Geller to bring Dunkin’ Donuts back to St. Louis Thursday

Kelsey Volkmann of the St Louis Business Journal Reports that Dunkin’ Donuts will officially return to the St. Louis market after a 10-year absence with the opening of a store Thursday in Kirkwood.

Michael Geller plans to open the first of his dozen planned St. Louis stores at 5 a.m. at 1210 South Kirkwood Road.

Geller, who until recently lived in New York, said he’s long wanted to return to the St. Louis area and bring the Dunkin’ Donuts brand with him.

He is a Washington University law and business school alumnus who hails from a family with a 20-year history of operating Dunkin’ Donuts on the East Coast.

“My mother and aunt have operated Dunkin’ Donuts in New Jersey, where Dunkin’ Donuts has a major presence, for more than 20 years,” he said in a statement. “I grew up with it, always loved the business and always loved the products.”

The last Dunkin’ Donuts in St. Louis closed about a decade ago. But the chain has been working with Pace Properties since late 2007 tore-enter the market.

Franchisee Milan Patel of OHM Concession Group LLC plans to open a unit at Lambert-St. Louis International Airport’s East Terminal next week.

Last year,the company signed a deal with Jay Patel, managing partner of Dunkin’ Development of Greater St. Louis, for 10 stores in St. Louis. Patel owns multiple convenience stores and gas stations in St. Louis as well as six Subway restaurants in Philadelphia. He is also the president of Accurate Personnel Services.

To cut costs and better access financing, some Dunkin’ franchisees are shifting away from new construction and toward retrofits of existing space. Under that plan, stores will require about$400,000 to $500,000in investment — half the cost of a new stand-alone building.

Each store will employ about 20 to 30 people. Company guidelines suggest franchisees should possess a minimum net worth of $500,000 and liquid assets of at least $250,000 per unit.

Read more at: St Louis Business Journal 

Related Story at DDIFO.org: Dunkin’ Donuts Sweetens to St Louis Again Under New Plan

Burger King Lets Franchisees Have it Their Way on Soda Rebates

Janet Sparks reports at BlueMauMau that the National Franchisee Association, representing over 90 percent of all Burger King franchisees in the US, has settled two class action lawsuits with franchisor Burger King Corp. (NYSE: BKC) and its two soft drink distributors, Coca Cola and Dr Pepper.

The litigation was over Burger King Holding’s unilateral decision to appropriate a substantial percentage of soft drink rebates for the franchisor’s designated use. Franchisees have received the “restaurant operating funds”, or ROFs, for the last decade based on the amount of syrup they purchased from the drink companies. The burger chain had hoped to start taking 40 percent of the soda rebate money this year as a way to increase its national marketing efforts.

NFA Chairman William Harloe Jr. made this statement yesterday to members: “We are pleased to report that we have been successful in negotiating a joint stipulation that memorializes [Burger King's] decision to cancel the implementation of the reallocation of ROF and preserves your rights in the event the ROF issue emerges in the future.”

Burger King was served with federal lawsuits, filed in the Southern district of California, on the opening day of its grand annual convention on May 4, 2009. Since that time, the franchisor has been dealing with negative press resulting from its tensions with franchise owners over the soda litigation and it requiring its franchisees to discount certain menu items. Another lawsuit filed by the franchisee association last year challenged Burger King’s promotion of its $1 Double Cheeseburger, which franchisees claim costs more than a dollar to make.

The franchisor recently acquiesced, saying that it will raise the menu price for the double cheeseburger to $1.19.

D.A. says Kainos CFO Skimmed $429K

NBC New York reports that a Long Island businessman was really raking in the dough — allegedly stealing nearly a half-million dollars from a corporation that owns a string of Dunkin’ Donuts, prosecutors said today.

Christopher Cortese, 54, of Rockville Centre, has been charged with grand larceny for allegedly siphoning $429,000 from the company where he was employed as the chief financial officer.  He used the money to finance trips, car payments, gift cards and payments to two girlfriends that he hired as “consultants” to the company, Nassau County District Attorney Kathleen Rice said today.

Cortese, 54,was working for Kainos Partners Holding Company, LLC, a corporation that owns and operates Dunkin Donuts franchises. Prosecutors began investigating Cortese last year after his expenses ran a little high — including $53,500 for a home office, $60,000 in gift cards, and more than $100,000 in trips, meals, and other expenses.

