Coffee Prices Bite Businesses, Public

Lisa van der Pool reports in the Boston Business Journal that he price of coffee is continuing to rise. Wholesale coffee prices are the highest they’ve been in 13 years.

Futures contracts for December 2010 delivery have risen each of the last few days and a fungus in Colombia is threatening to hit the country’s coffee output, according to a Bloomberg News reports.

Leaving managers of many Boston-area coffee shops to ponder whether to pass on those costs to customers.

The J.M. Smucker Co., which licenses Dunkin’ Donuts coffee for sale in retail stores, has already announced it will raise prices by four percent.

But whether local Dunkin’ Donuts shops hike coffee prices is up the each franchisee, according to the Canton donut and coffee chain.

“Dunkin’ Donuts restaurants are independently owned and operated by franchisees who are responsible for making their own pricing decisions.

“While we are aware of J.M. Smucker Company’s recent price increase for grocery store coffee, it will not impact the cost of coffee in our restaurants. Dunkin’ Donuts licensing agreement with J.M. Smucker Company extends only to coffee sold in retail environments like grocery stores, mass merchandisers, club stores, and drug stores throughout the United States,” Michelle King, director, Global Public Relations at Dunkin’ Brands, Inc. in Canton, Mass., said in a prepared statement.

Starbucks Corp. has announced it will not raise prices. Starbucks last raised its prices in January of this year.

Smaller coffee shops are reacting more quickly.

Boston-based FlatBlack coffee house, which has three retail stores in the city, is raising prices about 5 percent this week. A regular latte at the gourmet shop costs $3, up from $2.85.

“We have no choice but to raise our prices, said Jeff Chatlos, co-founder and vice president of FlatBlack coffee shop.

Josh Gerber says he has worked hard to not raise prices at the two locations of 1369 Coffee House in Cambridge that he runs, but he says if coffee prices continue to spike, a price increase is on the horizon for his customers.

Overall, Gerber’s coffee prices have gone up between 5-15 percent over the past year.

“It’s a lot when it¹s your primary product. It’s unfortunate, because I know people are cutting back on their budgets and we¹re working hard to make that morning coffee fix possible,” said Gerber, co-owner of 1369.

William Trull, a roaster for Red Barn Coffee Inc. in Milford, watches coffee prices on his notebook computer as he’s roasting beans. He said Red Barn hasn’t raised its prices yet, but that may change. He expects coffee prices to settle down again, but not until October or November.

Boston Business Journal

Burger King in Advanced Sale Talks

(Reuters) – Burger King Holdings Inc (BKC.N) is in advanced talks to sell itself to investment firm 3G Capital, the New York Times reported on Wednesday, boosting shares more than 16 percent .

3G could not immediately be reached and a Burger King spokesman declined comment.

The second-biggest U.S. hamburger chain has underperformed rivals like McDonald’s Corp (MCD.N) as its key customer base of young men has been hit harder by unemployment in the past two years.

That group has suffered massive job losses in industries like construction and manufacturing.

The company, which has a market capitalization of about $2.3 billion, debuted as a public company in May 2006 with an initial share price of $17.

Shares were up 15 percent to $18.92 in midday trading.

Famed for its flame-broiled Whopper, Burger King had previously been owned by private equity firms, which still hold a stake in the company. TPG, Bain Capital and Goldman Sachs purchased Burger King from British beverage company Diageo (DGE.L) in 2002 for about $1.5 billion.

One of the potential suitors, British private equity firm 3i Group Plc (III.L), distanced itself from a possible deal.

“We can confirm that we are not in discussions with Burger King,” a spokeswoman for 3i said.

Burger King last week forecast weak demand during its new fiscal year due to the U.S. economy’s slow pace of recovery and government austerity programs in several European countries. The company said it was unsure how costs for key ingredients like beef would impact the company.

Its shares hit a low of $16.30 in mid-August, but surged to $19.50 in premarket trading on Wednesday.

Private equity firms have become increasingly active and last month was the busiest August since 1999 in terms of the value of merger and acquisition deals struck.

