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A Greek-Cypriot pita bread empire in New Zealand June 4, 2007

Posted by grhomeboy in Greek Diaspora.
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A Pita Bread Empire > the Michaelides family, Kyriakos, Giannis, Despo, Stelios and Andreas. Giannis Michaelides arrived in Christchurch, NZ, in 1966 as a 19-year-old fleeing the troubles of Greek Cyprus. He can feel justly proud of his Lahmajou Company.

From a minor disaster, a new business can grow. Find what happened next after the toppings were one day left off the lahmajoun. Business is about people. The outside world simply sees a building, a product, a logo. All the public knows is that money goes in and stuff comes out. But inside every business there is a rich tale of joys, fears and frustrations. A soap opera if only you could peek behind the walls.

Take the Lahmajou Company, a pita bread bakery which has sprung up alongside a central Christchurch flyover during the past year. Painted bright Mediterranean white and fronted by two-storey Doric columns, the architecture has certainly excited a bit of comment. But you would be pushed to credit the story this “typical” small business has to tell.

On a sunny Friday morning, the dignitaries have turned out in force to snip the ribbon on a new pita chip packaging machine, among them small-business Minister Lianne Dalziel, the top nob from a supermarket chain, and local poet and broadcaster Gary McCormick. Hoisting his glass of bubbly, McCormick describes how his friend Giannis Michaelides arrived in Christchurch in 1966 as a 19-year-old fleeing the troubles of Greek Cyprus.

He had nothing but two shirts and a spare pair of underpants in his case, or was it two pants and one shirt? Later we walk up marble stairs to Michaelides’ office. The foyer is decorated with a mural of a Greek hillside village. All the touches of home. At 60, Michaelides agrees he has it made. And his is a story about the immigrant, family, hard work, everything you might expect. But also about ingenuity, scaling, productivity, and even that good old mainstay of business, a good dash of luck.

Michaelides trained as a print typesetter and book-binder. Arriving in Christchurch he hooked up with his uncles in the fishing industry, first running fish and chip shops and restaurants, then later helping them with the business that became United Fisheries. In 1991, with his wife, Despo, Michaelides opened up his own small business, a baker’s shop. His thinking was that no matter how hard times get, people always have to eat. So stick to something to do with food.

He specialised in lahmajoun, a small Middle Eastern pizza. It was a struggle. Of course, everyone loved cheerful Michaelides with his broken English and tasty lahmajoun. But where was the business going to go? Lahmajoun have to be eaten fresh. Flattening out dough and making toppings is a labour-intensive chore. The business had no scale. However, Michaelides was never going to get rich. And with three growing sons, he wanted something more. “You could make a good living, but that’s all you could make out of it,” he says.

Then one day Michaelides had one of those business accidents. A tray of lahmajoun went into the oven without toppings. An oven breakdown had caused a bit of confusion. Out came a tray of pita breads. Of course, the dough mix was the same. Michaelides realised that all along he had the recipe for something more mass market. Quickly he was into the pita bread industry. There are at least 16 manufacturers in New Zealand, most of them big bakeries doing flat breads as a sideline. But Michaelides was going for authenticity and quality.

Giannis brand pita bread did so well that within 18 months he had to change premises three times. The growth was good news but also dangerous. His pita bread was still hand-baked. Someone had to mix the dough, bang it out flat, load the ovens. To cope with the demand he had to keep taking on more staff. Pretty soon he was up to 30. There was never enough room even as he moved bakeries, and always a lot of spoilage. It was all quite inefficient really.

Like many small Kiwi firms, Michaelides was discovering that recruiting more people to increase production was not really paying off. The crunch came one Monday morning at his second factory when, as often happened, the oven broke down. “From 9 o’clock to 12 o’clock, we were fixing it. Everybody else was sitting around, making nothing. Then we finished fixing and now everyone says they want to go off to lunch,” says an exasperated Michaelides.

