June 2012 • Issue 14
We Communicate, We Educate, We Advocate!
Donuts to Dollars in India by Linda Formichelli
also isnue The Operating Philosophy: How Dunkin’ Chief Nigel Travis has this is changed the thinking about operating company stores by Matt Ellis Westward Espansion Picks Up Steam by Cheré Coen Taking the Mystery Out of Customer Service by Stefanie Cloutier
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INDEPENDENT JOE • JUNE 2012
Taking the Mystery Out of Customer Service
by Stefanie Cloutier
A customer walks into a shop. She’s looking for her morning coffee, maybe a little something to go with it, she’s not sure. It’s the start of her day, and her experience here could set the mood for the day. Will it be a good one?
selling the exact same thing. Says Mershimer, “Customer service is key.”
If you’re the owner of the shop, you know you want that answer to be a resounding yes. But how do you make sure of that, especially when you can’t be there yourself at all times? The answer, for some, is mystery shoppers. Mystery shoppers are the people who pose as regular customers, but who pay close attention to the details, from the look of the outside of the building to the cleanliness of the bathroom to the greeting by the staff. This type of quality control has been in existence for decades, and has long been an industry standard; it’s a great on-the-ground way of keeping tabs on your customer experience. Michael Mershimer is the owner and COO of HS Brands International, whose Mershimer Group division provides mystery shoppers for about one hundred clients – among them Dunkin’ Brands and several individual franchise owners. He knows how important it is to keep on top of how your business is performing – after all, a failed customer service experience can drive your customer to a competitor. “No matter the size of your business, in today’s economy, you’re fighting to the death for every consumer dollar,” says Mershimer. “You can’t afford to lose even one customer to the other guy because someone forgot to say thank you.” According to Mershimer, it’s all about distinguishing the experience at your shop versus the guy down the street
Michael Mershimer's company provides mystery shoppers for Dunkin' Brands and several individual franchise owners.
Mystery shopping is one way to validate customer service; another is Guest Service Surveys (GSS) – which DBI relies upon to collect customer data from a majority of franchises. These offer the customer an incentive to give feedback. According to Mershimer, any good chain will have both trained mystery shoppers and GSS. “The difference is that the majority of the GSS feedback is either really awful or really fabulous; there’s no in-between,” he says. “Plus you don’t get the narrative that shoppers provide.” With GSS, customers self-select the type of information they are giving to you, which might not always be the information you are seeking. For example, Mershimer had a national tire-changing client that was losing customers to competitors in a particular market. The client believed that customers who were calling late
03 05 07 08 11 14 27
Taking the Mystery Out of Customer Service
Stefanie Cloutier
Welcome to the 14th Issue of Independent Joe Magazine Jim Coen
Westward Expansion Picks Up Steam Cheré Coen
DDIFO Directory of Sponsors The Operating Philosophy Matt Ellis
Donuts to Dollars in India Linda Formichelli
Index of Advertisers
in the day, somewhat close to closing time, were being turned away. With mystery shopping, Mershimer could set up an audio shop: he had female callers call late in the day and push for service that day, to see what the employees were saying. No matter what kind of information a client is looking for, mystery shoppers can get it. They can make sure that marketing initiatives are in place; for example, does the staff mention the current promotion? They can also check to ensure the shop is complying with brand standards, displaying the right signage and maintaining appropriate cleanliness. But their biggest initiative is loss prevention, ensuring that employees are ringing sales into the cash register appropriately. Mystery continued on page 19 JUNE 2012 • INDEPENDENT JOE
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To the Dunkin’ Brands Franchisee Community:
Distribution. Commitment. Partnership.®
Thank You for 30+ great years during our Beverage Partnership!
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INDEPENDENT JOE • JUNE 2012
Dear Dunkin’ Donuts Franchise Owners,
Welcome to the 14th Issue of Independent Joe Magazine by Jim Coen In this issue you will find great stories about franchisees expanding into new markets – both nationally and internationally. We also have an article about how to gauge the quality of your service, and about why Dunkin’ Brands is operating more shops. Independent Joe magazine is important for a number of reasons. It positions you as key stakeholders, independent of Dunkin’ Brands. Through our reporting, you get a fresh perspective on how other franchisees approach the challenges of running their business. We share successes and explain issues – offering a voice that is focused solely on the interests of Dunkin’ Donuts franchisees. Independent Joe is also a venue for our sponsors to communicate with you. Thanks to their support, DDIFO is better positioned to defend, enhance and protect your equity as Dunkin’ Donuts franchise owners. From the very first issue of Independent Joe magazine in spring of 2009, we have written stories that reflect the interests and views of the community of Dunkin’ Donuts franchise owners. The cover story of our inaugural issue discussed why mediation is a viable option for resolving business disputes without involving lawyers and judges. At the time we wrote the story, Dunkin’ Brands was earning a reputation as the most litigious quick service restaurant brand, with 350 lawsuits filed against its franchisees.
munity. No matter what opportunities or challenges lay on the horizon, I want you to know that the strength of this organization will always rest on its collective and independent voice; Independent Joe magazine is a crucial part of our overall communications effort. DDIFO’s fine sponsors are a crucial part of our magazine. We have had great success with our sponsor program because we enable these companies to communicate their unique value proposition directly to our members. We appreciate the sponsors’ trust in us and we ask you take a careful look at what these sponsors can do to improve your systems, enhance your operations and improve your profits.
I invite you to visit our website www.ddifo. org, to stay on top of the news affects Dunkin’ Donuts franchise owners. On that site, we generate original content and aggregate other content we believe is important to your business.
I would also like to take this time to thank the talented and dedicated people who helped put this issue together including Communications Director Matt Ellis, Sponsor Coordinator Joan Gould and Graphic Designer Susan Petersen. Last but not least, thank you to the franchise owners for taking the time to communicate and share great stories with us all.
Please don’t ever hesitate to contact me with any comments, questions or suggestions.
In that article I was quoted article saying, “Litigation creates an environment of lack of trust, intimidation and fear. It is not conducive to a strong franchisee-franchisor relationship.” Since that time things have changed significantly. Dunkin’ Brands no longer has the reputation of filing lawsuits against its franchise owners. Under the leadership of CEO Nigel Travis, Dunkin’ Brands initiated a successful IPO, signed a groundbreaking new agreement with the National DCP and embarked on an aggressive expansion effort. At the same time, Dunkin’ Brands’ communications office has been more willing to publicly comment for Independent Joe. In this issue, quotes from Dunkin’ Brands appear in three of our featured articles. This truly exemplifies the renewed sense of trust and respect between DDIFO and Dunkin’ Brands. Independent Joe will continue to search out topics of interest to the franchisee com-
I look forward to seeing you at the DDIFO National Members Conference September 27th and 28th at Mohegan Sun; it promises to be the biggest and best meeting DDIFO has ever put together.
