On Episode 18 of Decision Dialogues, Jennifer Faherty and Tom Orrechio are joined by JJ Krachtus, president of Conrad’s Confectionery in Westwood, New Jersey. Conrad’s has been serving candy and ice cream in Bergen County since 1928. JJ talks about this multi-generational, family-owned business, the decisions he made which led to him “taking over” the enterprise, and the many difficult choices COVID-19 brought on him and the employees of Conrad’s.

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Transcript

The summary below has been created by a professional transcription vendor upon review of the recorded presentation. Please excuse any typos as well as portions noted to be inaudible.

Thanks for joining us on Decision Dialogues. We’re thrilled to have you along. My name is Jennifer Faherty, and I’m the Chief Client Experience officer at Modera Wealth Management, LLC. Today my colleague Tom Orecchio, who is the CEO, Principal and Wealth Manager at Modera Wealth Management, and I will be chatting with JJ Krachtus of Conrad’s. Conrad’s Confectionary is a family owned business featuring homemade ice cream, chocolate and candy. Conrad’s is the oldest business in Westwood, and one of the oldest in New Jersey, founded in 1928. Very impressive. I can’t wait to hear more about that. Modera’s Westwood office is right down the street from this iconic establishment. Welcome everyone to the show.

Thank you, Jennifer. So JJ, very excited to do this podcast with you. I’m a lifer. I’ve been going to Conrad’s since I’m a little boy. And always loved the ice cream, loved walking up to the window outside as a kid—just nothing more exciting than getting an ice cream cone in the summer. So how did Conrad’s get its start?

So Conrad’s got its start—Fred Conrad, the original proprietor—actually came over from South Africa. He was orphaned in the Boer War, and he came to live with an aunt in the United States. And he came to New Jersey, and decided to take confectionary classes in New York City. He went there to classes, started the business in 1928, and then in the 30s, my grandfather started working for him as a soda jerk, and became a partner eventually, and it’s been in my family ever since. So I’m the third generation in my family. My grandfather worked for Fred Conrad, who started the business.

And so what made you decide to get involved in the family business?

I guess serendipity played a large part. I went to school for engineering, got a Bachelors of Engineering, and spent almost two years in the field of—in a municipal engineering capacity. And then I didn’t love the office environment. It wasn’t—I didn’t see myself long term. So I went out with the surveyors when that opportunity came to be outside. And, you know, always in the back of my mind, even in college, you know, I thought about this business, the legacy. And then a lot of things came together, and it just became the path to take.

You know, Tom said, “How did you decide to get into the family business?” And so that word decide is interesting, because with family businesses, sometimes you don’t have, really, a choice. Sometimes it’s kind of, you know, expected that you will. Is that what happened with you?

It’s a mixed bag. one parent was “no choice,” and one parent was like, the opposite direction. Yeah. So it was, it was a mixed bag. But in the end, it all worked out wonderfully. So everybody’s happy with how it’s progressed.

And how long have you been at the helm?

About 17 years ago, I guess, I started working for sort of sweat equity, earning shares of the business. I’ve been sole owner, I guess about… god it goes so quickly, but I’d estimate it around six—six years, I’ve been 100% owner.

And is it turning out to what you envisioned 17 years ago? Is it different?

I think, 14 years ago, I stopped envisioning. And 14 years ago, I just envisioned a lot of different paths. One of my favorite analogies for business is mining—and you put shafts in the ground and you see how the ore is. And it’s good to have a lot of shafts in the ground when one dries up, but it’s harder to have more. So I had a lot of vision for what could happen, but now I don’t put any hard stock into it, and sort of ride the wave of where the business is directing itself, and where it’s telling me to go, and constantly try to try new things, and constantly try to improve the things that are working.

So running a small business, is—there are a lot of things that are similar in running a small business, whether it’s your business or our business, but there are things that are certainly unique to your business. Tell us some of the things that are unique to Conrad’s, and how you tackle those issues.

Yeah, the first thing that jumps out to me would be the business model, being the quote unquote “antiquated”—you don’t see gooseneck soda parlors, you know, you have to go a long way to see a genuine soda fountain that’s been open since 1928. And there’s a reason for that, so I think the business model is somewhat unique. And that’s been a challenge over the years—sort of when and what to adapt, and how to change properly. So that’s kind of been unique to Conrad’s.

And the generational aspect is a wonderful, unique part of Conrad’s—to have that customer base, you know, nothing’s better than to swap stories with someone who’s—would have been with my grandparents generation, you know—or to see four generations. We’ve actually had four generations of customers in the same booth, you know, at the same time, a little baby, and, you know, a great grandma. So those are somewhat unique to my business. So I appreciate them.

What do you like most about the business?

It suits me. It’s extremely challenging, but I couldn’t just work with my mind, I couldn’t just work with my hands. I enjoy shifting roles, and being able to use the business to scratch all kinds of different itches. So that’s one of the things I enjoy most about it.

