Pie in the sky
When customers walk into a Pie Face store, they are greeted with the sight of numerous pies adorned with endearingly childish faces – a smiley face for chicken, a squiggly face for chunky steak and a lip-licking breakfast version.
The faces help create a slightly offbeat, relaxed feel to the retailer. It has certainly helped it build a brand that is edgier and more interesting than its staple product – meat pies – would suggest.
However, the foundation of Pie Face wasn’t as easy and carefree as its anthropomorphic pastries suggest. Co-founder Wayne Homschek admits that, until relatively recently, he had doubts over whether the business would make it.
“It wasn’t easy to adapt to the business,” says Homschek, a former investment banker. “It took me about two years to adjust and there was a lot of self-doubt.”
“When you start a business, you aren’t actually buying a ready-made business. You are buying a piece of paper that pretty much says ‘go out and do it’.”
“I did pretty much the most extreme thing you could do, in going from the financial industry to the food industry. It was a good three or four years until I really knew I’d done the right thing.”
“The business had no cashflow and it had no security. I was 40-years-old when I started, so it was a bit late to go back to banking, so I carried on.”
“I wasn’t until this year that I wasn’t completely pre-occupied with not running out of money and becoming insolvent. That was weighing heavily on my mind until recently.”
A healthy slice of Pie
Homschek’s admission is perhaps surprising given the robust health of the business he set up with his wife Betty Fong in 2003.
Pie Face is planning an IPO next year that will value the company at $100 million, up from its current valuation of $45 million. With 55 stores nationwide, most of which are franchised, and a dozen more in the works, Pie Face is aiming for a $1 billion valuation by 2018.
But Homschek says that the business only hit profitability at the start of last year and has had to work hard to make the venture scalable.
“We had to scale up in 2009, so we’ve dipped in and out of profitability, but we managed to break through the break even threshold,” he says.
“It was hard. Once you hit 25 stores, you’re relatively safe, but less than that and all you’re doing is keeping afloat. Once you break through that, the challenge is getting the right franchisees and keeping them satisfied.”
Pie Face wasn’t the first business venture run by Homschek, who moved to Sydney from his native US in 1989, and Fong.
The duo helmed designer frock brand Paablo Nevada before a new collection devoted to the couple’s favourite restaurants unwittingly gave them the inspiration for Pie Face.
A doodle on a paper tablecloth, which now hangs in the couple’s home, provided the different faces to put on the pies. Combined with the name, a suggestion from Homschek’s friend, and the duo had the basis for a quirky, recognisable brand.
“We didn’t want to do fine dining, we wanted something mainstream that utilised our design and marketing skills,” explains Homschek.
“We wanted something that was scalable and we realised that no-one was doing pies well, despite them being such an Australian food. Coffee had Starbucks and bread had Baker’s Delight – there wasn’t anything equivalent for the meat pie.
“The Eureka moment was realising the size of the market, as well as coming up the brand itself. We were kicking around ideas for three or four months before a friend suggested it. We thought it was quirky, clever and functional.”
Path to finance
Homschek set about utilising his banking background to raise money, while Fong concentrated on store design, a partnership that continues playing to its strengths to this day.
The couple initially managed to raise $350,000 to launch the business and has since raised $15 million in funding to propel its growth. Homschek says contacts in the finance sector were key in accessing the kind of cash that most start-ups dream of.
“There was no way that I would’ve got that money for a food start-up without my banking background,” he says.
“Even so, I had 100 pitches and one person liked it. I would show them the market potential and the brand and say that this has the potential to be the next Boost Juice.”
“You have to sell them something special, but it’s basic metrics. The metrics of the stores, the revenue for each and so on. It’s a bit like calculus.”
The first Pie Face store opened in Bondi Junction, but it was far from a smooth debut.
“Site selection is hard unless you have major dollars, and even then you can get it wrong,” says Homschek.
“We were determined to get into Westfield in Bondi. We thought we were being clever, but it was a living hell for two years. They dug up the footpath right outside the store and we didn’t get people into the store.”
“It was an exciting but scary time. We were losing money, but we knew that people liked it. We knew that we had to scale it in order to support the staff we’d taken on.”
Having managed to carefully build the business to the point that it can grow to the next level, Homschek is looking forward to putting his initial struggles behind him.
But he has some good words of advice for any start-up looking to follow in Pie Face’s footsteps.
“No one will give you money unless you can prove your concept works,” he says. “Get a prototype up and running so that you have something to anchor your faith to.”
“You can’t just turn up with a business plan and get money off an investor. That happened once – in the dotcom boom. It won’t happen again.”
“Miracles don’t happen. You have to throw everything at the business and, as you sail into the horizon, hopefully someone will get to you before you go over the waterfall.”
“But you’ve got to show that you’re prepared to go down with the ship and drown.”