Jim Coen President, DDIFO, Inc jim@ddifo.org • 800-732-2706
June 2012 • Issue #14
Independent Joe is published by DD Independent Franchise Owners, Inc. ®
Editors: Jim Coen, Matt Ellis Contributors: Stefanie Cloutier, Cheré Coen, Linda Formichelli, Perry Ludy Advertising: Joan Gould • Graphic Design/Production: Susan Petersen Direct all inquiries to:
DDIFO, Inc. • 150 Depot Street • Bellingham, MA 02019 508-422-1160 • 800-732-2706 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.
INDEPENDENT JOE®, INDY JOE®, and DDIFO® are registered trademarks of DD Independent Franchise Owners, Inc. Any reproduction, in whole or in part, of the contents of this publication is prohibited without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright © 2012 • Printed in the U.S.A. JUNE 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • JUNE 2012
Westward Expansion Picks Up Steam Dunkin’ Donuts expansion in the West picked up steam this spring with the announcement of new franchises emerging in the Denver market and the opening of a distribution center in Phoenix, Ariz. The Phoenix center will be the first located west of the Mississippi — the seventh warehouse in the National DCP (NDCP) network — and will deliver essentially all food, paper and equipment supplies to Dunkin’ Donuts restaurants, a boom for western franchises. Dunkin’ Brands (DBI) and NDCP signed a long-term performancebased procurement and distribution agreement in January, in which NDCP would be the exclusive provider for Dunkin’ Donuts restaurants. The agreement includes working toward uniform product costs for franchises in all markets and the Phoenix property will assist in that goal by
providing less travel time for supplies reaching western franchises. The newly acquired leased space in Phoenix totals 50,000 square feet with an option to expand, according to Kevin Bruce, chief executive officer of NDCP. The center will offer distribution services to approximately 80 restaurants in Texas, New Mexico, Colorado, Nevada, Arizona and Camp Pendleton in southern California, he said. Currently, deliveries to western restaurants come from Chicago, which is not cost effective for franchise owners, Bruce explained. “It’s a good step forward because it helps current members in those markets who are now served out of Chicago,” Bruce said. “Right of the box, it’s a lower cost model for those franchisees in the west.”
by Cheré Coen Bruce said he looks forward “to expanding our footprint” as more franchises open west of the Mississippi. Although the majority of Dunkin’ Donuts’ 7,000 U.S. locations are located east of the Mississippi River, the company plans to more than double that number over the next two decades, with store development agreements announced this year in Denver, Houston, San Antonio, El Paso and Lincoln, Nebraska. “With the geography the way it is in the west, we will place distribution centers where we can minimize the miles our trucks drive, which reduces costs to members,” he said.”
Denver’s “Healthy Market” One of the new western markets is Denver, where 11 Dunkin’ Donuts Westward continued on page 13
JUNE 2012 • INDEPENDENT JOE
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Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org
Accounting Adrian A. Gaspar & Company, LLP, CPAs 1035 Cambridge Street, Suite 14, Cambridge, MA 02141 Robert Costello • cpas@gasparco.com 617-621-0500 • www.gasparco.com Bederson & Company LLP - CPAs and Consultants 405 Northfield Avenue, West Orange, NJ 07052 Steven Bortnick, CPA • sbortnick@bederson.com 973-736-3333 • www.bederson.com
Duro-Last Roofing 525 Morley Drive, Saginaw, MI 48601 Jim Schriber • jschribe@duro-last.com 800-248-0280 • www.duro-last.com ViewPoint Sign and Awning 35 Lyman Street, Northboro, MA 01532 Bill Gavigan • billg@viewpointsign.com 508-393-8200 • www.viewpointsign.com
Business Broker
Bedford Cost Segregation 60 State Street, Suite 700, Boston, MA 02109 Bill Cusato • bcusato@bedfordcostseg.com 978-263-5055 • www.bedfordcostseg.com/who_we_serve/ddifo.asp
Hirshon Associates LLC 425 Broadhollow Road, Suite 428, Melville, NY 11747 Andrew Hirshon • hirshonrep@aol.com 631-249-8989 • www.hirshon.com
Cynthia A. Capobianco, CPA 60 Quaker Lane, Suite 61, Warwick, RI 02886-0114 Cynthia Capobianco • 401-822-1990 cynthia@capobianco.necoxmail.com
Kensington Company & Affiliates 185 Roslyn Road, Roslyn Heights, NY 11577 David Stein • kstein@kensingtoncompany.com W: 516-626-2211 • M: 718-490-2218 • www.kensingtoncompany.com
James P. Ventriglia, CPA, Inc. 145 Phenix Avenue, 2nd Floor, Cranston, RI 02920 Jim Ventriglia • jimv@jpvcpa.com 401-942-0008 • www.jpvcpa.com Gray, Gray & Gray, CPA 34 Southwest Park, Westwood, MA 02090 Paul Gerry, CPA • pgerry@gggcpas.com 781-407-0300 • www.gggcpas.com Performance Business Solutions, LLC 87 Lafayette Road, Suite 11, Hampton Falls, NH 03844 Jeff Hiatt • jdh@revenuebanking.com 508-878-4846 • www.revenuebanking.com Rubiano & Company, CPA’s 5 Austin Avenue, Suite 1, Greenville, RI 02828 Daniel J. Rubiano, CPA • dan@rubianocpa.com 401-949-2600 • www.rubianocpa.com Sansiveri, Kimball & Co., LLP 55 Dorrance Street, Providence, RI 02903 Joseph Mansour • jmansour@sansiveri.com 401-331-0500 • www.sansiveri.com Thomas Colitsas and Associates, CPA 103 Carnegie Center, Suite 309, Princeton, NJ 08540 Tom Colitsas • tcolitsas@tcacpa.com • 609-452-0889 “A Member of Franchise Pros”
Advertising Access Rewards 1012 W Beardsley Place, Salt Lake City, UT 84119 Doug Jentzsch • dougj@accesscashrewards.com 866-681-2427 • www.accesscashrewards.com
Back Office
Communications 3 Wire Group, Inc. 101 Broadway Street West, Osseo, MN 55369 Derek Knapp • derek.knapp@3wire.com 518-563-3200 • www.3wire.com
