Domino’s to Add Sub Sandwiches to Pizza Delivery
Bruce Horovitz writes in USA Today that Dominos will announce plans today to roll out a line of four, $4.99 oven-baked sub sandwiches, including Philly Cheese Steak and Chicken Bacon Ranch, that it will deliver with or without pizzas.
The rollout starts Aug. 25. When complete on Sept. 22, Domino’s will become the largest sandwich delivery company in the nation, CEO Dave Brandon says. Non-burger sandwiches are a $21.2 billion market.
Domino’s is not stopping at subs.
"We’re looking at everything," he says. "We have more non-traditional products in various stages of R&D."
The move comes five months after Pizza Hut began delivering baked pasta dishes as well as pizzas. And it will be a wake-up call for sub shops Subway and Quiznos, which find themselves competing with pizza chains.
For the pizza giants, the message is clear: If pizza sales aren’t growing in a sour economy, maybe something else will. Besides the hot subs and baked pasta, some pizza chains also deliver chicken wings.
"It’s an attempt by the pizza players to try to get back into being a growth industry," says Ron Paul, president of Technomic, a restaurant research firm. "They’ve all lost their mojo."
They also are further conflating a fast-food world that’s grown jumbled. McDonald’s (MCD), Burger King (BKC) and Wendy’s (WEN) sell salads and chicken. Subway and Dunkin’ Donuts have tried pizza. Arby’s, once roast-beef-only, now makes a killing on Market Fresh deli sandwiches and sells toasted subs.
Domino’s U.S. same-store sales fell 5.4% in the second quarter after a 5.2% decline in the first quarter.
Brandon says the move should boost Domino’s lunch business and expects lots of calls from groups of office workers. (The minimum delivery order is $8 to $10, depending on location, and delivery fees are $1 to $2.)
Mrs Fields Cookies is Crumbling
CNN Money reports that Mrs. Fields Famous Brands LLC plans to file for Chapter 11 protection.
The cookie company is reorganizing and working out a prepackaged plan with its creditors, according to a filing Friday with the Securities and Exchange Commission.
Representatives from Mrs. Fields did not immediately return calls for comment.
In the filing, Mrs. Fields reported "aggressive competition" in its franchising business. "Many of our competitors have greater resources or more favorable business models than ours with which to attract new investors and procure sites," the filing said.
Mrs. Fields also said there has been a decline in customer traffic at shopping malls - a trend that has hurt revenue.
The filing also said the company has experienced a number of franchise store closings since its 2004 fiscal year, and this trend has continued throughout fiscal 2008. Mrs. Fields may need to close more stores in the future, according to the filing.
AAFD Suspends Accredited Contract Status for Cuppy’s Coffee
The American Association of Franchisees and Dealers (AAFD) announced today that it has suspended its recognition of Cuppy’s Coffee and More, LLC as an AAFD Accredited Contract recipient, pending a determination of the Association’s Board of Directors that AAFD’s Accreditation of the Cuppy’s contract should be withdrawn.
In an Email to Cuppy’s CEO, Dale Nabors, AAFD Chairman Robert L. Purvin stated, “Due to the serious allegations that have been raised [regarding Cuppy’s failure to honor various contractual commitments], and your apparent decision to cease our communications, I have determined to suspend your Accredited status with the AAFD pending consideration and action of the AAFD Board of Directors.”
In a formal notice being delivered today to Cuppy’s Coffee, Purvin added, “In that the AAFD Board of Directors next meeting is set for September 4, 2008, I am acting to immediately to suspend Cuppy’s Accredited Contract status pending action of the AAFD Board. I am causing this action to be published on the AAFD Website, and to appropriate media. All listings of Cuppy’s Coffee will forthwith be removed from the AAFD Website, and we are instructing Cuppy’s management to remove all references to the AAFD from its Website and franchise marketing literature.”
Cuppy’s earned AAFD Accredited Status in May of 2007 in an admitted effort to reinvent its corporate personal and ‘arise from the ashes’ from legal and economic difficulties of its predecessor brand, Java Jo’z.
