Choc It Up To Success

Entrepreneur Lindsey Ross, 10 years after buying a downtown Fort Worth chocolate shop at age 27, is toying with success in a new startup: the Houston Street Toy Co.

Visitors to Schakolad Chocolate Factory, a small chocolate store in downtown Fort Worth’s Sundance Square, on March 15, 2007 probably didn’t realize they’d stepped in on the first day of Lindsey Ross’ entrepreneurial career. Ross, a college kinesiology major who went into sales for four years before looking around for a franchise business she could own, was standing in the back of the store with the man whom she’d just bought it from. “Somebody came in and was staring at me,” she recalls. “I was in shock.” Finally, the former owner stepped forward to help the customer.

The shock has long since worn off. But more than a decade later, Ross, still the owner of the chocolate store, has thrown herself up against the learning curve again – this time with the Houston Street Toy Co., which she opened last fall because she wanted to create an old-fashioned experience away from technological devices.

“Kids grow up too fast,” Ross, who has two children, Kennedy, 5, and Alex, 3, said during an interview this summer at the toy store, held in the Storytime section amid gigantic stuffed animals while employees experimented with craft kits they’d break open for next Saturday’s craft-making session. “Everything’s too serious in life. I wanted to create a nostalgic experience. Get kids away from the screen.”

Walk past the store, on Houston Street around the corner from the The Worthington Renaissance Fort Worth Hotel, and it’s hard to miss the movement. A Ferris wheel – for sale – turns. Model airplanes bob up and down. If you’re there on a Saturday, you’re likely to walk in on craft-making, face painting, or storytime.

This was what Ross was looking for – an experience apart from the mass market. She confided her vision for a store with movement and music to a girlfriend, who recommended she watch a movie called “Mr. Magorium’s Wonder Emporium,” starring Dustin Hoffman and Natalie Portman, about a magical toy store in which the stuffed animals are alive. When a customer challenges Hoffman’s character about the price of a fish-and-turtle mobile in the store, he responds, “If you notice, they are fresh fish.”

It turned out that Sundance Square – the 35-block, mixed-use area downtown – was looking for a toy store when Ross pitched her idea to the leasing department. The category is socked in by intense competitive pressure from mass merchants like Wal-Mart and Target stores and big internet stores, and anything unique is hard to pull off. “Twenty or better we’d talked to,” Johnny Campbell, Sundance’s president and CEO, recalls of the number of prospects Sundance had looked at.

Ross’ surfacing was a surprise to Campbell, he says. “We had a great relationship with Lindsey,” he says. “She was a known quantity. We’d been working with her for 10 years. And here she had an idea that was right down the fairway of our merchandising plan.”

A decade earlier, because Sundance, as is typical of retail developers, has the right to approve or reject new tenants including ones who are buying existing businesses, Campbell was one of a group of Sundance executives who listened as Ross presented her plan to expand the Schakolad store into the corporate and convention markets, where the store had a small foothold.

“At that point, we were just getting to know Lindsey, and we simply had to have faith in her,” Campbell, who touts Sundance’s eagerness to incubate local small operators, remembers of Ross, who had no prior experience owning or managing a business at the time. But “I remember thinking she looks and sounds like someone we wanted to work with.”

With the toy store up and running, Ross is positioning her businesses this summer with an administrator who took over back-office functions so she can spend more time up front. “You’re either an extrovert, or you’re not,” Ross, now 38, says. “Sales is not for everybody.”

Lindsey Ross at her Sundance Square chocolate shop Schakolad Chocolate Factory, with daughter Kennedy and son Alex

From Dance to Chocolate Ross grew up in DeSoto. Her father, retired from a career designing boxes for the Packaging Corp. of America, has been helping Ross with projects like setting up the initial inventory for the toy store last year. Her mother “raised the kids” and worked for an insurance company for 30 years.

After high school, Ross danced for two years at McLennan Junior College in Waco and taught drill team on the side. She transferred to the University of Texas at Arlington, where she graduated. With all the side work, “it took me seven or eight years to graduate college,” she says.

How she landed in sales: “I put together this resume. There was nothing on it except for dance and some volunteer stuff.” So she took a job working for Joe’s Crab Shack for two years, waiting tables and moving into management. “I knew I didn’t want to be in the restaurant business,” she says.

She took a job working for a staffing company. Then she landed a job in over-the-phone sales for a freight company. “Which is something everybody should have to do in their life,” she says. She eventually moved into sales for another transportation company. And then, four years out of school, she began looking for a business to buy. “I was looking at franchises” like Subway, she says.

