza restaurant, the boss takes responsibility for success, tells the employees what to do, and then checks to make sure they did it. Sarillo wanted his employees to understand what had to happen for the business to be successful, and then he would trust them to do what was necessary. That way the system would operate nearly flawlessly even if he weren't there. It seems to have worked because Sarillo's turnover rate became a mere 20 percent and his profit margins reached 18 percent. One of the secrets to his success is his ability to understand the pain his community is experiencing. With an 11 percent unemployment rate in his community, he decided that people would pay half price in the dining room on Mondays and half price for carryouts on Tuesdays until the unemployment rate returned to normal. This approach benefited the community and the business because the two slowest days of the week now became the most popular. Sarillo is also known for surprising his guests by picking up the check and hosting community fundraisers nearly every week where his company donates 5 percent of net sales to a particular cause.

The journey has not been uneventful. For one thing, Sarillo borrowed and over built his second store in Elgin in 2008, a $5 million project that was more than twice the size of his first store, based on projections of 80,000 people moving into new housing developments and a super Walmart opening across the street. That never happened and the troubles began early in 2011. Nick's borrowing during the good times came back to bite and he learned the importance of watching the liabilities side of his balance sheet. By September of 2011, in a desperate plea to his customers, he wrote a passionate letter telling them that the business was about to fail. And his customers responded. He was about to reap the benefits of having been customer-oriented for so many years. In the first week after he sent the letter, sales in the Elgin store increased 105 percent, with a 110 percent increase in Crystal Lake. For approximately 5 weeks, sales remained above normal, just enough time for the business to recover and for Nick to work with the bank to restructure the loan. And the Walmart store? It opened in October, 2011, just in time to continue the increase in sales.

Sarillo has always made it a practice to hire only the best; and those employees know that while they work for the company, they will have many opportunities to grow, learn, and increase their wages. The company now tracks financial and behavioral metrics that support company goals. For example, how many times does a guest request a particular server or bartender? How often does a carryout cashier develop a conversation with a customer? After Nick's Pizza & Pub grew to two locations, he added catering and banquet services. Then in 2017, Nick's opened a third store, this time in Chicago.

Nick believes that it's important to make sure that he has the right people managing his current restaurantspeople who believe in "trust and track." In fact, Sarillo's internal leadership training program was so successful that he decided to share it with the public, first creating Nick's University to train his employees to be trainers and then the Trust & Track Institute, which teaches leadership skills and the employee training methods he and his team developed over the years. And, to no one's surprise, Nick also wrote a book in 2012, A Slice of the Pie: How to Build a Big Little Business.

1. Given the information provided about the Elgin store and what you may have learned through additional online research, what should Nick have done before breaking ground on the Elgin store?

2. What did Nick do to innovate and diversify his business?

3. How would you describe the company culture at Nick's?