Auntie Anne’s in Orlando, FL & Duck Donuts in Harrisburg, PA
Guest: Andy Kmiec
Topics: Auntie Anne’s, Duck Donuts
Transcript:
Chris Ressa 0:02
This is retail retold the story of how that store ended up in your neighborhood. I’m your host, Chris dresser, and I invite you to join my conversations with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.
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Welcome to retail retold everyone. Today I’m joined by Andy chemic. Andy is the Vice President of Development for duct donuts. He has been in the industry for over 20 years, he has been both on the landlord and 10 inside of retail real estate. He brings a wealth of knowledge. I think duck donuts is an super interesting brand. I’m excited for him to be here. Welcome to the show, Andy.
Andy Kmiec 1:23
It’s awesome to be here. Thank you for having me on.
Ressa 1:26
So Andy, why don’t you tell the audience a little bit more about who you are?
Kmiec 1:29
Sure. Yeah, I would love to and again, thank you for this opportunity. You know, duct donuts is an awesome brand. It’s 106 doors strong now. It’s growing. Love the product. Those are the things that really attracted me to duct donuts. When I first started looking at the opportunity to have the the product sell itself. It’s it’s served warm and, and fresh. And really to have the you know, the the the people that are going in experiencing it. It’s just it’s fantastic. It’s great to see the growth, we’ve got a lot of franchisees a lot of candidates who are looking to join the system, we’ve got a lot of opportunities in the world of real estate they’re being offered to us. So it’s great to be a part of an emerging brand. And it’s a strong market, you know, the donut industry $7 billion and projected to grow by another, say $5 billion over the next five, six years. It’s it’s fantastic to be a part of in our industry. You and I are always in tune with brands earlier than most consumers just because of the industry. However, I became familiar with duck donuts, as a consumer, My inlaws have a home in Avalon, New Jersey and duck donuts opened up and at the time, I had thought it was just like a local donut shop, I didn’t realize it was a national brand. When I went in the thing that blew my hair back the little that I do have was that it was made to order. And I could choose what I wanted on my donut that day. And it wasn’t premade. And I was blown away by that. And then the chocolate icing that was on my donut was I had to skip lunch that day. But it was incredible.
Lunch, that’s better than much. And that’s how I became familiar with duck Dona itself. You know, it’s funny you say that, because when we look at the franchisees that we’ve got in our system, and a lot of these, you know, a lot of the candidates who approached us about opening up a location, it’s for that very reason they were on vacation there or in the Outer Banks, they were in Myrtle Beach, they they were in Pittsburgh, or you know, some Main Street USA, they tried the product there and they just loved it. I think that that’s, you know, from from our perspective, that’s the biggest thing that separates us from from the competition, how the product is prepared, it’s made fresh for you, to your to how you want to talk to it’s not a matter of turning a sign on our front that says you know, they’re hot now, you know, come get it now. It’s every time you walk into that store, it’s you’re gonna have that same experience and you know, from my background,
that’s the most important thing from that brand. You know, the brand standards and the brand awareness and you know, when people walk into a location regardless if it’s in Florida, or Avalon, New Jersey or out in Idaho, it’s that same experience, you’re gonna get that same customer service, that same awesome product, and you’re gonna walk away you just satisfied and glad that you skipped lunch in your case. glad that you did that. Because it is you know, it’s an awesome treat. It really is. Okay, Andy, I want to pivot. I want to learn a little bit more about Andy for a second. Sure. I’ve got three questions for you. We call this clear the air you ready?
Yes, I’m prepared, hopefully.
All right, Andy, question one. Okay. What is one skill you don’t possess but wish you did? Playing the guitar and what’s
interesting about that is that I’m I’m ambidextrous. I don’t know if I would play left handed or right handed. But yeah, I would say playing the guitar would be would be one skill that that I don’t have that I’d like to I’d like to pursue, do you write lefty writing? I write right handed. I can write left handed, I would like to say the nuns cured me of that when I was young.
I throw left handed. So I you know, I eat left handed. So yeah, I use, I use both do golf, I golf right handed. And I think that that is I blame that on my dad who
taught me how to play. So I also blame my slice on him. I blame my lack of putting on him. But you know, my brothers have a brother that calls left handed. So I think that the first day if I grabbed his clubs, I probably would have golf left handed, but I grabbed my dad’s so I go off right handed. Interesting. Okay, very cool. Are you musically inclined?
No, no one has anybody who knows I cannot sing so.
