Voodoo Doughnut brings in new CEO with experience expanding Starbucks, MOD pizza.

PAMPLIN MEDIA GROUP: JAIME VALDEZ - Chris Schultz, the new CEO of Voodoo Doughnut, holds a Voodoo Doughnut at the downtown location.

Voodoo Doughnut's new CEO, Chris Schultz, came from MOD Pizza and before that, Starbucks.

An operations guy, rapid growth is his strength: while he was at the coffee giant for 13 years, at one point Starbucks was opening three stores a day globally. Founded in 2008, MOD is fast casual pizza based out of Seattle. MOD went from one to 300 locations on his watch. With Fundamental Capital backing Voodoo, the recipe is growth from an experienced restauranteur. It's just a matter of when. Voodoo Doughnut currently has six locations in four states, most recently opening on the Universal Studios CityWalk in Hollywood. "Voodoo has all the magic needed to create something really big and Chris (Schultz) has the experience we need as we realize our dream of a culture-driven business," said Kenneth "Cat Daddy" Pogson, co-founder of Voodoo Doughnut. "His commitment to the customer and dedication to building a strong culture will pave the way as we try and put more Magic in the Hole."

Business Tribune: What did you learn at Starbucks?

Chris Schultz: Leadership. I worked in the corporate office with Howard Behar, H.B. as he's known, for a year on special projects. He's a big believer in servant leadership. It's my role to serve my team, and to assume I'm not the most important person in the room. My job is to provide them the tools for success, and their success is my success. It is truly all about our people. I also worked for Jim Alling, who was president of Starbucks and is now CEO of Tom's Shoes.

As a leader you never have enough information, but a leader has to make a tough decisions even when you don't have all the information. A decision on an employee, or a vendor, it has to be made. You have to step forward, explain why and move forward, and own the decision. It's the same whether its business, your family or a nonprofit. Those are the leaders we truly identify as great leaders.

I'm a leader, not a manager. It's my responsibility to make those decisions. At Voodoo, it affects 250 to 300 people. At MOD, it was 5,000.

PAMPLIN MEDIA GROUP: JOSEPH GALLIVAN - Voodoo Doughnut downtown is ground central for the brand that new CEO Chris Schultz hope to take national.

BT: How do you expand so rapidly?

Schultz: MOD, like Voodoo, is a culture-driven organization. The essence of Voodoo is our people — eclectic, unapologetic, be yourselves. We don't have to put anything in a box. The only thing we put in a box today is our doughnuts.

In today's world, the Millennial workforce wants to believe in something more — name tags and nice shoes, that was your dad's company. They want to believe in something bigger than profits.

BT: What is this "people" thing at Voodoo?

Schultz: We invest a little less in our marketing, but I have 250 people who are brand ambassadors. They're walking billboards for us. At Voodoo we have a set of curbs instead of strict policies that say 'Thou shalt not...' It just doesn't fly. I want you to be yourself. Don't lie, cheat or steal. Be honest. Simply do the right thing. You know what it is, it was the right thing when you were five. Same when you're 25 or 55. Our doughnuts are crazy, Captain Crunch and bacon. There is something for everybody. We're trying to build memorable experiences that happen every day.

We don't have a set of rules. Do the right thing, people are individuals, treat them with respect. Same applies in any workplace, but more so when dealing with 18 to 28 year olds. They enjoy the companies that let them be themselves and it's not just for profits.

BT: How do you keep the line outside Voodoo longer than the one outside competitors like Blue Star Donuts?

Schultz: I don't like to talk about our competiton but I'll tell you why it's outside Voodoo. It's the Voodoo magic. The music's not what you'd hear in a doughnut shop, the person behind the counter doesn't look like a normal fast food worker, and there's the crazy doughnuts. You go 'Holy cow this is an experience.' You line up for an experience like a good movie and a theme park. It's not the daily grind of picking up doughnuts to take to the office.

BT: How does it work in a new city, like the CityWalk in Universal Studios (which, like Las Vegas, is full of brands)?

Schultz: We made sure they knew that to open a Voodoo it has to be very eclectic, a little bit different. I am a believer in the concept the walls talk. When you walk in a home the walls talk, it's the layout, the music, the energy the people put out. As humans we have this intuition, and I think restaurants are the same way. So many times, I go back to a restaurant, I can't remember what I had, I just know how they made me feel.