In August, Blackstone Group struck a deal to buy power company Dynegy Inc for $543 million, or $4.7 billion including debt.

Nigel Travis Talks Dunkin’s Strategy

In QSR Magazine’s September issue cover story, Carolyn Walkup writes: the midst of the worst recession in decades may seem like a tough time to take the reins of a restaurant company that sells discretionary treats not needed in the everyday diet. However, Nigel Travis, whom Dunkin’ Brands hired to head its Dunkin’ Donuts and Baskin-Robbins brands in January 2009, quickly showed he was up to the task.

Fresh from a four-year record of achieving excellent results at Papa John’s, Travis set out to do the same at the privately held, 60-year-old treats company. Dunkin’ Brands’ board of directors chose Travis to succeed CEO and industry veteran Jon Luther. Luther, who joined Dunkin’ Brands in 2003, remains as executive chairman of the board and worked with the board to develop an orderly succession plan.

In announcing Travis’ appointment, Luther singled out his accomplishments in several companies he headed of building strong franchisee networks, improving sales, and furthering global growth.

In spite of the economic downturn, Dunkin’ Donuts opened 350 new stores worldwide in 2009, with 250 of those in the U.S. When counting sister Dunkin’ Brands treats concept Baskin-Robbins, franchisees opened 550 stores last year. Dunkin’ Donuts units alone number nearly 6,400 in the U.S. and 2,700 overseas.

“We think this trend will continue and get better,” says Travis, who predicts that Dunkin’ Donuts brand openings this year will exceed last year’s to total 500 newcomers worldwide.

“The recession caused some difficulties,” he says. “High unemployment had a negative impact. The biggest impact has been the lending environment and getting new people to come in.”

He’s optimistic, though, about recent talks with banks, and has found some that “seem very positive about our brand.”

“The recession is just a problem you have to attack with vigor,” he says. “We are focused on the top line and are reducing costs of operating and construction. Our franchisees worked with their store economics.”

The brand does seem to be faring well, according to restaurant consultant Aaron Allen, founder and chief executive of Aaron Allen Restaurant Consultants, who credits Dunkin’ with doing a good job of keeping costs in line.

Dunkin’s policy of allowing franchise agreements with no minimum number of store openings required, along with its flexible unit designs utilizing smaller footprints, encouraged franchise development in these challenging times. Design choices include kiosks, gas stations, in-line units, and end caps, as well as free-standing stores.

Read more: QSR Magazine

Dunkin’ Sees Benefit from Lowering Threshold for Franchisees

Jon Chesto reports in the The Patriot Ledger that a dramatic change in Dunkin’ Donuts’ franchising policy to make it easier for new franchisees to open a Dunkin’ shop has helped fuel the chain’s growth during the first half of this year.

Canton-based Dunkin’ Donuts reported on Wednesday that it enjoyed a net increase of 338 new locations worldwide in the first six months of 2010, including 75 new stores in the United States. The company currently boasts of more than 9,000 locations worldwide.

The chain, run by Dunkin’ Brands Inc., changed its policy to allow new franchisees to sign a development agreement for as few as one to three locations. Previously, Dunkin’ had required first-time franchisees to sign development agreements for at least five locations.

Grant Benson, vice president of franchising and market planning at Dunkin’ Brands, said the company made the change about a year ago, partly to help new Dunkin’ franchisees land the financing they need. Benson said the change certainly helped continue to propel the chain’s expansion through the headwinds of an economic downturn.

“We have provided franchisee candidates more flexibility by allowing smaller development commitments,” Benson said. “In some cases, it could be as few as one, (but) we would like to be able to see at least two or three.”

Benson said much of the recent U.S. growth took place in the Southeast and in the Midwest, while overseas growth was strong in Korea and China.

Benson attributed the flexibility of the Dunkin’ Donuts model – shops can be opened in hospitals, train depots or gas stations – as a key element of its success. “That flexibility doesn’t exist with a lot of other concepts,” Benson said.