Finance Business Financial Services 3111 N. University Drive, Suite 800, Coral Springs, FL 33065 Scott Kantor • skantor@businessfinancialsservices.com 954-509-8019 • www.businessfinancialservices.com Capital One Bank 710 Route 46 East, Suite 306, Fairfield, New Jersey 07004 Stuart Vorcheimer • Stuart.vorcheimer@capitalone.com 732-439-7626 • www.capitalone.com Centrix Bank & Trust 1 Atwood Lane, Bedford, NH 03110 Deborah Blondin • dblondin@centrixbank.com 603-589-4071 • www.centrixbank.com Direct Capital Franchise Group 155 Commerce Way, Portsmouth, NH 03823 Robyn Gault • rgault@directcapital.com 603-433-9476 • www.franchise.lendedge.com Fidelity Bank 465 Shrewsbury Street, Worcester, MA 01604 Sally Buffum • sbuffum@fidelitybankonline.com 508-762-3604 • www.fidelitybankonline.com GE Capital, Franchise Finance 201 Merritt 7, 2nd Floor, Norwalk, CT 06851 Ab Igram • ab.igram@ge.com 203-229-1885 • www.gefranchisefinance.com
IKMS Group, Inc. PO Box 6221, Manchester, NH 03108 Cliff Pratt • ctp@ikmsgroup.com 603-644-4683 • www.ikmsgroup.com
Joyal Capital Management Franchise Development 50 Resnik Road, Plymouth, MA 02360 Daniel Connelly • dconnelly@joycapmgt.com 508-747-2237 • www.jcmfranchise.com
Building
Merchant Cash & Capital 450 Park Avenue South, 11th Floor, New York, NY 10016 Seth Broman • sethb@merchantcashandcapital.com 212-545-3185 • www.merchantcashandcapital.com
Absolut Contracting 4346 Route 27, Princeton, NJ 08540 William Lako • blako@absolutlycan.com • 609-655-0800 “A Member of Franchise Pros”
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INDEPENDENT JOE • JUNE 2012
Priority Capital 174 Green Street, Melrose, MA 02176 Brian Gallucci • bgallucci@priotiycapital.com 800-761-2118 Ext 14 • www.prioritycapital.com
Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org Susquehanna Commercial Finance 2 Country View Road, Suite 300, Malvern, PA 19355 Brian Colburn • brian.colburn@susquehanna.net 443-996-1792 • www.susquehanna.com
RMS Insurance Brokerage, LLC 575 Jericho Tpke, Suite 102, Jericho, NY 11753 Donna Mis • dmis@rmsinsurance.com 516-742-8585 • www.rmsrestaurants.com
Trust Capital Funding 132 Adams Street, Suite 1, Newton, MA 02458 Mark Wesalowski • Mwesalowski@trustcapitalfunding.com 800-LENDER1 • www.trustcapitalfunding.com
Sinclair Insurance Group - Risk Management 4 Tower Drive, Wallingford, CT 06492 Matt Ottaviano • mottaviano@sinclair-insurance.com 203-284-3235 • www.srfm.com
United Capital Business Lending 215 Schilling Circle Suite 100, Hunt Valley, MD 21031 Trey Grimm • tgrimm@ucbl-inc.com 410-771-9600 • www.unitedcapitalbusinesslending.com
Starkweather & Shepley Insurance Brokerage, Inc. 60 Catamore Boulevard, East Providence, RI 02914 Sabrina San Martino • ssanmartino@starshep.com 800-854-4625 ext. 1121 • www.starkweathershepley.com
Food Products CSM Bakery Products 1901 Montreal Road, Suite 121, Tucker, GA 30084 Marla Cushing • marla.cushing@csmglobal.com 770-723-2083 • www.csmbakeryproducts.com PepsiCo 315 Norwood Park South, Norwood, MA 02062 Bryan Gruttadauria • bryan.gruttadauria@pepsi.com 781-255-2663 • www.pepsico.com
Human Resources CareerBuilder.Com 400 Crown Colony Drive, Suite 301, Quincy, MA 02169 Maureen O’Neill • maureen.oneill@careerbuilder.com 781-453-3570 • www.careerbuilder.com Diversified Solutions, Inc. 412 Long Pond Road, Plymouth, MA 02360 Chrishelle Gavoni • jkerchgavoni@comcast.net 508-746-6995 • www.diversified-solutions.com/dsi_dd.html Employers Reference Source 1587 Hamilton Avenue, Waterbury, CT 06706 Sandra Fabrizio • sandra@employersreference.com 888-512-2525 • www.employersreference.com Gecko Hospitality 1415 West 22nd Street, Tower Floor Oakbrook, IL 60523 Robert Krzak • robert@geckohospitality.com 630-390-1000 • www.geckohospitality.com The PCI Group 303 Molner Drive, Elmwood Park, NJ 07407 Robert Boffa, Sr. • rgb@pcihr.com 201-797-8000 ext. 223 • www.pcihr.com
Insurance The Hill Agency 5 Washington Avenue, Endicott, NY 13760 Rita Frailey • rfrailey.hilla01@insuremail.net 800-446-1775 • www.thehillagencyinc.org KK Insurance Agency 541 Broadway, Long Branch, NJ 07740 Ashish Vadya • ashish@kkinsuranceagency.com 866-554-6799 • www.kkquote.com Paris-Kirwan Insurance 1040 University Avenue, Rochester, NY 14607 John Mulcahy • johnm@paris-kirwan.com 585-473-8000 • www.paris-kirwan.com
Legal Law Office of Carmen D. Caruso, PC 77 West Wacker Drive, Suite 4800, Chicago, IL 60601 Carmen D. Caruso • cdc@cdcaruso.com 312-606-8640 • www.cdcaruso.com Lisa & Sousa Attorneys at Law 5 Benefit Street, Providence, RI 02904 Carl Lisa, Sr. • clisa@lisasousa.com 401-274-0600 • www.lisasousa.com Paris Ackerman & Schmierer LLP 101 Eisenhower Parkway, Roseland, NJ 07068 David Paris • david@paslawfirm.com • 973-228-6667 www.paslawfirm.com “A Member of Franchise Pros” Zarco, Einhorn, Salkowski & Brito, PA 100 SE 2nd Street, 27th Floor, Miami, FL 33131 Robert Zarco, Esq. • rzarco@zarcolaw.com Robert Salkowski, Esq. • rsalkowski@zarcolaw.com 305-374-5418 • www.zarcolaw.com
Operations Access to Money ATM, Inc. 628 Route 10 - Suite 8, Whippany, NJ 07981 Doug Falcone • dougf@accesstomoney.com 973-599-0600 • www.accesstomoney.com Belshaw Adamatic Bakery Group 814 44th Street NW, Suite 103, Auburn, WA 98001 Fran Kauth • fran_kauth@belshaw.com 206-718-3573 • www.belshaw-adamatic.com Bunn-O-Matic Corporation 1400 Stevenson Drive, Springfield, IL 62703 Todd Rouse • Todd.Rouse@bunn.com 800-637-8606 • www.bunn.com Cashmaster Cash Solutions 2108 Trving Blvd., Dallas, TX 75207 Jayson Dunston • jdunston@cashmaster-us.com 214-747-1982 ext. 2 • www.cashmaster-us.com Comcast Business Services 500 South Gravers Road, Plymouth Meeting, PA 19462 Comcast National Sales • Dunkin_National_Sales@comcast.com 866-407-6338 • www.business.comcast.com/internet/index.aspx Delphi/Fast Track 2+2 Drive-Thru Timer 3500 West Moore Avenue, Suite M, Santa Ana, CA 92704 Mike Pierce • mike@phaseresearch.com 714-850-1320 • www.fasttracktimer.com
Thank You to Our Sponsors!
