Two sisters and a sandwich entrepreneur

Illustration by Nate Otto

I ask questions for a living and I love it. But sometimes it’s fun to have someone else do the interviews, especially when that person brings a unique perspective to the conversation. To that end, we tried something new for the latest episode of The Distance. We wanted to host a conversation between entrepreneurs on different ends of the experience spectrum so they could discuss the issues that matter most to them.

Paul McKenna opened Starship, a submarine sandwich shop in suburban Chicago, in 1977. He’s since expanded his business to include catering and events. About a mile and a half away is Lively Athletics, a boutique that carries women’s athletic apparel and running shoes. Sisters Anne Pezalla and Kate Pezalla Marlin opened the store in 2014 and have big plans for their business.

We’re bringing you Paul, Anne and Kate’s conversation in two installments. The first part covers growth, competition, burnout and more. Listen to the episode or read the transcript below. Then tune in next week for the second half of their interview!


Transcript

WAILIN: Welcome to The Distance, a podcast about long-running businesses. We’re trying something a little different for the next two weeks. You’ll still hear the story of an independent business that’s at least 25 years old, but someone else is asking the questions this time: the founders of a newer small business. The result is a conversation between entrepreneurs on different ends of the experience spectrum.

PAUL MCKENNA: My name is Paul McKenna. I am the owner of Starship Restaurant, Catering and Events, started in 1977 as a little soup and sandwich place, and then we’ve evolved over all that time to carry full line of buffet items, appetizers, deliver all throughout the Chicago area and doing quite well. Events is our new focus, so trying to do more fundraisers, any kind of event that people would need food for and liquor, because we just got a liquor license.

WAILIN: Starship’s dining room is decorated with Star Wars and Star Trek memorabilia, and the restaurant is located in Forest Park, a suburb of Chicago. A mile and a half away, in the neighboring village of Oak Park, is Lively Athletics, a store run by Kate Pezalla Marlin and Anne Pezalla.

KATE PEZALLA MARLIN: Hi, my name is Kate. I’m one of the owners of Lively Athletics in Oak Park. The other owner is my sister.

ANNE PEZALLA: Hi, my name is Anne. Um, we’ve been in business for almost two years now. We sell athletic apparel and running shoes for women.

WAILIN: Before the two sisters opened Lively, Kate was an editor for a medical journal and Anne worked at a different running store. Here’s Anne.

ANNE: We kind of looked around at what was out there and we were really shocked that there was no athletic store for women that had a more Anthropologie-like vibe to it, you know, independent artists, pretty to walk into and female-focused again, that’s really important to us.

WAILIN: Today on The Distance, we’re bringing you Kate, Anne and Paul’s conversation in two parts. Today, on the first installment: How Paul founded his restaurant and how he’s managed growth, competition, burnout and getting sued by the studio behind Star Trek. The Distance is brought to you by Basecamp. The brand new Basecamp 3 helps small business owners stay in control of projects and reduce email clutter. Tasks, spur of the moment conversations with coworkers, status updates, reports, documents and files all share one home. And now your first basecamp is completely free forever. Sign up at basecamp.com/thedistance.

KATE: Paul, I was hoping you could tell us a little bit about how you got started.

PAUL: I used to party with some friends of mine in a little apartment across the street from where our restaurant is, and they were trying to find themselves. I was an economics major at Northeastern Illinois University in Chicago and my one friend said “No, we should do this. We should try something new.” So we went ahead and gave it a shot, and I dropped out of college and, um, made 50 bucks a week for the first six months and then we got to 75 and then a hundred and eventually we started to make what was a decent wage. The good news is I didn’t have children at the time. I wasn’t married. I had a nice living situation where it didn’t cost me too much to subsist and I um, was able to get established before I really needed money, so that was a real grassroots type of thing.

KATE: Where did the name Starship come from?

PAUL: There was a sub shop you might know in Evanston called Captain Nemo’s and it had a wonderful theme to it—submarines, their party sub was called the Nautilus and it was, everything was based on under the sea. My other business partner who started it with me came up with the idea of doing more of a space theme and, uh, taking that same concept of spaceships or submarines but putting them in the sky and building around that. We also opened the year that Star Wars was released. And then the Star Trek thing.

ANNE: Do you want to tell us the story of Paramount suing you? Because it’s a great story.

