Scott Wolfe Sr. – Founder, President & CEO, Melba’s Famous Poboys

Founder, President and CEO of Melba’s Famous Poboys, which has been declared by Inc. 500 magazine as the #1 fastest-growing company in Louisiana (2016) and recognized by GQ Magazine as one of the BEST restaurants in America.

President and CEO of Wagner’s Meat (Est. 1980). Wagner’s Meat was a chain of convenience stores in the New Orleans Area from 1982 to 2003. In 2001, Wagner’s was slated as one of the 100 Fastest Growing Inner City Companies in America (#31) by Inc. Magazine and listed in City Business as one of the Top 100 Private Companies in New Orleans (#77).

President and CEO of Chicken Box (Est. 2001). Chicken Box was a chain of restaurants in the New Orleans Area. In its first six months, it raced to become New Orleans’ #2 Fried Chicken Company.

Owner and Chairman of the Board of Wolfman Construction Company (Est. 1999). Wolfman Construction is a commercial contracting company that does work throughout the New Orleans Metro Area. The company was listed by New Orleans’ City Business Magazine as one of the city’s “Top 25 Construction Companies”.

Together as the owner of Melba’s Famous Poboys, Wagner’s Meat, Chicken Box, Wolfman Construction and American Amusements, Scott Wolfe, Sr. employed over three hundred employees for more than thirty years.

Tell me about your early career.
My wife Jane and I are statistical parents of teenage pregnancy. She was 15 and I was 17 when we had our first child in 1980. High school sweethearts and high school dropouts. Both GED-certified with three mouths to feed.

Working for Jane’s dad at a small inner-city grocery store at $3.50 per hour, Jane and I saved up $10,000 in two years, enough to parlay with a partner ($20,000) to purchase a bankrupt grocery name Wagner’s in the poorest and highest crime section of New Orleans. 40% unemployment and 50% welfare. We were on welfare and foods stamps ourselves!

Determined and perseverance, we bought out our partner within six months, and within a year, we had that store up to $100,000 per month in sales. That community embraced the courage and determination of two white kids with a kid coming to their neighborhood to earn a living. Within the next five years, we would have grown the Wagner’s Meat brand to ten high-profile locations throughout New Orleans, and for the next 30 years, Wagner’s Meats became a New Orleans icon.

Retired at forty-two (2004), selling all the Wagner’s locations while retaining the real estate. Diversified with ten locations across town enjoying significant passive income. However, Hurricane Katrina had other plans. August 2005, Katrina destroyed all ten locations leaving us with $125,000 per month in mortgages and no tenants or customers to pay it.

Chicken or the egg…who would be first? Neighbors coming home, redeveloping their homes or businesses hoping that customers would soon ensue? City officials quarantined everyone out of New Orleans for two months following the storm which meant I already owed the banks $250,000 in payments. Electricity would not come back for four more months. Now due? $500,000.

It cost $200,000 just to clean the stores out and board them up ($20,000 per store). It would cost millions more to fix them, and still no neighbors to sell to. Our insurance policies would not pay for another four years! Scary times.

It was my own roots that would save us. While Jane’s father was in the grocery business, my father was a general contractor. I actually grew up on job sites helping plumbers and carpenters and watching my dad make deals. Prior to retiring in 2004, I acquired my contractor’s license in 1999, as I had planned my retirement career as a property developer. I have been developing property since 1999. So, while Katrina took away my retirement and my nest egg, it also provided a path to recovery. This is where preparation met opportunity.

With billions of dollars in destruction in New Orleans, my construction company, Wolfman Construction, quickly grew into one of the top 25 construction companies in New Orleans. Providing jobs and income for me and my extended family, it provided the cash flow desperately needed to pay $125,000 per month in mortgage payments as well as new renovation costs of my real estate empire as each neighborhood survived one by one.

Ironically, it was Wolfman Construction and my retirement plan of property developing that caused Melba’s to be born. The year was 2012, when I stumbled over a blighted, closed building on a major corner of New Orleans across the street from one of my other developments which leases to Family Dollar. I usually look for high-profile corners located with intense rooftops nearby. This location fit my appetite and the price was right – $850,000.

I gutted it and developed it into a two-bay commercial space available for my next commercial tenant. Asking $10,000 per month, triple net lease. Six months elapsed and no one even called. Because of my retail experience in groceries/deli’s/gasoline and laundromats, I always develop sites that I can start the business in case I can’t secure a tenant. This was such a location.

Therefore, I planned the development of a laundromat and an ice cream shop. I also needed to develop the name and menu. Melba’s it was. Why? Melba’s was one of those old time names famous in New Orleans for an ice cream shop which went out of business in the late 70’s. I knew it would resonate with many locals and give us a head start. So, we opened as an coffee/ice cream shop with a laundromat attached. Out the gate, the laundromat did well, but no one purchased ice cream. We couldn’t even cover the labor costs. Trying to overcome the low sales, we stuck it out for more than a year. Then, we knew we had to close it or change the concept. So I said, “We know these neighborhoods when we had Wagner’s. We need to sell similar products if we want to turn this place around. That meant more investment in equipment and renovations as well as much more labor to run it.” Our experience told us we should do it.

While losing $10,000 per month in profits and infusing another $10,000 per month in redevelopment, $200,000 later we rebranded Melba’s as a po’boys shop. From the beginning, sales jumped to $1,000 per day. That’s when I hit my stride because I now knew we had a marketplace that would respond. All I needed to do was deliver a good product with great service and ADVERTISE! Our specialty.

We purchased local TV commercials and created a celebrity chef out of one of our longest-employed cooks, Mama Lois. Soon, everyone was talking about Melba’s. 1,900% growth over the next two years causing Inc. Magazine to take notice. Now we’re already a New Orleans institution with tourists flocking to see America’s busiest po’boy shop. We are now working on developing our own trolley tour company, Melba’s Trolley Tours LLC, which will bring tourists from the French Quarter to America’s busiest po’boy shop for a taste of authentic po’boys as the highlight.

