How these two friends have turned pasta into a $3 million business in just three years

For long-time friends, Sylvan Spatarel (34) and Ben Thompson (30), it was a love of business, rather than pasta, which first inspired them to turn their backs on the corporate world and invest their savings in an idea for a new hospitality offering serving fresh pasta, pan cooked to-order.

Sylvan was a sales and marketing professional by trade, and had gone back to university in his late 20s to study a Masters in Marketing, while Ben was a serial entrepreneur with a number of both successful and challenging start-ups behind him.

Meeting one night for dinner to catch up on life, Sylvan mentioned to Ben his desire to quit the corporate world, and the two realised they shared a common passion to create their own paths in life.

Bringing two business minds together

“We basically became business partners over a bowl of pasta and a glass of red that night, and from there we set about finding an idea that we could turn into a viable business,” said Sylvan.

“For us it was really important to find a product or service that would fill a gap in the market, so we went through a number of different ideas from gimmicky products to app ideas before identifying hospitality and food as an industry that was undergoing an immense transformation,” said Sylvan.

“We spent some time studying food businesses until we realised that there was nothing in the way of healthy fresh casual pasta done in a cool and modern way. Pasta was either a $25 meal at a fancy/stuffy restaurant or an afterthought for a pizza place. So casual dining pasta became the focus.

“We had witnessed the success of businesses such as Grill’d and Spud Bar that had successfully franchised their initial brand offering and thought that was a clever way to go about it,” Sylvan said.

Figuring out a way forward

The pair spent months meticulously formulating a strategic business plan and refining their offering before even telling their closest friends, which they say was integral to ensuring they could take their concept through to reality.

“Soon after we had the concept in place we consulted a menu specialist who collaborated with us on the nutrition and flavour profile of every dish, and engaged a branding agency to create a logo and brand story. This gave us the backbone of a real business proposal that lead us to find our two investors, Danny and Jacob,” Sylvan said.

After signing a lease on their first site at the Windsor end of Melbourne’s famed Chapel Street, some six months after first creating the concept for Sauced, the pair (along with their investors) quickly set about renovating the space, with both Ben and Sylvan picking up the tools to save on tradie costs.

“It was an incredibly stressful time but also one of the most exhilarating experiences, knowing that we were in the process of bringing our concept to life,” said Ben.

“We had invested everything in a brand new hospitality concept that was untested in the market, and the renovation costs just kept on climbing as we hit various planning and design hurdles,” he said.

“I quickly became addicted to the challenges and stress of the unknown and realised through the process that my skills and propensity to take on risk are what drove me to always want to be my own boss – that’s when I knew this was absolutely the right path to take,” Ben said.

The first store opened its doors three months after the renovations commenced, and within six to eight months the pair had started to break even on their operating costs.

Since then, Ben and Sylvan have reinvested heavily within the business, a strategy that has paid off for the pair, with Sauced opening its third and fourth locations across Melbourne by October this year.

Soon they will be employing over 50 staff and aim to turn over in excess of $6million next financial year, generating over two tonnes of pasta and sauce each week to pasta-loving fans all around Melbourne.

Switching up the plan

In the past three years the boys say their business model has evolved rapidly in order to keep up with the fast-moving consumer trends, with the advent of ‘premium casual dining’ being one of the biggest pivots the brand has experienced to date.

“When we first launched our Chapel Street store, we had a very different business model. At the time, Grill’d was the leader in its field and it was very much an order-at-the-counter, ‘fast service’ experience,” said Ben.

“We thought that’s where the market was so we first launched with a similar model, with people collecting their orders from the counter and the meals being presented in cardboard biodegradable containers.

“We quickly learnt that the market had already started to move away from this model – they wanted to meet their friends for a mid-week dinner and wine and were seeking an experience that was more premium than a fast-food chain but not as high-end as a stand-alone restaurant.

“We quickly adapted our business model to encompass a more premium offering; we served our pastas in quality bowls and plates to improve the presentation, started table service, acquired a liquor licence and even undertook a substantial renovation to incorporate a bar and alcohol offering,” said Ben.

The results were almost instant with monthly takings jumping 25-30 percent in the months following the relaunched business model.

What next for Sauced Pasta Bar?

Ben says the new Sauced Pasta Bar in St Kilda will follow a similar model for the time being, (while Chadstone will represent a ‘quick service’ hybrid in order to cater for the expected high-frequency demands of the location), but won’t rule out another brand pivot in the future if that’s what the market demands.

“For us, it’s about moving with the market to remain competitive and fresh,” Ben said.

“At home delivery via services such as Uber Eats and Deliveroo is the latest concept that is rapidly changing our internal processes so we are now working on ways to ensure people who eat our pasta at home can enjoy the same quality as if they were eating it in our stores.

“Delivery has always represented about 20 percent of our business but with the advent of these new delivery services we estimate next year deliveries could make up approximately 30 to 35 percent of all revenue next financial year; the growth in such a short amount of time has been absolutely astronomical,” he said.

The pair say choosing the right location is another critical piece of the puzzle, with the boys choosing to select locations with a longer term outlook than most other businesses would consider.

“When we took out the lease on our first Sauced in Chapel Street, there were a few hospitality offerings nearby but it was nowhere near the food destination it is today. We were one of the first new wave brands to invest in the area and it’s now paid off in droves with that pocket of Chapel Street now one of the most vibrant and busy food-focused areas in Melbourne.

“Similarly with Camberwell, when we took out the lease along the northern end of Burke Road, away from the existing shopping and food strip, people told us we were mad. For us it was more about taking a calculated risk in an area that we knew had the potential to boom in future years,” he said.

That risk also looks to have paid off with the attention now shifting away from the more traditional and over-populated Glenferrie road, towards Burke road as the area starts to redevelop.

“We’ve now replicated this thought process with our new store in St Kilda’s Fitzroy Street. We could have easily chosen to open in Acland Street where the largest concentration of people and foot-traffic are currently focused, but we believe in the regeneration of the area and we believe that if we are one of the first to put our money where our mouths are and invest into more up-and-coming areas before they boom, other brands will follow suit.

“It’s a longer term strategy that has paid off for us so far and that delivers a better long term business outcome for our brand,” Ben said.

For now, the boys will focus on refining the two new stores before looking into franchising opportunities next year.

“For us, franchising is definitely a natural progression. We are always looking at ways to improve our systems and processes so we might also consider moving all our production to a separate location off-site if that helps to streamline our processes for future store openings.

“It’s been an incredibly hard yet rewarding experience so far but we truly believe that we’ve only just scratched the surface,” said Sylvan.