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ANN ARBOR — It was a typical Wednesday morning at Zingerman’s Roadhouse, a restaurant in Ann Arbor that offers nine varieties of macaroni and cheese and smokes its own hogs for pulled pork. But on this particular morning, in a colorful back dining room, finance was on the menu.
Gathered for their weekly huddle at various booths and tables were about 50 restaurant staff members, all studying a large whiteboard filled with handwritten numbers. Alex Young, a James Beard Award-winning chef who has run the restaurant since it opened in 2003, noted one figure in particular: $165,256, the previous week’s sales.
That number, as the board showed, was nearly $13,000 more than they had anticipated in the monthly plan for this third week of April and close to $5,000 more than they had forecast just seven days earlier. Smiles erupted across the faces of everyone from busboys to line cooks to wait staff. They had served 300 more meals than anticipated.
“I think we could get that number up to $180,000 next week with the start of graduation ceremonies,” said Mr. Young, referring to the festivities at the University of Michigan. “How do you think we might get to that goal?”
Staff members started offering suggestions, including promoting products made at one of the restaurant’s sister businesses: graduation cakes from Zingerman’s Bakehouse, for example, or a gift package of Zingerman’s Guide to Good Leading, a three-part business book series sold by Zingerman’s Press.
“Great ideas,” said the author of the books, Ari Weinzweig, who was sitting in a booth. The books explain how Mr. Weinzweig and his co-founder, Paul Saginaw, turned Zingerman’s Delicatessen, a tiny sandwich shop near UM, into a group of nine businesses that, three decades later, has 650 employees, 18 managing partners, and combined annual sales of $50 million.
Founded in 1982, Zingerman’s Deli is now known internationally for its many huge and creative sandwiches. President Obama ate there recently. But its most important creation may turn out to be a highly unusual business model — one that has produced impressive growth while engaging employees who enjoy the chance to help run the businesses and to start more. Zingerman’s also has introduced a business to share its philosophies with other business owners who come from around the country and the world to learn how to create environments where employees think like owners.
In 1994, the two founders wrote a vision statement for what would become the Zingerman’s Community of Businesses, or ZCoB. Instead of building delis wherever they could, they envisioned a dozen or so distinct, local businesses that would all be operating by 2009. Each would be founded and run by a passionate managing partner who would know the Zingerman’s culture and values, having gone through extensive training or “the path to partnership.”
Not everyone liked the new vision. Within three years of its introduction, 80 percent of their managers had resigned. With increased opportunity comes increased responsibility, and many of the employees were accustomed to the deli’s relaxed environment and didn’t want to recapture the spirit — or workload — of a start-up. So the founders went looking for people who shared the vision.
They started rolling out businesses: A bakery that had been started to make bread for the deli became Zingerman’s Bakehouse. A training and consulting business, ZingTrain, would share Zingerman’s strategies and philosophies.
Six ZCoB businesses are clustered on the south side of Ann Arbor, including the Zingerman’s Mail Order business, the Zingerman’s Coffee Co., and Zingerman’s Creamery.
Today, each business has a “training engineer,” and the nine businesses offer staff members more than 50 training classes, including sessions on knife and food safety, effective interviewing, and how to buy a house. At the deli, employees are taught the provenance of all of the cheeses, meats, and smoked fish they sell, as well as how to greet customers with a friendly “10/4” — a smile from 10 feet followed by a greeting from 4.
The lowest entry-level wage for most ZCoB employees is $9 an hour, and the company has committed to paying an entry wage of $11 an hour by January, 2016. Full-time salaries range from $32,000 for an assistant manager at the deli to $95,000 for a senior accountant.
When Mr. Saginaw and Mr. Weinzweig drew up their vision statement, the time, the deli produced a little more than $5 million in annual revenue. And while annual revenue at the deli topped $14 million in 2013, it represented less than 30 percent of total revenue for the nine businesses.
The business model that he and Mr. Weinzweig created has been studied and emulated.
Wayne Baker, a UM professor, turned it into four case studies. Bo Burlingham featured Zingerman’s in a book called Small Giants, about companies that “choose to be great rather than big.” And the owners and employees of more than 1,000 companies have attended ZingTrain seminars.