Saving Money & Recovering Costs: Strategies for Franchise Owners

This is the first in a series of three articles focusing on specific cost savings and cost recovery strategies. This first article will focus on Energy expenses.

For five years, Michael Lefkowitz owned and operated four Dunkin’ Donuts stores in Miami-Dade County. Before selling his stores in August of this year, he established ECS Business Services (ECS), a cost reduction and cost recovery consultancy. As ECS President, Lefkowitz is dedicated to helping franchise owners and other clients save money and recover costs related to fixed expenses.

As a former Dunkin’ Donuts franchisee, Lefkowitz brings a unique and valuable perspective–he’s been in your shoes–together with more than 30 years of experience managing hotels, including overseeing all purchasing and facility management.

His team of experts at ECS can perform thorough and meticulous analysis of your fixed expenses to identify opportunities for cost reduction as well as instances of incorrect billing that may entitle you to cost recovery. This analysis can typically be accomplished in a few weeks.

ECS is so confident that it can identify cost savings for you that its services are guaranteed: If ECS can’t save your business money, there is no fee. ECS is paid only via a percentage of the funds you save and recover. There are no up-front costs to you, so it is genuinely risk-free.

 Before initiating the process, ECS requires clients to sign off on two items:

1. A service agreement that details the specific tasks ECS will perform, the length of the contract and how ECS will be compensated.

2. A letter of authorization giving ECS permission to request additional information from your vendors as needed. This allows ECS to make the inquiries necessary for its research and analysis without having to bother you.

“We are very aware of and very concerned about how stretched for time franchisees and their managers are already,” said Lefkowitz. “That’s why we do everything we can to minimize the time investment on your part. You can stay focused on running your shops and let us do the nitty-gritty work behind the scenes.”

In order to conduct Energy (i.e., electricity and natural gas) audits on your behalf, ECS requires at least three to six months of historical billings from your shop or network of shops. ECS will also need your current service agreements or contracts. The first step ECS takes is to input the data from your bills into its proprietary software. ECS also secures comprehensive documentation from your service providers, including worksheets that fully detail your charges. Based on all of this data and such factors as peaks and valleys, weather, size of facility and hours of operation, ECS performs an analysis to determine a baseline monthly average of your costs.

The firm builds a “virtual meter” which it uses to reconcile your billing. If ECS finds a significant discrepancy between its reconciliation and your bill amounts, then it can pursue cost recovery for you. If ECS’s calculations match or closely approximate your actual charges, then the chance of cost recovery is unlikely. There may still be cost savings possibilities, however, that relate to your vendor agreements or contracts.

It’s important to note that the natural gas market is much more volatile than the electricity market because of geo-political factors as well as weather factors, like hurricane season. “You really have to be on your game in monitoring natural gas pricing,” Lefkowitz said. “That’s another advantage ECS provides. We have the experience necessary to account for the market’s volatility and stay on top of fluctuations in pricing.”

ECS’s reconciliation process and service agreement analysis can identify ways for you to save money on future bills as well as recoup overpayments you have made due to erroneous billings. When it comes to recovering costs, if a private vendor provides the service, the time frame from which you can recoup expenses is unlimited. If a municipality provides the service, that time frame is limited to a maximum of 36 to 48 months. In terms of identifying future savings, ECS investigates whether or not you might qualify for a better plan or tier that the provider offers or if a different service provider altogether offers more advantageous rates or plans. ECS also ensures that you are being billed according to the accurate rate category or tariff for your type of operation.

“ECS has been very successful in reducing electricity and natural gas expenses for our clients,” Lefkowitz said. “In 60 to 75 percent of all cases, we’ve been able to save clients 15 to 25 percent on these costs, which is a huge relief and benefit that instantly and continually impacts a company’s profitability. 

Stay tuned for part two in this series of articles, which will focus on cost savings and cost recovery related to Water and Sewer and Trash expenses.

For more information, contact Michael Lefkowitz at michael@ecssaves.com or 786-220-9250. You can also learn more at www.ecsbusinessservices.com.

FTC Subpoenas 48 Food Companies Regarding Marketing to Kids

Advertising Age Magazine reports that the Federal Trade Commission is once again handing out subpoenas to companies that market food to children and teens.

Three years after initially delivering what is technically known as “orders to file special report” to 44 marketers, the FTC last week began sending subpoenas to 48 companies in order to prepare a follow-up to its 120-page report issued in 2008, “Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities and Self-Regulation.”