Jim Coen, president of the Dunkin’ Donuts Independent Franchise Owners association, said this is the first time he’s seen Dunkin’ Donuts allow development agreements for one-location franchises since he’s been involved with the chain. However, Coen said he expects most franchisees will continue to pursue multiple locations.

“The average franchisee nationwide owns at least six shops,” Coen said. “There’s an economy of scale, a point where you reach critical mass, that you really need.”

The company didn’t provide comparable growth numbers for the same six-month period in 2009. Benson said there were 171 net new locations in the U.S. in all of 2009, and 351 net new locations worldwide.

“It speaks to the staying power of the brand and the profitability of the brand,” Benson said. “It’s not a fad. It’s here to stay and built to ride out some of the turbulent times.”

The Patriot Ledger

Checkers Expands with Former Dunkin’ Donuts Franchisee

Checkers Drive-In Restaurants has plans for five restaurants in Fairfield County, Conn. The first restaurant is scheduled to open in spring 2011 in Milford.

Checkers signed the multi-unit store development agreement with Kerrim Jivani, previously a Dunkin’ Donuts and Baskin-Robbins franchisee with eight locations in the New York City area.  Jivani sold his Dunkin’ Donuts network in 2009, a news release said. Lynette McKee the Chief Development Officer at Checkers previously held a similar postion at Dunkin’ Brands.

Checkers in July announced a five-unit deal for the vicinity of Hartford, Conn. The rest of Connecticut, including New Haven, is still open for expansion, the news release said.

Based in Tampa, Checkers develops, owns, operates and franchises Checkers and Rally’s hamburger restaurants.

Checkers has more than 800 locations across the United States, including locations at “non-traditional” sites such as airports, universities and turnpike plazas.

Read more: Checkers expands with former Dunkin’ Donuts franchisee – Tampa Bay Business Journal

National Members Meeting to Celebrate DDIFO Growth and Unity

Over the past year, DDIFO has enjoyed tremendous growth. With the inclusion of the Midwest Dunkin’ Donuts Franchise Association (MWDDFA) and the Independent Association of Franchise Owners (IAFO), an association of Dunkin’ franchise owners from the Mid-Atlantic market, DDIFO now represents over 2400 shops in the U.S.  According to DDIFO President Jim Coen, this will be one of the themes celebrated at the upcoming National Members Meeting on September 21, 2010 in the Cabaret Theatre at Mohegan Sun in Uncasville, Connecticut.

But it’s also more than that. “We are designing the meeting around the concept that DDIFO is ‘United Now…More Than Ever’ because we all know that with greater numbers and greater unity comes greater strength for the organization,” said Coen.

 “The DDIFO National Members Meeting is the showcase event for our association,” said Kevin McCarthy, DDIFO Chairman. “With the robust growth of DDIFO we can now say we are closer to national representation. We are expecting good turnout from members throughout the Dunkin’ Brands development triangle of New England to Illinois to Florida. The meeting will provide members with interesting and relevant information plus the opportunity to network and share stories from the front lines.”

Mohegan Sun is situated on 240 acres along the banks of the Thames River in the scenic foothills of southeastern Connecticut. Coen says DDIFO chose this site for the National Members Meeting because the venue offers wonderful amenities at a reasonable price. Plus it is within driving distance for members located along the east coast. Mohegan Sun is 225 miles from Philadelphia, 125 miles from Midtown Manhattan and 105 miles from Boston.

The event will be punctuated by a top-notch list of speakers featuring:

U.S. Senator Scott Brown (R) MA. Senator Brown was elected by the people of Massachusetts on January 19, 2010 to fill the term of the late Senator Ted Kennedy. He serves on the Senate Committee on Armed Services, the Committee on Veterans’ Affairs, and the Homeland Security and Governmental Affairs Committee.  Prior to his election to the U.S. Senate, Brown served in the Massachusetts State Senate.  Senator Brown is a 30-year member of the Massachusetts Army National Guard and currently holds the rank of Lieutenant Colonel in the Judge Advocate General (JAG) Corps. Brown was awarded the Army Commendation Medal for meritorious service in homeland security following the terrorist attacks of September 11, 2001.  Scott’s first job as a teenager was at a Dunkin’ Donuts in Wakefield, MA, he particularly remembers cleaning out the grease trap.

