Zingerman's Community of Businesses

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Zingerman's Community of Businesses

422 Detroit Street
Ann Arbor, Michigan 48104
U.S.A.
Telephone: (734) 477-5711
Toll Free: (888) 636-8162
Fax: (734) 477-6988
Web site: http://www.zingermans.com

Private Company
Incorporated: 1982
Employees: 400
Sales: $21 million (2004 est.)
NAIC: 722211 Limited-Service Restaurants; 722110 Full-Service Restaurants; 454110 Electronic Shopping and Mail-Order Houses; 611430 Professional and Management Development Training; 311812 Commercial Bakeries; 311510 Dairy Product (Except Frozen) Manufacturing; 722320 Caterers; 311920 Coffee and Tea Manufacturing

Zingerman's Community of Businesses encompasses a delicatessen, a full-service restaurant, a catering service, a bakery, a dairy, a coffee company, a mail order sales operation, and a training service, all based in or near Ann Arbor, Michigan. Zingerman's has gained a national reputation for offering specialty foods of the highest quality with matchless service, and under the guidance of founding partners Ari Weinzweig and Paul Saginaw it has grown from a single store into a $20 million operation.

Beginnings

Zingerman's was founded by a pair of young men who met in the late 1970s while both were employed at a restaurant in Ann Arbor, Michigan, called Maude's. Ari Weinzweig, from Chicago, was working as a dishwasher after having earned his bachelor's degree in Russian history from the University of Michigan, while Paul Saginaw, from Detroit, was a manager. Both had grown up in towns which had great delicatessens, and each lamented the fact that Ann Arbor did not offer one. The pair decided to join forces, and secured a $20,000 bank loan to start a delicatessen that would offer high quality traditional food products like corned beef, imported cheeses, and olive oils in an atmosphere of energy and abundance. The deli would also specialize in large sandwiches that contained only top quality ingredients and were memorably tasty.

The delicatessen opened in March of 1982 in an old brick building on Detroit Street in Ann Arbor, a cobblestone-paved historic area called Kerrytown near an indoor specialty-store mall a few blocks from downtown. It's name was an invention—there was no real "Zingerman," but the moniker seemed to fit the traditional Jewish delicatessen the pair had in mind, while also sounding an upbeat note.

Soon after it opened, the deli's high-quality food and friendly service began to draw customers from Ann Arbor and Detroit who were eager to sample the many deli meats, cheeses, mustards, vinegars, olive oils, sandwiches, and deli salads. Over the next several years, the bustling Zingerman's established itself as one of the Midwest's finest delicatessens. To give back to the community, in 1988 the founding partners helped create a non-profit organization, Food Gatherers, which distributed donated food (mainly from local restaurants that included Zingerman's) to homeless shelters in the Ann Arbor area. In time, the original Zingerman's outlet was expanded to a house next door, which had more seating for customers, a coffee bar, desserts, and some packaged foods.

To highlight the deli's many specialty foods, a monthly newsletter was created as well as a newsletter for employees. In addition to introducing newly discovered food products, it also included recipes and articles (many written by Weinzweig) about the history of a particular food or culinary region. For his part, Weinzweig had begun to travel the world in search of the best foods, be they cheeses produced on a family farm in France, olive oil pressed in small batches in Italy, or chocolates made of the purest ingredients in Belgium. Zingerman's customers could always sample anything in the store, and the idea of tasting a dollop of imported olive oil on a wedge of handmade bread amid the bustle of the busy sandwich line led many an Ann Arborite to drop by Zingerman's often.

By the end of its first decade, Zingerman's had grown into a $5 million business with more than 100 employees. Frank Carollo, one of the deli's managers, was now preparing to open an artisanal bakery offshoot, and catalog sales were starting up, but not much had changed in the two partners' basic game plan. If anything, the business seemed to be in a bit of a rut, with new deli rivals appearing on the scene with lower priced, if lesser-quality food, including one which Zingerman's sued over its apparent appropriation of the store's style.

