Independent Joe Magazine Issue #8 March 2011

March 2011 • Issue 8

We Communicate, We Educate, We Advocate!

DCP Chief Has Track Record of Success Kevin Bruce brings a winner’s attitude

also in this issue

International Travel Agency Offers Hiring Solutions and More Profit Building with Perry

Bill Rosenberg’s Autobiography Celebrates 10 Years

On the fast track, every decision counts.

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Another Decade of Donuts

by Linda Formichelli Bill Rosenberg’s Autobiography Celebrates 10 Years Ten years ago, Bill Rosenberg’s biography Time to Make the Donuts hit the stands. Before that, he and co-author Jessica Keener spent a year working together to give readers a look into Rosenberg’s life and the history of his horse farm Wilrose Farms, the International Franchise Association -- and of course, Dunkin’ Donuts, one of the most successful coffee chains in history. The biography, and the success of the company, is a testament to the benefits of a can-do mindset, high standards, and what Rosenberg called a PMA -- Positive Mental Attitude.

In the book, Rosenberg gives an unvarnished review of his youth: He grew up in a tough area of Boston and left school by the eighth grade to work for Western Union and help support his family during the Depression. Growing up, Rosenberg was influenced by his father, who had a hard time supporting his family but who was loved by all for his sterling reputation. “We had shelter and we had food,” Rosenberg writes. “Other than that we didn’t have the niceties of life. That just didn’t seem to be my father’s forte.” He adds, “My father also taught me that reputation, not money, was the most important thing in the world.”

In 1946, after working in the food industry in various positions for several years, Rosenberg founded Industrial Luncheon Services, which delivered snacks and lunches to factory workers in Boston; it grew to become a 140-truck operation. Rosenberg noticed that a good percentage of the business’s sales came from coffee and donuts, and this led Rosenberg to open a shop selling -what else? -- coffee and donuts, called the Open Kettle. In 1950, he opened the first Dunkin’ Donuts shop in Quincy, MA and in 1959, influenced by Howard Johnson’s ice cream chain, he turned the business into a franchise operation.

Today, Dunkin’ Donuts has about 8,800 stores in 31 countries and the shops are almost 100 percent franchisee-owned.

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Another Decade of Donuts Linda Formichelli

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International Travel Agency Offers Hiring Solutions and More Brooke McDonough

Dunkin’ Donuts founder and author Bill Rosenberg at Dunkin’s 50th Anniversary

High Standards Rosenberg had his ideals, and he was a stickler for them. Jessica Keener learned this when she signed on to co-author his biography. She had been working as a development writer for fundraising at the Dana-Farber Cancer Institute in Boston, and her final assignment before leaving to go freelance was to meet with Rosenberg, who had just donated millions of dollars to the cancer center. “I was blown away by his energy, his story,” she says. “I couldn’t believe no one had written it.” Rosenberg agreed to partner with Keener on his biography. Authors as high up the food chain as Mario Puzo, who wrote The Godfather, had offered to write Rosenberg’s story, but Rosenberg had always been too busy with his businesses. “I guess I just came at the right time,” Keener says.

It should come as no surprise that Rosenberg had high standards. “Bill was very exacting,” Keener recalls. “If he was going to do something, he put his heart into it.” And his demanding standards on the book were a reflection of how he ran his entire business empire. “I can remember stories of him walking in to stores in the field, and if the product wasn’t acceptable to him he would actually take the product and throw it away himself,” says Marvin Weiner, who’s owned Dunkin’ Donuts franchises in the Boston area since 1972.

07 08 10 19

Labor Pains & Profit Gains Perry Ludy

DDIFO Directory of Sponsors DCP Chief Has Track Record of Success Matt Ellis

Index of Advertisers

Keener shares another story that illustrates Rosenberg’s perfectionist attitude: At Rosenberg’s funeral, she told someone that she and Rosenberg would fight but would always get over the argument quickly. The other person replied, “If Bill wasn’t fighting with you, then he wasn’t paying attention.” If Rosenberg liked something, he’d tell you -- and if he didn’t like something, he was just as quick to let you know.

At the same time, Rosenberg gained fans with his down-to-earth way of communicating and working. “He was very approachable, a real regular guy,” says Steve Gabellieri, who started out in 1969 as a crew member in some of the Dunkin’ Donuts stores, worked his way up through the ranks, and became a franchisee in 2009 with four locations in Rhode Island. “There was nothing pompous or artificial about him; he presented Rosenberg continued on page 18 MARCH 2011 • INDEPENDENT JOE

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INDEPENDENT JOE • MARCH 2011

International Travel Agency Offers Hiring Solutions and More by Brooke McDonough International Students Want Work at Dunkin’ Donuts Looking for a hiring solution? How about a plan for global peace? According to the Council for Educational Travel, USA, (CETUSA), you can have both.

being a good place to work.

We benefit from that, so we have to try to live up to it. We take care of our employees as well as our customers. That has always been a key to our success.”