At that point he decided that if he was to keep growing the company, he would have to automate. Getting finance is part of every small business drama. When Michaelides wanted to make his first move out of his lahmajoun bakery, his original bank would not even extend his overdraft by $10,000. So he called in the branch manager and business manager of another bank, the BNZ, for a coffee and luckily got a different response. Michaelides told them he really needed $200,000 and he could offer no security on the loan. “I didn’t know them before. But I said what you see is what you get. And one thing I can say is I would have to be dead to let you down. That is all the guarantee I can give.”

He left them sitting with their cup of coffee as he unloaded a batch of pitas. When he returned, they simply told him he had a deal. And they have continued to back him ever since. But Michaelides admits that when he went for a third factory, with industrial dough mixers, he nearly overdid it. “At one stage I thought I might go bust. I over-spent. I went to Europe and bought machinery that cost me half a million. But I thought I couldn’t buy one thing and then later another thing. I just had to go for it and buy it all at once. I took a chance.”

Like many small businesses, Lahmajoun was by that time a proper family firm, with the sons growing up and becoming involved, helping out at the shop or delivering pita bread after school. But Michaelides was luckier than most. Andreas, his oldest, had qualified as an electrical engineer, while Kyriakos was studying commerce, and his youngest, Stelios, was becoming an accountant. Michaelides says he could not have planned it better, a trio of talents exactly right to take the business on to the next generation.

At this point in the story, yet another proud small business characteristic comes to the fore, the No. 8 fencing wire mentality. Michaelides might be Greek Cypriot, but he and his son Andreas turn out to have this quality in spades. With welding torch and angle grinder, they set about creating their own automated production line. They did have to buy mixing machines and a few other big ticket items. But the conveyor belts, the ovens, and much else they designed and built from scratch. It was all coming together. Yet now their third premises was out of space. So a year ago they had their fourth factory, by the flyover, purpose built for them.

Now they had the room and the systems to be the biggest pita bread producer in the country. And automation meant that instead of a 100 or more staff, the whole place can be run by a dozen people. But Michaelides and Andreas were already wondering what next? Pita bread can be wrapped and even frozen. It has no fancy toppings to complicate production and the business will quite naturally scale to cover a whole country. However what they wanted was a business that could scale to take on the world. And so they invented pita chips.

Back when there was a lot of wastage in the bakery from over-cooked or wrongly mixed batches, the results were bagged up and sold as dry crackers. But why not make crunchy mini-pitas as a healthy snack option? Andreas, the engineering son, could now really come into his own. The new product depended on entirely new machinery.

Andreas runs a hand over a few rough welds and apologises that a few of the metal covers over the oven look rather askew. He was in at the weekend giving things another bash about. They have spent a bit to get this factory, but also saved a fortune. Andreas even designed the smart red and white foil packaging for their Giannis pita bread chips. “Why would we hire someone when we can do it ourselves?” he says with some bemusement.

Lahmajoun is poised to go global. Well, fingers crossed, the chips will be a hit in New Zealand supermarkets. Then they can have a crack at Asia and the US. Anyway, you can see why Dalziel and others have flown down to cut the ribbon on their new pita chip production line. Dalziel says the story of Lahmajoun encapsulates so many of the issues that face all small businesses. The country urgently needs to automate to boost its productivity levels. We need to innovate and find products that can scale. Then there is the growing problem of business succession. Dalziel says with the retirement of the baby boom generation, it is scary to think how many small businesses lack the right people to take them on to the next generation.

Dalziel says Lahmajoun even says a lot about the role of serendipity in business. Things always happen in life. But it takes a clever business owner to spot the opportunities that fate is casting his or her way. Above all, Dalziel says, it is just refreshing to see that business is still all about people.

Lahmajou Company Ltd, Corner 26 Sandyford & Durham Streets, Sydenham Canterbury 8002, Christchurch, New Zealand, tel 033791027.

Source and Copyright > Article by John McCrone of Stuff New Zealand

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