“This is a follow-up to measure the effects that self-regulation has had over the last three years,” said Carol Jennings, spokeswoman for the FTC’s Division of Advertising Practices/Bureau of Consumer Protection. “We are supportive of industry voluntary efforts to limit their marketing to kids and this will see whether more is needed.”

Ms. Jennings said the findings will be made available to the public.

A handful of marketers that received subpoenas in 2007 were left off the 2010 list, (Dunkin’ Brands  was not on the 2010 list) presumably because they have limited their marketing to children. Twelve companies on this year’s list are new, but 36 companies are once again receiving subpoenas — including Yum Brands, which was called out by FTC Chairman Jon Leibowitz in a December 2009 speech in which he said, “Many companies that market heavily to children and teens have yet to join or make a commitment. Why, for instance, hasn’t Yum Brands, with its KFC, Taco Bell, and Pizza Hut chains, stepped up? Or Chuck E. Cheese and IHOP? Or the marketers of Air Heads and Baby Bottle Pops?”

Calls to Yum Brands were not returned. A spokeswoman for CEC Entertainment, parent company of Chuck E. Cheese, said she could not comment without having seen the subpoena.

Some have speculated that the new round of subpoenas was a prelude to Congressional hearings and possible legislation, but Ms. Jennings refuted that.

“We are not proposing any regulation,” she said.

Anthony DiResta, an attorney specializing in advertising, marketing and media at Washington firm Manatt Phelps & Phillip, agreed with Ms. Jennings and said he did not see legislation in the future.

Dunkin Brands is Not on the 2010 List

Debt on the Menu at Burger King

Steve Rosenbush writes at Portfolio.com here’s something for Burger King Franchisees to consider as the restaurant chain is sold to yet another private equity owner. Who will pay for the $2.8 billion in bank loans that are financing the buyout, worth an estimated $4 billion, including debt and equity?

3G Capital, a heretofore obscure investment company with holdings in CSX and Coca-Cola Bottling, is offering $3.26 billion for the company, a 46 percent premium to its pre-announcement market price. The new owners are taking on Burger King’s existing debt, bringing the total cost of the deal to $4 billion. About $2.8 billion will be financed with bank loans. 3G is run by Brazilian billionaire Jorge Paulo Lemann, a veteran of private equity firm GP Investments, America Latina Logistica, and Anheuser-Busch, where he has a seat on the board.

Burger King has been fried by the recession. It has gone through a series of ownership changes since 2002, when private equity players TPG, Goldman Sachs and Bain bought the company from British booze giant Diageo.

It went public in 2006, although the private equity group still holds nearly one third of the shares.

Those three private equity companies—regarded as among the best in the business—have failed to prevent a decline at Burger King. The recession has hit its core customers, who are in their late teens to early 30s. Revenues are down about 1 percent, while McDonald’s has a broader menu, double digit revenue growth, and a market cap of $80 billion.

Burger King is in need of new technology, a facelift for its aging stores, and probably an overhaul of its menu and general strategy. Its marketing campaign—featuring a bizarre-looking character—probably hasn’t helped, either. Needless to say, relations with franchisees could be better.

It’s not clear what 3G will bring to the table, so to speak. It once had minor holdings in Wendy’s and Jack in the Box, but that’s not the same thing as financial control, let alone operating responsibility.

What is clear, is that that debt is on the rise. It appears that less than $500 million of equity will go into the deal. That’s less than 20 percent of the purchase price, and about 12.5 percent of the value of the deal, including the assumption of existing debt. The economy remains weak. Any turnaround will require investment in the business.

Debt is cheap right now, and if the new owners can raise enough, they stand to make a profit by acquiring the company now, when equity values and interest rates are low.

But they need a great strategy to turn around sales and position the company for an upturn in the economy. That isn’t clear. What is clear is that the restaurants will have to support a higher level of debt.

Portfolio.com

A Whopper of a Decision: Burger King Franchisee Association Has Standing

Eric H. Karp

David J. Meretta

From time time DDIFO is pleased to present Guest Commentary from valued contributors. The following is an Analysis of  a recent 11th District Court Decisions regarding Burger King written and submitted by Eric Karp and David J. Meretta of 

Witmer, Karp, Warner & Ryan LLP  

22 Batterymarch Street,  Boston, MA 02109 Tel: 617-423-7250

Following the Supreme Court’s holding in State Oil Co. v. Khan, 522 U.S. 3 (1997) that maximum price fixing was no longer a per se antitrust violation, some franchisors have imposed deep discounting on their  franchisees through resale price caps.  Among the better known examples of this are the “value menu” pricing systems adopted by many fast food franchisors in which all designated  ”value” items must be sold at or below a specified price.