Sponsors continued on page 16 JUNE 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • JUNE 2012
The Operating Philosophy
by Matt Ellis
How Dunkin' Chief Nigel Travis has changed the thinking about operating company stores As a publicly traded company, Dunkin’ Brands has promoted itself as “assetlight,” meaning it does not have much of its capital tied up in real estate or operations. The company’s remarkable growth – from the days when Bill Rosenberg began building the Dunkin’ brand – has largely come as a result of its franchisees.
W power fu ith its new stare in Dallas led partnership , Dunkin’ expects Brands t o open 50 Metrople s h o p x over th e next fiv s in the e years.
Over the decades, Dunkin’ has dipped its toe in the business of running stores, operating between 50 and 100 shops in the late 1960’s, according to one franchise owner who has been in the system since then. But, in the years that followed, virtually every Dunkin’ restaurant has been opened, owned and operated by a franchisee. Dunkin’s rise to prominence within its primary development areas was built on a franchisee model—which allowed the parent company to focus on product development, marketing and strategic growth, not on baking donuts, ordering supplies and serving customers. “They went for many years without owning anything,” said one franchisee with knowledge of the company’s operations plans during the 60’s, 70’s and 80’s. “If they took over a shop, they turned around and sold it. They were caretakers.” Of the several franchisees interviewed for this article, most said the caretaker model fit the strategy of relying on franchisees to incur the expenses of development so the company could remain asset-light and revenue rich. But, in the three and a half years since Nigel Travis took over as the Dunkin’ Brands chief executive, the number of company-owned and operated shops has increased from zero to 25. “I think Nigel came in with an operations background and wanted to seed that culture within Dunkin’ Brands,” said John Gordon, restaurant analyst and principal of Pacific Management Consulting Group. “In earnings calls I have listened to, Nigel has said, ‘We are
going to operate a limited number of company stores.’ This helps him instill discipline into the operating philosophy.”
The 80/20 ratio In fact, among franchised quick service restaurants, Dunkin’ stands out for its predominance of franchisee-owned shops. According to Gordon, most QSRs operate on a targeted 80/20 ratio, with franchisees owning and operating the majority. Among QSRs with similar unit-level economics to Dunkin’ Donuts, Gordon says, only Subway and Tim Horton’s have a ratio of franchiseeowned restaurants close to Dunkin’ Brands. “It’s viewed as a weakness to be entirely franchisee-owned,” said Gordon.
“McDonald’s has always been 80/20. That is viewed as the right ratio among most restaurant operational observers in the industry, but not necessarily Wall Street.” Still, Nigel and his team sold Wall Street on the concept that Dunkin’ Donuts would grow through its the investments of its “asset-light” strategy leaning on its franchisees who tap personal wealth or lines of credit to establish new stores in new areas. Even as Dunkin’ Brands (DBI) listed 25 stores in its 10K Annual Report filed with the Securities and Exchange Commission in February 2012, Gordon says the number of actual stores DBI is Company Stores continued on page 26 JUNE 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • JUNE 2012
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Westward continued from page 7 stores are scheduled to open this year north of Interstate 70 by a new division of the Utah-based Sizzling Platter restaurant company. Seven more are scheduled by 2018 for the southeast portion of the city by Doug Redman and his daughter, Katy Redman, and 12 new restaurants by Buzz and Brad Calkins by 2018. The Redmans have signed a multiunit development agreement to open stores in suburbs such as Parker, Castle Rock, Denver Tech Center, Centennial and parts of Aurora. The Calkins, who recently signed a multistore development agreement under the Bradley Petroleum banner, will open their first franchise in 2013 and focus on central Denver.
and energy technology industries, he said. “There are a lot of smaller businesses that support those industries that are doing well here, too.” In addition, Denver is a “growing market for franchises,” Huspeni said. “I
lition in its sparse retail landscape. Because in Colorado sales tax drives the municipal budget, Centennial government suffered for lack of retail, even though the workforce was highly educated and the median income close to $80,000. “Coming into the recession was interesting because we were already in one,” said Corri Spiegel, Centennial’s economic development manager. The mall reopened in 2010 and then the state’s first IKEA store and Steak and Shake restaurant arrived in Centennial. ““It’s been an interesting ride through the recession for Centennial,” said Spiegel. “For Corri Spiegel, economic development manager of Centennial, Colorado
“We see a sizable opportunity for existing and new franchisees to help expand Dunkin’ Donuts’ presence westward in cities such as Denver over the next several years,” according to Karen Raskopf, senior vice president of corporate communications at Dunkin' Brands, who responded to our questions in an email. “In February we signed two multi-unit franchise agreements to develop 18 new restaurants with two experienced partners, and we are excited to expand our presence with CITY OF CENTENNIAL PHOTO them in the marChipotle Mexican Grill makes its home in Colorado. This franchise is located in Centennial. ket in the years to come.” just did a story on 7-11 booming like us the past three years were record crazy here. There are a lot of franbreakers, which was not the national “Colorado is a healthy market,” said chises starting up here. average.” Dennis Huspeni of the Denver Business Journal. “Denver is a hub, with “It’s definitely a really good center It’s no surprise, then, that Dunkin’ access to both coasts. There is plenty point of the country to have a presDonuts sought to expand into Cenof land available and prices are lower. ence in,” he said. tennial. Home sales and employment figures are above state and national averages and metro rents are increasing, with growth in the health, oil and gas
Only a few years ago, the Denver suburb of Centennial with its many subdivisions included a Wal-Mart and a 20-year-old mall planned for demo-
“Each market has its own unique competitive realities,” said Raskopf. “With our strong brand recognition Westward continued on page 21 JUNE 2012 • INDEPENDENT JOE
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Donuts to Dollars in India By Linda Formichelli In 2011, Dunkin' Donuts forged an agreement with New Delhi-based Jubilant FoodWorks, Ltd., to open between 80 and 100 stores in India. In Jubilant, Dunkin’ Donuts has a partner that is well established – with 17 years of experience in retail foodservice in the Indian subcontinent. The first two Dunkin’ shops opened in New Delhi recently to great fanfare and have been viewed closely in the U.S. where many Dunkin' Donuts franchise owners hail from India.