BT: Did you have mentors as a young man?

Schultz: My father. He was an upholsterer. He went to work seven days a week, lunchbox in hand, 12 hours a day. He ended up owning the business with my mom as a secretary. I learned about getting up and going to work every day. You don't feel well? You go to work. But I also recognized that I didn't want to have that life. He was in business so he could raise three boys. This was Los Angeles. I wanted to be influential and impactful to more than just myself. Opening a new store in MOD was a great success, but putting 13 people work, taking care of bills, that was what I enjoyed.

BT: Did your Starbucks or MOD periods overlap with the Great Recession?

Schultz: Both. I was laid off from Starbucks in 2008 when they had their big turn down. MOD opened a week after Lehman Brothers crashed and I joined shortly thereafter. People were struggling, wondering where their next paycheck was coming from. MOD was founded on 'can people afford to be fed if we pay our people a living wage?' We just had to stick with it. My mantra was burn the boat. The old metaphor was row the boat ashore and burn the oars — or failure's not an option. We burn the boat, it's gone. We don't even talk about failure. We talk about how we're going to be successful.

PAMPLIN MEDIA GROUP: JOSEPH GALLIVAN - What's on the menu at Voodoo Doughnut? Burn-the-oars expansion.BT: Is that dangerous, ignoring bad things?

Schultz: No, we look at how can things get better, how can we fix it. You get wrapped up in what went wrong and not even think about success. If we're just committed to making it happen, we'll find a way. It may not be pretty, but we'll find a way.

BT: What issues are you facing now?

Schultz: There's an ongoing pressure from minimum wage. For many they just say we'll raise prices, we'll just pass it through. It's natural, but you can only do it so many times before you start to deplete your customer base. We need to ensure we're paying those wages, and we give better benefits and better soft benefits — (skills like) how to use Excel, how to get a bank account.

We're not planning on raising prices. It's $1.75 for a basic doughnut, then $3 to $4 for bigger ones. It's a treat, when everyone's worried about cholesterol and sodium and gluten, at the end of the day we serve a treat. And for that 15 minutes you're in the store, I want to see your smile when you open up the box.

They're celebrating a birthday or after a soccer game, how do you celebrate that? There's nothing like watching a youngster pressing their nose against the glass and watching a doughnut go around. If I'm having a bad day at the office I go to the store, talk to the staff. They bring the energy.

BT: What do you think of Sizzle Pie pizza and Salt & Straw ice cream?

Schultz: I dig the branding, I think they've done a really nice job. I haven't had a personal experience coming from the pizza business, but they've done a good job with the branding.

I like Salt & Straw, they're a little bit naughty — a turkey dinner ice cream, but well-made and well-delivered. You go in there and you feel like you're in an old ice cream shop. And Kim (Malek, the founder) and I worked at Starbucks together. I was in operations and she was in marketing. We knew of each other. I just was up in Seattle, I went to her Ballard opening.

BT: Do you compare notes on expansion?

Schultz: Of course, of course! The magic is stay true to yourself. Growth is exciting, but do it when you're ready. At MOD we went from one to 14 stores in the first five years. Then when we knew who we were, when we were confident, that's when we opened other restaurants. Kim's done a nice job of that too: be thoughtful of real estate selection, whom you choose to run your shops and customers will tell you when you're read to grow — why aren't you here? Then you have to be ready to take a leap. It goes back to that leadership courage again.

BT: When a store bombs, do you close it?

Schultz: Yes, you do. MOD will hate this but the third store we opened was in Capitol Hill. It's closed. Expensive real estate, the customer base wasn't our customer base, we probably opened too soon. The thing just failed. But we opened a fifth store in north Seattle and it did great. And we're like, we're not going to make that mistake again, but of course you will. And you have to be well-capitalized: make sure you have some money to keep the rest of it going.

