Franchisee Highlight - October 2005

Fresco Management Group

The first challenge when going into business, experts say, is to decide exactly what business you're in. For South Florida franchisees Scott Ball and Fred Guttenberg, it didn't take long to figure out that their enterprise wouldn't be quite what they'd originally envisioned. "People used to think of Dunkin Donuts as a donut company," Scott says, "but I'm in the beverage business." Fred agrees, adding, "We're more of a competitor to Starbuck's than to Krispy Kreme."

In January 2005, Scott and Fred took over three Dunkin Donuts stores in Miami-Dade County: at 11506 Quail Roost Drive, Quail Roost; 18099 S. Dixie Highway, Perrine; and 13623 S. Dixie Highway in The Falls. Their fourth location is a new structure in Kendall at 12930 S.W. 120th St. All are profitable, and the partners plan to grow their business until they have 10 or 15 stores.

"We've been making money from Day 1," Fred says. "We've had over 20 percent growth this year," Scott says, adding, "The trend is good, the products are good, and we have good operators and good marketing."

Taking over from previous management can be a headache, but Scott had no qualms about that. "I was previous management," he explains. He'd worked for the former owners of the first three stores for two years before buying them out. A native of New York City, Scott had learned a lot about the food service industry working for another large franchisor, Triarc Restaurant Group, doing business development for Arby's and T.J. Cinnamon's. When he decided to buy a franchise of his own, he says he settled on Dunkin Donuts because "I liked the integrity of the brand, the equity in the brand and the fact that it's coffee-dominant. It's a great thing when you can sell an addictive brand."
Fred, originally from Long Island, says the entrepreneurial bug bit him early in life -- hard -- and never let go. Fresh from college, he started an auto detailing company. Although it flourished, he got out a year later, he says, because "I didn't want to be married to my business." Instead, he followed his heart: "I sold the business and moved to a place I love, Florida, and it worked." He then spent more than 13 years in sales with Johnson & Johnson Pharmaceuticals, where he became involved in management and training and developing a new sales force. The early years, with a small, innovative division called Janssen, were stimulating, but eventually Fred began to feel big company burnout coming on. "I knew I needed to go back to the entrepreneurial side," he says.

Neighbors in Coral Springs, Fla., Scott and Fred met through their wives, who were friends, and their children, who were in school together. With common goals and complementary skills, they soon clicked as business partners. Scott handles administration and marketing, while Fred oversees day-to-day operations in current stores and works on site development with an eye to the future.
Earlier experience with Dunkin Donuts taught Scott what to expect as a franchisee. "When I was first in the business two years ago," he says, "I was surprised at the lack of support from the franchisor ... You're on your own -- and maybe that's a good way to start out. You learn on the job, gain the business sense and people skills to make it effective, efficient and profitable."

The partners learned that being alert to details can keep little problems from growing into big ones. Dairy pumps that were incorrectly calibrated were causing big losses at one point. Half an ounce of extra milk or cream in a customer's cup may not seem like much, but multiply it by 3,000 coffees a week and it becomes very costly, Scott points out. He adds that donut filling machines also need to be watched, both for proper calibration and proper procedure by the finisher.

Then there was the time a communications breakdown while switching suppliers left their stores without orange juice for a whole week. This was a very big deal for these partners who try to make everyone who comes through their doors feel like a guest.

"The most important part of the business is people, both customers and employees," Fred says. "I pride myself on customer service. That's what makes my stores different from the others." Friendly smiles are part of all employees' job descriptions. "I hire based on personality. I can always teach the other things," he explains, adding, "We do a tremendous amount of training for shift people, shift leaders and store managers, catering the training to meet their needs. We've developed a whole training program."

People pleasing is high on Scott's list of priorities, too. He says, "My customers always tell me we've got the best stores, the best customer service. For example, we have all our managers walk around the stores with pots of coffee, giving people free refills. They love that and come back because of it."

What makes a great Dunkin Donuts staff? Fred says he looks for smiling people who are naturals at greeting customers and interacting with them, with a work ethnic that prompts them to do whatever needs to be done, as well as "a sharp intellect. We're a growth company, so we look for shift people who can become managers."

Looking ahead, Scott says, "We currently have a three-store development agreement and may be up to seven total in three years." He adds the partners are actively looking to acquire existing stores because "construction costs are outrageous right now."

Growth also means developing new products to pamper customers' palates. "Our line of coffee drinks & coffee-based products is expanding. That's the big thing to come out recently," Scott says. The coffee menu offers nine flavors, with seven more just released. Turbo Ice, iced coffee with a shot of espresso, is a big seller. And Smoothies, both coffee- and fruit-flavored, are on the horizon.

Scott leaves the food and beverage sampling to Fred. "I don't drink coffee and I don't eat donuts," he confides, "but Fred drinks 22 cups of coffee a day." Fred says that's a bit of an exaggeration although he is a coffee lover who savors at least five cups a day of his favorite brew. He adds he looks forward to doing his "daily donut taste test," trying a new variety each day.
The franchisees says they're in the business for the long haul and want to have a say in how things are done at the corporate level. Fred is already taking a leadership role in the Dunkin Donuts community. "I'm on the people subcommittee, working on recruitment, retention and training issues," he says.

Happy to share what they've learned, both partners offer advice for newcomers and wannabes. Fred cautions, "Don't get into this and expect you can be an absentee owner. There's a good chance you'll fail. It does require your time and attention. There's so much more to managing this business than just what goes on in the stores." Scott says, "Be patient, and learn about your operation, your business, what the customer wants. Don't expect to earn a lot of money right away. Stick to your plan and stick to your guns and in time everything will be okay. You should be turning a profit in six to eight months."