held a couple other jobs, and then came the fateful event: "One day I saw an ad that a Dunkin' Donuts store was for sale in Morristown, NJ," he says. He met with the owner, be-
come interested in buying the store, and brought on a partner to help with the financing. Says Patel, "This is how we started the very first store in 1989." India continued on next page
An Unlikely Franchisee Dipak Patel and his partner own 28 Dunkin' Donuts stores and North and Central New Jersey; the first was opened in 1989. Seven years earlier, Patel had come to the U.S. from an area 200 miles north of Mumbai and 800 miles Dipak Patel emisouth of New Delhi; grated to the U.S. in 1982 and opened he had underhis first Dunkin’ graduate degrees Donuts shop seven in chemistry and years later. chemical engineering, and planned to earn a master's in industrial engineering at Texas A&M University. While studying for his master's, Patel had an early-morning paper route, and the only place in the area that was open 24 hours was a shop called Shivley Donuts. "I used to stop there in the morning, and this is how I got interested in coffee and donuts," he recalls. After graduate school Patel got a job at an oil products company, but was laid off when the economy went south. He moved to New Jersey and 14
INDEPENDENT JOE • JUNE 2012
With the opening of its first stores in New Delhi, Dunkin’ Brands says it plans on opening 100 stores in India over the next five years.
India continued from page 14 When asked whether he had ever thought, when he was in India earning his undergraduate degrees, he would eventually own 28 Dunkin' Donuts stores in the U.S., he says, "No -- never." Patel thinks the time is ripe for Dunkin' Donuts to enter India, since it has a growing middle class -- and with growth of the middle class will come a surge of businesses to serve them.
A Growing Opportunity
you can find Cinnabon, Yum! Brands, Curves, California Pizza Kitchen, Subway, and more. Starbucks plans to open 50 outlets by the end of the year and Krispy Kreme says it will challenge Dunkin’ with 35 stores over the next five years. "There is a huge familiarity of U.S. culture and U.S. economy by the Indians, and vice versa," says Faisal Hoque,
Even better is that the middle class is growing, and people in large cities have more disposable income. However, according to Shubhakar Hegde, who came to the U.S. from southern India 40 years ago and now has 11 Dunkin' Donuts stores in New Jersey, along with a middle class of about 250 million, there are 750 million people in
In an article in Franchise Times, Nancy Weingartner writes, "Franchising already is a $3.3 billion market in India, with the potential to grow to $20 billion by 2020, according to the Commercial Service literature. Currently there are 1,200 franchisors
Fred LeFranc, founding partner of Results Thru Strategy, says Dunkin’ will have to adapt its offerings to accommodate a Hindu and Muslim customer base.
India who are not in the consumer market. The majority of Indians lives in rural areas; they are not in the location or income bracket to buy Dunkin' Donuts' products.
in India, of which 25 percent are foreign, with U.S. brands dominating." She notes that according to a white paper by the Indian Restaurant Association in 2010, the burgeoning restaurant industry is estimated to grow 5 to 6 percent annually, and "organized eating out" has grown at a 20 percent rate. McDonald's was the first U.S. franchise to hit India, in 1996, and now
CEO of the business consultancy BTM Corporation and author of The Power of Convergence: Linking Business Strategies And Technology Decisions To Create Sustainable Success. "So from that point of view it's easier for products or services like Dunkin' Donuts to expand in that market."
But, according to Dunkin’ Brands, “In India, Dunkin’ Donuts is positioned as a value for the money brand that offers high-quality products as well as a great in-store great experience.” Karen Raskopf, senior vice president of corporate communications at Dunkin' Brands says JubliantWorks has benchmarked prices against prominent cafes and quick service restaurants already established in India and,” judging by the initial response from our guests, India continued on page 23 JUNE 2012 • INDEPENDENT JOE
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Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org
Sponsors continued from page 9 DTT Surveillance 1755 North Main Street, Los Angeles, CA 90031 Mira Diza • mdiza@dttusa.com 800-933-8388 ext. 1441 • www.dttusa.com Ecolab 8300 Capital Drive, Greensboro, NC 27409 Arliene Bird • arliene.bird@ecolab.com www.ecolab.com/Businesses/ eCube 5 Cold Hill Road, Building 20, Mendham, NJ 07945 Cardie Saunders • cardie.saunders@getecube.com 888-99-ECUBE • www.getecube.com Energy Gateway, Inc. 451 Worcester Road, Charlton, MA 01507 Christopher Tremblay • Chris@energygateway.org 508-207-9740 • www.energygateway.com ePOS Solutions, Inc. 1910 Smith Street, North Providence, RI 02911 Robert Marcello • bobm@epossolutions.net 401-354-6500 • www.epossolutions.net FireKing Security Group 101 Security Parkway, New Albany, IN 47150 Rick Uren • ricku@fireking.com 800-457-2424 • www.Fireking.com Glacial Energy 24 Route 6A, Sandwich, MA 02563 Kristy Solt • kristy.solt@glacialenergy.com 340-201-4323 • www.glacialsales.com/dunkindonuts Hi-Tech Sound 53 Brigham Street, Unit 8, Marlborough, MA 01752 Gary Hanna • gary@hitechsound.com 508-624-7479 • www.hitechsound.com HME Drive-Thru Headsets 14110 Stowe Drive, Poway, CA 92064 Brady Campbell • bcampbell@hme.com 858-535-6034 • www.hme.com HS Brands International 500 Myles Standish Boulevard, Taunton, MA 02780 Michael Mershimer • mike@mershimer.com 800-723-1150 • www.hsbrands.com iTech Digital 4287 West 96th Street, Indianapolis, IN 46268 Natalie Himmel • natalie@itechdigital.com 317-704-0440 ext. 104 • www.itechdigital.com Jarrett Services ATM, Inc. 1315 Stelton Road, Piscataway, NJ 08832 Eric Johnston • ej@jarrettforcash.com 732-572-0706 • www.jarrettforcash.com Jera Concepts - Order and Production Management Software 17 Fruit Street, Hopkinton, MA 01748 Wynne Barrett • wynne@jeraconcepts.com 508-686-8786 • www.jeraconcepts.com LED Source 402 Knights Run Avenue, Suite 150, Tampa, FL 33602 Haitham Charles • hcharles010@ledsource.com 813-279-2099 • www.ledsource.com
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INDEPENDENT JOE • JUNE 2012
Macdonald Restaurant Repair Service, Inc. PO Box 61, 83 Pond Street, Norfolk, MA 02056 Mark & Debi Macdonald • debi@macdonaldcompany.com 508-384-9361 • www.macdonaldcompany.com Metromedia Energy 200 West Park Avenue, Suite 125, Westborough, MA 01581 Scott Werman • swerman@mmenergy.com 508-329-0186 • www.mmenergy.com Muzak 3318 Lakemont Boulevard, Fort Mill, SC 29708 Joanna Barrett • joanna_barrett@muzak.com 803-396-1656 • www.muzak.com New England Acquisitions 7 Babcock Street, Pawcatuck, CT 06379 Jim Calash • mrpapijim2002@comcast.net 860-235-1344 New England Drive-Thru Communications 12 Wildwood Road, Auburn, NH 03032 Angela Bechard • angela@nedrivethru.com 888-966-6337 • www.nedrivethru.com New England Repair Service - a div. of New England Coffee Co. 100 Charles Street, Malden, MA 02148 Jerry Brown • jerry.brown@necoffeeco.com 781-873-1536 • www.nerepairservice.com Payless Shoe Source 3231 SE 6th Avenue, Topeka, KS 66607 Matt Lemke • matt.lemke@payless.com 785-368-7530 • www.payless.com