As part of its commitment to collaborative franchising practices, Cuppy’s adopted a new franchise agreement that substantially complied with the AAFD’s Fair Franchising Standards and further agreed to support the formation of an independent franchisee association, to collaborate with the development of a purchasing cooperative to be jointly owned by Cuppy’s and its franchisees, and to submit claims and disputes to mediation upon the request of any party.
In February of this year, the AAFD became aware of several claims that Cuppy’s or its affiliate, Elite Manufacturing, was not honoring promised construction deposit refunds. The AAFD commenced a publicly announced investigation of these ‘refund’ claims, including tracking some 22 refund demands that had been made between October, 2007 and April 2008. The AAFD reported that if it was determined that Cuppy’s was not honoring the provisions of its Accredited Contract that the AAFD would act to suspend or withdraw AAFD Accredited status to the company.
The AAFD was able to confirm that 18 claims had been resolved in a commercially reasonable fashion, and four claims were disputed. Cuppy’s issued a public statement of its intent to honor its contractual commitments, and to submit disputed claims to mediation through the AAFD. Through April, Cuppy’s fully cooperated with the AAFD’s investigation.
In April, 2008, Cuppy’s was sold to a new management team. The AAFD was subsequently advised that the company would abide by all written commitments, but that any oral commitments, including publicly acknowledged commitments to promised initiatives regarding an owners association, the purchasing cooperative and to mediate claims and disputes would be subject to further review.
Between July 15 and August 5, the AAFD became aware of a new series of complaints that Cuppy’s and/or Elite Manufacturing was not performing promised build outs of franchisee storefronts. Some claimants contended that they had been waiting for promised construction for months (and in some cases for more than a year), during which time the claimants were unable to open for business but were bound to pay rent on their premises. Around this time, the AAFD also learned that Cuppy’s had been sued by its retained general contractor for non-payment of construction invoices.
Despite diligent efforts of the AAFD to complete its investigation and to gain Cuppy’s fulfillment of promised initiatives with its franchisees to avoid sanctions from the AAFD, Cuppy’s new management has ceased to be cooperative, and since June 12, 2008, Cuppy’s has not replied to repeated invitations from the AAFD to respond to this new waive of complaints and allegations.
Mr. Purvin added that it is still not too late for Cuppy’s to avoid ultimate consequences by the AAFD. Said Purvin, “Our purpose remains to inspire fair contracts and collaborative relationships, and we are open to negotiating and mediating effective relief for all Cuppy’s franchisees in a manner that will effect restitution from injuries and will allow Cuppy’s Coffee to achieve the corporate goals set by new management upon its acquisition of the company.”
Purvin added, “The path to a successful resolution of the Cuppy’s quagmire is through communication, negotiation, collaboration, and if necessary, mediation. The path to certain destruction is to ignore the problem and face an inevitable and costly litigative path.”
Small Businesses Add 50,000 US Jobs in July
According to today’s ADP National Employment Report®, private employment among small businesses increased by 50,000 in July.
The ADP National Employment Report, sponsored by ADP, was developed and is maintained by Macroeconomic Advisers, LLC. It is a measure of employment derived from an anonymous subset of roughly 500,000 U.S. business clients.
“Employment among small-size businesses, defined as those with fewer than 50 workers, advanced 50,000 during July, rebounding somewhat from the weaker gain of 7,000 reported in June. July’s growth in employment is consistent with the gains seen among small-size businesses during most of the recent months. These figures continue to offer evidence of the resiliency small-size businesses have demonstrated over the past several years when compared to the job losses experienced at larger firms,” said Joel Prakken, Chairman of Macroeconomic Advisers.
The ADP Small Business Report is a monthly estimate of private non-farm employment among companies in the United States with 1-49 employees and is a subset of the ADP National Employment Report. The data for both reports is collected for pay periods that can be interpolated to include the week of the 12th of each month, and processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey of establishments.
Additional information about small business employment, including charts on monthly job growth and employment levels, along with historical data, is available at http://www.smallbusinessreport.adp.com.
