John Pepper, co-founder and former chief executive of the Boston-based Boloco burrito chain, stepped down in October after an investment deal fell apart in a dispute over control.
In a memo to the 22-unit chain’s employees dated Oct. 18, Pepper explained that his resignation followed an ultimatum given to the board in a last-ditch effort to push the deal through. Incumbent investors, however, were unwilling to relinquish control of the company to the investment firm, which had offered $15 million to help fund new growth.
Boloco and Pepper have given permission to NRN to publish the memo in its entirety. It appears below.
Team Boloco,
By now, most of you have heard that after nearly 17 years my last day as CEO of Boloco was last Monday (10/7). If you think it was a surprise to you, please know that it was also a “relative” surprise to me too. And if you think today, Day 12, is a walk in the park, think again. This is not easy.
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Make no mistake. I love Boloco. I’ve lived and breathed it more than I ever imagined possible. From scratch in 1997, we built this company from one tiny location on Mass Ave. to 22 restaurants and over $27 million in annualized sales in 2014. We did so with a highly differentiated, delicious product, a unique brand personality and voice, a maniacal commitment to treating each guest as if they were our very last, innovative marketing strategies and tactics, and a higher purpose to positively impact the lives and futures of people who work in fast food through bold and inspired food and practices. I’m immensely proud of these things and grateful to have had the chance to work on so many worthwhile endeavors as the company’s CEO. And now that I’ve had a few weeks’ perspective under my wings, I thought I owed those of you who care or are curious the more complete story, as I see it.
It was about this time last month, after over 60 days of reasonably intense and fragile new investor due diligence (a fancy term for saying “audit”… of everything we do to see if we are worthy of new investment $$) that it became quite clear that the new financial supporters were, in fact, going to follow through with their $15 million investment commitment, which our board and our investors had approved in mid-July at a high (term sheet) level. Boloco’s future, it appeared, happily, would once again include rapid growth, investment in the future, and an ability to hire world-class people ahead of our current size. New challenges lay ahead, for sure, but so did ample resources to tackle those challenges. Last Tuesday, October 15 would have been the day we celebrated our new future – the day the transaction would be complete and new money in the bank. I could honestly and clearly see (and smell?) the finish line, and it was very, very promising.
In an unexpected turn of events, only days before everything was supposed to be complete, our current ownership group and the new investors could not resolve their different views regarding control of the company and, with neither side willing to capitulate, the deal fell apart. The current majority owners essentially blocked the transaction and terms that our board had previously approved, which was, to be clear, 100 percent in their legal right to do. In an effort to bring our “dream” back to life, I put my job on the line and issued an ultimatum to our Board and current ownership to either take the $15M deal, invest $4M immediately themselves, or to accept my resignation “for good reason” (a legal term that I thought might matter but didn’t in the end). I walked the proverbial plank, and sadly never got to get back on our boat. In short, our current owners accepted my resignation and rejected the deal. It happened very quickly.
Everything you see happening now at the Support Center is a direct result of the above series of events. So, what now? Well, I’m most definitely and officially off the boat. And while my decision to stand firm for what I believed was right and ultimately leave the company most definitely comes as a result of substantially differing views between myself and our ownership partners as to how to best create value for Boloco, please know this:
A company like ours, in its current state and at its current size, can be and is a wonderful place to work and to thrive for most of you, for many years to come.
As for me, I’ve been doing this for nearly 17 years, and as you know, that’s a really, really long time – consider the fact that there are at least two of you employed by Boloco today who weren’t even alive when we first opened our doors!
For me personally, at this stage in my career/life, a new kind of personal growth is critical. When the $15 million in new capital scheduled to arrive on October 15 was no longer a reality, I realized that my life aspirations would be harder to fulfill if I remained CEO. More importantly, I have seen and experienced the current “episode” of Boloco (ie. today’s challenges) more than a few times, and honestly don’t have any new solutions to the “same old” challenges we face as a company.
Trust me on this, and most of you probably already know it: there exists, somewhere, a far more experienced CEO candidate with a fresh perspective who will lead a 22-unit restaurant chain like ours to solid ground and long-term prosperity, while maintaining our unique people-first culture. For the right leader – an individual who will be a world-class operator at his/her core – getting us back to performance excellence might even be an easy(ish) task. When I think about it from this perspective, I am positive that the right decisions have been made, even if they weren’t my or our owners’ original intentions.
Leaving with a quote
For those of you who have known me for a while, you know I love to quote movies, usually the same ones, over and over again. And, forgive me as I’m going to quote of my favorites, just because it feels right.
Coach Gaines (FNL) says:
“… for a long time now you've been hearing me talk about being perfect. Well I want you to understand something. To me, being perfect is not about that scoreboard out there. It's not about winning… Being perfect is about being able to look your friends in the eye and know that you didn't let them down, because you told them the truth. And that truth is that you did everything that you could. There wasn't one more thing that you could've done.
Can you live in that moment, as best you can, with clear eyes and love in your heart… with joy in your heart? If you can do that … then you're perfect.
Boys, my heart is full. My heart is full.”
I want you to know that I know I haven’t been perfect. Few of us are.
But as I write this today, I can tell you for sure that my heart is very full– and it has more love and joy in it than ever. In the 12 days since I announced I was leaving Boloco, I’ve received an outpouring of support from some of you that will live with me (and my family) for the rest of my life. And even though I didn’t know it, I needed to hear those words. Thank you to those of you who took the time and were so thoughtful to reach out.
Boloco is full of so many incredibly talented, generous, good-hearted people. I leave my day-to-day role as CEO knowing that if we select the right leadership to go forward, a very promising future lies ahead for many of you who choose to continue believing in and relentlessly pushing for our purpose, mission and best possible performance (and yes, hopefully a few of you will have an opportunity to risk your own jobs some day in the name of doing what you believe to be right – I will never regret having done it, despite the inevitable moments of sadness and loss that creep in once in a while). There are often bumps in the road in life and in business, and this certainly looks like a big one from many viewpoints, but in fact, it may turn out to be the best possible outcome for everyone. Only time and effort will tell.
In closing, please know that I’ll still be supporting from the sidelines, as an owner myself, as a believer, and very likely as a board member and perhaps even the Chairman for a period of time. I hope that perhaps in this role, without some of the day-to-day bullets that a CEO has to endure which become somewhat distracting and discouraging (especially over so many years), I will be of greater assistance to those of you who call on me for help and maybe most importantly of a more positive mindset and attitude than I’ve displayed at times in the past few years. Positivity is my goal for this coming year, as some of you know, and you’ll be happy to know that I feel it’s off to a terrific start.
We can all achieve whatever we decide to in this world. I believe this even as I step away. And I know most of you do as well. Please don’t be strangers (my email will work for the foreseeable future). Thank you… for all of it. For the last 17 years, for what you do today, and for all the good things that will come as a result of your work and dedication to excellence tomorrow and beyond.
With gratitude (and a full heart),
John