All right. Question two. What is one thing most people agree with? But you do not. I do in light of the the all star game being held yesterday. The baseball star in I am an old school. I think that pitchers should I don’t agree with the DH. I hate seeing the DH in the American League. Yeah. Don’t don’t agree with I also don’t agree with their league baseball either. I think that your All Star game has lost its luster. At the very least it should be about you know, it’s about the competition, right? It’s about the rivalries between cities, and and, you know, between regions. So, you know, the Yankees and the Mets play each other the White Sox and the Cubs play each other. I think that that’s entertaining, but I don’t know, to have Pittsburgh play Minnesota, and to take games out of the schedule where I’d rather see them play Philadelphia, or, you know, some other teams in this area. I’d rather see that. And the DH. I don’t I don’t know. I mean, if you’re a pitcher and you throw the ball,
you throw a 90 mile an hour fastball. Somebody said you shouldn’t be held to account when you’re up to bat. And you’re now staring at their pitcher. So there’s there’s got to be some accountability there. Wow, what an incredible answer as a baseball fan. I love getting rid of the D H. I think that is a really interesting concept that’s been talked about for years, obviously. But I love that idea. It’s for me, it’s not an accountability piece. For me, it would be another element to the game that I think is missing. The interleague play. I was a huge fan when they started this. I don’t know that I would want to see it go maybe refined personally. Yeah, yeah. The nationally the National League game, you’re talking to someone that grew up in Pittsburgh, so the the National League game, from, from a management perspective, there’s much more to it than an American League game, you know, if you’re subbing out your pitcher, and where they’re at, and, you know, they’re hitting ninth in the lineup, but where they’re coming up in order, you know, you’re making double switches. And there’s timing with that. There’s just more strategy to a national league game than there is an American League game. And that’s, you know, when you got big boppers in the lineup in the American League, it’s, you know, I don’t know, there’s probably more, there’s probably more fastballs thrown in one leg than the other. I don’t know that. But I don’t know. It’s to me, it’s, it’s about the game. And it’s about, you know, the strategies there. And that’s, that’s one of the reasons why I’d say no, do away with it. Ah, I love the answer. Thank you for sharing. Last question. When is the last time you did something for the first time. So the last time that I did something for the first time would be my my in laws on some property over in Wyoming. And when we were visiting there last summer on vacation, we went horseback riding with the kids. That was something I’d never done before. Very, very cool. How’d you like it? I was, you know what, it was fun. You know, I couldn’t I couldn’t imagine. You know, obviously, you’re you’re not in shape to ride a horse. You know, it’s I couldn’t imagine riding it for miles on end. You’d be really sore. But I you know, it was fun. It was fun to take a spin around. We had some cowboys there that were helping us out and kids loved it. So I enjoyed it. You know, it was it was fun. I do it again. Let’s put it that way. All right. All right. But not for 20 miles. No, no, no. When they say walking, you know, settle. Sorry. That’s, yeah, no, I I couldn’t do it. Okay. Well, that was fun. I love the answers. Thank you for sharing. Let’s talk a little bit about duck donuts. What is duck donuts up to these days? And how was moving from COVID to a post COVID world? So alright, so two questions there.
I’ll tackle the maybe the second one first and then we’ll, we’ll get back to COVID. Because I think it’ll the state of affairs now duck dominance is doing today, because they’ll bleed, you know, one into the other. Sure. COVID really, you know, from a business model perspective,
you know, really highlighted a lot of things. And I think this is true in the retail world. And it was true for us. And that was the need to have other other ways to get your product into the hands of the consumer.
You know, for us, it was with storefronts that were not drive thru, it really put an emphasis on our app, ordering through the app, ordering through online, pick up curbside service, utilizing delivery, grub up and, and DoorDash. And organizations like that, how does it travel, I’m curious, I get it delivered, how does it travel, it travels well, because you know, that turnaround time is going to be fairly quick, you know, between the between the time that either you pick it up at our door, or,
you know, when when GrubHub or somebody’s is actually walking into the store, they’re made fresh, you know, those orders come in, those donuts are prepared right there with the, with the with the toppings. And that doughnut travels very well. And the beauty of it is because you know, it’s made fresh, it’s made warm, it’s made to order. So it’s not like you’re worrying about something that was prepared, hours ago, or the day before or something like that, you know, that you start to put even more age onto the product and you know, you come back to the base donot that we use that cake doughnut,
you know, the batter that we use, it’s not a, it’s not a yeast on it, you know, yeast is activated continues to, to eat away at the at the sugars within the donut. And over time, that donut becomes more stale. You know, it’s a it’s a kick based on it. It’s an awesome product. And so, you know, we’re relying on those channels to help build our business.
