independent joe magazine issue #6 september 2010

New Yorkers Run on Dunkin’Times SquareBillboard MarksExpansion

also in this issue2010

CFA DayForum

ProfitBuilding

with Perry

September 2010 • Issue 6 We Communicate, We Educate, We Advocate!

DDIFO’s National Members Meeting September 21, 2010 at Mohegan Sun

United Now…More Than Ever!United Now…More Than Ever!

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of the United States; sale of 48 locations in NY; purchase of 15 stores in the Northeast;

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SEPTEMBER 2010 • INDEPENDENT JOE 3

I am pleased to present to you the sixth issue of Independent Joe magazine. Four times a year, DDIFO publishes Independent Joe (IJ) magazine to cel-ebrate Dunkin’ Donuts franchise owner-ship. IJ is full of articles and information regarding the proud ownership of one of the world’s great iconic brands.

As an independent association, one of the foremost missions of DDIFO is to utilize all the resources it can to make sure Dunkin Donuts Franchise Owners have the opportunity to grow, prosper and reap the rewards of their hard work and substantial investment. We act as a trade association and watchdog group for our members paying special atten-tion to the franchisor, industry research, and government relations.

Contrary to what some may believe, Dunkin’ Donuts franchise owners have every right to join an independent association. In the 2010 Franchise Disclosure Document (FDD) issued by Dunkin’ Brands, DDIFO is listed as a qualifying franchisee association ac-cording to Federal Trade Commission standards and guidelines.

The strength of DDIFO lies in the organization’s independence and its membership. There is strength in num-bers and the resources those numbers generate. We are all stronger together.

That concept will be evident on Sep-tember 21st when DDIFO will hold its first National Members Meeting at Mohegan Sun in Uncasville, CT. The theme of the meeting is “United Now…More Than Ever!” Response to the meeting’s announcement has been robust. We are looking forward to providing DDIFO members top quality content, sponsor exhibitions and signifi-cant member participation from within Dunkin’ Donuts franchise development triangle (Boston-to-Chicago–to-Florida).

Dunkin’ Donuts franchise owners have over $10 billion dollars invested in the Dunkin’ Donuts brands, from real es-tate, food service equipment, leasehold improvements, production and distribu-tion. Dunkin’ Donuts franchisees own 100% of the retail locations and work hard to provide loyal consumers the freshest and highest quality products available in the marketplace today. DDIFO is proud of the hard work and community involvement Dunkin’ fran-chise owners exhibit every day.

I’d like to thank all the people that helped put this publication together including Amy Levine, DDIFO Sponsor-ship Director for coordinating our Spon-sorship Advertising program whose financial support is critical in making this publication possible.

DDIFO has a fine team of writers that worked diligently to produce quality journalism, and valuable content, spe-cial thanks to Matt Ellis, Sue Minichiello and Brooke McDonough. DDIFO is fortunate to have Sue Petersen as our graphics designer, Sue not only creates appealing graphics but she is a wonder-ful illustrator.

Last but not least, thank you to the franchise owners for taking the time to

by Jim Coen President, DDIFO, Inc.

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United Now...More ThanEver!Jim Coen, President

Senator Scott BrownHeadlines 2010CFA Day ForumMatt Ellis

How to Build ProfitsDuring a RecessionPerry Ludy

DDIFO Directoryof Sponsors

New Yorkers Runon Dunkin’Brooke McDonough

Index ofAdvertisers

“DDIFO is a powerful force that is stronger with you than it is without you!”

communicate and share great stories with us all.

We invite you to visit our website www.ddifo.org, for regular news that affects Dunkin’ Donuts franchise owners is break-ing and changing all the time.

I look forward to seeing you at the DDIFO National Members Meeting “United Now…More Than Ever!” September 21st, at Mo-hegan Sun, it promises to be the biggest and best meeting DDIFO has ever put together.

Please don’t ever hesitate to contact me with any comments, questions or sugges-tions.

Jim CoenPresident, DDIFO, [email protected] • 800-732-2706

United Now... MoreThan Ever!