Scott Carter, principal of Supply Chain Associates, Norcross, Georgia. Carter has over 20 years of management, finance, operations and consulting experience.  He has worked in executive positions in industry and consulting and has successfully built two global business strategy and operations consulting firms, UPS Consulting and Supply Chain Associates, LLC (SCA).  He is a member of the board of directors for two quick service restaurant co-operatives representing over 13,000 North American store locations. Carter served as interim CEO for the National DCP and now serves as a strategic advisor.  

Eric Karp, Esq. Karp is a partner at the Boston law firm Witmer, Karp, Warner & Ryan LLP. He serves as counsel to numerous franchisee associations in such chains as McDonald’s, Choice Hotels, Dunkin Donuts, Popeye’s Chicken, Cartridge World, TCBY Yogurt, Portable On Demand Storage, Fitness Together, Resort Maps, and Massage Envy. In that capacity, he provides a broad range of advice and guidance to the leadership of the associations on matters including the franchise disclosure documents, franchise agreements and issues that affect the relationship between the franchisee community and the franchisor as well as vendors and suppliers to the system. He has represented franchisees throughout the country in a myriad of franchise issues including sales, purchases, relocations, remodels, transfers, defaults and terminations and lease issues. 

Perry Ludy, Carolina Restaurant Partners LLC, a Dunkin’ Donuts franchise operator in Myrtle Beach and Florence, South Carolina.  Aside from operating a network of Dunkin’ stores, Ludy is the author of several business books including Profit Building: Cutting Costs without Cutting People, an award-winning management book that is translated into several languages and sold worldwide. Ludy is also a contributing writer to DDIFO’s Independent Joe magazine. His column, “Profit Building” includes many of the topics included in his books. Ludy

Dennis Gramm, FNC Restaurants, a two store franchisee in Northwest Suburban Chicago. He has been part of the Dunkin’ Donuts and Baskin Robbins businesses for 14 years. He began his Dunkin’ Donuts career in May 1996 as a General Manager of Operations in Boston. He experienced quickly the strength of the Dunkin’ Donuts Brand and the importance of franchisee involvement in the independent franchise association, committees and Brand advisory councils.

Dennis has been a franchisee since June of 2007 and a member of the Mid-West Dunkin’ Donuts Franchisee Association and the DDIFO. Prior to becoming a franchisee he held several leadership roles in ADQSR and Dunkin Brands as a Senior Market Executive, Regional Vice President and Vice President of Operations Baskin Robbins USA. In addition to his Dunkin Brands resume Dennis has held executive leadership positions at KFC, Pepsico and Market Day Corporation.  

In addition, the meeting will feature discussions with members of the Brand Advisory Council Panel and the DDIFO Board of Directors. DDIFO Communications Director Matt Ellis will serve as emcee for the meeting.

DDIFO Members Can Register Here

Sponsor support has been significant, booth space has been sold out. Sponsors for the DDIFO National Members Meeting include:

Access to Money;  Adrian Gaspar, CPA; Bederson & Company CPAs; Belshaw Adamatic Bakery Group; Comcast Business Services; Direct Capital Franchise Group; DTT Surveillance; Glacial Energy; HME; HS Brands; IKMS Group; iTech Digital; Jarrett Services; Jim Ventriglia, CPA; New England Repair Service; Paris, Ackerman & Schmierer, LLP; Paris-Kirwan Insurance; Payless Shoe Source; PepsiCo; Performance Business Solutions; RF Technologies, Royston LLC; Secure Energy Solutions; Skal East; Sprint; Starkweather & Shepley Insurance; SureShot Dispensing Systems; The Franchise Pros

DDIFO Members Can Register Here

Dunkin’ Donuts Franchisee Makes it His Business to Give to Maine Causes

Ed Wolak of Scarborough began at Dunkin’ Donuts more than 40 years ago and now owns 70 stores.