So says Kevin Watson, vice-president for CETUSA in charge of the organization’s J-1 Work and Travel Program. In fact, college students across the globe are looking for an opportunity to work at a Dunkin’ Donuts store.

“It’s known as a fun place to work, and students continuously request to be placed in a Dunkin’s store,” said Watson.

CETUSA is a non-profit global exchange organization designated by the U.S. State Department to provide work opportunities for qualified university students to allow them come to know and experience life in the United States.

CETUSA partners with U.S. business owners, like Dunkin’ Donuts franchise owner B.J. Patel, and places students in jobs for their summer breaks. CETUSA helps the students find housing and transportation, provides them with an orientation of the area they are placed in, and stays in touch with them throughout their time in the U.S. to make sure everything goes smoothly.

“For employers, program participants are bright, energetic, eager, hard-working, dedicated, reliable and capable employees. For participants, this is an important experience that will help them build their own futures. In the process, friendships are formed, and valuable learning takes place,” said Watson.

CETUSA also works in conjunction with the State Department to provide Visas, paperwork, and necessary insurance so the students can work and stay for three or four months.

“Taking part of the international exchange increases culture awareness and promotes an understanding of other’s experiences,” said Watson. That’s exactly how the organization seeks to build what they call global friendships.

Patel has hired CETUSA students as seasonal workers in his store located right in Hershey Park. Hiring employees to work only from Memorial Day to Labor Day has been a challenge. So, CETUSA students were a good fit.

Brazilian student Vinny Leite behind the counter of B.J. Patel’s store in Hershey, PA.

Patel, who owns Dunkin’ franchises in Hershey, Pennsylvania, has hired several students through CETUSA, and is not surprised about the high demand to work at Dunkin’ Donut stores.

“It is fun here,” he said of his store in Hershey Park. “Everyone is always smiling and laughing.”

And Patel likes it that way. “Dunkin’ Donuts has a reputation everywhere for

Patel’s CETUSA employees have come from Thailand, Ukraine, Brazil, and Jamaica. The students, he said, add energy to the workforce. “It rubs off on the other workers, and it’s motivational for everyone.”

Beyond the “global friendship” aspect CETUSA promotes, there are some real benefits for employers to sign on. First, students come from all over the world, CETUSA continued on page 14

Independent Joe ® is published quarterly by DD Independent Franchise OwnersSM Editors: Jim Coen, Matt Ellis Contributors: Linda Formichelli, Perry Ludy, Brooke McDonough Advertising: Amy Levine • Graphic Design/Production: Susan Petersen

Direct all inquiries to:

DDIFO, Inc. • 150 Depot Street • Bellingham, MA 02019 508-422-1160 • 800-732-2706 • info@ddifo.org • www.ddifo.org DD Independent Franchise Owners, Inc. is an Association of Member Dunkin’ Donuts Franchise Owners.

INDEPENDENT JOE ® is a registered 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 © 2011 • Printed in the U.S.A. MARCH 2011 • INDEPENDENT JOE

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INDEPENDENT JOE • MARCH 2011

Labor Pains & Profit Gains

By the author of Profit Building: Cutting Costs without Cutting People

“If little labor, little are our gains; man’s fortunes are according to his pains.”

Robert Herrick

Have you ever noticed when two Dunkin’ Donuts franchisees are in a conversation only minutes pass before one of them starts talking about improving profits? This is predictable because a main focus of owning a franchise is to make profits. What is not so predictable is that most managers have a limited ability to formulate effective plans for profit improvement. This is what I call The Profit Improvement Paradox: although a key goal of management is to improve profitability and reduce costs, few managers have the tools or ability to do so. How can this be? It is profit that drives owner interest. It is profit that drives return on investment. Profit is one of the key ingredients making it possible to develop new restaurants in order to expand our markets. Our managers should be profit pros, but few are. Although this paradox pervades our business environment, it is so deeply entrenched and so well camouflaged that I fear business owners will continue to overlook it. If profit improvement is a main goal of business, why is it that most managers do not know how to reduce costs continuously?

Experience tells us that employees are a costly, but essential element that enables us to do business. As owners and operators, we share the expectation that we want our employees to deliver excellent customer service, follow coffee excellence standards, control waste and control labor cost. But do we know the actual cost of labor to our business?

Where are the “buckets” that are hoisting away our labor costs? If we cannot openly discuss all the components of labor, how can we effectively action plan to reduce those very important costs?

This may reveal an important reason for the paradox. Let’s take a few moments to explore for the potential existence of The Profit Improvement Paradox in our restaurants:

1. Choose a group of restaurant managers within your organization.

2. Call an impromptu meeting and ask them to come to the meeting with a blank pad of paper and a pen.

3. Once they are assembled, ask your managers to quickly write down all the costs they can think of that are associated with labor as it impacts their bottom line, their P&L. You will see that most managers will list hourly labor rates, salaries, and payroll

• • • •

Absenteeism/tardiness Indirect labor costs Production costs Management scheduled hours in production • Hours of operation If you compare your managers’ lists to the list above, most likely they would achieve a 50% or less comparability. If they come up with a list that is comparable by 75% or more, they probably are more successful in controlling labor than the average restaurant manager.