4 INDEPENDENT JOE • SEPTEMBER 2010

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DunkinDonuts_DCC_FullPage_V3.pdf 1 8/30/2010 12:59:33 PM


Independent Joe TM is published quarterly by DD Independent Franchise OwnersSM

Editors: Jim Coen, Matt EllisContributors: Perry Ludy, Brooke McDonough

Advertising: Amy Levine • Graphic Design/Production: Susan PetersenDirect all inquiries to:

DDIFO, Inc. • 150 Depot Street • Bellingham, MA 02019508-422-1160 • 800-732-2706 • [email protected] • www.ddifo.org

DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.

INDEPENDENT JOE is a trademark of DD Independent Franchise Owners, Inc. DD INDEPENDENT FRANCHISE OWNERS, DDIFO, and INDY JOE are service marks of

DD Independent Franchise Owners, Inc.Any reproduction, in whole or in part, of the contents of this publication is prohibited

without prior written consent of DD Independent Franchise Owners, Inc. All Rights Reserved. Copyright © 2010 • Printed in the U.S.A.

IndependentJoeThe Quarterly Magazine of DD Independent Franchise Owners

If there’s one thing all Dunkin’ Donuts franchise owners have in common, it’s the connection to their local communi-ties and, by extension, their connection to the United States Congressman or Senator who represents that communi-ty. Even before the legendary Speaker of the House, Thomas P. (Tip) O’Neill Jr. said, “All politics is local,” business owners knew that when a local politi-cian recognizes them, good things can happen.

That concept is behind the efforts of the Coalition of Franchisee Associations (CFA), of which the DDIFO is a charter member. This summer, franchise own-ers representing Dunkin’ Donuts and other well-known brands gathered in Washington, D.C. for the second annual CFA Day Forum on Capitol Hill.

DDIFO President Jim Coen has at-tended the CFA Day Forum for two years in a row. He says it is a tremen-dously valuable experience, not just for franchise owners, but also for members of Congress who may not be aware of the issues small businesses face within their districts.

“This is a valuable exercise,” said Coen. “You sit in a room with franchise owners from Dunkin’ Donuts, Subway and Pizza Hut and Congressmen say, ‘I have one of these in my district,’ so it relates directly to them. They under-stand that franchise owners invest in their communities, create jobs and sup-port local charities. And, we can remind them that in the Dunkin’ Donuts system, 100 percent of the stores are owned and operated by franchisees.”

According to Dave Glodowski, Chair-man of the CFA and a member of the Board of Directors for the Independent Hardee’s Franchisee Association, Inc. (IHFA), “When you’re in a Congress-man’s office and you represent jobs in his district he’ll listen.” The CFA, he says, helps members of Congress un-derstand the local issues as told by the franchise owners.

Senator Scott Brown Headlines2010 CFA Day Forum

Dunkin’ franchise owner Rob Branca sees the value as well. Case in point: Branca spent an hour meeting with Massachusetts Congressman Jim McGovern, whose district includes the city of Worcester where Branca and his family own a number of Dunkin’ Donuts shops.

“He also got the chance to put a face on the Dunkin’ Donuts that he frequents when he is home in Worcester and offered to do the ribbon cuttings at two

of the projects we have in development in the inner city,” said Branca. “McGovern was very interested in the views of small business owners and we were able to share specific instances of the unintended consequences of otherwise well-intended legislation that makes franchise owners crazy.”

As an example, Branca high-lighted the red tape, expenses and penalties associated with the Massachusetts health care

law. “We told Congressman McGovern how we wanted the national legislation to avoid duplicating these problems.” Branca says the Congressman was keenly interested and agreed to listen to the concerns of business owners when the new regulations are written.