Information from the July ADP National Employment Report:
Non-farm Private Employment Highlights – July Report:
- Total employment: +9,000
- Small businesses* +50,000
- Medium businesses** -9,000
- Large businesses*** -32,000
- Goods-producing sector: -65,000
- Service-providing sector: +74,000
Addendum:
- Manufacturing industry: -49,000
* Small businesses represent payrolls with 1-49 employees
** Medium businesses represent payrolls with 50-499 employees
*** Large businesses represent payrolls with more than 499 employees
Straw Hat Pizza Rides the Wave of Success to Significance
Pizza Maker to Open 50th Store, Boasting 30 Percent Growth in Last Six Months
In a shaky economy, as more people interested in running a business turn to franchising, California pizza maker Straw Hat Pizza is boasting a built-in roadmap to success, one that has driven business growth up 30 percent in the last six months to 52 stores from 38. By September, the chain plans to have 55 stores.
Straw Hat Pizza has been awarded the Fair Franchising Seal by the American Association Franchisees & Dealers (AAFD) and awarded "hottest franchise" by America’s Hottest Franchise.
Poised to celebrate its 50th birthday, the chain is growing rapidly. Straw Hat plans to more than double in size, increasing its locations from 52 to over 100 by 2010, and expand from California, Nevada and Oregon to Washington, Arizona, Texas and beyond. What’s more, it has recently added a two new concept restaurants called Straw Hat Express and Straw Hat Grill, and plan to expand that to targeted cities and states on the West Coast.
The new-concept "Grills" expand the pizza menu to the next level, featuring typical sit down-eatery fare such as pasta, steak, ribs, burgers and pizza
"During economic slumps like this, we offer a lot of benefits for those downsized from corporations who are looking for jobs and income," says Jonathan Fornaci, president of Straw Hat Cooperative Corp., who was brought on board in January to encourage rapid growth. "We also offer a great opportunity to take the family for dinner at an affordable price at a time when families are cutting back on their discretionary spending."
Credit seen drying up for U.S. small business
Forbes Magazine reports that as losses mount at American banks and the pain of the credit crisis spreads from housing and finance to the broader economy, many small companies complain it is increasingly difficult to obtain loans.
Tighter credit could not only help to push the United States into recession, but prolong the downturn as ideas for new businesses get stymied once entrepreneurs sit down with local bank managers, small business representatives warn.
"In recent weeks we’ve seen banks becoming more cautious and the pace of lending has slowed considerably," said Weldon Gibson, a consultant at the Lamar University Small Business Development Center in Texas. "They are demanding higher credit scores and want more collateral before lending."
According to the U.S. Small Business Administration, for the year up to July 11, about 10 percent fewer 7(a) loans were issued than in the same period in 2007. These are the SBA’s most popular loans and — with a government guarantee covering up to 85 percent — low risk for lenders.
"Our loan volumes reflect the condition of the overall economy," said SBA spokeswoman Christine Mangi. "Credit is tightening and there is less demand for small business loans."
But not everyone agrees credit is harder to come by for small businesses. Earlier this month, a National Federation of Independent Business poll showed "no evidence of credit problems has appeared on Main Street. It is a Wall Street issue."
But the NFIB seems to be in a minority.
"In the past few weeks, we haven’t seen further deterioration of credit conditions, but they are certainly not improving either," said Todd McCracken, head of the National Small Business Association.
McCracken said that, with so much uncertainty over the U.S. economy, many small companies are "shelving expansion plans and are less likely to be looking for credit. Things would be a lot worse if there were a lot more business owners out there in need of loans."
Subway Continues to Expand
Advertising Age reports that while Starbucks is closing stores and McDonald’s is focusing its expansion efforts abroad, Subway, by far the largest fast-food chain, with 22,000 U.S. locations, is adding 800 this year.
Don Fertman, director-development for the sandwich shops, said there’s now about one Subway for every 13,800 people in the U.S., although some markets, such as Philadelphia and Boston, are "under-served." He said he thinks Subway can take the ratio to one restaurant for every 12,000 people in the U.S. while revving up growth overseas, where it now has 8,000 outlets.