Stephanie Hardiman of the Portland Press Herald writes that when Ed Wolak was 16 in 1967, he was working his first job washing floors in a Manchester, N.H., Dunkin’ Donuts. He didn’t plan on sticking with it long term, particularly when he hit college and developed an allergy to flour, suffering from what he calls “baker’s asthma.”

While his business is rapidly expanding, Wolak is also a major fixture in the nonprofit sector, donating money back to the Maine communities he serves coffee to each morning.

“I think it’s somewhat of a moral obligation to give back, especially to the folks that support you every year,” Wolak said, adding that he has developed long-standing relationships with some of the charities.

“Without Ed, the place would’ve been closed,” said Tom Doherty, executive director of Scarborough’s Camp Ketcha, where Wolak serves on the board of directors and donates tens of thousands of dollars each year to support its programs.

“He stuck with it when it wasn’t really pretty to stick with it,” Doherty said. Wolak has seen the camp through a devastating fire, staff changeovers and financial difficulties, providing business insight and leadership over the past 20 years.

“He’s one of the backbones of this organization,” Doherty said.

Being a good steward and actively involved in the community is something that’s important to Wolak.

“A lot of people don’t realize we’re locally owned,” Wolak said of the Dunkin’ brand.

All of the proceeds from his Main Street, Yarmouth, store on July 15, up to $5,000, were donated to the Firefighter’s Muster event at the Yarmouth Clam Festival.

The festival had one of its best years on record, said spokesman Sheldon Perkins, partly due to a handful of generous, reliable contributors like Wolak.

He’s incredibly modest and low-key, Doherty said, and doesn’t often talk about his contributions.

Now the YMCA of Cumberland County is seeing the effects of Wolak’s efforts, as all proceeds from V.I.P. mugs sold will go to the organization. Purchasing the $5 mug means free coffee fill-ups every Sunday for the rest of the year.

“Ed is very in touch with the groups he supports,” said Dana Reid, a field marketing manager at Dunkin’ who works in the Maine area. “He’s a great example of a franchisee.”

As Wolak’s business expands, it creates more opportunity for him to give back.

Last week he opened a store in Verona, N.Y., and plans to have another open its doors in the next week or two at Le Moyne College in Syracuse.

This will bring his holdings to 11 Dunkin’ Donuts in Maine, three in New Hampshire and 56 in upstate New York, as well as a donut factory. A large territory in New York including Ithaca and Syracuse is also exclusively set aside for Wolak’s development. The Maine market, he said, is already built out.

When he started with the company there were only about 250 stores. Now there’s more than 9,000. He was one of the first testers of Munchkins and was in the coffeeshop business long before there was a Starbucks on every corner.

Read More at: The Portland Press Herald

DDIFO Approves Mid-Atlantic Franchisee Group and Colitsas as New Board Member

DDIFO has officially approved creating a Local Members Committee for Dunkin’ Donuts franchise owners belonging to the Independent Association of Franchise Owners (IAFO) – representing 125 Dunkin’ Donuts stores in New York, New Jersey and eastern Pennsylvania. The Board has also voted to add IAFO Executive Director Tom Colitsas as a member of the DDIFO Board.

“A lot of work has gone into making this a reality,” said Colitsas. “I met with (DDIFO President) Jim Coen a year ago and we discussed how to bring this region into the association. Going forward we are going to engage in an aggressive campaign to increase membership among franchise owners in this region.

Colitsas says the IAFO is holding a seminar in August on topics of interest to the members and at that time they will discuss the benefits that come with inclusion in the DDIFO. “The recruitment effort will focus on education and communication,” he said.

Perhaps the strongest benefit for IAFO members is their inclusion in a group that is growing not just in size but also in influence. Late last year, DDIFO welcomed a Local Members Committee (LMC) made up of over 400 shops from the Chicago area. With IAFO’s entrance, DDIFO now represents close to 2500 shops nationwide.