“I was glad to have had the chance to meet with Rob and am grateful for his family’s continued investment in Worcester. As the son of two small

by Matt Ellis

CFA Day continued on page 6

DDIFO President Jim Coen, Dunkin’ Donuts Fran-chise Owner Rob Branca, and Congressman James McGovern (D-MA 3rd) discuss franchise owner issues in the Congressman’s Capital Hill office.

business owners myself, I especially appreciated hearing his concerns about the challenges facing entrepreneurs in this struggling economy. I look forward to working with him to make sure those concerns are addressed as revisions are made to the health care reform effort and regulations are put in place,” said Congressman McGovern in a statement to DDIFO.

Attendees at the CFA Day Forum not only have the opportunity to meet one-on-one with Congressmen who represent their district, they also are exposed to dynamic speeches from some of Wash-ington’s most influential leaders, journalists and experts. This year, former White House correspondent Sam Donaldson and Pulitzer Prize winning columnist George Will spoke to the group.

But, the showstopper was definitely U.S. Senator Scott Brown.

According to Misty Chally, Deputy Executive Director for the CFA, the luncheon at which Senator Brown spoke was so packed, they needed extra chairs. She says the Senator was very interested in meeting CFA members. “He shook hands one by one. I think it was really helpful for the franchise owners,” she said.

“Senator Brown is perhaps the most important legislator in the United States right now,” said Branca. “His is the key swing vote on nearly every piece of big legislation that comes out of Congress. He literally gets to make the decision on what does or does not become law in many cases, and I, a Dunkin’ franchise owner, got to discuss our positions on each of the laws and com-ing bills that affect our bottom line.”

CFA Day continued from page 5

CFA Day continued on page 13


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It was the best of times, it was the worst of times. These contrast-ing phrases were written by Charles Dickens in A Tale of Two Cities to describe the conditions leading up to the French Revolution and they remain true today. Just ask any business owner how current economic conditions are impacting their business. It could be the best of times for a computer repair business or a used car dealership and the worst of times for a health club or retail ice cream business. Arguably, marketing a business effectively in any economic climate

How to Build ProfitsDuring aRecession

Profits continued on page 14

requires skill, but marketing a business during a recession requires masterful skills. Some businesses thrive. Others struggle. But the fact remains that build-ing profits during a recession requires finding better ways to grow revenue. Let’s take a look at what we have learned during the recent economic downturn that can help us better under-stand and market to our Dunkin’ Donuts customers.

First, let’s look at ourselves individually. In the last couple of years during your visits to the grocery store, have you stopped buying products that you oth-erwise would have purchased without giving it a second thought? Have you recently turned down the opportunity to purchase a special treat for yourself or your family? Have you put off buying

a new car, computer, furniture, or new shoes? Have you postponed a trip or vacation? If you answered yes to any of the above you are like millions of other consumers who are responding to the current economic situation by changing their buying behaviors. Many econo-mists believe the changes are signifi-cant based on certain facts. As Drag-net’s Sgt. Joe Friday used to say, “Just the facts ma’am…” Let’s consider a few facts from the National Coffee Associa-tion’s 2010 National Coffee Drinking Trends study:

• Coffee is the oldest and second larg-est globally traded commodity (behind petroleum).

• The U.S. is the largest consumer of coffee in the world with nearly 200

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million coffee drinkers.

• Despite sustained economic challeng-es, a consistent number of consumers continue to drink coffee on a regular basis.

• Despite the recession and the need for consumers to alter their spending habits, their daily cup of coffee has proven to be non-negotiable.

• The number of people consuming cof-fee has not been significantly affected by the economic environment.

• Most consumers are consciously maintaining the coffee behaviors they had developed prior to the recession.

• Most regular coffee drinkers will quickly say that their daily cup of cof-fee is essential.

As business people who are very interested in coffee sales and trends, we should see some good news within these facts. They offer us an opportunity to tailor our marketing tactics to help grow our business.

With consumers consciously maintain-ing their coffee purchase behaviors dur-ing the recession and calling their cup of coffee essential, there must be some positive steps that we can take to help build revenues during this economic downturn.