With this very brief exercise, most management teams will start to open their eyes to the fact that the true cost of labor is not 22-23%, but closer to 50-150% higher than initially thought.

Do we know the actual cost of labor to our business? taxes; but not many of them will come up with the not-so-obvious hidden costs associated with their most valuable asset. How many of them do you think would generate a list similar to the following: • • • • • • • • • • • • • • •

Training costs Health insurance Uniforms Workers Compensation Paid time off Manager’s office space expenses Cell phones Small tools and first-aid kits Employee meals and celebrations Clocking in/out procedures Crew incentives Hiring Salary increases Accident replacement hours Payroll administration/check distribution • Turnover percent • Bank deposit administration • The time it takes to make bank deposits

Now let’s go back to The Profit Improvement Paradox. How many of our managers have taken the critical step to evaluate actual labor costs and then action-plan against them? If we were to take the items from the above list and develop a specific action plan to reduce the cost of each item we would keep our management teams focused on cost reduction as a continual process working within our organizations.

Consider the following jumpstart questions that Dunkin’ franchise owners can use to help management teams brainstorm to go deeper in the area of labor cost reduction.

Jumpstart Questions for Cost of Labor Reduction 1. Would it be appropriate to have a training rate of pay which could be lower than the actual pay during an employee’s initial hire-in training? In other words, is there a place between minimum wage and your hire-in wage Labor continued on page 16 MARCH 2011 • INDEPENDENT JOE

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Directory of Sponsors Absolut Contracting

William Lako 4346 Route 27 Princeton, NJ 08540 609-655-0800 blako@absolutlycan.com “A Member of Franchise Pros”

Access Rewards

Doug Jentzsch 1012 W Beardsley Place Salt Lake City, UT 84119 866-681-2427 dougj@accesscashrewards.com www.accesscashrewards.com

Access to Money, Inc.

Doug Falcone 628 Route 10 - Suite 8 Whippany, NJ 07981 973-599-0600 dougf@accesstomoney.com www.accesstomoney.com

Adrian A. Gaspar & Company, LLP

Robert Costello 1035 Cambridge Street, Suite 14 Cambridge, MA 02141 (617) 621-0500 cpas@gasparco.com www.gasparco.com

Bederson & Company LLP CPAs and Consultants Steven Bortnick 405 Northfield Avenue West Orange, NJ 07052 973-736-3333 sbortnick@bederson.com www.bederson.com

Bedford Cost Segregation Bill Cusato 60 State Street – Suite 700 Boston, MA 02109 978-263-5055 bcusato@bedfordcostseg.com www.bedfordcostseg.com/ who_we_serve/ddifo.asp

Belshaw Adamatic Bakery Group

Fran Kauth 814 44th Street NW Suite 103 Auburn, WA 98001 206-718-3573 fran_kauth@belshaw.com www.belshaw-adamatic.com

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INDEPENDENT JOE • MARCH 2011

Bunn-O-Matic Corporation Bunn-O-Matic Corporation Frank McAdam 1400 Stevenson Drive Springfield, IL 62703 800-637-8606 Frank.McAdam@bunn.com www.bunn.com

Caturano & Company

Jennifer Grossetti 80 City Square Boston, MA 02129 617-241-1412 jennifer.grossetti@caturano.com www.caturano.com

Comcast Business Services

Jamie Gersten 500 South Gravers Road Plymouth Meeting, PA 19462 610-405-4135 jamie_gersten@cable.comcast.com htp://business.comcast.com/internet/index.aspx

Direct Capital Franchise Group

Robyn Gault 155 Commerce Way Portsmouth, NH 03823 (603) 433-9476 rgault@directcapital.com www.directcapital.com/apply/dunkinbrands

Diversified Solutions, Inc.

Chrishelle Gavoni 412 Long Pond Road Plymouth, MA 02360 508-746-6995 jkerchgavoni@comcast.net www.diversified-solutions.com/dsi_dd.html

DTT Surveillance

Mira Diza 1755 North Main Street Los Angeles, CA 90031 800-933-8388 mdiza@dttusa.com www.dttusa.com

Duro-Last Roofing

Fast Track 2+2 Drive-Thru Timer Mike Pierce 3500 West Moore Ave. Ste. M Santa Ana, CA 92704 714-850-1320 mike@phaseresearch.com www.fasttracktimer.com

FireKing Security Group Rick Uren 101 Security Parkway New Albany, IN 47150 800-457-2424 ricku@fireking.com www.Fireking.com

GE Capital, Franchise Finance Ab Igram 201 Merritt 7, 2nd Floor Norwalk, CT 06851 203-229-1885 ab.igram@ge.com www.gefranchisefinance.com

Glacial Energy

Eric Nickulas 24 Route 6A Sandwich, MA 02563 Local: 508-833-3500 Eric.nickulas@glacialenergy.com www.glacialsales.com/dunkindonuts