It also gave us you know, the, the, as far as additional business models, you know, really put a light on that, you know, how else are outside of our traditional real estate? What other ways are we going to be able to get product into the hands of our consumers, not just through the channels that I talked about, but through like food trucks and concession trailers and, and, you know, doing a shipping container store over in California.
You know, we’re opening our first drive thru location here this fall here in Harrisburg, Pennsylvania. So it’s, it’s also caused duck donuts, to review the business model to see what other opportunities there are for growth. And, you know, that’s, that’s really one of the exciting things about joining duck donuts, you know, it’s coming into a situation where it’s a young company, first location opened in Oh, seven first franchise locations, 2013 106 locations. It’s, it’s a, it’s a great time to be a part of this, this, this brand and the growth that we’re going to be seeing here in the next, you know, three, four or five, six years as we go from just over 100 stores to you know, to 300 to 500 stores. You know, it’s a great time. A lot there. I got a lot of things running through my head here. So one, do you know how many franchisees are multi unit operators? Sure, yeah. So within that, so within that 105 store 106 stores, we’ve got about 70 franchisees? So quite a few single unit operators. There are multi unit operators in the system, the company what’s interesting is the company has one company on store here near the headquarters. The drive thru location will be company owned as we test it, as we prove out that business model, but 91 99% of the stores are owned by franchisees, we see franchise concepts all the time and you’ve been at some places where you have like massive companies that own like 300 locations they’re a franchisee but like they’re like, you know, Carol’s and stuff is a company that owns like hundreds of Burger Kings and we have private equity groups that have gotten into franchising. Do you see this continuing to be this Mom and Pop operator? And I’m not sure if that’s the right characterization, or where do you see it moving to where you’re trying going to sell packages of 50 to one franchisee so, you know, a couple things there one, you know, would we shy away from from an operator who wants to come in and open 25 locations? I don’t know. We wouldn’t want to we wouldn’t shy away from it. But we would want to understand their business plan their business model for the brand. So what’s really important for us and I think it’s important to understand is that the franchisees
Is that we’ve gotten our system and you know that that kind of that ideal franchisee that we look for
when we’re looking to approve new franchisees to join the system. Now, these are people who are engaged in their local markets, they know their local markets they’re involved in, in the community in a bunch of different ways. Sure, you know, they, they understand what it takes to build the brand, to operate the store, the people who are coming into their customers are going to be neighbors, they’re going to be people that they know, they’re going to be friends. So I think it really helps when you’ve got excuse me, when you’ve got that connection at the local level, which I think you lose when
you when you get to that,
that 30 store 40 store 50 store, I dealt with large franchisees you have Yeah, you’re moving from the small business model to a corporate conglomerate. And I’m not saying it can’t be done. And that’s why I’m saying we would entertain it, you know, I dealt with, you know, some some very large franchisees and Auntie Anne’s, and focus brands that did a fantastic job of operating their stores, because they understood the brand, they understood what made the brand successful, they understood the customer service, the quality of the product, and the need to make sure that that product is being delivered, warm and fresh. And so they understood that so they had infrastructure in place, you know, they had general managers, managers, people who were compensated well, based on performance of the store, based on their the the marks that they would get through their customer through the Secret Shop, and the the customer feedback, so I can see where that, you know, we would trend towards that here at McDonald’s. But no, we really enjoy having,
you know, having that, that kind of franchisee be a part of the system, you know, and when you’ve got multiple operators, say in the state of Pennsylvania, because we’re here in Pennsylvania, you’ve got multiple operators, and there’s real estate opportunities that come available, then you’ve got, you’ve got different franchisees who are interested in that particular site. And then you’re in the position of selecting the best franchisee, who’s going to fit in that in that store with that store. And it’s going to be the best opportunity to drive the brand and drive the sales with application. Well, thank you for sharing that good perspective there. When you look at the landscape. Have you mentioned the $7 billion donut market and growing?
