The Pampered Chef Ltd. - Company Profile, Information, Business Description, History, Background Information on The Pampered Chef Ltd.

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History of The Pampered Chef Ltd.

The Pampered Chef Ltd. is a leading supplier of kitchen-related products. It is one of America's top direct-selling organizations, and has international offices in Canada, the United Kingdom, and Germany. By the time of its silver anniversary, the operation had grown from a one-woman show in a suburban Chicago kitchen to a staff of more than 950 in four facilities with sales approaching $1 billion. The Pampered Chef's army of more than 70,000 "Independent Kitchen Consultants" sells a line of about 200 professional-quality kitchen items featuring utensils and unglazed stoneware cook vessels. The stunning growth of "The Kitchen Store That Comes to Your Door" mirrored two important trends of the 1980s and 1990s: the proliferation of home-based businesses and "nesting." Berkshire Hathaway acquired the company in 2002.

Founded in 1980

The Pampered Chef was founded in 1980 by Doris Christopher, who like many women in her generation sought to balance a vital professional career with a fulfilling home life. Having interrupted her career as a home economics teacher with the University of Illinois Cooperative Extension Service to raise her two daughters from birth to school age in the late 1970s, the 35-year-old Christopher found herself at a crossroads. As she described it in an April 1996 interview for the Chicago Tribune, Christopher began to seek "a part-time job that would allow me to be a mom too." Quickly narrowing her focus to self-employment opportunities that capitalized on her interests and experience in the kitchen, she investigated catering and retail sales of cooking utensils. However, she eliminated both these options because catering demanded long, odd hours, and retailing required a high capital investment. Husband Jay urged her to launch a party-plan, direct-selling operation à la Tupperware, but Doris balked, recalling in a November 1996 Success piece, "I thought home parties were a waste of time, that perhaps the products were overpriced."

With the continuing support of her spouse, who reminded her that her business could be set up in any way she wished, Christopher began to realize that her cooking and teaching expertise was perfectly suited to the demonstration techniques often used in direct selling, and that there was an untapped market for professional-quality, multi-use kitchen gadgets. Armed with this core concept and a $3,000 cash-out from a life insurance policy, the mom-turned-entrepreneur bought a dozen each of about 70 kitchen gadgets from Chicago's wholesale Merchandise Mart. The Pampered Chef would not require one more dime of additional financing over the course of its first decade-and-a-half in business, funding all its growth from cash flow.

Christopher set her home-selling events apart from their predecessors by calling them "kitchen shows" and naming her sales representatives "kitchen consultants." She scheduled her first kitchen show for October 1980, avoiding what she called the "silly games" that characterized other home-selling parties and opting instead for an entertaining evening of cooking demonstrations, eating the fruits of the demo, and some low-pressure selling. That first night's recipe was leavened with trepidation: Christopher later recalled that "during the entire drive to my first show, I vowed that I would never, ever do this again. My stomach was in knots. Of course, on the drive home, I knew differently."

Exponential Growth: 1980-95

This modest beginning belied the phenomenal growth to come. She brought in a friend as a part-time sales representative in May 1981, and had recruited a total of 12 kitchen consultants by the end of the year. Sales passed $200,000 by 1983, and more than doubled in 1984. Warehousing of the burgeoning business's products outgrew the Christopher family's household basement that year, when TPC's headquarters were moved to a 2,500-square-foot building. By 1987, the business generated by the company's more than 200 sales representatives demanded a full-time purchasing, warehousing, and distribution staff. Husband Jay quit his job as a marketing executive that year to join his wife's company as executive vice-president of operations. By the end of the decade, TPC boasted 700 kitchen consultants. Coverage in nationally circulated magazines in the early 1990s brought another wave of consultants on board, and by 1993 the company had sales representatives in all 50 states.

