In normal times, Piroshky Piroshky has a literal line out the door of its flagship location at Seattle's famed Pike Place Market. In normal times, that kind of demand would be the envy of most business owners. But in a time of social distancing and widespread stay at-home orders amid COVID-19, it's a pretty problematic business model.
Or is it?
The popular chain of bakeries in the Emerald City, with four locations and a food truck specializing in traditional Russian pastries, was riding high as 2020 began. Business was solid, as it's been for the past 28 years, and owner Olga Sagan had plans for two more locations. She had been named the SBA's Small Business Person of the Year for Washington State, just as the coronavirus pandemic started reaching the United States.
Like virtually every business out there, Sagan suddenly found herself contending with a new “abnormal.” Her retail sales ground to a halt, and an early shift to delivery proved futile.
So Sagan did what great entrepreneurs do: She rolled up her sleeves and started working on a solution. Today, business is way up from the initial drop-off, and the changes she implemented will likely make Piroshky Piroshky even stronger when we emerge from all this.
In the latest installment of The Art of the Pivot, we sat down with Sagan to discuss her quick thinking amid crisis, how she rallied her employees and other local retailers to fight back, and why it's so important for business owners to help one another during tough times.
Time seems a bit of a blur for all of us right now. How did this situation unfold for you?
Luckily enough, me being Russian and my partner living in Hong Kong, I have a global view of things. I was communicating with him and seeing what he was seeing in Asia. We started initiating all kinds of sanitation procedures and protocols at the end of February. We asked employees if they had any signs of illness, and you were not allowed to be in the bakery without a mask.
First week of March, things really started to unfold and fall apart. Business went down significantly. The first drop was 70 percent. We were ramping up for spring break, where we do robust hiring and turn on the engines, usually going from 50 employees to 85 or
90. We had to stop everything and really pause and assess what was going on.
Like many restaurants and food-related businesses, you turned to delivery. How did that go at first?
By the second week of March, sales were completely dropping off in all our locations. The problem I started having is that it wasn’t enough business to keep people employed. My employees were wonderful and said, we can do whatever you need us to do. I got frustrated, because we had a website that was fully ready to do online business and we were able to take orders online and fulfill them, but no one would go on our website. So I went to other local businesses and I said “Let's put the power of our brands together and see if we can have people buy things directly.”
That's when you decided to cobble together, Catch22Delivery.
By March 21st, I realized I could put local businesses on my website and really start letting people know that we have websites, we want to deliver, and we want to connect with our customers.
A daunting effort, no doubt. How has it worked out?
On March 23rd, we had 20 businesses on our website. Today, we're one month old, and we have 192 businesses. We have 40,000 unique users. And it's a free platform for all businesses to use. It's about community, and when you're an immigrant, the sense of community is so important.
That's pretty remarkable and resilient. How has the platform impacted Piroshky Piroshky specifically?
Brick-and-mortar retail sales are down 90 percent, but our online sales went from $200 a month to $5,000 a day. That's how powerful online presence is now. Those are all sales generated by the website. We get to know all the customers, we get to talk to them and engage with them.
We are making money and dumping all this money into Catch22. Any extra money goes to support the small-business community because this is what we have to do now.
We have all our employees employed and we're actually hiring. We just hired four new people today and we're at 48 now.
How have your employees' roles changed?
Dramatically. I have a store manager doing Excel data spreadsheets, I have cashiers doing deliveries. Eighty percent of my workforce is doing new jobs. That was a very expensive learning curve, because we went from brick-and-mortar to online. Two completely different business models. So instead of hiring new people with experience, we had to teach all the existing people how to use Excel efficiently, how to answer phones and how to make deliveries. Our team has been incredible. Everyone wants to work, everyone wants to keep their jobs.
What is the most meaningful support you have received thus far?
From other business owners who are sharing ideas and experiences. We have a lot of University of Washington students helping run the platform, as interns. We are so grateful for everyone who offers advice. If you watch how this is growing, you can see how small businesses are fighting to survive.
Any tactics you have implemented that you think could help other business owners out there?
Open your heart, open your door to partnerships. Be creative. Communicate with your employees. Be transparent. Ask your employees, “Hey, what else can you do?” During this time of crisis, the culture we created over the past 28 years was the most valuable tool we had. All my employees had to trust me to turn this business around.
How do you see your industry, and the overall business environment, changing after this?
It is everybody's best guess. People's mindsets have switched. Office space will be reconsidered. Working from home will be reconsidered. We need to look at this globally and learn from other countries. It's OK, because now, we all have the same problem.
Once we open up to customers, I don't think we're going back to last year's sales. I don't expect everything to come back and bloom. It's going to take us several years to be really truly what we were in 2019 and I think you're going to see that in a lot of industries.
I've been telling entrepreneurs, and pretty much everyone I know, that now especially is a time to be kind to yourself. No one's exactly winning the pandemic. As a business owner, but also just as a person, how are you holding up?
Thank you for that. You're the first person to ask me in two months. I'm pretty tired. I have not had a day off. I had four hours off at one point, but the feedback and the amount of help we're providing really keeps me going. I wish I could have three of me.
I have forgone my salary since February. A lot of my upper management took volunteer pay cuts, but we're finally making enough money for them to get their full paychecks.
I feel there is so much more for me to do. This is a time to lead, step up and do everything I can for the community I'm a part of and to show other businesses there's more that can be done. We need to keep pushing.