Ross saw a listing for the Schakolad store – a franchise location – in Sundance Square. Living in Arlington at the time with her husband, a Fort Worth firefighter, she’d visited Sundance a few times to eat at restaurants. The chocolate store was 5 years old, owned by the initial franchisee. “It was open,” Ross says. “All I needed was to go there and make it better. Two employees were already there. People love chocolate. Most people do. It seemed different from everything else.”

Ross flew to Schakolad’s home base in January 2007 to seek the company’s approval of her as a franchisee. She obtained Sundance’s approval. With her husband’s income backing them up, she obtained a Small Business Administration loan to buy the franchise, which cost more than $100,000. “We had enough for a down payment,” she says.

Ten years later, Ross recently renewed the franchise agreement and paid off the SBA loan, making it profitable, even though she’d been drawing a regular salary. Sales have grown 30 percent from when she walked in the door, she says.

The store’s business was largely walk-in. “They were selling to walk-by traffic,” Ross says. “As soon as you opened the place, you saw people coming in.”

Ross, using recommendations in Schakolad’s franchisee manual, set out to grow the store’s corporate and hotel relationships. “I was there. I was networking, talking to hotel concierges,” she says. “Advertising is expensive.” And there was no social media back then. “Thankfully, the [store] staff was great.” The bookkeeping was in shape; recipes and foundational corporate accounts were in shape. The construction of the Sundance Plaza across the street was a drag, but Ross soldiered through it.

Forty percent of sales occurs in the fourth quarter around the holidays; the store consumes more than two tons of raw chocolate at Christmas. The corporate business, 10-15 percent of sales when she bought the store, is 30 percent annually today, Ross estimates. “Ideally, it’s 50-50,” she says.

She aims to recruit several recurring corporate accounts per month. “I can take a Chase [Bank] logo and put it on a candy bar” that the bank can give to clients or hand out as a promotion, Ross, showing off a Chase candy bar, says. She made chocolate houses for a title company, and toolboxes for a local hotel, which leaves them in rooms after making a repair. “The idea is to get five of those a month,” says Ross, who is the salesperson. “There are so many different areas where you can grow.”

Ross, who calls herself “the wearer of all hats,” says she’s learned every function in the store over her first decade. Like dipping truffles, which the store sells 10,000 of in December alone. The store makes 90 percent of its chocolates in the store. “I know how to make everything in there,” she says. “I’m up to my elbows in chocolate at Christmas.”

Still, there were mishaps. Like the accidental pouring of peanut butter all over her clothes and shoes. And “when you dip a truffle, your first five or 10 truffles aren’t going to look that good,” she says. “They didn’t look that good for a while.” She took the imperfect truffles home to her family. “It took me over five years to figure out everything in the store,” she says.

On the retail side of the business, Ross has launched chocolate-making classes to bring customers in. “I had a guy who paid $150 for a date with a girl,” she says. “I taught them how to make chocolate.”

Ross says she’s learned her customer-service chops along the way. “I’ve learned if you can get on the phone and apologize genuinely and say what can I do to make it right, 95 percent of the time, you can make it right,” she says. The store, for one, occasionally gets complaints about broken or melted chocolate when it ships orders. “People appreciate it when you just pick up the phone and just take ownership.”

Lindsey Ross and her young helper, daughter Kennedy, at the Houston Street Toy Co. in downtown Fort Worth's Sundance Square

The Next Idea? The decade has brought other changes. Ross and her husband divorced. Juggling her responsibilities as a single mom and those as a business owner, she began looking for the next business idea. “I’m always looking for fun ideas,” she says. And she wants to give her children a good role model.

“They grow up knowing that I worked hard,” she says. “You shouldn’t expect something for nothing. If I can instill that in my kids when they’re young, they’ll be ahead of the game.”

Ross thought first of opening another chocolate store somewhere. The germination of the toy idea bubbled up from questions customers at the chocolate store had been asking. “We had customers ask us through the years what else they can do in Fort Worth, where else they can take their kids,” she says. “I’d recommend Sundance Plaza.”

Then came the idea for the toy store. And “not just to be a toy store,” Ross says. “But to be an experience. They come in, and we can pretty much open everything. They’re not going to come in here if it’s not unique.”

She didn’t know Sundance was looking for a toy store. Fort Worth has other independent toy retailers, some in business for years, that shun what’s in the mass market in favor of a curated unusual selection. Ross wasn’t too worried about those, viewing downtown as her chief differentiator, she says. “I wanted to be downtown,” she says.

