Franchisee Highlight - March 2006

Cutler & Ferreira

Happy customers -- and satisfied managers who keep them that way -- are the secret of Charles Cutler's success. The South Florida franchisee makes a habit of asking managers, "Who's your boss?" and answering the question by pointing to the folks waiting on line for their coffee and snacks.

Charles has owned Dunkin Donuts and Baskin-Robbins stores for 10 years. Before that, he had a year and a half of experience with Baskin-Robbins alone. He and his and partners, Joe Ferreira and his son Mike, run seven stores -- Dunkin Donuts/Baskin-Robbins combos in Cooper City, Pembroke Pines, North Lauderhill and Pompano Beach, and Dunkin Donuts-only franchises in Davie, Wilton Manors and Lauderdale Lakes.

Charles, a Miami native, came to Dunkin Donuts well-prepared for running a sizable operation. He studied business and communications at Temple University in Philadelphia, then worked as a retail manager for three years at Luria's and two years at Service Merchanise.

"I always wanted to own my own business," Charles says, adding the experience of working many nights and weekends prepared him for the hours a franchisee needs to put in to see his business succeed.

Going into partnership with the Ferreiras, he says, turned out to be a win-win situation. The father-and-son team "were baking donuts for me for several of my stores, and we figured we'd do better as a partnership." As the business grew, "We each became 50-50 partners in each other's operations," he explains. Joe, originally from Portugal, handles production, while his son, Mike, who hails from Rhode Island, works with Charles to handle operations. "We've been profitable ever since we became partners," Charles says.

"The first store typically takes two years to become profitable," he says, adding, "After you have three stores, you're able to divide expenses ... the more stores you have, the easier it is to become profitable."

The formula for success may be simple, but that doesn't mean it's easy. "You can't miss on your first store," Charles says. When he and his partners started out, he adds, they "looked for a high residential, high office street." While everyone tends to think about drawing traffic from nearby businesses, he explains, "on the weekends you need residential customers." He also recommends acquiring a free-standing store that includes a drive-through window because it will account for about 60 percent of sales. Other desirables on his list include locating near a school and getting a store on the right saide of the street where it's easier for drivers to turn in.

As for product sales, Charles has seen big changes in the market in a relatively short time. "Coffee is king. I believe that's what South Florida has experienced the past five years. It's gone from a heavy donut market to a heavy coffee market. Business has tripled for many," Charles says. Regular hot coffee continues to be the favorite morning eye-opener, but in summer when fewer customers request it, iced coffee and iced latte make up the difference. "Seven or eight years ago," he recalls, "from May to September, sales would take a 15-20 percent hit." But since Dunkin Donuts introduced cold coffee drinks, he says, there's been no seasonal drop in sales.

Brand loyalty brings Charles many new customers and helps turn them into regulars. "South Florida is very fortunate to have lots of New Yorkers and Bostonians who bring a love of the brand with them," he says, adding that some of the transplanted New Yorkers and New Englanders stop into his stores two or three times a day.

For this franchisee, it's a people-oriented business on both sides of the counter. "I'm a big believer that your manager and crew will make or break your business," he says, describing the ideal scene at a store: "Smiling faces at the counter, knowing people by name, asking how their son or daughter is doing."

Charles favors outgoing, energetic applicants who ask a lot of relevant questions during the interview. While good pay and fringe benefits are important, and he plans to start offering health benefits soon, he says "happiness definitely means more than money" to most employees. He says he strives to create a work environment that's "a fun place where you're free to express your opinions," where a job can lead to a career. He must be succeeding because he reports there's "a lot of longevity" among his employees, who include a number of managers who've been working in his stores for 8-13 years. "It's impossible to grow without the people," he says, advising franchisees to let good employees "know there's room to grow." He believes job satisfaction -- or the lack of it -- spreads from the top down. "If I've made my managers miserable, they're going to make the customers miserable," he says, so it's vital to "treat your staff the way you want them to treat your customers."

The best way to learn this business, Charles says, is hands-on. He advises newcomers to "find a franchisee who's willing to let you work with them a few months before you start." It's also vital "to understand your commitments legally to Dunkin Donuts," he says. For example, he explains, if your contract says you're going to have four stores in three years, you must be prepared to open them within that time frame.

As a franchisee, Charles points out, "You are your own boss -- but you can't sell hamburgers in your store." Company policies are there for a good reason, he notes: "They're protecting us from ourselves." He counsels new franchisees to "follow standards, policies and procedures and be organized."

The day-to-day-reality of the business, he says, is that "you're always one person away from a disaster -- one baker, driver or manager away from a disaster." When there's a staffing emergency at one of his stores, he says, he and his managers and trainers fill in. Even when everything's running smoothly, Charles says, he makes a point of waiting on two or three customers in one of his stores every day. "Every owner needs to go in and get behind the counter," he says, reminding franchisees to "keep in touch with your customers."

If you want a real adventure, Charles says, "Tell the drive-through lady you're going to wear her headset." Trying to understand what's said over the speaker, plus remembering five orders from one car, can be quite a challenge, he observes.

Although it's great to be heading a profitable seven-store enterprise, Charles admits he misses the camaraderie of earlier days when he had just one. "It used to be like Cheers -- you'd know everybody's name," he recalls. But no matter how large his operation may become, his guiding principle will never change. "I truly believe in treating people like family," he says.

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3/06 - Cutler & Ferreira