In addition, Cortese “hired” two girlfriends as consultants, funneling $110,000 to one woman for information technology services that were never performed, the D.A.’s office said in a statement.

“The level of this defendant’s deception, arrogance and sheer greed is shocking,” Rice said.

Cortese was terminated by Kainos in 2009 and he faces up to 15 years in prison if convicted.

Dunkin’ Brands To Gobble Up Kainos Franchise Shops

BlueMauMau reports that Dunkin’ Brands has announced its intent to purchase some of the stores of troubled Kainos Partners Holding Company, a master franchise of 56 Dunkin’ Donuts shops located in New York, South Carolina and Nevada. Dunkin’ will acquire the franchisee’s stores to be owned and run by the franchisor, and then refranchise them later.

In an email sent out to Dunkin’ franchisees, CEO Nigel Travis explained the franchisors intent to buy the company. “Kainos has been unable to emerge from bankruptcy and has filed a motion seeking an order authorizing bidding procedures to be employed in connection with the proposed sale of their Dunkin’ Donuts restaurants and related assets,” Travis wrote. “Dunkin’ Brands has submitted a bid to purchase a substantial portion of the assets and business operations.”

Travis went on to write, “Kainos will continue to operate its Dunkin’ Donuts restaurants in Buffalo, NY, Greenville, SC, and Las Vegas, NV until the conclusion of the sale process.”

Attorney Adam Seigelheim, chair of Stark & Stark franchise group elaborates. “The implication from Nigel’s email is that Kainos is not going to put forward a plan to come out of Chapter 11,” the franchise attorney explains of last Wednesday’s deadline by the court to file a plan and the company’s missing of that deadline. “They’ll remain in chapter 11 but will move to sell off their assets in the ordinary course of business,” says Seigelheim.

Refranchising bankrupt Dunkin’ stores

“Dunkin’ submitted a proposed order to acquire the assets of Kainos under a 363 sale, which is the code section for selling stuff through bankruptcy,” says Jim Balis, who is both chief executive officer and chief financial officer of Kainos Partners.

A “363″ sale refers to a sale of a company’s assets who is undergoing bankruptcy, as in a Chapter 11 reorganization. It refers to the bankruptcy code that regulates the procedure, 11 USC §363.

“I think the order will be entered on Monday (March for that proposed 363 sale, says Balis. “Over the next month, we will be marketing units to see if anybody else is interested to buy the assets of Kainos, the debtor.”

“It looks like they are going to sell off their assets through a liquidated chapter 11,” explains franchise attorney, Adam Seigelheim.

Michelle King, director of global public relations for Dunkin’ Brands, adds, “Other buyers will have an opportunity to purchase the assets of Kainos subject to bankruptcy court approval. Although a final date has not yet been set for completion of the sale, we believe it to be in early April. In the meantime, Kainos will continue to operate in all markets.”

One year’s high flyer crashes the next

Kainos’ Balis says that the original franchise agreement that Dunkin’ required was for Kainos to commit and build over a hundred units in various states. Kainos received development money when credit was flowing from private equity investor Palisades Capital and senior secured lender CIT.

The master franchise quickly built some 56 stores in New York, South Carolina and Nevada since 2005.

Dunkin’ was happy.

Dunkin’ Donuts honored New York-based Kainos Partners as “developer of the year” in July, 2008, meant to have the way it grows emulated by others. In a toast given at a ceremony for its award winners, Jon Luther, who at the time was chairman and chief executive officer of Dunkin’ Brands, Inc., said: “This room is filled with an accomplished and elite group of leaders from all around the world who represent the very best of the Dunkin’ Brands system. I applaud the values and dedication you all bring to this company.”

But a year later, Kainos was filing Chapter 11 for bankruptcy protection.

When asked why the master franchise failed and whether the high number of store locations spread out in such a diverse geography had caused the company’s downfall, CEO Balis replied, “Unfortunately, I cannot comment on that.”

