She-EO of the week: Stacy Madison, Founder of Stacy’s Pita Chips
Our female CEO series for this week features Stacy Madison, the founder of Stacy’s Pita Chips. We learn how Stacy put focus on a product that she was initially giving out for free to create a multimillion-dollar business.
Stacy grew up in the suburbs near Boston and thought about becoming a psychologist. Once she received her master’s degree she moved to Washington and did social work. She would be making only $22,000 a year. It was then that she decided to get licensed and do private practice. She put a lot of effort into this but to her, it felt very isolating. She was 30 years old at this time and was engaged but broke it off. She went and had a massage one day and the woman told her to take off her jewelry. When she went to put it back on the jewelry was gone. The ring wasn’t replaced and it ended up forcing both her and her fiancé, Rick, to look at their relationship.
She met a man named Mark, who at the time was a friend and eventually, their friendship led to dating. He was doing an internship in Hawaii and she would go to visit him. While Stacy was out there she worked at a surf-themed restaurant and learned about starting a business. They had helped with a successful opening of the surf-themed restaurant but when she asked about the bonuses they were promised she was let go. She figured if she can work this hard for someone else why can’t she do it for herself.
Stacy and Mark had the idea of putting a sign in the lobby so people could fax in their dinner orders and they started cooking in their apartment. Soon after that, they got shut down since they weren’t cooking in a commercial kitchen. The experience helped Stacy get back on her feet. Stacy and Mark both loved to cook. They decided when they got back to Massachusetts that they would try something in the food business.
In 1996, they moved back to Boston and decided to buy a food cart for $5,000. They would prepare the food at Stacy’s sister's catering kitchen. The food cart was a hot dog cart. They would go out at night after the bars closed and did sausages to earn money to revamp the cart. They turned the cart into something similar to a deli counter and they would serve healthy sandwiches rolled in pita bread and made everything to order. It was a Chicken Ceaser rolled in pita bread.
They would take the cart to downtown Boston. The name of the pushcart was Stacy’s Delights. It ended up being a hit even when this was a time when a food cart had a connotation of being dirty.
Stacy and Mark eventually found themselves ordering extra bread for the cart. That was the only item they couldn’t afford to run out of otherwise they would need to close. They would end up with extra bread at the end of the day. They couldn’t use the bread the next day because it would be less pliable so they would cut it up and bake it into different flavored chips.
Initially, the chips were used to keep people happy while they were waiting in line. People would start saying they wanted to buy them. So Stacy and Mark would put them in a little baggy and charge 50 cents. They were baking them in an 8 rack oven. It wasn’t until later that there was a jump between making the chips in the oven and finding a manufacturer.
The coming about of the pita chips was the struggle of getting an inside location. It would take too much to get an indoor location for wintertime, this forced them to focus on the pita chips. Stacy also realized they could grow much faster with the Pita chips. She walked into a bread and circus one day and asked them to try her pita chips. She was able to get that store to buy them. The buyer would go on to show them to corporate.
They had a lot of debt and ran up credit cards to fund this initiative. A bank gave them 60,000 dollars if they put up $12,000 of collateral. Within 6 months she went back and asked them for 500,000 but they asked for equity in return. The bank eventually gave 350,000.
Stacy and Mark would do a lot of sampling at various stores to set up their customer base. At one point, they paid $1,500 and flew someone up from Frito Lays. He told them they wouldn’t be able to scale because they were doing everything by hand. Stacy and Mark ended up purchasing a custom-built oven and ordered a machine that was used to cut carrots. They would adjust the blades to be further apart.
They got their production method down and their revenue began to grow. It would take them 5 years to turn a profit. They would go on to hit 1 million in revenue by 2001. Roughly 10 years after the launch Stacy sold Stacy’s Pita Chips to Pepsico for $250 million.
1. Find a way to do what you love and have it make you money. Stacy hated being a social worker and found the job isolating. She realized that she loved to cook and this passion is what lead to the creation of her Pita Chips.
2. Find a way to stand out. Stacy offered pita chips for free to the people standing in line at her pushcart in the winter. This kept her customers happy and those same customers would eventually end up asking to pay for more of her pita chips.