In certain instances, franchisees have embraced such maximum pricing caps, particularly where those schemes have maintained or actually increased the franchisees’ bottom line profitability.  Where pricing restrictions are viewed by franchisees as harmful to their profitability, however, substantial system discord and even litigation can ensue.

A fascinating recent example of the latter scenario can be found in National Franchisee Association v. Burger King Corp., 2010 WL 2102993 (S.D.Fla. 2010), which concerns Burger King’s system-wide $1 double-cheeseburger (DCB) promotion.  This case epitomizes the collision between the divergent interests of franchisors, for which the top-line revenue of the franchisees is paramount, and franchisees, who live off the bottom line.

The DCB promotion has long been the subject of heated debate between Burger King and its franchisees, which maintain that because it costs more than $1 to produce the DCB – something that is not true of any other item previously placed on the Value Menu – the promotion requires them to sell the DCB at a loss and could lead to bankruptcy of some franchisees.  The franchisees were also mindful that Burger King’s marketing of the DCB promotion was being funded by the franchisees’ advertising contributions.  Burger King’s decision to implement the promotion in the fall of 2009 marked the first time that it had imposed a maximum price on its franchisees without obtaining their majority consent, the franchise community having twice voted against it. 

In November 2009 the National Franchisee Association (NFA), which consists of approximately 83% of all Burger King franchisees in the United States and Canada, filed suit against Burger King in federal court in Florida.  The NFA alleges that (1) Burger King does not have the right to set maximum prices under the franchise agreement, and (2) the DCB promotion violates Burger King’s duty of good faith under both the express terms of the franchise agreement and the implied covenant of good faith and fair dealing under Florida law.

In response, Burger King moved to dismiss the complaint, challenging the NFA’s standing to sue on behalf of individual Burger King franchisees, and arguing that the Eleventh Circuit had previously confirmed Burger King’s authority to set maximum prices under the franchise agreement.

While the court agreed that it was bound to follow the previous Eleventh Circuit determination that Burger King does have the right to set maximum prices under the franchise agreement, the court declined to deny the NFA standing to bring its action at the current stage of the litigation, and it ordered that the case proceed with respect to the NFA’s claim that Burger King’s decision to impose the DCB promotion violated its contractual or implied duty of good faith.  Both aspects of the court’s decision are significant.

In reaching its decision, the court noted the longstanding principle that an association has standing to sue on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.  In this case, Burger King challenged the NFA’s associational standing with respect to the first and third elements.

The court rejected Burger King’s arguments that the NFA’s standing is contingent upon (i) all Burger King franchisees being members of the NFA, and (ii) the identification of an individual franchisee that has standing.  Observing that the NFA brought the action “on behalf of its members and on behalf of a class comprised of all the Franchisees”, the court found that, at the current stage, the action is only on behalf of NFA’s franchisee members and would only be extended to all Burger King franchisees should the NFA succeed in certifying a class.  The court likewise found that the allegation that “at least one” NFA member would be harmed by the DCB promotion satisfied the first element of associational standing.

With respect to the third element of associational standing, the NFA maintained that the participation of individual franchisees in the lawsuit is unnecessary, because the NFA could prove bad faith through Burger King’s own internal documents and data, and through expert testimony.  The court agreed and concluded that the NFA had sufficiently alleged associational standing at this early stage of the litigation.  The court cautioned, however, that because of the nature of the NFA’s claims, it must prove, on a franchisee-wide basis, that Burger King imposed the DCB promotion in bad faith, and “it remains to be seen” whether the NFA can prove such bad faith “without resort to individual determinations”.

Burger King’s duty of good faith to its franchisees is both contractual and implied by law.  The franchise agreement provides that Burger King can only make changes and additions to its operating system which Burger King “in the good faith exercise of its judgment believes to be desirable and reasonably necessary . . .”  Toward this end, under Florida law, the implied covenant of good faith and fair dealing prevents a party from capriciously exercising discretion accorded it under the contract “so as to thwart the contracting parties’ reasonable expectations.”

Addressing the NFA’s claim for breach of the duty of good faith and fair dealing, the court found that, construed in a light most favorable to the NFA, its allegations plausibly state a claim that Burger King breached its duty of good faith by setting the maximum price at $1, forcing the franchisees to sell the DCB at a loss. The court also noted the NFA’s allegation that Burger King has admitted that the sale of the DCB at $1 could lead to bankruptcy of its franchisees.