So 17 years in, you obviously have a lot of wisdom—not just knowledge—but wisdom on working in the business and working on the business. If you could rewind 17 years, what would be the piece of advice you’d give yourself 17 years ago?

Yeah, so I would tell myself, “Mind my own perfectionism and OCD, and not to waste energy”—in that, just to be more aware of those two aspects of my personality. My example being like, first thing I did was, “Let’s get a website!” Website’s gotta be, it was like, when websites were new, for businesses like this. 

Sure.

And I learned Photoshop and I spent so many hours making the pictures look good. Whereas, you know, a little bit more of “slap the picture up and sell the nonpareils” kid would have been something I would, you know, I would have done.

Ah, that’s good! So that’s the advice you would give yourself, what’s the best piece of advice you received from someone else?

That would have to be my grandpa in a prophetic moment. I guess, when I was growing up—you know, just a kid coming into Conrad’s watching him do whatever he was doing at the time. I remember, he turned to me, and he said, “Take care of the quality and this business will take care of you.”

That’s great.

Yeah. And it’s just been one of the foundations of the designing and running the business.

What would you say is the biggest challenge to running the business?

Man, it’s, I think there’s so many plates you have to spin, is one of the biggest challenges. Not having enough time really to give any one aspect of the business and—managing that energy in a way where I can grow, get more people on board, and you know, give each aspect of the business the human attention it really requires.

Okay, I know that the business can be somewhat seasonal. I know that there are certain times of the year where the chocolate part of your business is huge. Whether it’s around the holidays, or again, around Easter, and then obviously the ice cream in the summertime. Do you have a favorite of the seasons?

I appreciate the change. I often tell people, “By the time you’re sick of candy, it’s ice cream time, and by the time you’re sick of ice cream, it’s candy time.” And the candy is like build, build, build, build, build, build, build, inventory for the holiday, the holiday comes up and then things you know, you go crazy, everything’s empty, it’s a disaster, you start picking up the pieces, but and then ice cream’s a grind. You know, weather’s good, sales are good; weather’s bad, sales are bad. But like sort of day in, day out and they’re both. I appreciate being able to jump into both of those modes.

That’s great. Tell me a little bit about your people. Have you had long term employees?

Yeah, yeah. So what my mom taught me was the people aspect of the business, and the importance of keeping people happy. And we actually have, one of my employees is on the third boss she’s worked for. So she started in high school for my grandparents. 

Wow.

And then she worked for my parents. And now I’m the boss, you know. So like, in a way, she’s more of a cornerstone than any of us.

Wow, that’s great. One of my closest friends, his wife works for you. And she’s been working there a long time. I tease her every time I come in what a sweet job she has. And she she finds some humor in that.

Who’s that?

Sharon.

Oh, that’s who I’m talking about!

Oh, you’re kidding!

Yeah, you’re friends with Sean?

Yeah, I’ve known the Aspens for a long time, [we’re] very close friends.

Oh okay! Yeah, Sharon! Sharon started from my grandparents.

That’s great. That’s fantastic. Very nice to hear.

That must be so rewarding in many ways, right?

Yeah, it’s amazing. It’s amazing. What I hope to be a part of because I’m an engineer, you know, I see the world, everybody wants the same thing, and we all get more of it working together, and why isn’t it working out as well as it could be? I just want to, in this time, [be] very optimistic about how systems and communication can pair with the business models that facilitate that for everybody’s mutual happiness. And I’m hoping to be somewhat part of that in my designs, and sharing that someday in the future.

So I asked what was one of your greatest challenges earlier. Let’s talk about recent challenge. How did you guys fare getting through the pandemic?

Yeah, I lost a lot of hair, I think. Lost what was left. It was very challenging. So for some background, Easter is our biggest holiday. So we—like I said—you build, you build, you build, all your inventory. The shutdown happened, I think three or four weeks before Easter? Like literally worst possible time for us. When I also signed the lease for March 1st for our expansion facility. 

Wow.

So that was, you know, that was… very interesting. It’s incredibly challenging. I wouldn’t wish it on anybody, but because of the people we had, and just because of the love of all the employees—like getting through it together—we just faced every day and every challenge that popped up, you know, as best we could. And if it wasn’t for my team, you know, we wouldn’t be here.

And we just, we just faced it together, and I think that’s the bottom line of what you got to do. But it was, yeah, it was a trip, man. And it’s not over.

No, it’s not over.

The supply chain, you can’t get anything, you know.

And pricing?

What kind of pivots did you have to make specifically during that time in terms of like, did you have to think about different ways to grow the business? How to reach different—how to reach customers? Different inventory?