Dunkin’ has been caught up in the coffee wars, a war over the menu price among McDonald’s, Starbucks and others over cups of coffee. Meanwhile, competitors are increasing breakfast offerings to raise revenues in the tough economy. “It is a challenging market,” says Balis over his firm’s decline. “It didn’t help that some of our competitors are advertising very aggressively in the breakfast segment.”

Kevin McCarthy, current chairman of Dunkin Donuts Indepedent Franchise Owners association and a former vice president of real estate and operations at Dunkin’ Donuts, thinks that it is a problem of franchisor Dunkin’ not understanding the chain’s traditional strengths. Speaking strictly on behalf of himself, McCarthy thinks misconceptions caused Dunkin’ to use the wrong development strategy.

He stresses that Dunkin’ is largely a mom & pop franchise chain. It should grow organically, rather than using large area developers. “Nothing replaces a franchise operator who is on premise,” declares McCarthy. He stresses a slower but more steady growth is by opening a store to get it profitable, and then open another in a fairly contiguous neighborhood that the owners know well.

Read More at: BlueMauMau

Dunkin’ Donuts has announced the result of its most recent Brand Advisory Council (BAC) election with 26 franchise leaders representing five regions.

Chain Leader, reports that Dunkin’ Donuts, America’s all-day, everyday stop for coffee and baked goods, has announced the result of its most recent Brand Advisory Council (BAC) election with twenty-six franchise leaders representing five regions.

The members serve a two year term, providing strategic advice and guidance on brand initiatives. They attend regular meetings with the senior leadership team at Dunkin’ Brands corporate headquarters in Canton, Mass. This group represents the entire franchise community and serves as a forum to exchange ideas, provide feedback, observations and suggestions.

For 2010-2011, eleven new representatives were elected to the Dunkin’ Donuts Brand Advisory Council by their colleagues from a slate of candidates for each respective region. They include:

* Nick Apostoleres (Florida)
* Rob Branca (Shrewsbury, MA)
* Mark Cafua (North Andover, MA)
* Jim Cain (Norwalk, CT)
* Dan Costa (Acton, MA)
* Jason Duffy (Phoenix, AZ)
* Barkat Gillani (Chicago, IL)
* Sid Mody (New Brunswick, NJ)
* Parth Patel (Clayton, NC)
* Vipul Patel (Chicago,IL)
* Vishal Shah (Chicago, IL)

The new franchise leaders will serve alongside returning members, Jim Allen (co-chairman). Danny Bouzianis (Biddeford, ME), Scott Campbell (Great Neck, NY), Neal Faulkner (Upton, MA), Lou Garcia (Manasquan, NJ), Ram Javia (Westminster, MD), Dinart Serpa (Beverly, MA), Perry Shah (Philadelphia, PA), Dave Sisson (Cleveland, OH), Clayton Turnbull (Boston, MA), Rod Valencia (Woodhaven, NY), Mike White (Atlanta, GA), Ed Wolak (Scarborough, ME), George Zografos (South Yarmouth, MA) and John Justo (Providence, RI).

“It is a privilege and honor to serve on the Brand Advisory Committee again this year to represent the Dunkin’ Donuts franchise community,” said Dunkin’ Donuts BAC co-chairman, Jim Allen of Lexington, MA. “I look forward to working with my fellow franchisees and senior management to help address many of the topics that are important to the Dunkin’ Donuts network.”

“We are always working towards building a stronger franchise system and the BAC plays a critical role in providing senior management with thoughtful and valuable advice and worthwhile perspectives to further strengthen the business,” said Nigel Travis, Dunkin’ Brands CEO and Dunkin’ Donuts President. “We look forward to the contributions of our newly appointed members who join a strong group of dedicated franchise leaders that takes its commitment to Dunkin’ Donuts seriously.”

Dunkin’ Donuts senior leadership consults with the Brand Advisory Council on a wide variety of topics, including the brand’s strategic direction, marketing strategies, menu innovation, operations, technology issues, education and training needs, regional and national meeting agendas and more.

The Dunkin’ Donuts Franchise Advisory Council system has been in place for more than three decades and includes operators located in 35 United States across the country.

Tim Hortons Plans Menu Expansion to Compete with Starbucks, Dunkin’ Donuts

The New York Daily News reports that Tim Hortons is brewing up a fresh strategy to take on Starbucks and Dunkin’ Donuts.

