Pretzel shop struggles to survive after move to larger space

Some people wear their hearts on their sleeves. Carolyn Vella, owner of The Pretzel Stop in Rockville Centre, wears a small diamond pretzel — a gift from her husband — around her neck.

“Pretzels are my passion,” she says.

Six years ago Vella, 44, who had worked in health care management, turned her passion into a business, opening a shop in Oceanside. Her offerings include a range of salted, unsalted, cinnamon sugar, caramel and chocolate-covered soft and hard pretzels. She also makes pretzel nuggets, stuffed pretzel bites and pretzel platters.

Business was so brisk at the 800-square-foot location that she sometimes had to turn people away. Vella recalls one Super Bowl Sunday — her busiest day of the year — when she baked 30,000 pretzel nuggets and still couldn’t meet the demand.

A year ago, with high hopes, she jumped at a chance to expand. But today, at a new location nearly four times the size of that first shop, Vella is struggling to stay afloat.

Making a move to bigger quarters, while a sign of success, can pose big challenges for a small business, experts say. The problems Vella faces — higher overhead, increased debt, and difficulty attracting customers to the new location — are common, they say.

Old location too small

Before she made her move, Vella says, “I was making money and had a nice little business, but . . . I didn’t have the space” to produce more.

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Pretzels have a high profit margin. Vella estimates the fixed cost of making a pretzel is about 32 cents, while that pretzel can retail for $2 or $3.

She borrowed about $500,000 against her house to buy a 5,000-square-foot warehouse-style building at 106 South Long Beach Rd. in Rockville Centre from the Casati family, who had operated their E. Vincent Luggage business out of the space for more than 25 years. The Casatis are leasing 2,000 square feet back from Vella for their store, leaving her with 3,000 square feet.

She says she spent $250,000 to $300,000 on renovations and improvements to turn the space into a bakery and to make sure everything was up to code.

But since opening in October 2015, she says she has struggled “to get people through the door.”

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However, Vella has accrued a faithful following.

She knows them by name

“The customers I have, people I’ve gotten to know throughout the years are not like regular customers. I know them by first name. They’re more like my cheerleaders. These are people who celebrate almost every weekend with a pretzel platter. It’s their support and encouragement that has kept me going through my darkest days,” she says.

But beyond her loyal core, Vella says she has so little walk-in traffic she’s had to cut back her hours to 10 a.m. to 6 p.m. Thursday to Sunday.

She has tried a variety of tactics to boost sales — web advertising on a local wedding site, a school bus and pretzel cart for special events, and make-your-own-pretzel parties at the shop.

Signs on the walls read “Keep Calm, Eat a Pretzel” and “This pretzel is making me thirsty,” the latter a quote from a “Seinfeld” episode. There’s an old Panasonic television set that plays black-and-white movies, and little vintage knickknacks can be found in every corner.

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“I never had dreams of becoming the pretzel queen or making a gazillion dollars,” she says. It’s “not that I need a line out the door but . . . there should be life here,” says Vella, sipping coffee and sharing just-out-of-the-oven cinnamon-sugar pretzel nuggets in her cozy, Cracker Barrel-esque shop.

So, how can Vella untwist her way out of this financial knot?

“Using her existing customers as brand ambassadors, people who are already passionate about her business to drive new customers, might just be her saving grace,” says Andrew Medal, a California-based author, Entrepreneur Magazine contributor and co-founder of marketing company bizaboost.com.

“If she can find a way to incentivize her loyal customer base and have them become brand advocates that can sell her business for her, she’ll be able to exponentially reach more people,” he says.

Medal suggests she create new customer referral and rewards programs.

Richard Vogel, dean of the School of Business at Farmingdale State College, agrees with Medal but warns that business owners thinking of making the leap into a larger space should first conduct market research or more in-depth evaluations before making a decision.

Consider downsizing

“She’ll have to grow into the space or right-size the place,” Vogel says. “It could be more lucrative renting it out to a different business. She could also try running specials on discount sites like Groupon to generate more traffic to her store. She really needs to weigh her options.”

Vella is open to the suggestions, but as for Groupon, she says, “I will never make it with Groupon-type customers. My competition will always beat me on price.”

As far as customer rewards programs, she says, “You know I’m Italian. I take good care of all my regulars and walk-ins with free samples, extras and then some.”

One of her employees “makes fun of me all the time, saying ‘You just give away the store.’ ”