Developing a New Approach in the Early 1990s

On a hot summer's day in 1992, as the usual lunchtime rush was backing up and a cooler was breaking down, Saginaw requested that Weinzweig accompany him outside to talk. Instead of mentioning a matter of extreme urgency, as Weinzweig was expecting, Saginaw simply asked, "Ari, where are we going to be in ten years?" Weinzweig was at first taken aback, but then admitted that Saginaw had a point. This moment of reflection initiated a two-year dialogue between the partners over the future of their business. For his part, Saginaw thought opening other Zingerman's delis was the solution, an idea which had often been suggested by patrons. Weinzweig disagreed strongly, unwilling to sanction watering down the unique quality and purpose of the original store. After spending much time researching, writing, and rewriting vision statements, and rejecting other ideas such as moving to larger quarters or acquiring other businesses, in 1994 Saginaw and Weinzweig settled on a plan to create a new entity, to be called Zingerman's Community of Businesses.

In an informal letter to the company's employees called "Zingerman's 2009: A Food Odyssey" (and in a similar one to customers), they laid out plans for a company that would grow to encompass twelve to fifteen separate businesses over the next fifteen years, each one small and located in the Ann Arbor area. Like Zingerman's Bakehouse, now in operation, each would have at least one managing partner who would do hands-on work and be a part owner. The businesses would all be food-related and serve to enhance the basic Zingerman's concept and bear its name. Funding would come from the two original partners (who would take a majority stake) and their new managing partner-owners and be designed to break even as quickly as possible based on cash flow.

The plan was met with a decidedly mixed response. The partners' legal and financial advisers thought the structure of separate businesses co-owned with new partners was a bad idea. Customers were concerned that the deli they loved would change in ways they did not like. In addition, the store's managers had the most negative reaction of all—within the next year and a half, more than four-fifths quit.

Unfazed, the partners proceeded to put the plan into action, first forming Zingerman's Service Network, or ZingNet, which would provide central administrative services to the new units. A Chief Financial Officer was hired, and new management practices were put into place. A new non-food unit, Zingerman's Training, Inc. (ZingTrain), was introduced next. Cofounded with University of Michigan MBA and former General Motors and SoHo Natural Soda executive Maggie Bayless, ZingTrain would offer training for both Zingerman's employees and outside firms that wanted to reach the high levels of quality for which Zingerman's had earned a reputation.

To facilitate training new employees, the company's principles and practices had already been codified in a series of multi-part plans with names like "Five Steps to Handling Customer Complaints" and "Four Steps to Order Accuracy." Building on these, Weinzweig did extensive research and wrote papers on other business philosophies, which were then broken down into straightforward sets of steps and points. In addition to forming the curriculum of ZingTrain, this work also helped the different units of Zingerman's learn a common corporate language. ZingTrain soon became known as the University of Zingerman's, with the firm's own staffers learning not just basic service techniques but food history and sociology, business practices, and other related information. ZingTrain would also come to serve a wide range of businesses from around the Midwest, including restaurants, banks, hospitals, and even a funeral home. Seminars on such topics as "Specialty Foods 101" and "The Art of Giving Great Service" cost $375 for a one-day session or $695 for two.

Growth in the Late 1990s

In 1996, Zingerman's Mail Order was founded to offer the deli's specialty foods around the globe. By the following year, the firm employed 270 full- and part-time workers and was taking in an estimated $10.5 million in annual sales. In 1998, Zingerman's Catering was introduced, offering high quality food for small and large events. The next year a Web site, Zingermans.com, gave the mail order unit an online presence.

On Labor Day weekend, 2001, Zingerman's Creamery opened, run by managing partner Dave Carson. Located southwest of Ann Arbor in Manchester, Michigan, the $520,000 facility began operations by producing small batches of cream cheese and gelato ice cream for use and sale at Zingerman's. After being road-tested in the deli and bakehouse, products from Zingerman's Creamery were later sold through other retailers.