Absolutely. First pivot was, I’m sitting on like 15% of my annual revenue that usually goes in the next three weeks, and if it doesn’t, I’m tapped from a cash flow perspective—as far as like line of credit. So it’s like, what? Can I get 10% of that out the door? You know, the initial question was, “Can we be in business?” And like, thank God, they determined takeout food was okay. So you know, if people need cheeseburgers and fries, you can make a case they need ice cream.

So we started going at it. Serendipitously, and because we’re a growing business, we had just gotten our entire product catalog on to Shopify—everything inventoried. So transitioning to a 100% phone call / internet based sales model, whereas typically it was 80/20 in store to online, now we’re 100% online, and does this framework have what it takes to to get it done?

My first full time hire was my cousin, Tony. He’s kind of a tech whiz, had experience with logistics and things like that. And, you know, with spit and duct tape, day by day, you know, he kept that, got things going. You know, rip down all the merchandising shelves, set up packing stations. Serendipitously, we had trucks, because we’re moving into—the expansion was moving into events and things. So use the trucks, direct-to-door delivery, and we managed to get it all out the door, which was, looking back, I can’t even believe it, honestly. 

Would you say one of the blessings was it kind of forced you to change your business model a bit, and that’s something that’ll stick going forward?

Absolutely. There’s a lot of silver linings to it, and that was one of them. Being able to realize we can offer next day delivery, sort of like an Amazon. So you know, when Christmas comes, you know, it’s just as easy to get your candy, gifts, delivered next day. So that convenience factor. So there’s a number of silver linings to the stress.

And I would say with the—because you have that history, and you have these customers that probably know you from growing up, but they don’t necessarily live locally—now you have this whole other market that you might be able to reach—

—Absolutely—

—if they moved away, something like that, where they can get Conrad’s just like they were, you know, back in Westwood.

Absolutely. And there’s a lot of people out there looking for an Easter Bunny that couldn’t get it their traditional way, you know, and we were shipping. So we ate the shipping and did free shipping through the entire northeast, just to move product from a cash flow standpoint, and probably built a decent amount of customers, you know, who tried us for the first time because of that.

So how do you build on that? Because it sounds like it’s gonna be a big part of your business going forward. I mean, some people like, look, like I said, I’m a lifer, and I live right around the corner from Westwood. I only found out recently that you ship, because I’m so close with the Espen family, and they told us that “Oh, yeah, we ship now.” And how do you get that word out? 

Yeah. You know, I struggle with that. It’s a great point. I ran into someone who lived in Westwood for 30 years and didn’t know we sold ice cream. 

What!?

Like, it was a candy customer.

Oh boy.

And I’ve done a lot of thinking about it, and what I’ve come to realize is, you know, we are so inundated—every business is trying to get in our heads. So we walk around the world with a natural defense mechanism of like, “We got these walls.”

Yep.

Because otherwise, you know, your brain space is going to be co-opted by business. It’s amazing, the best is always word of mouth.

Yep.

That’s always the best. And then cross-selling. I got a lot of different mine shafts in the ground right now. We’re doing events, birthday parties, I have the trucks. So we have delivery locally, where we deliver nationally, candy, you know. So developing a team in-house for content creation is my biggest goal in the—I’d say next year or two—as far as facilitating communication to my customers. Because of video—and a quick video, you could do a lot more if you can produce content in-house and just constantly get it out there.

Have you done any co-marketing or delivery to commercial, where they don’t have that in-house, and you become their outsourced opportunity? I mean, you’re doing birthdays, are you doing events anywhere?

How do you mean, commercial?

Well, so have you partnered with any, any other retail outfits where they don’t do what you do, but could offer it because they put on other events, or birthday parties where you can be their supplier?

Yes, that’s actually right now, it’s sort of a “swim club” to me. So it’s, you know, I would love to place a freezer or a cart at a swim club or a country club.

Right.

And I’m actually working with someone right now. And my new product line is the “Sweets and Treats” menu, which is our homemade ice cream sandwich—pre-packaged ice cream, essentially. So everything’s pre-packaged, and designed to be able to do that, and where I could just, you know, fill the freezer, check in, do the inventory. So right now we’re looking for partners like that, and just, I’m brainstorming and if you got any thoughts, I’d love to hear them. But like the swim club is a great fit, country clubs are a great fit.

I even like I have some vision of a—either a car dealership, or Knights of Columbus that’s on like a busy road, and you know, partnering up with them somehow making it work where we’re either attracting attention, or a certain percentage of the proceeds go to the benefit of their choice.

Right. A lot of the towns in the area do town days, usually over the summer or in September to end the summer. And they’re always looking for sponsors and you could park a cart.

Oh, yeah, that’s what the expansion was, in large part—towards big events. We’re a part of Mahwah Food Truck Festival, [ ] but yeah, that was like, that was what I was looking towards, with the expansion and some corporate gift type stuff. And those both dried up instantly.