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Absolut Contracting William Lako4346 Route 27Princeton, NJ [email protected]“A Member of Franchise Pros”

Access RewardsDoug Jentzsch1012 W Beardsley PlaceSalt Lake City, UT 84119866-681-2427dougj@accesscashrewards.comwww.accesscashrewards.com

Access to Money, Inc. Doug Falcone628 Route 10 - Suite 8Whippany, NJ [email protected]

Adrian A. Gaspar & Company, LLPRobert Costello1035 Cambridge Street, Suite 14Cambridge, MA 02141(617) [email protected]

AflacSteven Ross200 Atlantic AvenueSwampscott, MA 01907781-592-3765steven_ross@us.aflac.comwww.voluntarybenefits4dunkin.com

Bedford Cost Segregation Bill Cusato60 State Street – Suite 700Boston, MA 02109978-263-5055 [email protected]/ who_we_serve/ddifo.asp

Belshaw Adamatic Bakery GroupFran Kauth814 44th Street NW Suite 103Auburn, WA [email protected] www.belshaw-adamatic.com

Brendon Pierson/PurePayroll Brendon Pierson, Jr. or Jeff Kotch PO Box 1750 Wall, NJ [email protected]@purepayroll.netwww.brendonpierson.comwww.purepayroll.net

Carter Glass Insurance AgencyDebbie Carrara5901 Falls of Neuse RoadRaleigh, NC [email protected]

Caturano & CompanyJennifer Grossetti80 City SquareBoston, MA [email protected]

CeilSpray CeilingRefinishing, Inc.Brian Nolen18 Lamy DriveGoffstown, NH [email protected]

Comcast Business ServicesJamie Gersten500 South Gravers RoadPlymouth Meeting, PA [email protected]://business.comcast.com/internet/index.aspx

Direct Capital Franchise GroupRobyn Gault155 Commerce WayPortsmouth, NH 03823(603) [email protected]/apply/dunkinbrands

DTT SurveillanceMira Diza1755 North Main StreetLos Angeles, CA [email protected]

Duro-Last Roofing Jim Schriber 525 Morley DriveSaginaw, MI [email protected]

FireKing Security GroupRick Uren101 Security ParkwayNew Albany, IN [email protected]

Glacial Energy Eric Nickulas24 Route 6ASandwich, MA 02563Local: 508-833-3500 [email protected] www.glacialenergy.com

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Goldstein Law Group, PCJeff GoldsteinPO Box 1707Leesburg, VA [email protected]

Hi-Tech SoundGary Hanna53 Brigham Street Unit 8Marlborough, MA [email protected]

HME Drive-Thru HeadsetsLisa Jokinen4110 Stowe DrivePoway, CA [email protected]

HS Brands InternationalMichael Mershimer500 Myles Standish BlvdTaunton, MA [email protected]

IKMS Group Inc. Cliff PrattPO Box 6221Manchester, NH [email protected]

iTech DigitalNatalie Himmel4287 W. 96th StreetIndianapolis, IN 46268317-704-0440 ext. [email protected]

James P. Ventriglia, CPA, Inc.Jim Ventriglia145 Phenix Avenue, 2nd FloorCranston, RI 02920 [email protected]

Jarrett Services ATM, Inc. Eric Johnston1315 Stelton Road, Piscataway, NJ [email protected]

Jera ConceptsWynne Barrett17 Fruit StreetHopkinton, MA [email protected]

Joyal Capital Management Franchise DevelopmentDaniel Connelly50 Resnik RoadPlymouth, MA [email protected]

KK Insurance AgencyKiran Sondhi541 BroadwayLong Branch, NJ [email protected]

Law Office ofCarmen D. Caruso, P.C.Carmen D. Caruso77 West Wacker Drive, Suite 4800Chicago, IL [email protected]

Lisa & Sousa Attorneys at LawCarl Lisa, Sr.5 Benefit StreetProvidence, RI [email protected]

Macdonald Restaurant Repair ServiceMark & Debi MacdonaldPO Box 61/ 83 Pond St Norfolk, MA 02056508-384-9361debi@macdonaldcompany.comwww.macdonaldcompany.com

New England AcquisitionsJim Calash7 Babcock StreetPawcatuck, CT [email protected]