By now it was clear that the firm had gotten over its growing pains, and it was attracting a new, highly skilled group of business professionals who were happy to be earning less than what the corporate world paid doing traditional "Slow Food" work such as baking bread and making cheese, while finding creative ways to market them. With a corporate culture drawn from the laid-back, hippie ethos of a classic college town, where a cheerfully pierced and green-haired employee might serve food to a suited corporate type, Zingerman's also had a goal of donating 10 percent of its operating profit to charitable causes.

Company Perspectives:

Mission Statement: We share the Zingerman's experience. Selling food that makes you happy. Giving service that makes you smile. In passionate pursuit of our mission. Showing love and caring in all our actions. To enrich as many lives as we possibly can.

During 2001, nearby Detroit Metropolitan Airport was undergoing major renovations, with a new terminal being built to house the hub operation of Northwest Airlines. Plans were in place to open a second Zingerman's Delicatessen in the concourse, but after the September 11 terrorist attacks, heightened airline security caused the main food contractor to pull out of the project over concerns that fewer customers would be admitted past security gates. It was a rare setback for the firm, which had years earlier also given up on a short-lived produce business offshoot. For fiscal 2001, revenues hit an estimated $13 million.

Zingerman's was now known nationally as a purveyor of fine foods, as attested to by articles in Saveur, Esquire, Eating Well, Bon Appetit, and the New York Times, among others. The company's national presence helped boost its Internet sales, which in 2003 hit a peak of $1 million, up from $150,000 in 2000. The original deli operation continued to do strongly as well, pulling in $6.6 million.

In the fall of 2003, another new business made its debut. Zingerman's Roadhouse was a full-service restaurant offering "down-home" specialties like barbecue, grits, and greens, all made from the finest ingredients (and priced accordingly). Located on the west side of Ann Arbor at a busy intersection near two shopping malls, the operation employed 120 and was expected to bring in annual revenues of $4 million.

The spring of 2004 saw the introduction of a smaller offshoot called Zingerman's Coffee Company. Run by Allen Liebowitz, it would supply high-quality roasted coffee to Zingerman's Delicatessen, Roadhouse, and Mail Order. Other plans on the drawing board reportedly included a Mexican restaurant and a chocolatier. By now, cofounder Ari Weinzweig had published several books, most recently Zingerman's Guide to Giving Great Service and Zingerman's Guide to Good Eating. During the year, Zingerman's was named one of the world's 25 great markets by Food & Wine magazine.

After more than twenty years, Zingerman's Community of Businesses had grown into a thriving, multifaceted operation that brought great food and service to Ann Arbor and the world. With its founding partners still enthusiastically involved, and more new business ideas on the drawing board, the company's future looked bright.

Principal Subsidiaries

Zingerman's Creamery; Zingerman's Bakehouse; Zingerman's Mail Order LLC; Zingerman's Deli; Zingerman's Training, Inc.; Zingerman's Service Network, Inc.; Dancing Sandwiches, Inc.; Zingerman's Coffee Co.

Principal Competitors

Dean & Deluca Inc.; Harry & David; Balducci's.

Key Dates:

1982:: Zingerman's Delicatessen is founded by Ari Weinzweig and Paul Saginaw.
1988:: Founding partners help create Food Gatherers to donate surplus food to the homeless.
1992:: Zingerman's Bakehouse opens in conjunction with Frank Carollo.
1994:: Zingerman's Service Network and Zingerman's Training Inc. (ZingTrain) are created.
1996:: Zingerman's Mail Order is founded.
1998:: Zingerman's Catering debuts.
1999:: Online service Zingermans.com is introduced.
2001:: Zingerman's Creamery opens in Manchester, Michigan.
2003:: Full-service Zingerman's Roadhouse restaurant opens in Ann Arbor.
2004:: Zingerman's Coffee Company is founded.