Although direct, demonstrative selling proved a powerful marketing method for TPC, its sourcing of unique and useful kitchen tools was also vitally important. In 1995 Christopher told Inc. magazine's Robert A. Mamis: "People I knew didn't like to cook, because it wasn't easy for them. Part of me said, 'Maybe I can never convert them.' But another part said, 'They're using knives that aren't sharp and forks with missing tines. If they had the right tools, it would be fun.'" But finding the right tools was not easy for the average cook; they were expensive rarities in retail stores, and even if a budding chef found them, she'd likely have an even harder time figuring out how to use and care for them properly.

Christopher sought to fill this market void with a line of high-quality, multipurpose wares. She assembled an array of about 150 products ranging from peelers and juicers to bakeware and cookware, about one-third of which were exclusive to TPC. Although TPC often had a hand in the development and refinement of the products it carried--making them more ergonomic or combining several functions in a single tool, for example--it did not manufacture them. Many were emblazoned with their makers' names and marks, then packaged in TPC boxes with the marketer's use-and-care information. Believing that the origin of the utensils was far less important to her customers than knowing how to use them, Christopher created an in-house test kitchen to develop simple yet innovative recipes and menus that used TPC products. Although many of the company's gadgets had more than one use--the "Bar-B-Boss," for example, incorporated a bottle-opener, fork, and knife in one grill tool--TPC's creatively written recipes often required more than one TPC tool. Something as simple as a tray of crudités could call for three separate TPC tools: a v-shaped cutter, lemon zester, and "garnisher" (a wavy cutter). A plan for a whole meal might specify more than a dozen different products. When compiled in a company cookbook and used in kitchen shows, these recipes became powerful selling tools.

Years of trial and error resulted in fairly simple pricing and commission plans. Christopher arrived at an individual item's retail price by multiplying its wholesale cost by two. An initial investment of $100 bought a new kitchen consultant a set of about two dozen kitchen gadgets to use in demonstrations. As new utensils were introduced (two or three times each year), sales reps were required to purchase samples for demonstration purposes. Christopher kept all new introductions--even obvious dogs--on the line for at least one year.

Following recipes written with TPC tools in mind, kitchen consultants guided kitchen show attendees in the use and care of the equipment. The consultants--99 percent of them women--started out earning a 20 percent commission on gross sales and earned an extra 2 percent after exceeding $15,000 in sales. The chief executive who had started out seeking a part-time job did not expect her recruits to commit to a 40-hour (or more) week; instead, she required a meager $200 bimonthly sales quota. On top of commissions, incentives for prolific sellers included all-expenses-paid family vacations to Disney World. TPC literature emphasized that a career in direct sales "is considered by many to be a ground-floor opportunity with no glass ceiling."

Late Decade Development

That assertion was perhaps best exemplified by Doris Christopher herself, for what started out as a part-time job had turned into the chief executiveship of a multimillion-dollar nationwide venture by the mid-1990s. Although the founder has commented only half-jokingly that she might not have launched TPC had she known what she was getting into, the effort made her a millionaire many times over. When growth began to spiral out of the entrepreneur's control, she was compelled to hire outsiders with expertise in the management of large, growing businesses.

The Pampered Chef also earned Christopher national recognition. In 1992 the School of Human Resources and Family Studies Home Economics Alumni Association at her alma mater, the University of Illinois, recognized her with an Award of Merit. Ernst & Young, Inc., and Merrill Lynch named her a regional National Entrepreneur of the Year in 1994, and Inc. gave her a tongue-in-cheek MBA--a "Master of Bootstrapping Administration"--in 1995.

TPC's charitable activities were in keeping with the company's food orientation. Launched in 1991, its "Round-Up from the Heart" promotion set aside $1 for every kitchen show hosted by its representatives between September 1 and December 31 of each year, and encouraged customers to round their orders up to the nearest dollar. The firm donated these extra funds--a total of more than $1.3 million in its first five years--to Second Harvest food banks across the country.