In our view, in addition to demonstrating the perils of implementing key system changes in the absence of franchisee buy-in, this case should serve as a lesson to franchisors that this kind of overreaching rarely survives legal challenge.  Can it really be good faith to require that franchisees sell a key product at a loss?  Would Burger King, if it was a chain comprised solely of company owned outlets, impose this promotion on itself?  Toward this end, we note that in April 2010 Burger King removed the DCB from its $1 value menu and re-priced it at $1.29.  This step has not eliminated the controversy, however, as Burger King now requires the sale for $1 of the “Buck Double” – which differs from the DCB only in that it has a single slice of cheese instead of two – a product that, according to the franchisees, still costs more than $1 to produce.

The case also serves as validation of franchisee associations in general and confirms, contrary to the statements of some franchisor advocates, that the implied covenant of good faith and fair dealing is very much alive and well.

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.

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

Subway Says Breakfast a Success

Four months after debuting its breakfast menu, expansion plans are set

Elissa Elan reports in Nation’s Restaurant News that after serving breakfast for four months, Subway said the daypart has increased sales systemwide and exceeded expectations, leading the sandwich chain to expand the early-morning menu with limited-time offers and explore the service of more coffee or espresso-based beverages.

In an interview with Nation’s Restaurant News, Larry Varvella, Subway’s research and development project leader, said the chain’s foray into breakfast — a daypart filled with heavyweights McDonald’s and Dunkin’ Donuts — was a success for the brand and its franchisees.

“We’re very excited that our initial results show it is outperforming even our original expectations,” Varvella said. “Those original expectations were based on our franchise owners breaking even at the least. Of course we fully realized that to be a major player [at breakfast] we needed a long-term commitment. We figured that would be a three-to-six-month period. The last thing we wanted was for our owners not to be profitable.”

The Milford, Conn.-based quick-serve sandwich chain introduced its breakfast program April 5 to more than 25,000 Subway restaurants across North America. The menu features egg and cheese sandwiches served on whole-wheat English muffins, flatbreads or Subway’s traditional 6-inch and foot-long hoagie breads at a prices ranging between $1.75 and $2.25 for the English muffin melts, $2 to $3.50 for the 6-inch hoagies or flatbread sandwiches, and $4 to $6 for the foot-long variety.

The chain entered breakfast as more research highlighted the daypart’s growth potential and popularity with consumers. According to a study conducted by market research firm Mintel Research earlier this year, the breakfast foodservice market is expected to grow 13 percent through 2014. In addition, two of the fastest-growing menu items at quick-serve restaurant chains are specialty coffees and breakfast sandwiches, according to NPD Group, a marketing research firm based in Chicago.

More sandwiches are on the way, Varvella said, although he would not disclose what was in test or when new items would debut.

“We are definitely looking at introducing new items through limited time offers,” he said. “We fully believe that new products are one of the life-bloods of a restaurant chain. We want to keep [the program] new and exciting, and have a lot of items in the pipeline.”

He added that Subway also is exploring the possibility of expanding its beverage line to include espresso-based and flavored coffee drinks.

“Coffee has been a very strong part of our program,” Varvella said. “We’re looking at expanding with Seattle’s Best above and beyond standard drip coffee.”

Though Varvella would not disclose sales for the breakfast program, he indicated there are several barometers that have determined its success, including the acceptance by Subway franchisees.

“The franchisees are happy and the customers are buying the product,” he said. “In the past the menu mix was higher in non-breakfast items, but now we’re seeing equal amounts [in sales] of about 50 percent breakfast and non-breakfast, which, again, is ahead of projections.”

Varvella noted that the two best-selling breakfast items include the egg white western melt and the double bacon and cheese omelet. Latest promotions have highlighted the steak, egg and cheese sandwiches.

Read more at: Nation’s Restaurant News

Subway says Breakfast a Success

Four months after debuting its breakfast menu, expansion plans are set

Elissa Elan reports in Nation’s Restaurant News that after serving breakfast for four months, Subway said the daypart has increased sales systemwide and exceeded expectations, leading the sandwich chain to expand the early-morning menu with limited-time offers and explore the service of more coffee or espresso-based beverages.

In an interview with Nation’s Restaurant News, Larry Varvella, Subway’s research and development project leader, said the chain’s foray into breakfast — a daypart filled with heavyweights McDonald’s and Dunkin’ Donuts — was a success for the brand and its franchisees.

“We’re very excited that our initial results show it is outperforming even our original expectations,” Varvella said. “Those original expectations were based on our franchise owners breaking even at the least. Of course we fully realized that to be a major player [at breakfast] we needed a long-term commitment. We figured that would be a three-to-six-month period. The last thing we wanted was for our owners not to be profitable.”