Hirshon Associates, H & H Properties and Franchises

Stephen Hirshon or Andrew Hirshon 425 Broadhollow Road Melville, New York 11747 Email- Hirshonrep@aol.com “A Member of Franchise Pros”

Hi-Tech Sound

Gary Hanna 53 Brigham Street Unit 8 Marlborough, MA 01752 508-624-7479 gary@hitechsound.com www.hitechsound.com

HME Drive-Thru Timer Systems

Jim Schriber 525 Morley Drive Saginaw, MI 48601 800-248-0280 jschribe@duro-last.com www.duro-last.com

Brady Campbell 14110 Stowe Drive Poway, CA 92064 858-535-6034 fax: (858) 535-6060 bcampbell@hme.com www.hme.com

Ecolab

HS Brands International

Arliene Bird 27 Oak Street Wayne, NJ 07470 973-699-8465 arliene.bird@ecolab.com www.ecolab.com/Businesses/

Michael Mershimer 500 Myles Standish Blvd Taunton, MA 02780 800-723-1150 mike@mershimer.com www.hsbrands.com

Directory of Sponsors IKMS Group Inc.

Cliff Pratt PO Box 6221 Manchester, NH 03108 603-644-4683 ctp@ikmsgroup.com www.ikmsgroup.com

iTech Digital

Natalie Himmel 4287 W. 96th Street Indianapolis, IN 46268 317-704-0440 ext. 104 natalie@itechdigital.com www.itechdigital.com

James P. Ventriglia, CPA, Inc. Jim Ventriglia 145 Phenix Avenue, 2nd Floor Cranston, RI 02920 401-942-0008 jimv@jpvcpa.com www.jpvcpa.com

Jarrett Services ATM, Inc. Eric Johnston 1315 Stelton Road, Piscataway, NJ 08832 732-572-0706 ej@jarrettforcash.com www.jarrettforcash.com

Jera Concepts

Wynne Barrett 17 Fruit Street Hopkinton, MA 01748 508-686-8786 wynne@jeraconcepts.com www.jeraconcepts.com

Joyal Capital Management Franchise Development Daniel Connelly 50 Resnik Road Plymouth, MA 02360 508-747-2237 dconnelly@joycapmgt.com www.jcmfranchise.com

Kensington Company & Affiliates

Kenneth Stein, CBI, M&AMI 185 Roslyn Road Roslyn Heights, NY 11577 516-626-2211 kstein@kensingtoncompany.com www.kensingtoncompany.com

KK Insurance Agency

Kiran Sondhi 541 Broadway Long Branch, NJ 07740 732-870-1500 info@kkinsuranceagency.com www.kkquote.com

Law Office of Carmen D. Caruso, P.C.

Carmen D. Caruso 77 West Wacker Drive, Suite 4800 Chicago, IL 60601 312-377-7761 cdc@cdcaruso.com www.cdcaruso.com

Lisa & Sousa Attorneys at Law Carl Lisa, Sr. 5 Benefit Street Providence, RI 02904 401-274-0600 clisa@lisasousa.com www.lisasousa.com

Macdonald Restaurant Repair Service

Mark & Debi Macdonald PO Box 61/ 83 Pond St Norfolk, MA 02056 508-384-9361 debi@macdonaldcompany.com www.macdonaldcompany.com

New England Acquisitions Jim Calash 7 Babcock Street Pawcatuck, CT 06379 860-235-1344 Papijoe2002@sbcglobal.net

New England Drive-Thru Communications Angela Bechard 12 Wildwood Road Auburn, NH 03032 888-966-6337 angela@nedrivethru.com www.nedrivethru.com

New England Repair Service Jerry Brown 100 Charles Street Malden, MA 02148 781-873-1536 jerry.brown@necoffeeco.com www.NERepairService.com

Paris Ackerman & Schmierer LLP

David Paris 101 Eisenhower Parkway Roseland, NJ 07068 973-228-6667 david@paslawfirm.com www.paslawfirm.com “A Member of Franchise Pros”

Paris-Kirwan Insurance John Mulcahy 1040 University Avenue Rochester, NY 14607 585-473-8000 johnm@paris-kirwan.com www.paris-kirwan.com

Partyka Isuzu

Craig Judge 200 Skiff Street Hamden, CT 06415 860-281-4117 cjudge@partykatrucks.com www.partykatrucks.com

Payless Shoe Source

Larry Dunning 3231 SE 6th Avenue Topeka, KS 66607 785-295-2498 larry_dunning@payless.com www.payless.com

PepsiCo

Bryan Gruttadauria 315 Norwood Park South Norwood, MA 02062 781-255-2663 bryan.gruttadauria@pepsi.com www.pepsico.com

Performance Business Solutions, LLC Jeff Hiatt 87 Lafayette Road - Suite 11 Hampton Falls, NH 03844 508-878-4846 jdh@revenuebanking.com www.revenuebanking.com

R.F. Technologies

Gary Gerst 542 South Prairie Street Bethalto, IL 62010 618-377-4063 ext. 121 garyg@rftechno.com www.rftechno.com Sponsors continued on page 17

DDIFO does not endorse or recommend any commercial products, processes, or services. A sponsor on DDIFO’s Web site is paying to advertise, 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.