So the way I even learned that you ship, was my son broke his shoulder back in April, and your ice cream sandwiches showed up on our front door, which was great!

Yeah!

He was thrilled. He couldn’t wait. He couldn’t wait to dig in.

Yeah, so we do the ice cream. locally. I think most of the towns in Bergen County, we do next day. And so I have, like, software in the works—because I got the trucks and you know, theoretically with the right people, I can run them all day long. So we want to be able to do almost like pizza delivery too, with the Sweets and Treats menu. So you can, if you’re in the backyard at the barbecue, you’re hanging out, like order, you know, hopefully we’ll be there as soon as possible.

That’s great.

Yeah.

So it sounds like a fair amount of expansion going on at your place.

Yeah, definitely expanding. Like I said, our old business model, it’s the foundation and bedrock of who we are, but with, essentially labor costs in New Jersey’s doubling from where we started, so that’s going to be a huge challenge—how does that soda fountain look? I mean, I can have 40 or 50, high school and college kids on the payroll working for me. So figuring out how to make that work, it’s going to be nice to have different areas of the business to different minds in bringing in different cash flow to be able to figure out how to adapt to that.

That’s great. So it sounds like with this expansion, there’s going to be a fair amount of new parts of the business to manage. Do you have a favorite book, or author, or method of learning about business and how you can expand it?

Yeah, I wish I had time to read. I definitely—I’m more of a podcast guy. I listen to a lot of podcasts. Honestly, Lou Lamoriello, the old New Jersey Devils manager. 

Yeah, the GM.

Yeah, the GM, was a big influence on me of how to run the business. So he sees he jumps out as sort of someone I’ve always, I think, learned from, not even realizing it, just being a huge Devil’s fan growing up.

Yeah, he did it in two sports.

Yeah.

He built a dynasty with the Devils.

Yeah, a lot of what he said was, you know, spoke to the core of a long term quality product, long term business model, that that I’m trying to achieve.

So where do you think you’d like to take the business next? What’s the big—is it the online sales we’ve been talking about? Is it delivery?

Franchise? I don’t know if you’d ever think of that, or opening up another location?

Yeah, I think it’s the new locations, where it is, like that next big step, in my mind. So space is a huge factor in Bergen County, with the prices of everything. We got this site, just 1500 square foot extra production space, and instantly, you know, I need more—but it’s so expensive. So the thought now, with real estate is absolutely crazy—commercial real estate’s kind of high too, but I think like avenue retail real estate is maybe not so high—not even positive. But if Fred Conrad didn’t buy the building, and pass it along with the business, the business wouldn’t be here, so there’s a lesson there in considering purchasing a building that I could, on retail, second retail, Conrad’s, with an apartment above I can live, sort of make it work, cash flow wise, and then start that second store.

And my vision for increasing production, would, I sort of—instead of a large factory, producing everything, I’d sort of like to, if the trend is such that retail is more affordable, I’d like to maybe combine each new retail establishment with one aspect of the production. So, you know, this store would be the “clusters and bark” store, you know, this store could be—things that would work on a small, hand basis, which is a lot of what we do, because we’re you know, we’re a lot of our stuff is by hand.

So that’s sort of my vision as far as increasing production, as well as sales. And then having the online shipping, the driving the truck to a place—like that can all work out of a central facility, warehouse type place. So that’s sort of where my head’s at right now.

You put a smile on a lot of people’s faces with what you do. We’re going to wrap up with one last question that we always ask. And that is, what was the last non financial related decision that you made today, yesterday, most recently?

Whether to clean up that mess in the background. And it’s a big No!

That’s good!

‘Cause this is all audio, right?

This is all audio. Well, it was a pleasure having you on the show. I look forward to seeing you over the summer for sure. Thanks for taking the time today.

Thank you for having me. It’s been a pleasure. I appreciate it.

So thanks very much to Tom and JJ for letting us listen in on their conversation. We appreciate their time and perspective. And thank you for tuning in. We hope you’ll join us next time on Decision Dialogues for more stories from successful business owners. So long for now.

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About JJ

Portrait of JJ Krachtus

JJ Krachtus is the current president of Conrad’s Confectionery, founded in 1928 in Westwood, New Jersey. Conrads believes in making the very best chocolate confections and ice cream with the highest standards and same quality craftsmanship as nearly 100 years ago.

Conrad’s won the Best of Bergen Reader’s Choice award in 2008, 2009, 2011, 2013, 2014, 2015, 2019 and 2021.


Disclosure

Modera is an SEC registered investment adviser which does not imply any level of skill or training. For additional information see our Form ADV available at www.adviserinfo.sec.gov which contains a full description of our business, operations and service offerings including fees. Statements made in the podcast are not to be construed as personalized investment or financial planning advice, may not be suitable for everyone and should not be considered a solicitation to engage in any particular investment or planning strategy. Statements made are subject to change without notice.