Chef executive Featured

7:00pm EDT October 30, 2003
A little more than a year ago, Doris Christopher and her husband, Jay, were on a flight from O'Hare to Nebraska to meet with Warren Buffett, the world's second richest man and CEO of Berkshire Hathaway, a holding company of diverse business including insurance brokers, construction firms, furniture manufacturers, fractional jet ownership -- even a brick company.

Every year, thousands of investors flock to Berkshire's annual meeting to hear the "Oracle of Omaha" hold forth on the prospects for investing success in the coming year. But on this early September day in 2002, Buffett wanted to hear what Doris Christopher had to say.

Just a week earlier, the $36 billion dollar man had never heard of Christopher. Now he wanted to know if the founder and CEO of The Pampered Chef would sell her company -- a direct seller of 225 high-end kitchen tools including everything from vegetable peelers and cutting boards to skillets and fondue sets -- to Berkshire.

But it wasn't the cooking accessories that drew the interest of Buffett, whose culinary tastes run toward a simple steak and Dairy Queen ice cream. Instead, it was the fact that The Pampered Chef had grown by more than 230 percent since 1995, had no debt, offered juicy profit margins (estimated as high as 25 percent pre-tax) and boasted a following of 70,000 dedicated sales reps, or "kitchen consultants" as the company calls them.

So there was Christopher, a mother of two daughters and a former full-time homemaker, face-to-face with the man Fortune magazine calls the most powerful person in business. After a brief meeting, he made an offer. She accepted.

"We are extremely excited by The Pampered Chef," the notoriously tight-lipped Buffett said in a brief statement. "Doris Christopher has created from scratch an absolutely wonderful business and (CEO) Sheila O'Connell Cooper is exactly the type of manager Berkshire admires. They both clearly love the business and the people they work with. We are delighted to add The Pampered Chef to the family of Berkshire businesses."

While details were never released, it is estimated that Berkshire paid around $900 million for The Pampered Chef.
 

Getting started

To think it was just 23 years ago that Christopher thought she might want to be a caterer.

It was 1980, and Christopher's youngest daughter was ready to start school for the first time. That left Christopher, a former high school home economics teacher and adult education instructor at the University of Illinois Cooperative Extension Service, with more time on her hands.

She wanted to work again, but it couldn't be just any job. It had to involve something she enjoyed, but be flexible enough that she could still take care of her daughters. She loved cooking and entertaining, so she thought starting a catering business might be a good solution. If it were only so simple.

"One of the things I didn't have much of was capital," Christopher recalls from her office in The Pampered Chef's new 780,000-square-foot headquarters in Addison. "Plus, when people need caterers is pretty much the time I wanted to have off -- weekends, holidays, things like that."

Christopher noticed, however, that when she entertained friends and family they would admire and ask about the kitchen and cooking tools she used to prepare and serve food.

"These tools seemed to be very simple and basic to me, but they were things that other people seemed not to have," Christopher says. "With that, I got the idea and thought, 'Maybe there's a business here.'"

With a $3,000 low-interest loan taken out on an insurance policy, Christopher sought out a line of kitchen tools and devices focusing more on quality than quantity. The easy part was choosing what to sell; the hard part was choosing how to sell it. Retail was too expensive and too time-consuming, and printing mail order catalogs required more capital than Christopher had.

"What I did know a little bit about, not much, was in-home selling through party plans," she says. "The only thing I knew was that I had been a customer a time or two, so I had a little bit of an idea how the party plan system worked. That really was the basic knowledge we were armed with as I started the business."

The party plan

There were some things she didn't like about party plan sales: The high-pressure pitch, the obligation to purchase something even if you didn't want to. From the beginning, Christopher eliminated that aspect from The Pampered Chef's culture, and focused simply on the quality of the tools and the expertise of the consultants.

Here's how it works. A host offers up his or her home for what The Pampered Chef calls a "kitchen show" and invites the guests. The kitchen consultant arrives and demonstrates a range of kitchen tools. Afterward, the consultant takes orders from the catalog. There's no obligation and no pressure, yet the formula is wildly successful.

"I didn't have a formal business plan," Christopher admits. "I didn't study direct selling or party planning. When I look back on it now, I truly was a novice, both from a business perspective, but certainly from the perspective of understanding anything about direct selling. I learned as I went along."

From the first kitchen show in 1980, Christopher booked more shows until about nine months later, when a woman approached her about doing her own kitchen show. Christopher had always thought she would add a sales force, but wasn't sure she could afford one.

That night, she and her husband devised a commission system for the kitchen consultants and made their first hire. By 1981, The Pampered Chef had 12 consultants.

By the late 1980s, The Pampered Chef had expanded to states surrounding Illinois but had yet to make the leap to other parts of the Midwest, let alone the eastern states. By that time, Christopher's girls were older and didn't need as much supervision, which allowed her to do some traveling.

She went to St. Louis, Indianapolis and Milwaukee to recruit new kitchen consultants. She placed small newspaper ads and worked her personal network of family, friends and consultants who knew people in those areas who might be interested in selling.

"One of the things that's very strong in our business is that we recruit other people into our business from the experience itself," Christopher explains. "That's how we recruit them best. That is where people become really enamored and excited about being a part of this, so having kitchen shows is pretty important."

A little good press helped, too. A few small articles in national magazines about this new kitchenware phenomenon that was quietly sweeping the Midwest proved to be a major catalyst for Christopher. Eventually, The Pampered Chef cracked Pennsylvania, then Maryland, then Washington, D.C., and Virginia. Soon, it had a kitchen consultant in every state.

Hitting the brakes

This dynamic growth came with its share of problems. Christopher had long since left her basement office where she started the business and moved to larger and larger buildings to accommodate the rapidly expanding inventory and staff.

So she put on the brakes. In 1991, she called for a hiring freeze of all kitchen consultants. The back end of the business needed to catch up with the front end before the company careened out of control.

"That was a very trying time," Christopher says. "First of all, from our standpoint, it sort of stopped the momentum. Secondly, there were people out there in the field who viewed this as a real wedge in the momentum of their business as well, so some chose not to stay."

Most consultants, however, did stay, and during the seven months of the hiring freeze, The Pampered Chef started a waiting list for consultants. By the end of the freeze, it reached into the hundreds.

"We got through that time," Christopher says. "These things do have a way of working themselves out, but they're challenging as you go through them."

With the rapid growth under control, by the late 1990s, Christopher and her husband started to plan for their future with the company and to make sure it continued to thrive after they retired.

Although one of their daughters worked for the company, she was not ready, and not yet willing, to take the reigns. Christopher decided to look for a buyer for The Pampered Chef, but one that would maintain the same vision and enthusiasm with which she started the business.

"We had financial people over a five-year period who said to us that this is a business that has all the earmarks of something Berkshire Hathaway would be interested in," says Christopher. "The more we looked at it, the more we thought that it, indeed, would be a world-class place for this company to reside."
 

All in the family

It's been a year since the acquisition. Sheila O'Connell Cooper was named CEO of the company, while Christopher remains as chairman of the board and is still very active in the strategic vision of company.

Christopher is by no means ready to exit her company, but when that time comes, she knows it will be in competent hands. That, she says, is why she sold to Berkshire Hathaway now instead of in five or 10 years, when the pressure to sell would be much greater.

"There was no reason why we had to do this at this point: No financial crisis, no health problems, nothing at all," Christopher says. "The business is alive and well and thriving, as am I. And I intend to be here for the long term.

"But being here through the transition and being able to see that through was the prudent thing to do."

HOW TO REACH: The Pampered Chef, (800) 266-5562 or www.pamperedchef.com