Directory of Sponsors Please Visit The DDIFO Sponsor Directory online at: www.DDIFO.org R.F. Technologies 542 South Prairie Street, Bethalto, IL 62010 Jennifer Morales • jenm@rftechno.com 618-377-4063 ext. 121 • www.rftechno.com
SureShot Dispensing Systems 100 Dispensing Way, Lower Sackville, NS, Canada B4C 4H2 Steve Robert • srobert@sureshotdispensing.com 905-827-4415 • www.sureshotdispensing.com
Register Tapes Unlimited 1268 Bella Vista Circle, Longwood, FL 32779 Michael Curtin • michael.curtin@rtui.com 203-240-4121 • www.rtui.co
TredSafe/WalMart 450 West 33rd Street, New York, NY 10001 Ted Travis • ttravis@esoriginals.com 909-949-0495 • www.walmart.com
Secure Energy Solutions, LLC 12-14 Somers Road, East Longmeadow, MA 01028 Mike Schmidt • mschmidt@sesenergy.org 413-733-2571 ext. 223 • www.sesenergysolutions.org
Waste Management 107 Silvia Street, Ewing, NJ 08628 JoAnn Bradbury • jbradbury@wm.com 215-378-1417 • www.wm.com
SKAL East, Inc PO Box 303, 31 Eastman Street, Easton, MA 02334 Jim Zafirson • jim@skaleast.com 800-966-0106 • www.skaleast.com/index.cfm?keyword=dunkin
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Thank You to Our Sponsors!
DDIFO® does not endorse or recommend commercial products, processes, or services. A DDIFO® sponsor is paying to advertise, and it is not to be considered a product or service endorsement by DDIFO®. Furthermore DDIFO® does not control or guarantee the currency, accuracy, relevance or completeness of information provided by sponsors in their advertising.
JUNE 2012 • INDEPENDENT JOE
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INDEPENDENT JOE • JUNE 2012
Mystery continued from page 3
?
It takes a day or two to set up the scenario, and to get shoppers assigned to the project. Shoppers come in all shapes and sizes, with the majority being middle aged to seniors, people who have the time and interest. Each shopper collects their information, and submits it via a form; editors then take those reports and streamline them. That way, there is consistency in how the information is reported from shopper to shopper, making it easier for the client to compare the information collected. The cost to set up a shopping program is approximately $300, plus a per-shop fee of $30 to $50, depending on the number, complexity and frequency of shops.
A Sample from the Mershimer Group Report
??
Mitzi Lawlor, who owns and operates several Dunkin’ Donuts franchises in the greater Boston area, has used both GSS and mystery shoppers at different times. She likes both, but for different reasons. “The GSS is an everyday, ongoing situation,” said Lawlor, “whereas the mystery shopper is a one day situation, more of a come in, check up, make sure they’re doing it properly.” She says that, while the GSS makes it easy for a customer to go onto the website and input the information, there has to be a compelling reason to make them actually do it, either a really great or really not-sogreat experience. She has found the surveys to run about 50-50, good and bad feedback, though she also finds she gets a lot of information that’s not useful. The mystery shopper, on the other hand, is following a script and looking at specific items. That provides more specific feedback. Lawlor likes the fact that the GSS program lets her compare all her shops and see which ones are providing excellent customer service. She takes the feedback and posts it weekly in her shops, where employees can see it and celebrate the positives; she finds it pushes the crew to do a good job. “It’s always nice, as an employee, to see your name,” said Lawlor. She also has someone in
As part of our research into how Dunkin’ shops run by franchisees may differ from those run by Dunkin’ Brands (see page 11), DDIFO asked the Mershimer Group to provide mystery shoppers for four shops in the greater Boston area. Two were owned by different franchisees; the other two were part of DBI’s portfolio.
?
We had two shoppers visit each store twice, during the same time periods: early morning, mid-morning, lunch, and afternoon snack. To make the comparison fair, we had them order the same items during each visit. While the results do range slightly, they do not show a significant difference between those shops run by franchisees and those run by Dunkin’ Brands. The report generated by the Mershimer Group – and the examples cited below – give franchise owners insight into how their shops perform in terms of cleanliness, service, product and overall satisfaction.
Quality
Appearance: Was the store interior clean and well-maintained?
Suggestive Sell: Were you offered a promotional item, upsold to a larger item, or suggestively sold something? Overall: Would you return to this store?
Response Yes - 75% No - 25%
Sample comment: “Exterior was clean and parking lot was clear of debris.”
Yes - 56% No - 44%
Sample comment: “I was asked if I wanted to buy two donuts, to make it a combo.”
Yes - 75% No - 25%
Sample comment: “I was pleasantly surprised…the sandwich was amazing.”
her own organization who goes out, unannounced, to do loss prevention. The fact is, with social media, it’s easier than ever for your customer to let the world know in real time about their experience with your business, good or bad. Whether they are tweeting as they stand in your shop, or texting their friends, or posting to Facebook, their message is getting out there, and other people are paying attention. Remember Molly Katchpole? She’s the 22-year-old who used social media to force Bank of America to rethink its plan to charge a fee for debit cards. As a franchise owner, it’s more important than ever for you to figure out what’s working and what isn’t and to take steps to fix it, before it becomes a bigger issue.
Comments
Mershimer says that because his mystery shopper program provides clients with a Manager Action Plan (MAP) – a back-end tool that gives clients a way to take the results of the shopping experience and make informed decisions to improve the customer experience – clients can see where the differences are, and take necessary action to make improvements. “You want to know that the guest is being treated exactly as if the shop manager was standing right there,” said Mershimer. Whether it’s through GSS or mystery shoppers, “The ultimate goal is to provide customers with consistently delightful experiences.” JUNE 2012 • INDEPENDENT JOE
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In 2012, 21 stores have been sold/under contract/ letter of intent. We currently represent 12 DD owners in 7 states looking to sell their network of stores.