MARCH 2011 • INDEPENDENT JOE

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DCP Chief Has Track Record of Success

by Matt Ellis

Kevin Bruce brings a winner’s attitude to every facet of his job Kevin Bruce knows something about winning. As a member of two NCAA Division 1 Football National Championship teams at the University of Southern California—and co-captain of the squad—Bruce learned early-on the sweet taste of success. Today as the Chief Executive Officer of the National DCP, he defines success a different way.

wife Patty—whom he met while they were undergraduates at USC—hit the road on what would ultimately become a cross-country journey ending in Massachusetts: home of Dunkin’ Donuts and the National DCP.

vices Inc., a privately held equipment/ services company in Westborough, MA. Taking the chief position at the DCP was a natural progression for Bruce, who sees his role primarily as a teacher and visionary; a description legendary USC Football Coach John McKay also used to define his job.

“My impression when I came to the DCP was that we have the opportunity to create many exciting advantages for our members. Some of that involves real change and we are looking at the operational initiatives that will bring change to the organization. It’s our job to do that in a manner that allows teammates to embrace change and not fear it.”

“Winning for us means delivering the lowest sustainable cost for our members – period.” That was the theme Bruce repeated several times during our one-hour interview in his Bellingham, MA office. Touching on topics ranging from his family to his days playing football to his career path, Bruce returned often to what makes the DCP unique.

“The National DCP is the largest, dedicated, member-owned food service supply chain and distribution provider in the world. We are not just a purchasing co-op. We have strategically combined sourcing and distribution giving Dunkin’ Donuts franchise owners control over delivered pricing. There’s no other model like that in the industry. .”

For franchise owners, the DCP is the lifeline they help to control. And, when business is good, they benefit—not just from timely deliveries and low prices; but also through the Patronage Dividend they receive when the business runs at a profit over operating expense.

It’s clear this job is a source of pride for Kevin Bruce, who has had much to be proud of through his athletic and business career. After turning down an offer to play professional football because, “I would have made only slightly more than I was making driving one of my father’s beer trucks,” he decided to stay at USC to earn a Masters in Business Administration.

Upon receipt of his degree, his professional career started in Los Angeles, as Regional General Manager for a healthcare product supply company. It didn’t take long before Bruce and his 10

INDEPENDENT JOE • MARCH 2011

Kevin Bruce, Chief Executive Office of the National DCP, inspecting inventory and as a player in the 1975 Rose Bowl

From LA, the couple moved to Dallas for opportunities with PepsiCo. At PepsiCo, Bruce waspromoted to Vice President, running the company’s newly formed restaurant equipment division servicing Taco Bell, Hot-N-How, Chevy’s and California Pizza Kitchen.

After that, Bruce spent three years as Executive Group Vice President for LSG Lufthansa/SKY CHEFS, Inc – combining his knowledge of the food service supply chains and international business which he learned at PepsiCo. Stints in Michigan and back in Dallas ended in 2007, when Bruce moved to New England to assume the role of President and CEO of United Site Ser-

Bruce is clear and careful with his choice of words, always referring to his employees as members of the team and his customers – Dunkin’ Donuts franchisees – as the members of the co-op.

He’s also clear about defining success.

“In sports you keep score for a reason.

The outcomes are well defined. But, as you move away from that, what comprises a win can be fuzzy. We could think that we are helping our members win but if they don’t think so you’ll know the difference quickly.”

So, Bruce’s top priorities are managing member costs and and creating a

DCP Chief from previous page work environment that allows his team to succeed.

When he played inside linebacker at USC, Bruce needed to anticipate each play, how every player would move and where he should step-in to have the greatest impact. As the head of the DCP he has to employ similar skills—recognizing how fluctuating commodities markets alter the prices of raw materials, understanding how to best manage the constant motion of the business and knowing how to step-in and initiate change which, he says, will ultimately have the greatest impact on the future of the DCP. “Every function that we engage in will benefit from change and if we don’t change it, somebody else will,” he said.

Anticipating change demands Bruce focus on the big picture. But, he’s learned along the way that if he has any doubt about what steps to take next, his default position is to first take care of his customers – the franchisees – then address other issues.

When he walks the floor of the DCP’s giant warehouse, Bruce says he is care-

ful not to interfere with the regular flow of work. He takes the time to chat with teammates so they know he’s listening and he’s not afraid to tell them something they don’t want to hear. “If I have to tell someone that they’re not getting a

has the ability to look at the hundreds of pallets of flour, sugar, cups and stirrers and instantly recognize if something is amiss. When we walked the floor with him, his eyes were constantly moving, scanning for signs of anything out of line. But, he is quick to praise his team as “pros who know what they’re doing.”