The big Canadian coffee chain said Friday it would open hundreds of new cafés, including in New York City, that break the mold of Tim’s iconic coffee shops north of the border.

Tim Hortons already has 11 shops in the city – nine in Manhattan and two in Brooklyn.

As part of a plan to open 900 stores in North America over the next three years, the company said it will build 300 more outlets in the U.S. That will increase its total of U.S. stores by more than 50%.

Rather than sticking with a format that has become a part of Canadian culture, Tim’s said it would open what it described as “redesigned upscale café/bake shops” that feature a menu that differs from the Canadian fare, including pastries baked on premises.

“The bottom line is that the Tim Hortons you know today will be dramatically different in four years from now,” CEO Don Schroeder said.

The company told industry analysts Friday it would locate the 300 new cafés in parts of the U.S. in which it already had a presence – mostly in New York, Ohio and Michigan.

“They are making the right move by targeting current markets. You just can’t continue to throw more stores out there. It’s like throwing bad money after bad money,” Edward Jones analyst Brian Yarbrough told Reuters.

Tim Hortons currently has 3,015 shops in Canada and 563 in the U.S. Those numbers pale compared with Starbucks, which has more than 11,000 outlets in the U.S. alone, and Dunkin’ Donuts, which has 6,400 in its home market.

Also for 2010, the company expects sales at stores open for at least a year to increase by 3% to 5% in Canada and by 2% to 4% in the U.S.

Read More:  New York Daily News

Dunkin Donuts’ Not Hurting from Coffee Price Wars

Convenience Store News reports The fast-food coffee wars have yet to dent Dunkin Donuts’ bottom line very much, one of the chain’s owners said this week.

Despite efforts by McDonald’s Corp to undercut competitors on price, Dunkin’s market share in coffee is steady and growing, Mark Nunnelly, managing director at Bain Capital, said Monday at the Reuters Private Equity and Hedge Funds Summit in New York.

“The big hurt has not been Dunkin to McDonald’s, or McDonald’s to Dunkin. It’s been Dunkin and McDonald’s to your local fill-in-the-blank convenience store,” he said.

Nunnelly, whose firm is one of three private equity owners of the doughnut chain, said Starbucks Corp. has been hurt the most by the price war and the weak economy, noting that more consumers are trading down from expensive drinks to cheaper plain coffee rather than switching among the various outlets.

“The higher-priced players at $4 or $5 for a latte have obviously had the toughest year through the crisis,” Nunnelly said. “The more accessible price point players like Dunkin and McDonald’s have fared better through that period.”

Read more at: Convenience Store News

South River Celebrates Arrival of Dunkin’ Donuts

The Sentinel in New Jersey reports  that the town of South River celebrated the grand opening of a Dunkin’ Donuts store Feb. 12, describing it as a landmark occasion in the borough.

The Dunkin’ Donuts is not only the first South River location for the franchise, it is also the first restaurant with a national presence that has chosen to set up shop in the borough. Officials expressed hope that the new operation, located at the corner of Thomas and Main streets, would draw more local residents to the downtown area.

“Whenever a new business opens in the borough, it is good news,” Mayor Ray Eppinger said. “The owners did a great job renovating this location and it really looks good. Everyone hopes that this store does well and helps the neighboring businesses too by increasing foot traffic in the area.”

The Dunkin’ Donuts is located on a site that previously housed an insurance agency, pharmacy and bank. The building there had long been vacant.

Councilman John Krenzel said that, when campaigning last year, he and Councilman John Trzeciak were repeatedly asked when the Dunkin’ Donuts was opening.

“It has finally opened and South River is all the better for it,” Krenzel said. “The store is a clean and bright addition to the downtown area.”

Krenzel said he hopes the shop will serve as an anchor, helping to bring visitors to other downtown stores.

Both he and Eppinger attended the grand-opening ceremony, along with franchisee Igor Zak, who will operate the store, according to a press release from communications firm RF Binder, on behalf of Dunkin’ Donuts.

“As a small business owner with many years of experience with Dunkin’ Donuts, I am excited to bring my passion and enthusiasm to South River,” Zak said. “I see this store as an excellent opportunity to reinvigorate South River, and we’re confident that our presence here will drive more traffic to the other businesses in the area as well.”