Sundance’s Campbell thinks unusual boutiques could thrive in the online-driven retail climate. Sundance Square is drawing 166,000 pedestrians a week this year, Campbell says. That’s up from 144,000 last year. “In today’s retail climate, you read every day about these national cookie-cutter shops that are failing,” he says. “I really think that we’re going to see more of these local, provincial, independent shops. The uniqueness is a bit of a protection to online shopping.”

Ross pitched her idea to Sundance early last year, with a November opening date, and then began touring the Dallas Market Center, looking for unusual merchandising ideas among the showrooms. Sundance Square hadn't approved her as a tenant yet, but “I’m going to open it before anybody else does,” she says. “There’s not one fear I had. That’s just how I’m programmed.”

For what turned out to be an 1,800-square-foot store – small, but not as small as her 850-square-foot chocolate shop – she handpicked an assortment in outdoor play, books, games, puzzles, construction, make-believe, toddler, girls, tweens, stuffed animals, and trains. Merchandise began arriving over the summer, and her father helped her open, tag, and organize the inventory.

The unknown then, and what Ross is still sorting now that the store has been open since November: who the customer is and what they will buy. Are they local? To what extent will conventioneers downtown stop in and buy. Will they buy for young children, or teenagers, or even themselves?

“We didn’t really know if people would come in and buy things for their teenagers or toddlers,” she says. “Since we really didn’t know who the customer was going to be, I just tried to get a little bit of everything. I really didn’t have a roadmap.”

Ross also used her children as a small focus group. “I can see what they’re drawn to,” she says. Ross found and stocked items made by Texas companies: Piki Piki bikes for toddlers made by an Austin company; pump-action marshmallow shooters made by the Marshmallow Fun Co. of Dallas. Old-fashioned games like Monopoly with real metal pieces – not plastic – came in, as did toy trucks from Bruder, a German company that offers spare replacement parts to customers. “They don’t want any of their toys to end up in the landfill,” one of Ross’ toy store employees says.

Sundance Square approved Ross’ toy store as a tenant in the spring last year. Friends put her in touch with a lender for another Small Business Administration loan. She doesn’t say how much total she invested in the store – “a lot,” she says – but volunteered she had $100,000 in inventory alone.

Sundance Square helped her design her logo with a classic feel – “they helped me see that,” she says – and with finish-out in the space. An architect helped convert her concept. “I could talk about my concept, but I couldn’t draw it,” she says.

Ross “understands the keys to downtown and the need for street merchandising,” Campbell says. “You walk by that space, and the window merchandising is spectacular.”

Ross launched the store during her high chocolate season. “I’m up to my eyeballs in chocolate at Christmas,” she says. She drew her children’s nanny into the store as an employee, telling her, “you’re going to be a toy expert.”

Figuring out what people will buy, and for whom, “is still trial and error right now,” Ross says. “Dinosaur stuff sells like crazy. I didn’t think puzzles would be a big category for us. [It is.] Construction didn’t sell as quickly as I thought.”

Locals are buying. Visitors are about 20 percent of traffic, she estimates. The store has one manager, four part-time staff, and Ross; the chocolate store has five employees and Ross. Late this summer, with her two children in school downtown, Ross brought her children’s newest nanny on board in a part-time administrative role, to handle bookkeeping, payroll, reports and schedules – functions Ross had been handling.

The store’s categories are now construction; dinosaur; science, including rocks and geodes; outdoor play, with items like zip line; make believe; cosmetics and jewelry; books; infant and toddler; music; puzzles; and games and crafts. The game section includes classics like Twister, Yahtzee, Sorry, and Clue. “People appreciate that,” Ross says. She worked to stock the store with keepsake items. “I wanted to have pieces that you don’t necessarily give away, but pass down,” she says.

“When you come in, you find things that are a surprise,” Campbell says. “Even things that guys my age would like to play with. That’s what makes a place special.”

Ross has worked aggressively to get the word out on the store. The popular Tanglewood Moms blog gave Ross a big early boost with a prominent post. Ross ran a “Christmas in July” promotion, offering $5 in December “Toy Bucks” for a $50 expenditure. The store offers birthday wish lists. The toy store has done some crossover merchandising with Schakolad, selling chocolate bunnies and eggs during Easter and doing cross promotions like offering coupons. Ross and her staff invite active play in the store.

“Just be engaged, and just play; it’s magical,” she says, repeating a word used often in “Mr. Magorium’s Wonder Emporium.” “It gets loud in here on Saturdays. Kids are screaming and throwing stuff.”