New England Repair ServiceJerry Brown100 Charles StreetMalden, MA 02148781-873-1536jerry.brown@necoffeeco.comwww.NERepairService.com

Paris Ackerman & Schmierer LLPDavid Paris101 Eisenhower ParkwayRoseland, NJ [email protected]“A Member of Franchise Pros”

Sponsors continued on page 17

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DDIFO does not endorse or recommend any commercial products, processes, or services. A sponsor on DDIFO’s Web site is paying to adver-tise, it is not to be considered a product or service endorsement by DDIFO.DDIFO does not endorse organizations and does not endorse products or services that such organizations may offer. Furthermore, DDIFO does not control or guarantee the currency, accuracy, relevance, or completeness of information provided by sponsors in their advertising.


This summer, Dunkin’ Donuts unveiled a 50 x 48 foot billboard in the middle of Times Square, claiming a place of prominence in New York’s competitive landscape.

It seems Dunkin’ - that every day, all day favorite stop from New England - has taken quite a bite out of the Big Apple.

As the coffee wars in New York contin-ue to brew, Dunkin’ has been increas-ing its market share in the past decade. Sources say that what was once ap-proximately a $700 – $800 million busi-ness 10 years ago is now estimated to be at about $1.2 billion, bigger even than the popular New England territory.

The billboard went up with much fan-fare, keeping New Yorkers guessing with teaser ads. The sign, designed by New York renowned street artist Robb Buono and his team, is a marked contrast to the flashiness of other Times Square signs, reminding the city that never sleeps in a simple but stylish way that America runs on Dunkin’.

Reportedly, the billboard could attract 1.5 million impressions a day. “The sign has the potential to be iconic,” said Kevin McCarthy, DDIFO Board Chair-man. “Think of what the CITGO sign means to Boston and Fenway Park.”

But, as any Boston Red Sox fan knows, winning anything in New York doesn’t happen easily.

New York is a tough market with clutter, competition, high rents, and expensive utilities according to franchise owner Dan Colaitis, who has opened 11 stores in the past seven years throughout Brooklyn. “You’re competing with the bigger brands like McDonalds, but there’s also a mom and pop bagel shop on every block in New York.”

So how does a company that started as a small donut shop in Quincy, Massa-chusetts, become a giant in New York? Franchise owners in the area said it was done the old fashioned way: one customer at a time.

“Most of our customers are regulars,” says Colaitis. “They come back be-cause we gave them a good experi-

ence. We keep the stores clean, and we haven’t raised prices. We’re trying to give them what they want and stay in touch with the economy. Know-ing the customers is key.”

Tony Pellizzi and his son Anthony Jr. have developed 12 stores in Long Island in seven years. Anthony Jr. plans to open six more new units and acquire three more existing locations. New Yorkers, the senior Pellizzi said, have plenty of options for their coffee and baked goods.

“The billboard and brand marketing might bring custom-ers to the door, but

the only thing that brings them back is the experience they had that day. If you don’t deliver, they won’t come back,”

New Yorkers Run on Dunkin’Times Square Billboard Marks Expansion by Brooke McDonough

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said Pellizzi, who worked for Dunkin’ Brands before becoming a franchise owner.

The fierce competition in the New York market has an upside according to Scott Campbell whose company Metro Franchising has played a large role in the New York expansion with 40 stores in Queens, Brooklyn, and Long Island.

Competition, he said, makes you stronger.

“You need to have the competition to strive for your best. It pushes you to focus on your guest and on each oc-casion. Doing that, you’re drawn more into your community.”

Community relations is part of the recipe for success in New York and the growth comes from the franchise owners, often families, who work hard, develop a customer base by running a high quality-shop, and reinvest back into the business.

“It’s the franchisees who are the he-roes of this story,” said McCarthy.

Colaitis has deep roots in Brooklyn. He’s lived there all of his life, has owned several businesses, and before him his father was there for 55 years. As a Dunkin’ Donuts franchise owner, he has sponsored Little League teams, donated to local hospital charity events, and has been involved in various school fund raisers. Folks in Brooklyn know his name and his reputation, and they trust him.

