After founding Papa John’s Pizza in 1984 and leading the chain to more than 3,000 units in 10 countries, John Schnatter stepped away from day-to-day restaurant operations in 2006 to explore philanthropic activities and real estate investments. Until, that is, he met Mark Bates, operator of Calistoga Bakery Cafe.
Based in Naples, Fla., where Schnatter vacations, Bates’ concept sparked enough attention from Schnatter that he bought into the company last year. The deal’s terms were undisclosed. The Calistoga chain now has six units between Florida and Kentucky, and Schnatter is musing about a future public offering. He insists that getting there, however, will come only by calculated and steady gains.
After building a billion-dollar pizza company, what intrigued you about a small company like Calistoga?
First of all, it doesn’t compete with Papa John’s, which I didn’t want to do. Second, I wanted some more diversification and balance in my portfolio. Plus, I’m an entrepreneur, and I’ve got to have something to do, and I need to stay out of Papa John’s hair and let them run the business.
What sort of investments have you made in Calistoga?
We’ve put $7 million in so far.… We’re very careful about how we invest our money. We also have a line of credit, but we’re very cautious about drawing on that. If your unit economics are good, and ours are really close to where we want them, you won’t have to use it.
Why a bakery-cafe now, when the segment has been hit hard by record commodity costs?
Understand where my mind is at: It’s not on today, or three months down the road, or even next quarter, it’s four years, out thinking about 40 to 50 stores, the place where maybe we’ll want to go public. We’ll be able to say to Wall Street: “We’ve proved ourselves…we can get through adversity and stressful times like commodity issues, record gas prices and bank collapses. So think how much money we’ll make when times get good.”