He also needs to see through the clutter in the complex world of commodity trading. In their famous 19th century comic opera, H.M.S. Pinafore, W.S. Gilbert and Arthur Sullivan wrote, “Things are seldom what they seem, skim milk masquerades as cream.” That phrase exactly describes how Kevin Bruce views the wild fluctuations we have seen in global commodities markets.

Ed O’Rourke, Chief Procurement Officer, is focused on commodity prices.

raise this year they may not like the answer but they’ll appreciate my honesty,” he said.

Like the seasoned linebacker who recognizes a play as it develops, Bruce

“This is a speculator dynamic. There are no supply issues on commodities. It is an extreme circumstance as a result of the recession and the weak dollar.

Monetary policy is causing commodity costs to increase dramatically. People are fleeing currency as an investment and going elsewhere, like commodities, until something better emerges. But, when that happens, the speculators will DCP Chief continued on page 12

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DCP Chief continued from page 11 pull out and then prices will come down and come down quickly.”

The DCP is laser focused on commodity prices because, as Ed O’Rourke, Chief Procurement Officer for Dunkin’ Donuts National DCP notes, “Our number one goal in a time of turbulent commodities is continuity of supply. It is paramount that we have no disruption to our product flow.”

You could look at O’Rourke as the offensive coordinator to Bruce’s head coach. Their offices are next door to one another and they are constantly sharing information. Not long after Bruce came on board, commodities started their wild upswing. O’Rourke says it didn’t take long for franchisees to start asking for more detailed information so they could accurately project their 2011 budgets.

“We did a four-quarter projection by region and communicated that out.

Franchisees received a forward looking market basket assessment at the end of 2010,” said O’Rourke. “This was something new for the National DCP; we’d never done a four-quarter forward approach before.”

Internal and external communication is clearly one of Bruce’s strategies for success. He’s proud that he’s consistently played for a winner – starting at St. Francis High School in La Canada, CA, continuing at USC, then at PepsiCo, Sky Chefs and the DCP. “My job is to build a high performance team. Do a good job teaching; set high expectations, empower and go!”

Of all the things Kevin Bruce knows about winning, perhaps this sums it up best.

“Winning is important but you learn a lot from losing. You just don’t want to do it often.”

For Dunkin’ Donuts franchisees the message is simple. The head of the National DCP knows that doing what’s important for his customers is the real metric for success—for scoring another in a long history of wins.

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CETUSA continued from page 5 so their summers vary depending where they’re from. For example, Costa Rican and Brazilian students come to the states in our winter season and students from Poland, Ukraine, Russia, and Mexico come in our summer season. So, the program can work for seasonal hiring, but can also provide coverage pretty much all year round, with students coming every four months or so.

To be eligible for the program the students must be able to speak English, and they have to be enrolled in a college or university. CETUSA also encourages students to provide proof that they have sufficient funds to pay for housing and support themselves.

“The students are very dedicated and highly motivated,” said Agnieszka Woch, regional manager for CETUA. “They have to buy a plane ticket, pay some upfront travel expenses, and pay room and board.

It’s not easy for them. The type of students who is going to go through all that is usually a highly-motivated person to begin with.” She added that employers are usually impressed with how hard these students work.

Patel agreed. “They are absolutely very hard working. They do what they’re asked to do; they want to learn, and they have to show up,” he said.

CETUSA works with students and employees to make sure the relationship is beneficial on both sides. Student who don’t show up for work, or are not good employees can have their Visa withdrawn.

But Patel says that’s a rare occurrence.

The students who work for him actually like their jobs so much that they are always asking Patel to hire their friends who may have been placed in other nearby restaurants, but want to work more hours.

“Every summer, I end up with stacks of resumes from college students who want to work at my store,” said Patel.

Another benefit to employers who hire CETUSA students is that they don’t have to pay certain payroll taxes because the students are exempt. So depending upon the number of international student employees hired and the hourly wage, some employers can see close to a $10,000 savings, said Woch.

Patel, however, didn’t hire CETUSA just for the tax benefit. With seasonal employees, he said the benefit is not too much of an incentive. He was first recommended 14

INDEPENDENT JOE • MARCH 2011

to CETUSA by a colleague in the fast food business as a practical solution to summer staffing.

It’s worked well for Patel for the past three summers. This year, he decided to try CETUSA students in his other stores that are open all year. That means having students come every four months to work. “I figured that I’d try it for the year,” said Patel “I wanted to see if it could work.”

Patel said that the challenge of this program is training the students as they come. It’s not too difficult in his store in Hershey Park because that has a limited menu, but in his other stores, there’s just more to learn.

“You have to be sure you have a good training program in place,” he said.

“Some students don’t even know what a donut is. So, you’re starting from scratch.

You have to teach them about all the products on top of how to do their jobs.”

“You need to have patience in the begining,” he says. “The students are great, and they want to succeed, but it takes some managing. Sometimes if feels like once you get everything set and everyone trained, it’s time for them to go.”

Patel says that not many students return for a second summer so it’s mostly a new crop of employees every season. According the CETUSA, some employers chose to interview the students via Skype before hiring them.