“The business has to have personality. In a community where they know the owner and see the owner as someone that supports their needs, consumer loyalty comes easy,” says Pellizzi.

Campbell also attends neighborhood and charity events to chat with his cus-tomers. “Anytime you have a chance to bring your product out to the commu-nity you should,” he said. “People are passionate about their coffee habits, and they have strong opinions. I am happy to hear about that.”

Those conversations, Little League games, and charity functions in the

New Yorkers continued on page 12

New Yorkers from previous page


throughout the Mid-Atlantic region has been a long-term goal for Dunkin’ Do-nuts and success in New York, a part of that plan. Dunkin’ has had a presence in those states since the 1960s but didn’t lead the coffee scene as it does in New England.

There’s room for that growth in the overall market according to Peter

Brio, professor at Babson College in Waltham Massachusetts, and owner of multiple franchise concepts including Naked Pizza, and Five Guys Burgers.

“The coffee market is fragmented; no one has more than 4%. There is still a big opportunity in that space.”

New Yorkers continued from page 11


boroughs are the right strategy for taking Manhattan. “The trick is to cre-ate a habit in the suburbs, and then it spreads in Manhattan as people take it to work,” Campbell explained.

According to McCarthy, growing the brand from the New England territory

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learn about the issues facing those vari-ous franchise owners and their brands.”

Glodowski cited an example from his home state of Minnesota where a Taco Bell franchise owner learned about a proposal before his city council to institute new menu labeling laws. He said the own-er reached out to the CFA and they gath-ered franchise owners from six different systems to attend a city council meeting and explain the impact that such a statute would have on their businesses. Their aim was also to convince the council to hold off on passing a new menu label-ing law until after the federal government completed its work on legislation address-ing how calorie content and other nutrition information is listed on menu items across the country.

Glodowski and Chally are already plan-ning the 2011 CFA Day Forum. The key, they say, is getting more franchise owners involved. “Everybody is reaching out to colleagues in other systems to tell them to be a part of this,” said Glodowski. “The bigger we are, the better and more power-ful we can be.”

CFA Day continued from page 6

In a statement to DDIFO, Senator Brown reiterated the importance of meeting with franchise owners. “Small businesses continue to be the drivers of our economy and hold the keys to our economic recovery. As a member of the Senate, I am committed to pushing policies that will create a more favorable environment for small businesses, allowing them to spur economic growth and create jobs.”

Brown also has a unique relationship with Dunkin’ Donuts, having worked at a shop in Wayland, Mass. when he was a teenager.

“No doubt, Senator Brown is the hot guy,” said Glodowski. “He has star power and we wanted to hear him speak on issues. Plus, he is an advocate for small business owners and that is what the CFA is all about.”

Glodowski says one of the challenges with an event like the CFA Day Forum is convincing busy franchise owners, many of whom already have commitments to their individual franchise associations, to take time away from their businesses and families to spend a couple of days with

franchise owners from other systems. His pitch is that, regardless of what system you operate in, the issues are largely the same.

“We are talking about issues that face small business owners: government regulation, new mandates and changes to employment law. Those issues are all the same whether you own one store or 100 stores. We reach out to the various fran-chise associations and talk to their boards so we can share their best practices and

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Dunkin’ Donuts franchise owner Rob Branca with U.S. Senator Scott Brown (R-MA) at the CFA Day Forum.


On the wings of the NCA study, I did some research of my own and found a Harvard study that revealed some facts around consumer buying patterns in general (Har-vard Business Review, April 2009). Based on this and other research, I created a matrix that could be useful in reaching out to Dunkin’ customers as it offers some legitimate reasons why coffee sales are up and donuts and ice cream sales have been impacted by the recession.

In the matrix, consumers are divided into four major segments based on actual behavior change during an economic downturn:

1. Rapid Stop: These are low income consumers, the most vulnerable and the hardest hit during an economic down-turn.

2. Hurt-but-Tolerating: This is the largest segment of consumers and includes a great majority of households typically unscathed by unemployment, resilient, optimistic about the long term, but less confident about the near term.