Eppinger said he was honored to be able to cut the ribbon.

“It is nice to know that this property is being revitalized without the use of eminent domain,” he said.

Tim Hortons Bets on Michigan Expansion

Jennifer Youssef  of The Detroit News reports that as Starbucks Corp. shutters stores in Michigan — seven closed last year and 11 more are on the chopping block — Canada’s Tim Hortons Inc. is moving in to serve coffee-drinkers left in the lurch.

Tim Hortons has 125 stores in Michigan, including 93 in Metro Detroit, and plans to open more here, though officials wouldn’t disclose details of the expansion plan. The company also has stores in Flint, Saginaw and Lansing. It employs about 2,000 workers in the state.

Two weeks ago, the Canadian company signed an agreement with the Red Wings for the exclusive “pouring rights” at Joe Louis Arena, meaning only Tim Hortons can serve coffee there, said David Morelli, director of public affairs for the company based in Oakville, Ontario, a suburb of Toronto. Last year, it signed a similar deal with The Palace of Auburn Hills.

The company has existed since 1964 and has been growing steadily, Morelli said. Store sales in 2008, the latest annual figures available, topped $4 billion.

It’s uncommon for national restaurant chains to be expanding in Michigan now, said Andy Deloney, vice president of public affairs for the Michigan Restaurant Association. But Tim Hortons’ emphasis on value is a quality Michigan customers are demanding.

“There’s something they see in Michigan that says ‘This is right for us,’ ” Deloney said. “Success is a gamble, but companies will do their research and do whatever they can to compete.”

“They’re placing a bet on Michigan and I hope their bet pays off,” he said.

Company officials are confident the coffee and baked goods chain will do well in the Michigan market. David Clanachan, Tim Hortons chief operations officer for the United States and internationally, said he was aware that Starbucks closed three stores in Detroit last year and also announced in 2009 that it would close 18 stores in the state, but he is confident Tim Hortons won’t face the same fate.

Unlike Starbucks, which has limited food choices, he said, Tim Hortons has “the right menu mix” of breakfast foods, soups and other lunch items, as well as coffee, all for an affordable price. Plus, the company already has many loyal customers in Michigan and retail space that was previously occupied by other businesses is available for Tim Hortons stores to move in, he said.

“We’re very positive about our position in the Michigan market and our progression there,” he said. “We think we fit the bill.”

Walter Bender, owner of four Tim Hortons stores in Metro Detroit, fell in love with the eatery as a high school student in Detroit and used to cross the border into Canada to go there. He opened his first store in 2008 in Warren and has two in Detroit — both of which have moved into space vacated by Starbucks — and one in Harper Woods.

“It’s been going great,” said Bender, who employs about 70 people. “Business is growing, it’s picking up every day.”

He said he has a “very loyal” customer base and new customers stop into his stores all the time, he said. Customers are always commenting on how good the food and coffee taste and what a good value they got, he said.

“I’m living a dream,” he said.

 From The Detroit News: http://www.detnews.com/article/20100223/BIZ/2230330/Tim-Hortons-bets-on-Michigan-expansion#ixzz0gMKxLmeC

Dunkin’ Donuts Franchisees to award 100 scholarships in Connecticut

Dunkin’ Donuts is seeking applicants for a scholarship program in which the chain’s franchisees will award 100 $1,000 scholarships to college-bound high school seniors.

Dunkin’ Donuts franchisees are partnering with Scholarship America to administer the program and the selection progress.

This is the seventh year of the program, which has donated more than $600,000 to Connecticut students to date.

“We understand the challenges families encounter today when financing their child’s college education,” Michael Batista, a Connecticut franchisee, said in a statement. “The franchisees of Dunkin’ Donuts are excited to give back to the local families who support us every day.”

Applications are due March 15 and are only available online, at www.dunkindonuts.com/scholarship.

The awards will be given to high school seniors who intend to enroll as full-time undergraduates at an accredited two-year or four-year college, university or vocational-technical school.

Recipients will be chosen based on “well rounded” character, their academic record, demonstrated leadership, commitment to school and community activities and experience in the work environment.

Full- and part-time employees of Dunkin’ Donuts franchisees who meet the eligibility requirements may apply.

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