But, even with the extra training involved, Patel sees this program as a good thing both for the students and for his store.

The blend of cultures, he said, makes the atmosphere in the store livelier. The regular employees get excited when the students are hired. “There’s a lot of bonding that goes on in the short time they’re here.”

Overall, Patel’s glad that he’s been part of the program. “I like the kids. I like their commitment to work hard and the effort they put in. That’s what you want to see from your employees.”

Dunkin’s is especially popular with students in Brazil, said Watson. “Each year, our representative in Brazil tells us that our students who worked for Dunkin Donuts last year really loved their jobs.

They are always asking for opportunities for more of our students. We would like to be able to do that, not only for Brazilian students, but also for students from some of the other 43 countries we work with,” he said.

Vynicius (Vinny) Leite, a CETUSA student from Brazil working this winter in Patel’s store, is grateful that he’s had the chance to come to the U.S. to work. Although there is a Dunkin’ Donuts in San Paulo, Brazil, Leite has never been and he was surprised by the amount of repeat customers who line up for their Dunkin’s order every morning.

“That’s been the best part,” he said, “I like getting to know the customers. When you see the same people each morning you get to know a little about them.”

Another reason Leite said he loves working at Dunkin’s is the double chocolate donut and regular coffee with extra cream and extra sugar.

“Brazilians love sweets,” he said.

Leite said that it’s hard work, but he’s learned so much. He’s hoping to visit Washington D.C. and New York City before he has to go back to school.

Patel sees these students as the type of people who will continue to do well in life. He tells them in his orientation that he’s impressed that they are motivated to come to another country and work.

CETUSA’s motto, “founded on friendship” may not mean much to franchise owners looking for a hiring solution, but it seems to be an added perk. Patel says that when students leave, saying goodbye is often emotional. He had received letters from past students who are grateful for the experience.

“I’ve seen the students in tears when they have to go,” said Patel. “We get emails and letters telling us that they have built up their skills and learned things that can help with their careers.”

CETUSA believes the program has an even loftier perk: global peace and understanding. “We believe whole-heartedly that this what we’re working toward when we match our eager and capable participants with business owners who, in trade for a job well done, will allow them this opportunity to visit and learn first hand about the people of the United States of America,” said Watson.

It’s a good feeling said Patel. “It makes us happy that we were able to make a difference their lives.”

In the end, whether it is a smart hiring decision, a tax break, or even a global peace you’re looking for, being known internationally as a “fun place to work” is a good place to start.

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Labor continued from page 7 where an employee could start while training?

2. How many hours does it take to train an employee for a particular task?

3. What is the true cost of health insurance?

4. What is the best way to manage employee uniform cost?

11. Does a “tip cup” help or hurt your overall cost of labor?

21. Is there a standard salary range in place for managers?

12. What is your cost to distribute pay checks? Can that be reduced?

22. Are you using production guidelines for night bakers?

13. What is your turnover percent per restaurant? Is one restaurant higher than others? What can be done to reduce store level turnover?

23. How productive are administration employees?

14. Does it cost anything to make a bank deposit? If so what is the cost?

How can this cost be reduced?

5. Have you explored worker’s compensation insurance enough to know if you are at fair market value?

15. How much time does it take to make a donut?

6. Are manager’s cell phones on the best possible plan in terms of cost to your business?

16. How much time does it take to finish a donut?

17. Are you tracking waste effectively?

7. What are the costs to provide employee meals?

18. What is your ideal labor cost percent?

8. Does the employee meal program hurt or help product waste percent?

19. How productive is your crew at each store?

9. How often are wage increases discussed?

20. What is your Net Sales per Labor Hour standard?

10. Are there guidelines in place for wage increases?

No doubt, your teams will come up with many more questions. The point of this article is to suggest that there are many paths to reducing labor costs and the approach to cost reduction in every store must be a continual process. But before you attempt to take your organization through the above exercises and subsequently action-plan to achieve higher levels of profit improvement, ask yourself, are we willing to go through the labor pains to achieve the profit gains?

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 perryludy@earthlink.net.

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Royston, LLC

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Michelle Meleo PO Box 303 - 31 Eastman Street Easton, MA 02334 800-966-0106 michelle@skaleast.com http://www.skaleast.com/index. cfm?keyword=dunkin

Rubiano & Company, CPA’s

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Daniel J. Rubiano, CPA 5 Austin Avenue, Suite 1 Greenville, RI 02828 401-949-2600 dan@rubianocpa.com

Sansiveri, Kimball & Co., LLP Joseph Mansour 55 Dorrance Street Providence, RI 02903 401-331-0500 jmansour@sansiveri.com www.sansiveri.com

Secure Energy Solutions, LLC Kevin Mattson 12-14 Somers Road East Longmeadow, MA 01028 413-733-2571 ext. 212 kmattson@sesenergy.org www.sesenergy.org

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Starkweather & Shepley Insurance Brokerage, Inc. Sabrina San Martino 60 Catamore Blvd.