PAUL: So yeah, it is a good story. We opened up in ’77 and we incorporated in ’79 and at the time, Star Trek was a canceled TV show. We loved the name Starship Enterprises because it was a play on the word Enterprise. And then in ’81, we opened up a second venture, which failed eventually, but we called it Starship Enterprises II. Well, between ’79 and ’81, Star Trek the movie came out and the whole franchise of Star Trek, the Next Generation, all the movies came back and it became something. So in ’79, they hadn’t copywritten any of the stuff because it was a canceled TV show and then in ’81, when we went ahead and got our second corporation called Starship Enterprises II, they had their little fence around their name, so we got sued for stealing something that we had already, frankly, and it was a fun experience because we got tons of publicity. We agreed to drop the name “Enterprises” from the checks that we wrote, but never affected the restaurant in any way. It was fun. I got on the radio a couple times. It’s one of those feel-good, David and Goliath stories. So that’s it. I was sued.

ANNE: Uh, this is Anne again. So when Kate and I opened Lively, we honestly thought it’s open seven days a week, and we really thought that between the two of us, we could handle it, and we would hire one employee in our first year. That was ridiculous. We’re now at five employees and it’s still a lot of work. So um was the restaurant a full-time job for you from the beginning, how many employees did you have at the beginning and how many do you have now?

PAUL: Okay, so when we first started, it was myself, my business partner and his wife, and we worked there all the hours. We were closed one day a week. And we were just a retail outlet. We weren’t catering and all that. So we did that for six months and then we hired our first employee because somebody got sick and we realized we can’t just do this anymore, so we started hiring part-time people. Right now we’re probably about 20, 25 if I count all my part timers and delivery guys. It’s still not the level that some caterers in Chicago might have 10 trucks. We have one truck, you know, heh, we’re working on it, but it is still growing. Business is increasing. We’ve only had two downturns over the time. One was, um, the real estate thing and the other was the dot com, uh, bust. Those were the only kind of ones where the graph actually went down.

KATE: How much time do you yourself spend like you know, making sandwiches, ringing up customers, in the front rather than in the back office? Um, we ask because this is something Anne and I have struggled with, like do we need to be on the floor and engaging with customers so they get that family vibe and they get to know us and want to come back? Or do we totally trust our employees to be up there so that we can be in the back office, you know, Anne has to worry about payroll and taxes and I have to worry about, you know, our inventory levels, so we’re just kind of wondering how you manage to strike that balance.

PAUL: You know, It’s a great question because that’s challenging. Your customers like to see you. You’re certainly more engaged and motivated than any employee will ever be. Ninety-five percent of my time is in the back office, uh, quoting catering orders, helping people plan events, which is customer service but I’m not — my face isn’t up front. I do not make sandwiches anymore unless something happens where we screw up and it’s all hands on deck. And I don’t really ring customers too much anymore. My problem with that is, and this is probably true to you too, is you know, you get to know a customer, and I mean I know a lot of them by name, and I know their kids. So if I’m up front on that register, I’m actually a detriment to the process because it’s like “Oh Frank, how are ya? Oh, you lost your ma.” So I get involved in these kind of conversations with them and, uh, so I’m better off not being up front, involved, because I tend to slow the real producing of the food part down, so I come out once or twice a day and see how everybody is, say hello to people and that’s about it.

KATE: So in the 90s—this is Kate speaking—it seems like there was a huge boom in sandwich shops with Quiznos and Subway popping up everywhere, and now there’s Potbelly and Jersey Mike’s. How do you think about your competition then and now, and has your attitude about competition changed?

PAUL: We’ll go back to ’79, and this was even before Quiznos and Potbelly’s and then there was Mr. Submarine and there was Italian U-Boat and there was a headline to the Forest Park Review that said “Three Sub Shops to Open on Madison.” And we were a sub shop on Madison at the time and it just hit me like I got punched. And that was when I realized that had nothing to do with me. It was me taking care of my business and my customers and the focus is on your thing. I mean, McDonald’s and Burger Kings are right next door, Wendy’s are right next door. They all thrive and we, you know, as long as you take care of Lively, you’ll be just fine, frankly.

KATE: We did have like a moment of panic when we found out before we had opened our doors here, when we were still working on a business plan, we hadn’t even signed the lease yet, that a competitor was coming in pretty close and yeah, it was terrifying and for a moment we doubted ourselves. We’re like, maybe we should just pull out now, we don’t have those resources. This is a chain store, you know, with locations nationwide, and a big player in the Chicagoland area as well. But yeah, we tried to focus on what makes us different instead of like how could we ever compete with them, yeah.