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INDEPENDENT JOE • JUNE 2012
Westward continued from page 13 and proven development, product and marketing strategies, we are confident in our ability to connect with consumers in Denver. When Dunkin’ Donuts looks to expand in existing or new markets, we look at the needs of the customer base. Our focus is to find the best real estate in the marketplace and make the customer’s visit as convenient and comfortable as possible.” DBI is planning more than 50 restaurants in the Denver area in the coming years, with focus on north, south, southeast, southwest and central Denver, in addition to Fort Collins-Greeley. Both in-line and stand-alone locations are planned for Denver, said Raskopf, who indicated the right real estate for both will present itself. Having existing Baskin-Robbins stores in the area has assisted the company in developing the market. “Our experience with Baskin-Robbins has given us insights into what Denver consumers are looking for, and we feel confident that they will be very receptive to the Dunkin’ Donuts value proposition as well. Our existing Baskin-Robbins presence also helps us develop our infrastructure in the market more quickly to support Dunkin’ Donuts franchisees, since we already have team members on the ground in the market.” Some candidates have shown an interest in opening combo locations of Dunkin’ Donuts and Baskin-Robbins, and other concepts, and Dunkin’ Brands is evaluating these requests “on a case-by-case basis,” she said.
points,” he said. “We’re a pretty strong coffee market here.” “We believe we will be successful as we move westward to Denver because Dunkin’ Donuts offers exactly what consumers are looking for,” said Raskopf, “a unique combination of beverages, breakfast and snack foods at a great value served in a fast, friendly and convenient environment.”
Continued Westward Expansion The new Phoenix distribution center, as well as restaurants opening in Denver and other western states, supports DBI’s commitment to expanding westward and throughout the United States. “We are committed to a steady, contiguous development strategy, and we are pleased with the momentum,” Raskopf explained. “We have expanded beyond our core in the Northeast to the Mid-Atlantic, the Midwest, the Southeast and Florida. We then expanded in adjacent markets along the Mississippi. “We are still focused on a contiguous growth strategy, which is about being disciplined and strategic in our approach to growth,” she added. “We know there is high demand for Dunkin’ Donuts on the West Coast, as evidenced by the fact that California is the number one state for sales of Dunkin’ Donuts bagged grocery coffee. We believe the westward markets represent a 5,000 store opportunity for Dunkin’ Donuts, and look forward to opening up additional western markets for development in the future.”
Franchise opportunities remain in Colorado Springs, Fort Collins, Greeley and South Denver.
Western Reception Siegel calls Denver a “cowboy town” at heart, with a modern melting pot of people who travel to the Mile High City for work. This combination means that food tastes run the gamut. “New things are welcomed here,” she said, adding that Chipotle Mexican Grill began in Denver in 1993. “People like quick but good food, those are the brands that do well here. Denver is a great market for retail.” Dunkin’ Donuts has had a minor presence in the Denver area since the 1980s, but Siegel says the brand has good a recognition factor. “Dunkin’ Donuts is one of those iconic brands — particularly for the East Coasters who have moved here — and will do particularly well.” Calkins believes that East Coast transplants living in Denver, the strong market for coffee and recognition of the brand will make his stand-alone stores successful. The owner of gas stations admits that there may be growing pains involved in his new venture and an “education of a customer base,” but he’s optimistic. “We feel it’s (the Denver market) strong enough,” he said. “The combination of all these things led us to believe that that we will be successful.” Huspeni believes Denver residents will frequent Dunkin’ Donuts for coffee, “looking for good coffee with lower price
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INDEPENDENT JOE • JUNE 2012
India continued from page 15
Faisal Hoque is chief executive of BTM Corporation, a business consultancy.
we feel we are priced right in the market,” she said. Still there is a cultural barrier to cross, according to Hegde. He says in India coffee is something only the younger generation enjoys; a popular coffee chain there called Coffee Day attracts a younger crowd, but people of the older generation tend not to frequent coffee shops.
Good Eats Dunkin’ Donuts is not just about coffee and donuts anymore – there are real food options. But they may
find that they need to adapt their offerings for the Indian market. "The majority of the country is Hindu, so no beef, and there's a small population of Muslims, so there's no pork -- so you have to adapt to things like that," says Fred LeFranc, founding partner of Results Thru Strategy, a consultancy for the restaurant and
hospitality business. For example, according to Weingartner in Franchise Times, "The top-selling sandwich at McDonald’s is the Aloo Tikki burger, a spicy potato-and-pea patty served on a hamburger bun. The Maharaja Mac is ground chicken India continued on page 24 JUNE 2012 • INDEPENDENT JOE
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India continued from page 23 instead of hamburger and another sandwich's protein is a slab of cottage cheese seasoned with traditional Indian spices." More differences: Patel believes Indian consumers will like their coffee drinks light and sweet instead of black, that they'll prefer a spicier donut, and that because of the hot weather much of the year, Indian customers would like more iced beverages. Hegde adds that only the younger generation is likely to enjoy donuts, so Dunkin' Donuts will need to create treats that appeal to Indian tastes. “Our approach to business in India is to preserve the core values of the Dunkin’ Donuts brand, which is to serve great food and beverage in a fun, fast and inviting environment, while making some subtle additions to the menu to suit the Indian consumers’ preferences,” said Raskopf. For example, Dunkin’ Donuts shops in India have such offerings as focaccia and rustic Mediterranean ciabatta sandwiches and tea, fruit milk shakes and smoothies.
Business Basics
Dunkin' Brands can expect some significant differences between business in the U.S. and India. For
example, space is at a premium in cities, so many businesses open in small stalls instead of full-size stores. And even if a Dunkin' Donuts were in a large store, the owners may find that customers prefer to be served rather than wait at the counter for their order. Also, "If you look at traditional tea stalls, tea houses or coffee
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bars in an Indian market, people tend to linger in those kinds of places a lot longer," says Hoque. "If you make it too comfortable, you may not have enough volume. So the volume aspect of it needs to be considered significantly." A major consideration for Dunkin' Brands will be the distribution system. In some cities traffic congestion is a real issue, and products are often carried through the city in giant bales on the backs of motorbikes. Small panel trucks may be able to make it through, but large trucks -forget it. Companies like McDonald's have funded their own distribution system and other businesses are making inroads, but, "you have to be very careful who you’re dealing with," LeFranc says. Another big issue: "There's a lack of refrigeration, not just in terms of the trucks but also sometimes in terms of some facilities," says LeFranc. "Some of the native restaurants have less than Western standards when it comes to sanitary conditions, but that's just how it is over there." India continued on page 25
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INDEPENDENT JOE • JUNE 2012
India continued from page 24 But, those issues appear to be under control according to Raskopf. “Jubilant FoodWorks, has identified and developed various business partnerships to facilitate local procurement
of ingredients. They have invested in a state of the art CML and a cold chain for storage and distribution. In addition, at the restaurants they have large reach-in refrigerators as well as freezers,” she said.
With the surge of franchises entering India, the growth of the middle class, and a savvy youthful market that loves American brands, Dunkin' has a good chance of making it work. Says Patel, "I think Dunkin Donuts franchises will have great success there."