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Stera-Sheen Brands by Purdy Products Co. Cathy Morgan PO Box 456 Wauconda, IL 60084 800-726-4849 cathy@purdyproducts.com www.purdyproducts.com

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Thomas Colitsas and Associates, PA

Tom Colitsas 103 Carnegie Center, Suite 309 Princeton, NJ 08540 609-452-0889 tcolitsas@tcacpa.com “A Member of Franchise Pros”

Trust Capital Funding

Mark Wesalowski 132 Adams St. Suite 1 Newton, MA 02458 800-LENDER1 Mwesalowski@trustcapitalfunding.com www.trustcapitalfunding.com

ViewPoint Sign and Awning Bill Gavigan 35 Lyman Street Northboro, MA 01532 508-393-8200 billg@viewpointsign.com www.viewpointsign.com

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Robert Zarco, Esq. or Robert Salkowski, Esq. 100 SE 2nd Street - 27th Floor Miami, FL 33131 305-374-5418 rzarco@zarcolaw.com rsalkowski@zarcolaw.com www.zarcolaw.com

MARCH 2011 • INDEPENDENT JOE

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Rosenberg continued from page 3 himself as he was. I think that people respected him because he had core values and fundamentals about the customer that were so important to the success of any business.”

manual-labor intensive; making donuts by hand was something that took a certain degree of skill and physical stamina. It was a lifestyle that people just weren’t very attracted to.”

Big Changes

And the franchisees watched the business grow. Mark Silverstein started as a franchisee in Concord, NH, in 1969 along with his father, who bought his first Dunkin’ Donuts in 1964. They saw promotions like balloons, Munchkin dolls, and “Christmas this and ChristCo-author Jessica Keener mas that.” They saw cookies and was “blown away” by brownies come and go throughRosenberg’s energy as out the years. They saw sandwell as his story. wiches make their debut. Adds Weiner, “It was a lot different years ago than it is now because there were very few franchises and the company was young,” adds Weiner. “We had a very limited number of products. We had donuts and coffee and that was it.”

Now Dunkin’ Donuts has over 1,200 franchisees in the United States, but in the beginning, when franchising was young and running a donut and coffee shop was a 24-hour-per-day proposition, it was hard to get franchisees on board. At the start, the business attracted people with a bootstrapping mindset. “A lot of immigrants Photo by Roger Gordy came down and bought stores in New Jersey,” says Tony Pellizzi, Franchise owner Steve who started working for the Brand Gabellieri began as a crew in 1981 and became a franchise member in 1969. owner in 2003. “They saw this as an opportunity to get into their own busiBut early franchiness. Also, they were willing to do what sees saw something promising in this it took. They were willing to work seven fledgling franchise operation and had days a week, to work 20 hours a day, to faith in its founder. According to Weiner, have their families work.” Gabellieri adds, everybody in the business believed that “Attracting new franchisees to the busiBill was a visionary. ness was difficult because the job was

The business grew year after year. Part of it, says Pellizzi, was timing: Rosenberg was the first to envision a coffee and donut shop in New England. Another factor to Dunkin’ Donuts’ success was that Rosenberg surrounded himself with people who were committed to doing their jobs well. Says Pellizzi, “It was an absolute commitment to the very Rosenberg continued on next page

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index

Rosenberg continued from page 18 best coffee and the very best donuts. The idea was excellence.” That’s not to say the company didn’t go through hard times -- in the 1970s Dunkin’ Donuts stock plummeted, they realized that they had 100 stores in bad locations, and a group of franchisees won a class-action lawsuit against the company-- but the business always recovered.

Rosenberg did more than create Dunkin’ Donuts -- he also had a hand in the founding of the Distributor Commitment Program in the early 1970s. “Years ago they used to have all these salesmen who would come to the store and ask, ‘Do you want to buy our jellies? Do you want to buy our flour?’” explains Silverstein.

The franchisees realized that if they got together and purchased as a group, they could negotiate lower prices due to the economies of scale. Later, the company rented a warehouse, hired a general manager, and went into the distribution business for itself.” We had a board -- some Dunkin franchisees along with some professionals and the company -- and we ran everything ourselves,” Silverstein says. “So it was not a distributor distributing for us under his terms. It was our own.”

Another vision of Rosenberg’s was the International Franchise Association, which began in 1959. “Of all things Bill did, founding the International Franchise Association was probably the most significant,” says Rosenberg’s wife Ann Rosenberg, who’s a member of the IFA’s board of directors.

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Keener, for her part, stresses that everything in the book is, if anything, more relevant today than it was 10 years ago.

“It just becomes clearer and clearer to me how enduring his vision was in terms of how to build a business, teamwork, positive thinking, can-do attitude, and how to deal with naysayers,” she says. “And I do apply them to the scenarios in my life. I really felt that I had the privilege of learning from the master.”

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A Decade Later When asked what she’d like to say to Dunkin’ Donuts’ current franchisees, Ann Rosenberg replies she’d like everyone to read Time to Make the Donuts to gain insight into what drove Rosenberg, what his original philosophy was, and what he thought was important in running a business.

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