PAUL: So I think that’s a great point, what makes you different. I know in the restaurant world, you know, farm to table kind of thing, local uh, is a huge thing. People nowadays, especially in Oak Park, love to come into a small-owned independent shop and they would rather spend more money at your place, frankly, than the chain, and that’s a good vibe. And I would certainly, um, keep that thing going, that concept of “Hey, we’re just two girls trying to make it happen and accomplish our dream,” and people will buy into that. That’s a good marketing tool, I think.

ANNE: Yeah, we’ve found that people really love the fact that we’re two sisters, we grew up in Oak Park and we opened a business together. Little do they know that opening a business with a sister can be a lot of hard work, but fun, overall.

KATE: Sometimes I think people do know, because they get this really specific look on their face when I say I own a business with my sister, and they’re kind of like, “Oh, how is that working out for you?”

ANNE: Work-life balance is a really hot topic right now. It’s hard for Kate and I because we’re always on the clock at Lively. And, you know, I have a five-year-old and a seven-year-old, and if either of them get sick, they have to come to Lively with me, and they’re in the office with a sleeping bag and an iPad. So how do you handle work-life balance?

PAUL: In terms of balance over the years, um, I’m a musician. I went to Columbia College downtown and was a fiction writing major. I still play in a band. It’s such a waste of time if you want to really put a money thing on it or a time thing on it, but boy does it feel good at the end of the day after having played music with people and stuff, so. I’ve always been good about honoring myself because if you get too wrapped up in Lively, you won’t like it anymore. So be fresh, if you can.

ANNE: I just, you know, I love coming to work in the morning. Like, I love walking into the store and opening the doors and it’s so pretty here. My sister Kate does all the merchandising and it always looks beautiful. I’m so happy to come to work. But you know, you’ve been in business longer. There’s the risk of burning out. And other entrepreneurs I’ve talked to seem to think there’s like a three-year mark that you hit and you really question things, or maybe five years, whatever the length of your lease is, is when you’re really like, “Am I gonna sign on again? Is this worth it? Do I want to keep doing this?” So how do you avoid burnout?

PAUL: I don’t think you avoid it as much as you kind of like um, sidetrack it. Because there is burnout. But growth certainly helps, right? You guys have hired five people now, so you’re not hopefully not doing more of the grunt work, so that helps. When you’re growing, it helps immensely. I can get into what I went through about a year ago, which really changed everything for me, because I was ready to sell. I actually had the place on the market and I was burnt out, but what was I doing? I was showing up every day, going through the motions, running my business but not growing it. When your focus switches to growth, it becomes exciting.

ANNE: I love the idea of the growth mindset and it’s something — it’s hard for Kate and I to look at the big picture because we do get so caught up in the day to day, running Lively, we need to clean this up, we need to reorganize this, what are we doing about this inventory. So I, I think that’s really interesting that growth mindset is something you recommend, um, and Kate and I are definitely going to have to talk about that more in our meetings.

PAUL: I want to add one more comment too. One of the things that we did when we signed our first lease in 1977 is we had an option to buy. So if I’m giving advice here, find a location close. Now you’re building a base. You’ve got a customer base, uh, so you will hopefully become a destination rather than just another shop that they’re walking up and down Oak Park and they want to stop in. You really need to buy something because 20 years from now, if you’re still paying rent, you’ll still just have the inventory. So somewhere along the line, this gear has to shift to ownership and I think, uh, in my case, we bought the property on Madison Street for $38,000 in 1979, okay? We bought the property next door for 140, something like that, about 10 years later. Together the two properties are probably worth nine, maybe a million, because Madison Street has done well. My point was somewhere along the line you guys can think about buying a piece of property, that would be a great move for you.

WAILIN: That’s it for Part One of our conversation with Anne Pezalla and Kate Pezalla Marlin of Lively Athletics and Paul McKenna of Starship. We’ll bring you the second part next week, when they discuss social media, whether to offer coupons, and what’s next for their businesses. The Distance is produced by Shaun Hildner and me, Wailin Wong. Our illustrations are done by Nate Otto and our website is thedistance.com. The Distance is a production of Basecamp, the leading app for keeping teams on the same page about whatever they’re working on. Your first Basecamp is completely free forever. Try the brand new Basecamp Three for yourself at basecamp.com/thedistance.

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