Runner & Stone - Brooklyn, NY
When Runner & Stone, an artisanal bread baking business, sought to expand beyond its food stand at Brooklyn's outdoor market Smorgasburg, owners Christopher Pizzulli and Peter Endriss were unable to find bank financing.
Despite their success at Smorgasburg and their well-regarded baked goods, they could not secure a lender for the start-up costs of a brick-and-mortar business. They had $100,000 of their own money to invest, but had been rejected twice for conventional loans.
Endriss and Pizzulli saw great potential in 285 Third Ave., the address in the Gowanus section of Brooklyn where Runner & Stone occupies 2,000 square feet. The location is situated between Brooklyn's affluent Park Slope and Carroll Gardens neighborhoods, just two blocks from an R train subway stop.
"Both owners had high levels of expertise, but banks still turned them down," said Dave Hanold, NYBDC vice president.
It is difficult for restaurants to find traditional financing because they are high risk, but NYBDC was impressed with the brand recognition that the men had developed throughout their careers. Pizzulli worked for Blue Ribbon, and Endriss worked at Bouchon Bakery and Per Se, all New York City institutions.
After receiving a detailed business plan, NYBDC approved a $316,000 loan to open Runner & Stone. Working with NYBDC was much easier than the two business partners anticipated.
"We expected bureaucracy and got none of that," Endriss said. "It felt like we were working with a hometown bank."
Runner & Stone has certainly reaped the benefits of its address, as evidenced by revenue in 2013 that was slightly more than $1 million, or 25 percent higher than projected. It's just that those benefits took on a different mix.
When in-house dinner service didn't generate the interest they were counting on, Pizzulli and Endriss kicked up the bakery component of their business plan.
"I think the biggest surprise to us is that the neighborhood has not provided the amount of dinner business that we expected it would. The restaurant portion is giving us a little less revenue than we anticipated, and the bakery is giving us a little more. We had to adjust our business model," said Endriss, a civil-engineer-turned-baker who opened Runner & Stone with Pizzulli, an executive chef, in December 2012.
They went door-to-door to stores and businesses in their area and built a wholesale customer base for their baked goods. They also pursued Whole Foods Market. The national supermarket chain opened its first Brooklyn store in their neighborhood in late 2013, and thanks to the pair's persistence, Whole Foods now sells Runner & Stone's homemade breads.
One other element of their experience has also taken the business owners by surprise. They planned to operate with a staff of nine, including themselves. Today, they employ 20.
"We did not realize that aspect of it. We always looked to food as our contribution to the community," Endriss said. "But signing 20 paychecks a week really drives home the impact that you have on people's lives."