3. Very-Well-Off: Secure about their ability to ride out the economic storm.

4. Live-for-Today: This segment of consumers carry on as usual. They may extend their timetable for major purchases, but will unlikely change their overall consumption behavior.

Next, consumables are divided into the following four product categories:

a. Essentials - necessary for survival or perceived as central to well-being.

b. Treats - indulgences whose immediate purchase is considered justifiable.

c. Postponables - needed or desired items whose purchase can be reason-ably put off.

d. Expendables - perceived as unneces-sary.

The product categories are rated high to low; and the consumer behavior change is rated low to high by segment. Thus, the matrix becomes a tool that you can use to determine the potential risk of a sales downturn on any given product.

Let’s assume that a cup of coffee is con-sidered an essential product to Dunkin’

Donuts customers. Based on the matrix, we can determine the following:

Rapid Stop consumers will likely seek lower cost coffee products and brand substitutes.

Hurt-but-Tolerating consumers will seek out their favorite products at lower price points, but settle for cheaper, less-pre-ferred alternatives and or will stock up on good deals.

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Very-Well-Off consumers will continue to buy their favorite products at pre-recession levels.

Live-for-Today consumers will continue to buy their favorite products at pre-recession levels.

Therefore, depending on how your indi-vidual store’s customer base breaks down as a percentage within the consumer segments in the matrix, you can project a low risk of a sales downturn in coffee and also tailor your marketing tactics to blunt a negative impact on other products.

Now, let’s put donuts and ice cream through the matrix. Assuming most con-sumers will consider donuts and ice cream as a treat, the following would apply:

Rapid Stop consumers will reduce or eliminate treats.

Hurt-but-Tolerating consumers will cut back on frequency.

Very-Well-Off consumers will be more selective.

Live-for Today consumers will continue to buy their favorites at pre-recession levels.

Depending on the consumer break down in your trading areas, donuts and ice cream are at a higher risk of a sales downturn, which would require the brand and franchisees to be more diligent in their marketing and preventative strategies.

A second matrix, Tailoring Your Tactics, suggests how to adjust marketing strate-

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gies during an economic downturn. Again, using coffee as the example, let’s assume that our customer base is equally split into the four customer segments. Let’s also assume that most of those customers consider coffee as essential. Our market-ing strategy would include the following elements sorted by consumer segments:

Rapid Stop• Emphasize price and hit wallet-friendly

price points

• Offer smaller pack sizes for less money• Promote low-cost value productsHurt-but-Tolerating• Offer a lower-priced option• Hit retail price points• Promote bonus packs to encourage

stockpiling• Emphasize dependability of branded

product and service (this is especially true with McDonalds, Wendy’s and Sub-way’s recent coffee advertising)

Very Well-Off• Continue awareness advertisingLive-for-Today• Continue awareness advertising• Emphasize “You can’t live without it”

As Dunkin’ Donut franchisees, we are fortunate to have coffee products that consumers believe are essential to their lifestyle. We should make the most of this opportunity and encourage market-ing strategies in our stores that will grow our revenues masterfully during times of economic recession.

Perry Ludy is a senior executive, business consultant, and author of business books. He is president of Carolina Restaurant Partners LLC d.b.a. Dunkin’ Donuts. Contact Perry at [email protected].


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lems with many of the stores and the relationship didn’t work out.

“The franchise system with hands-on-operators has always been the more successful formula,” said McCarthy.

Franchise owners in New York take pride and ownership in their business and they know that it’s important to adhere to high-quality standards. “How

another franchise owner runs his busi-ness can have an effect on the cus-tomer’s view of my store,” said Pellizzi.

Operational stan-dards were re-viewed and revised by the brand several years ago and that has played a role in building franchisee net-works. “Operational standard translate to more profits,” said Pellizzi. “If the stores are run well, it draws custom-ers.”

It’s a simple formu-la, said Brio, “and Dunkin’ Donuts does it well.”