Cover Photo: The New Delhi shop, owned by Jubilant FoodWorks, LTD., features an upstairs seating area.
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Company Stores continued from page 11 operating is fluid. That’s because some of stores held by DBI are in the process of being sold back to franchisees. Such is the case in Dallas.
A Big Do-Over On March 29, 2012, the Dallas Morning News published an article under the headline, “Dunkin’ Donuts partners with Jerry Jones, Troy Aikman to boost local store count.” The article, written by Karen RobinsonJacobs, said, “More than two years after the economic meltdown poured cold reality on its red-hot expansion plans, Dunkin’ Donuts is again targeting North Texas for growth. This time, the game plan includes Hall of Fame quarterback Troy Aikman and Jerry Jones, owner of the Dallas Cowboys. The article cited Jones’ prior partnership with Papa John’s Pizza, which was led by Travis before he came to DBI. The article continued, “The doughnut team — called Star Dunkin’ LP — hopes to open at least 50 Dunkin’ Donuts restaurants in Dallas-Fort Worth in the next five years. “The partnership also will take control of 11 of the 19 local Dunkin’ Donuts stores. The 11 are owned by DBI Stores LLC, a subsidiary of Dunkin’ Brands. The remaining locations are owned by three franchisees.” A lot is at stake in “Big D” as Dunkin’ Donuts becomes the official coffee of the Dallas Cowboys. This is a major market west of the Mississippi and it is a place for which Dunkin’ Brands has high hopes. Since the 1970s, Dunkin’ has had a modest presence in the Dallas Metroplex. When Jon Luther was still Dunkin’ Brands chief, DBI decided to expand its footprint and offered development rights to a number of groups. Barry Zale, whose family had owned and operated the world’s largest retail jeweler, was part of one franchise group that signed up to open 60 stores in Dallas. “I was elected to head up marketing for the group and I remember Dunkin’ Brands poured in some market development funds to support advertising 26
INDEPENDENT JOE • JUNE 2012
Dallas Cowboys owner Jerry Jones and star Quarterback Troy Aikman are using their popularity to help grow Star Dunkin’ LP – a new franchisee group in the Metroplex.
and promotion. But, none of the stores were successful.” Zale’s group opened a total of four stores before they went back to Canton and told DBI, “This isn’t working.” Zale says there were several reasons why they didn’t believe they could be successful in Dallas. For one, Starbuck’s has created a beachhead in the area. There are approximately 84 Starbuck’s within a 40 mile radius of the Metroplex and more beyond.
“7-Eleven” has its U.S. corporate headquarters at One Arts Plaza in Dallas and is a popular choice for coffee and snacks in the area.”
“I think Dunkin’ has superior coffee to Starbucks but you have a Starbucks on every corner and you’re not going to change the habits of the people here,” said Zale. McDonald’s is also well established in Dallas and has successfully promoted coffee. On the donut front, mom-and-pop Korean donut shops are hugely popular. “They are only open in the morning because people in Dallas don’t eat donuts later in the day.” Zale says they capture a big segment in the morning and operate cheaply because of their limited schedule. Finally, Zale says 7-Eleven—whose U.S. subsidiary is headquartered in downtown Dallas—has captured
the Hispanic segment for coffee and snacks. “We didn’t realize the strength of these factors going in,” said Zale. “It just made it too difficult to do business.” Whether the Aikman-Jones group can have better success is still unclear. In its article, the Dallas Morning News said Travis “acknowledged that the company hit a few speed bumps on the way.” Citing the recession Travis said, “We had a number of franchisees who signed up, and unfortunately they weren’t doing as well as we would have liked.” Before the Aikman-Jones announcement, DBI had been in the driver’s seat in Dallas for over two years operating Company Stores continued on page 27
Company Stores continued from page 26 a handful of existing shops but, clearly, Travis and his team decided the market – and DBI – would be better served if it was run by franchisees.
said one franchise owner who said he is convinced they have a different approach to operations than a franchisee would.
New development areas in Wisconsin, Nebraska and Colorado are not designed to be company run either. As one franchise owner put it, “They are not looking to be pioneers.” While Travis has not publicly stated where and how many shops he thinks DBI should operate, one market they have committed to is Boston.
What has DBI learned? DDIFO submitted a list of questions to Paul Twohig, DBI’s chief operating officer, related to running stores. Our questions were answered in email by Karen Raskopf, senior vice president of corporate communications, In response to our question: What has the company learned about running stores?, she wrote, “I’ve learned that in addition to a very passionate and engaged franchisee community, we also have a very loyal and passionate customer base. Our guests truly love the wide variety of beverage and food options available at Dunkin’ Donuts, from our coffee and tea to our baked goods and breakfast sandwiches. Customers love coming to Dunkin’ Donuts, and it’s amazing to see the demand among guests to bring our restaurants to even more places across the United States and around the world.” Certainly demand is high at two Bostonarea locations visited by mystery shoppers working for DDIFO (see inset box page 19). One, in Brockton, Mass. is only 13 miles from DBI’s headquarters in Canton; another is at Logan Airport. Visitors to these locations would probably never know that they are run by Dunkin’ Brands and not by a franchisee. Several franchise owners we interviewed said company-run shops have excellent customer service because, as an owner, Dunkin’ Brands will spend more on labor than an independent franchisee because they are less concerned with the bottom line and want to be sure they do as good a job as a franchisee. “They will flood a store with employees to be sure it works,”
DUNKIN’ BRANDS PHOTO
Karen Raskopf
Clearly, DBI values its labor force. According to Raskopf, “The essential component of a successful operation is finding the right people for each role within an organization. We look for individuals with a passion for the quick service
restaurant industry and a deep knowledge in their functional area. We also try to find people who are team players, as at Dunkin’ Donuts employees need to be able to work across teams and among both corporate employees and our franchisees.” Something else DBI values, according to several franchisees we interviewed, is having and maintaining its credibility as an operator. Based on his public and private comments, it appears Travis and his management team is comfortable remaining well below the 80/20 ratio with regard to company ownership. But, having a handful of stores in its portfolio does give them a broader perspective on operations – enabling them to share experiences with their franchisees – while also giving them a platform to test new products and platforms. As one former Dallas franchise owner told us, “It’s a positive that they’re operating stores because now they’re in the trenches with franchisees.
index ®
25 17 10 22 18 24 21 28
Independent Joe Advertisers Access to Money ATM, Inc. Adrian A. Gaspar & Company, LLP Bright House Network Comcast Business Services Direct Capital Franchise Group Exchange Authority Fidelity Bank
20 4 12 12 6 2 16
Kensington Company & Affiliates PepsiCo Performance Business Solutions RF Technologies Siemens Sprint Starkweather & Shepley Insurance
Joyal Capital Management, LLC JUNE 2012 • INDEPENDENT JOE
27