Americans were spending increasing amounts of their free time, not to mention disposable income, on entertaining at home in the late 1980s and early 1990s. Kitchens were recognized as the "heart and hearth" of the household. Many categories of consumer goods--including cookware--were buoyed by this strong and ongoing trend known as "nesting" or "cocooning." Given retail analysts' predictions that this homeward movement would continue for decades, The Pampered Chef appeared poised to build on its success. Christopher revealed that she expected the privately owned company to generate $300 million in revenues in 1996. Furthermore, the businesswoman predicted that "a billion dollars isn't far in our future." By the end of 1997, The Pampered Chef had more than 38,000 sales representatives and 600 staffers at its headquarters.

New Ownership in the New Century

The philanthropic activities of the company and its founders continued. They gave $15 million to Concordia University, a Lutheran-sponsored school where Jay Christopher's father had worked as legal counsel, in 1999. Four years later, they gave a similar award to fund a new library at Jay Christopher's alma mater, Valparaiso University in Indiana. In 2000, a gift from the Christophers helped launch the Family Resiliency Program at the University of Illinois.

Doris Christopher published a book celebrating family mealtimes called Come to the Table: A Celebration of Family Life in 1999. "Isn't it worth the investment of effort and time to summon your family to the table?," she asks, echoing the mission of The Pampered Chef.

By the time of The Pampered Chef's 20th anniversary in 2000, annual sales were more than $600 million. It had around 1,000 corporate employees and about 60,000 reps calling on 12 million customers. The firm's international reach extended beyond North America to Germany and the United Kingdom. In 2000, The Pampered Chef launched its "Help Whip Cancer" promotion to raise funds for the American Cancer Society through the sale of items such as specially made measuring spoons and bag clips.

The Pampered Chef had grown into three buildings with more than 800,000 square feet of space, and was expanding still further with the construction of a new 780,000-square-foot headquarters and distribution center (it officially opened in October 2002). According to the Chicago Daily Herald, Christopher wept with joy at the dedication of her firm's new headquarters building in October 2002. "The building," she said, "is much more than a testament to how far we've come. It is a statement of our firm belief in the incredible future we have ahead of us."

Incentives helped keep the company in the Chicago area village of Addison. The local chamber of commerce named Doris Christopher its business person of the year in 2001. Sales were $740 million in 2001. By this time the company had 1,100 corporate employees.

Berkshire Hathaway Inc., the holding company led by legendary Omaha investor Warren Buffet, acquired The Pampered Chef in the fall of 2002. (The purchase price was not disclosed.) The Pampered Chef's financials were strong as ever. While growing revenues 232 percent between 1995 and 2001, noted Fortune Small Business, the company still had not managed to pick any debts beyond the original $3,000 used to launch the business.

Although Buffet was known for leaving acquired companies in the hands of existing management, Doris Christopher soon turned the CEO job over to Sheila O'Connell Cooper, a transition that had already been under way. A former executive with Mary Kay Corp. before joining Pampered Chef in 2000 as president and chief operating officer, O'Connell Cooper had launched BeautiControl Inc. and sold it to Tupperware Corp. before joining The Pampered Chef. Marla C. Gottschalk, formerly an executive with Kraft Foods, Inc., took the roles of president and chief operating officer in November 2003.

O'Connell Cooper told part of her mission was to reach new users, including men. The sales force, which then numbered 71,000 reps, had been composed almost entirely of women. The company also was aiming to sell more to minorities. The product line already had begun to expand beyond chef's tools.

Doris Christopher published another book in 2005, The Pampered Chef®: The Story of One of America's Most Beloved Companies. "If you chase the money, you'll never get it. But if you chase after your dream to serve others, the money will follow you," she wrote. With sales approaching $1 billion, The Pampered Chef was a colossal success that flew in the face of the career woman myth, according to a profile of Doris Christopher in the Chicago Sun-Times. "Most women were not that woman," noted Christopher.

Principal Competitors

Bed Bath & Beyond; Tupperware Brands Corporation; Williams-Sonoma, Inc.; WKI Holding Company, Inc.


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