The Milford, Conn.-based quick-serve sandwich chain introduced its breakfast program April 5 to more than 25,000 Subway restaurants across North America. The menu features egg and cheese sandwiches served on whole-wheat English muffins, flatbreads or Subway’s traditional 6-inch and foot-long hoagie breads at a prices ranging between $1.75 and $2.25 for the English muffin melts, $2 to $3.50 for the 6-inch hoagies or flatbread sandwiches, and $4 to $6 for the foot-long variety.

The chain entered breakfast as more research highlighted the daypart’s growth potential and popularity with consumers. According to a study conducted by market research firm Mintel Research earlier this year, the breakfast foodservice market is expected to grow 13 percent through 2014. In addition, two of the fastest-growing menu items at quick-serve restaurant chains are specialty coffees and breakfast sandwiches, according to NPD Group, a marketing research firm based in Chicago.

More sandwiches are on the way, Varvella said, although he would not disclose what was in test or when new items would debut.

“We are definitely looking at introducing new items through limited time offers,” he said. “We fully believe that new products are one of the life-bloods of a restaurant chain. We want to keep [the program] new and exciting, and have a lot of items in the pipeline.”

He added that Subway also is exploring the possibility of expanding its beverage line to include espresso-based and flavored coffee drinks.

“Coffee has been a very strong part of our program,” Varvella said. “We’re looking at expanding with Seattle’s Best above and beyond standard drip coffee.”

Though Varvella would not disclose sales for the breakfast program, he indicated there are several barometers that have determined its success, including the acceptance by Subway franchisees.

“The franchisees are happy and the customers are buying the product,” he said. “In the past the menu mix was higher in non-breakfast items, but now we’re seeing equal amounts [in sales] of about 50 percent breakfast and non-breakfast, which, again, is ahead of projections.”

Varvella noted that the two best-selling breakfast items include the egg white western melt and the double bacon and cheese omelet. Latest promotions have highlighted the steak, egg and cheese sandwiches.

Alan Warmund, president of Subway Development of Washington, the McLean, Va.-based area developer of 1,100 franchised units in the mid-Atlantic region, said many franchisees are upbeat about the breakfast program’s success.

“It is doing much better than expected from ground zero,” Warmund said. “The results have been extremely encouraging; overall in our territory, the owners are happy and sales are growing.”

Warmund agreed with Varella’s assessment of a 50-50 split between breakfast and non-breakfast item sales, mainly because the chain’s full menu is now available from 7 a.m. onward, depending on location.

“We’re selling a lot of standard items along with breakfast items,” he said. “We’re really offering a full menu from 7 a.m. on. Why wait in line at lunch if you’re already there in the morning? I think it’s great. We don’t care what we sell; we just know we’re selling more.”

Warmund expressed skepticism over the possibility of Subway growing its coffee program, however. He said the equipment would be too expensive to implement systemwide. He noted that the needed equipment could cost between $10,000 and $15,000.

Subway now operates or franchises more than 29,000 locations in 86 countries.

Read more: Nation’s Restaurant News

Franchisee Announces Eight New Dunkin’ Donuts In Indiana and Michigan

Franchisee Sack of Donuts, LLC Announces Eight New Dunkin’ Donuts Franchises In South Bend, IN and Kalamazoo, MI.  They will open first location in 2011 and remainder by 2015.

Dunkin’ Donuts, America’s favorite everyday all-day stop for coffee and baked goods, announced today the signing of a multi-unit franchise store development agreement with Sack of Donuts, LLC for eight new restaurant franchises in South Bend, IN and Portage / Kalamazoo, MI.  One restaurant will open in 2011 and the remainder by 2015.  Dunkin’ Donuts’ development throughout the region is part of a steady and strategic growth strategy, which includes expanding in existing markets while entering new cities across the country to help drive the leading bakery and coffee franchise chain’s growth.

Sack of Donuts, LLC is led by brothers Mike and Andy Knapick and Dewayne White, former NFL starting defensive end for the Detroit Lions.  The local entrepreneurs also own eight Jimmy John’s sandwich franchises and a Bar Louie franchise operation spread out between the South Bend and Kalamazoo markets.

“Our team has built a strong reputation with our two current concepts and we’re very excited about adding a third operation to our portfolio and expanding Dunkin’ Donuts’ presence in South Bend, Kalamazoo and Portage,” said Mike Knapick, Managing Member, Sack of Donuts, LLC.  “We all have a strong passion and loyalty for the brand and know Dunkin’ Donuts will thrive in each of these markets.”

Read more at: Franchiseworks

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