A major factor helping Subway sprawl is its low overhead. The shops don’t need room for large kitchens, so there are outlets in hospitals, appliance stores, a smelting plant and even a church where the pastor wanted to provide job training for neighborhood kids. Subway is also the largest chain within Wal-Mart.
Mr. Fertman, who joined Subway in 1981, when there were 166 stores, said franchisee applications are up again this year and he credits the chain’s advertising for sparking renewed interest. He said that when he joined the company, most people thought he worked for New York mass transit. Now when he says he works for Subway, people chant "Eat Fresh."
Subway is "possibly out of all restaurants, by consumer perception, the healthiest restaurant out there through a combination of marketing and product," said Darren Tristano, exec VP at Technomic. "Because of the amount of marketing dollars put forth by the company and brand recognition, they have a great opportunity to be successful."
Mr. Tristano said Subway still has room to grow — within its existing stores. He noted that the average McDonald’s brings in more than $2 million a year, while the average Subway earns closer to $375,000. And since Subway has about 50% more U.S. stores than McDonald’s 14,000 locations, he said they can do more. "They’ve just started to get deep into breakfast," he said. "I still think there’s opportunity for growth."
Cross Posted at: Franchising in New England
Hot and Sexy Grinders?
The New York Post reported that business has not ended well for ex-franchisee, Anthony "Cousin Vinny" Agnello, who offered "Subway-style" grinders by day and exotic lap grinders by night. He has been sued successfully in court by the Subway chain.
Anthony "Cousin Vinny" Agnello ran afoul of trademark laws for offering the fast-food chain’s signature sandwich - as well as Subway wrappers, bags and menus - in his X-rated deli wannabe.
Agnello, 48, had sent out fliers promising customers free fountain sodas and $5 foot-long subs alongside "six hours of nonstop, hard-core, live action from some of the most beautiful young ladies who have ever chosen to take their clothes off in public."
A federal judge ordered him to stop using the trademarked goods in his skin scheme and forced him to pay more than $12,000 for the chain’s legal fees.
Does the RI Amended Law Set A New Franchise Standard?
Does the amended Rhode Island (RI) that was passed and agreed to by many parties including the IFA, CFA, DDIFO, Dunkin Brands and others set a new standard for termination clauses in franchise agreements, moving forward?
The RI law calls for:
60 days prior written notice of termination, cancellation, or nonrenewal.
30 days in which to cure any claimed deficiency, provided that a dealer has a right to cure 3 times in any 12 month period.
Even though the dates had been reduced from the original law, it still sounds fair and reasonable to me.
The AAFD Published Standard in its Fair Franchising Standards:
STANDARD 12.3 DEFAULT BY A FRANCHISEE
A franchise agreement should contain a provision setting forth material events of default by a franchisee, a franchisors right to terminate for good cause, after notice and a reasonable time to cure, where appropriate, and a franchisee’s post termination rights and obligations.
The RI Law quantifies the time frame, the question is: is 60 days notice and 30 days to cure sufficient?
If so, maybe the AAFD should consider using the RI law as the basis of its "Default By A Franchisee" standard?
If it does, that standard has already been vetted and agreed to in RI by the powers that be.
Cross posted at: Blue MauMau
Au Bon Pain to add 100 stores in India
The Boston Business Journal reported Au Bon Pain plans to add a total of 100 units over the next two years in India. The Boston-based bakery and cafe chain has signed a master franchise agreement with Spencer’s Retail Limited, the retail arm of RPG Enterprises, a $3 billion Indian conglomerate with 20 companies operating in six business sectors, including retail, power, entertainment, technology, transmission and tires. The announcement comes at a time when Au Bon Pain, earlier this year, announced a recapitalization by LNK Partners in March, the introduction of smaller portions and store openings in Kuwait and Dubai next month.
Au Bon Pain’s menu in India will include a line of vegetarian sandwiches as well as other vegetarian items to accommodate cultural traditions and religious dietary needs.
Cross Posted at: Franchising in New England
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