“We have a huge investment in Dunkin’ Donuts and, as franchise owners we have to protect our investment by making sure we have strong platform from which we can negotiate with the company,” said one Mid-Atlantic franchise owner who asked to remain anonymous.

DDIFO President Jim Coen says the addition of the IAFO shows that DDIFO’s efforts to provide a united voice for franchise owners is working. “Franchise owners throughout the system are learning that we are a true advocate for their business interests and have the clout to get things done.”

Board Vice-Chairman Asheesh Seth, who was the former Executive Director of the Midwest Dunkin’ Donuts Franchise Association (MWDDFA), says IAFO members will immediately see that DDIFO is a great source of information when it comes to protecting franchisee interests. And, he says, the addition of these new members will further strengthen the DDIFO.

“DDIFO’s strength is directly proportional to the number of members it has.  The more that join, the stronger DDIFO will be. IAFO’s inclusion is a huge step in the right direction toward creating a truly national franchisee organization,” he said.

According to Colitsas, new members from the Mid-Atlantic region are going to play a prominent role in the DDIFO.

“We’re very excited down here. We have a good team of dedicated people and we are going to surprise everyone. We’re going to make this a prominent region and make a big contribution to the national effort.”

DDIFO at the CFA Franchisee Forum in Washington DC July 2010

The Coalition of Franchisee Association held their Capital Hill Forum in Washington DC, July 15th – 17th attracting franchisee leaders from the Meineke, Hardees, Pizza Hut, Burger King, Super Cuts, Buffalo Wild Wings, Subway and Dunkin’ Donuts franchise systems.  Rob Branca and I attended the Forum, representing Dunkin’ Donuts Franchise Owners.

Watch the slide show below!

There was a star studded and information packed agenda, we started Wednesday night when Congressman John Campbell (R) from California’s 48th Congressional District. John lives in Irvine, CA.  joined us for dinner. John has a reputation as a dedicated fiscal conservative, he is an advocate for sensible public policy, and lower taxes for business owners.  As a member of the House Commitee on Financial Sevices, he has taken an active part in addressing the country’s top economic issues, including reducing credit card interchange fees, banking reform, and insurance regulation. He spent a majority of his professional career as a taxation specialist representing several automobile franchisees, in Southern California.

Next US Senator Scott Brown from Massachusetts  joined us at a CFA PAC Lunchon where we had the opportunity to sit and eat with the Senator and discuss small business and franchisee issues. Later that day Senator Brown voted to pass the Financial Services bill which included the Durbin Amendment to reduce Debit Transaction swipe fees.

Some of the other speakers were:

George Will, Washington Post Columnist

Sam Donaldson, Retired ABC Correspondent

Mike Bober , Coalitions Director for the National Republican Congressional Committee

Katie Hays Strong, Executive Director of the US Chamber of Commerce Public Affairs Division

Rick Berman, President of Berman and Company

Douglas Kantor, of Stephen Johnson LLP

David Kreutzer, Ph.D. Research fellow in Energy and Climate Change

Representative Steve Kagen (D-WI) 8th District of Wisconsin

Representative John Boehner (R-OH)8^th District of Ohio

Hudson Riehle, VP Research, National Restaurant Association

James Hammersley, Office of Policy and Strategic Planning at the US Small Business Administration

Robert Skelton, CAE Chief Administrative Officer for the ASAE

Soccer Team from Portugal Comes to Fenway Park – Carlos Andrade is Honorary Captain!

Fans of Sporting C.P. believe that Fenway Park is a fitting place for their beloved team to play since their devotion is comparable to that of Red Sox Nation.

NESN’s Jade McCarthy caught up with Sporting’s honorary captain, Carlos Andrade, a Portugal-native who is one of the largest Dunkin’ Donuts franchise owners in New England. When asked to compare the Sporting’s fan base to Red Sox fans, Andrade said they were very similar.

“It’s exactly like you have here,” Andrade said. “Our football team is as big as the Red Sox here. Especially Sporting, they are always one of the top teams in the country.”

To see Andrade’s interview during the pregame, take a look at the video below.

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