According to Brio, the keys to growing

a franchise are to have a good con-cept, good locations, good marketing, and good people, “Dunkin’ Donuts,” he added, “picks smart franchise owners who work hard.”

The relationship with the franchisor is also important Brio said. Franchisors have to create a system where the franchise owners can make money. And the profits will drive the growth.

“I don’t know too many Dunkin’ Donuts franchise owners who are skipping dinner. That’s a pretty good indicator for success in the long term,” said Brio.

Campbell, who previously worked for the brand, knows the importance of that relationship, and as a fran-chise owner he’s taken on several elected leadership positions on ad-visory councils. “That ensured us as we grew we knew what was going on, so we could make appropriate investments.”

Brio also said the timing of the “ev-eryman” marketing strategy works well in the New York market, especially now. People are looking for value and Dunkin’ Donuts answers that nicely.

“The Hummer is out. The average Joe is in,” said Campbell who added that the America Runs on Dunkin’ cam-paign was the timeliest message in advertising.

New York Magazine writer Stephen Rodrick put it plainly in a 2005 article in response to the Starbuck’s luxury image culture in New York, “Maybe New Yorkers are yearning for a simpler time when they got their coffee, got the hell out of there, and got on with their lives.”

The straightforward message from Dunkin’ Donuts is here to stay according to Campbell. “The reset of the economic landscape has changed things, and it will probably be this way for the next 9 to 10 years.”

Another thing that the New York fran-chise owners got right it is choosing successful locations, which according to Brio, is the first step toward success.

When Colaitis first approached Dunkin’ Donuts with an idea for a location in Brooklyn, he was turned down.



And, it’s not all about the coffee. New Yorkers like their treats as well. In fact, Pellizzi credits some of the success in New York to the combination Dunkin’ and Baskin-Robbins stores. New York was the first market to introduce that concept and it created an opportunity for more development.

The high-profile billboard in Manhattan is good news to McCarthy who admit-ted that the growth in the New York region didn’t just happen overnight. But, he said, the slow and steady pace is the right way to do it.

“It’s a hands-on retail business. You have to be patient to grow. You have to know your market, and you have to run the business well. Then, there is poten-tial to expand and make your fortune.”

The company learned this lesson the hard way. In the 1990s large corpora-tions, such as the Riese Organization, which had tremendous real estate assets, opened stores throughout Manhattan. Despite the significant investment, the company didn’t act as focused operators. There were prob-



continued from page 9

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But, Colaitis was a neighborhood guy. He owned a gas station nearby and he was familiar with the people and their traffic patterns. Eventually he con-vinced Dunkin’ Brands to let him try.

“I knew it would work and it did,” said Colaitis. It’s now one of the most suc-cessful stores in his network.

Understanding how New Yorkers work and play is certainly a factor. Colaitis has another store on Coney Island across from where the famous Na-than’s Hot Dog Contest is held each year. Although it’s a seasonal busi-ness, some weeks in the summer they see about 10,000 customers a week. This July 4th they had 3,000 custom-ers in one day.

Brio admitted that the New York market is a great place for Dunkin’ Donuts to be since there are so many more customers in that region. Even better, he said that the success in New York bodes well for the future, inspiring ex-isting and potential franchise owners to invest and to continue to expand.

Its no secret that there’s a bit of rivalry between Boston and New York, so is there pride involved when a Boston area company has success in the Empire State? According to Boston born and bred McCarthy, there is, but it doesn’t stop there.

“I’m not only proud as a Bostonian,” said McCarthy, who at one time lived close to the location where William Rosenberg opened the first shop in 1950. “I’m also proud as an American entrepreneur. It’s an amazing success story all around and it continues to be. What started as one donut and coffee shop is now a major corporation.”

That tradition of success continues as franchise owners “go the distance” and grow and expand, said McCarthy “And it is all done based on hard work, determination, and good business sense.”

Add to that a good dose of New York chutzpah, and the possibilities are endless.

independent joe magazine issue #6 september 2010

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