Fundamental Capital out of the Bay Area invested in Voodoo a year ago. It's well-financed. I came over in January. Voodoo? I couldn't pass up. I've been in the restaurant business for 30 years. What a great way to round out my career! It's the epitome of branding. The first three times I came down, the line was too long. The fourth time I waited 30 minutes, the music was great, the energy was great and I came away with this great box of doughnuts. We were opening a MOD in Cedar Hills and people were really happy. Then I followed along with Cat Daddy and Tres — they're amazing marketers, this thing was born out of their minds — to be able to join them in this chapter is amazing. They wanted someone who had grown up in the restaurant business who didn't come saying here's my MBA hanging on the wall. I was a dishwasher at 15, in L.A., Sabrosos. It was Mexican, they called me Carlos for the year I was there. I'm an operator, not a finance or marketer. I roll up my sleeves, I like to feed people. This area (Burnside) is challenging with the social services. People are hungry, and I like feeding people. When they come into Voodoo I feel like they're coming into my house. It's a tough business. People say 'Well I've got a bit of money, I'm a good home cook, let's open a restaurant.' Don't do it. If it's just to make money, you're not putting your heart into it, do me a favor, just don't do it.

BT: How long do your staff stay?

Schultz: We've got people from Day 1. But in this business, it's normal to have 100 percent turnover. If they're going off to a better job, great. North of 80 percent of America, their first job was in restaurant.

BT: What do you think of Nando's, the UK chicken chain?

Schultz: A good friend who runs MOD UK came from Nando's. I love it. They struggled at first though. It took a while for people to understand their offering, but they built beautiful stores and they've done an amazing job of branding. Peri chicken and chips, that's what it is. There are some on the east coast but they're not doing well. I think one would work in the Northwest, it's a different style. I've come to love the amazing food culture here. People in Seattle think they're foodies? Not even close.

BT: What can you sell apart from doughnuts?

Schultz: We sell a lot of mugs and T-shirts. The Voodoo baron is great, people like their mugs and trinkets. You want to take the experience back home with you, but at the end of the day we sell doughnuts. I don't think we'll ever do a klotchke — it's like doughnut wrap, a Polish pig in a blanket, they sell it for breakfast. Stay true to your core.

BT: Could you have a second brand?

Schultz: Never say never. But at the core we have to remind ourselves we're a doughnut shop.

Many people would say that's not a quality doughnut, it's novelty. But we make them fresh three times a day in our stores. It's not a store doughnut, we take pride in making them fresh. It doesn't look like it's behind a jewelry glass, one little doughnut, it's meant to be fun. There's one with a color in its name, you walk in, there's one in its case, no music, it's like walking into Tiffany's.

BT: Do you look at every city of a million people and think it should have a Voodoo in its cool neighborhood?

Schultz: We look at spreadsheets, where can we operate it in a way that is financially thoughtful. We're in every airline magazine: the top 10 things to do in Portland, Voodoo's on the list. Rightfully so. You don't see our competitors.

BT: Were you part of Starbucks when it opened a store a day in China and they opened the Reserve in Seattle?

Schultz: No, mine was mostly domestic growth, and I did London. I was there when Howard left and Howard came back. It's an amazing impact they've have on the restaurant trade. And the most important thing we have is our people. People who think success comes from a self-help book or an MBA, good luck. I grew up in Woodland Hills in the San Fernando Valley. The thing about Portland and the food culture, I can strike up a conversation anywhere. There's a little bit of eclecticness, I bought a knit hat, a backpack and a bike — I haven't used it yet — but I'm trying to blend in (laughs). I do a lot of business talks. At one point I was a cruise director. I was there talking to people, six months on, never a day off. Celebrity and Princess cruises in the Caribbean, Mexico and the Panama Canal. I learned hard work. That couple could have saved their who life for this cruise. People deserve the best. You don't get a second chance. I learned you only get one chance to deliver an experience. When you fail, you don't understand the impact. You saved your whole life and I'm having a bad day? Shame on me. I can't have a bad week.

BT: What else have you learned?

Schultz: From Scott at MOD, I learned the definition of gratitude. I really embrace and understand gratitude. I don't think I had any nine years ago, but now I wake up and before my shower and coffee, I write down three things I'm grateful for. And I can't repeat myself in a week. It's been a real powerful thing for me. I'm grateful for my health, for my friendships.

BT: Sounds a bit new-agey.

Schultz: Yeah, maybe I should write a book: 'Burn the Oars and the Power of Gratitude, a self-help book by Chris Shultz.' They think I'm nuts, but I lead from the front. I know how hard it is to work 14 hours a day and can't afford to buy a loaf of bread.

Joseph Gallivan
Reporter, The Business Tribune
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