What’s the secret to our ability to rise to the top of any business we invest in? I think it is a few simple tricks.

No matter how slick the ad or how much advertising we do, the food and service needs to be paramount every time. Our employees are well-groomed with uniforms and the facilities and restrooms are clean and festive. All the things any prudent business owner should do. Beyond the obvious, we have always spend a lot of money on marketing. Much more than our peers.

My last piece of advice is to “listen to the land.” I’ve always listened to the land…my customers. They will tell you everything if you listen. For example, I have one general manager and four shift managers who run Melba’s. Every Tuesday morning at 8:00 AM, we have our managers’ meeting. A pre-scripted agenda which covers all important topics, from security to housekeeping. Each week, I can barely get my team to tell me what we do wrong and how we can be better beyond my experience and earned knowledge. Thanks to technology, we use a cloud subscription service that records all of our telephone calls which I personally listen in the comfort of my remote office where I “listen to the land.”

My customers who call Melba’s for phone orders or other requests always tell me what’s wrong. Wrong with our food, or what we should sell and how was our service. Refunds, spoilage, complaints, attitudes, compliments, and atmosphere. They will tell us the unvarnished truth. All you need to do is listen.

What was your marketing strategy?
We are a fan of outdoor marketing – signs on our buildings, neighborhood billboards, and television ads.

How fast did the company grow during the first few years?
The first two years were flat. Very flat, barely paying the labor and losing $10,000 per month. We changed the concept and returned to our successful roots, calling back some of the Wagner’s Meat staff while pouring in marketing dollars. From 2015 to 2017, the growth was vertical. Almost viral.

How do you define success?
If this is a financial question, as it usually is in business, the answer is turning a profit. When you beat your industry with sales per square foot, gross margins, labor costs, and opportunity, then you have a roaring success.

What is the key to success?
As corny as it sounds, it is primarily product and service, in that order. Once you master that, then you can broadcast it to a wider audience to achieve more than your market share of customers.

What is the greatest lesson you’ve ever learned?
Integrity is everything. In business, it is NORMAL to have shrinkage, especially from employees (which means theft). While it breaks your heart that people you employ and emotionally-invest in would pilferage from you, it almost seems like human nature. However, as the owner and leader, you can never reciprocate, meaning you cannot get caught stealing or cheating an employee out of one cent, because once your integrity as a boss/owner is tarnished, it can never be recaptured. Bankers, suppliers, employees, and family are all holding you accountable at much higher levels than anyone else. You have to be different.

What are some of your favorite books?
Positioning by Jack Reiss and Al Trout. After reading this book in 1985, it prompted us to create one message (“You can’t beat…Wagner’s Meat”) and the rest was history for us. The same is true with “Melba’s Old School Po’ boys”.

Now that circumstances have changed at Melba’s, whereby we are Louisiana’s fastest-growing company in 2016 according to the Inc. 500, we’ve changed our slogan to “America’s Busiest Po’boy Shop”. Listen to the land.

Tell me about one of the toughest days you’ve had as an entrepreneur.
At the height of Wagners success, the U.S. Department of Labor audited our books, a three-year history. I wasn’t worried. Heck, we hired Paychex Corporation to handle our payroll and everything was on the up and up. “Give them the records,” I said. It took them three months and cost me $20,000 in CPA fees to oversee it.

Results day: They called us to their office to tell me the results. “Mr. Wolfe, the good news is over the past three years we only found about $15,000 discrepancies. The bad news…you have about 25 violations of child labor laws. Each violation is a $10,000 fine.” $250,000!

What child labor? “That 17 year old high school kid you employed who uses the slicer to cut ham for Mrs. Jackson…thats a violation.” Only 25 times? That should be a million times. Turns out, 17 year olds cannot use any motorized machines. “Are you serious? You are going to fine me $250,000 for employing inner-city high school kids?” That meeting was held at 3:00 PM that day.

At 8:00 AM the next morning, I received phone calls from every TV station in town asking me my comments on the child labor violations? Stunned, I asked “How did you know?” Turns out the DOL had their press release all typed up for broadcast the next morning. We were set up as the poster child to show how government bureaucrats are doing their job. Publicity stunt.

Because of our success, we were worthy of statewide exposure, making the front page of every newspaper and the teaser commercials for the upcoming newscast, along with the talk of every radio show. Our hard work and success made us a target. It would take us another six months for the DOL to accept a $10,000 settlement and a contract that says neither party is guilty of anything. From $250,000 to $10,000. However, it cost me $65,000 in CPA and legal fees for being a target of my own government. I’ve never trusted my government again.

My customers? I can trust. We never lost a penny of sales from that bad press, as all of our customers rallied to our side, telling us we appreciate what you do for our neighborhoods and our kids.

When faced with adversity, what pushes you to keep moving forward?
With 300 employed for more than 30 years and 20,000 customers per day, I’ve ran the equivalent of a small city. I call myself a 51% batter, which means I’ve succeeded at 1% more than the number of things I’ve failed at, yet I’ve learned from each of them. I’m as seasoned as Gumbo which means I can recognize adversity and problems in advance and I’m experienced enough to know that consistency and persistence will overcome them all.

What advice would you give to young entrepreneurs?
It takes twenty years to become an overnight success! True for actors and entrepreneurs. Focus on one goal and work 24/7 to accomplish it. Write down your goals and chip away at them. I look at all problems as an iceberg. I chip, chip, chip, and occasionally, I break off a chunk. Business is like that.

This interview was conducted for research purposes by Jason Navallo for his upcoming book, Underdog.

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