Yeah, it’s huge. Mind blowing. I think of donuts I’m thinking of like, dunkin donuts or Dunkin now, and shop and brands. Are these who you guys think are competitors when you’re analyzing a market? You know? No, no. And I’ll tell you why. So and Dunkin you just started to say Dunkin Donuts, you know, they’re a coffee shop that sells donuts now. Yeah, they’ve rebranded? No, we don’t, because the duck donuts, that brand is so different. It’s made to order, you know, it’s not your typical walk in, you’ve got the donuts on the on the shelf, you know, that had been sitting there for however long it’s, it’s, you know, you look at it and you think, Well how many preservatives are in there? And you know, how long will this keep? And you know, will this will this last and you know, it’s a different, it’s a different mindset, you know, when you walk into a duck donuts, you know, that that product is going to be made fresh, and it’s going to be made to order for you as you’re standing there. Or it’s going to be delivered, you know, warm and fresh to you at at, at your store. And it’s it’s a different experience altogether. And that’s why you know, you talk about the donut, you know, that category being 7 billion, and what it’s going to grow to here in the next few years. I really think that you know, for McDonald’s, it’s really you know, for us it’s it’s disrupting
that category, even when you look at
when you think about rested Julio who founded the company, this is someone who grew up going to the Jersey Shore, was used to Ocean City in browns and o’s and, you know, getting a warm cinnamon sugar doughnut while he was there on the boardwalk, but then with his family going to the Outer Banks, you know, there was nothing there, he could have gone into the bakery at the grocery store and grabbed something that you know, again, it’s a similar experience to to a Dunkin Donuts or Krispy Kreme or somebody like that. But he wanted that something different. He really believed in that idea. And so you know, he opened his first location in Kitty Hawk and, and duck they almost opened simultaneously. That’s that’s how we got the name duck donuts. For those of you who don’t know, how we how we got that name.
And that was you know, for him it was creating that business model was creating something different that
Ressa 20:00
at, you know, has grown in time to the point where, you know, we’re at 100 and store strong today and looking to get to that next benchmark 300 500. You know what the future holds great insights there. And I know this is a big one, when you go to the market, and you’re talking to franchisees, and you’re selling the brand, and I’m sure you have days where you bring franchisees to the corporate office, what do they call those days, just every day? So yeah, catchy names for him, but boil down, it’s a discovery day, right? One of the things I know franchisees look for, is the AU V, compared to peers, and how is the AU V of duck donuts versus the peers? Well, I don’t know that you can compare us, you know, to a, to a Dunkin Donuts or to a to a Krispy Kreme. I think that, you know, when when you look at us, and what we’re attempting to do, you know, we’re the largest Made to Order donut, you know, in the category, the duck donuts brand. So, you know, to have
Kmiec 20:58
to say that, you know, our goal is to have a duck donuts on every street corner, in Manhattan, or, you know, that’s not what we’re, that’s not what we’re about, we’re really trying to protect the franchisees we’re trying to protect the brand, we’re trying to grow smart. You know, there’s wisdom behind the locations that were that we’re looking for that we’re engaging in those conversations to, to open up a location, we’re looking to benefit our franchisees, you know, are you when you look at an FTD, and you look at the, you know,
you look at the back of the FTD with all the litigation, that’s not what we’re about, you know, there’s other brands that would put a location right across the street from another. And that’s not, that’s not what we’re about, we’re about driving our average unit volumes and trying to give our franchisees as much opportunity to grow to be successful. And so you know, the average unit volume, and I can tell you, Chris, that
Ressa 21:59
obviously COVID Put a dent into our business, we’re up 30% over last year. And we’re up three, almost 4% over 2019, which 2019 was a good year. So, you know, I can say that we’re trending in a great direction, we’re trending positively, which is fantastic for the brand. Is the AU V higher than a Krispy Kreme or a Dunkin? No, no, I mean, we’re, we’re gonna be in that $630,000 range. So, you know, compare that to, you know, to what they do. Remember, I mean, that’s their mass producing NSRA, right, you know, they’re mass producing their beverages, or their product of bake the doughnuts that they serve, we’re about the, you know, we’re going to be more custom. We’re going to be more tailored to that local market. And that’s one thing I did, one thing I didn’t mention was catering. You know, there’s a lot of catering that our franchisees perform that I’ve heard about, in the time that I’ve been here. I know that they’ve catered weddings to cater, wow, birthday parties. Yeah, I can’t imagine you know, having having a wedding and you know, serving serving doughnuts to, you know, to the the bridal party and to the guys, you know, but they’re doing it and I think it speaks to you know why doughnuts are, are exploding now why their categories exploding now why it’s why it’s so interesting. And there’s 200 million people in the US who eat donuts which I was blown away when I saw that number. I couldn’t imagine 200 million people eating eating donuts on a regular basis. Yeah, I mean, that’s, that’s significant. Wow. And when you think about, you know, when you think about how we approach business, at the local level with our franchisees, just like what you said you thought it was a one off brand. I did. That’s you know, that’s that’s the right you know, the expectation that someone’s going to walk in and get something that’s that’s regional local to them that that’s what they want. So that millennial snacker the mom with the kids, you know, that’s, that’s the experience that they’re looking for. That’s the product and the taste that they’re looking for. I would tell you, it is a premium product for sure. That is a premium product. There is no doubt about that. Excellent insights on duck donuts. I really appreciate you going through it. I’m excited to see what you guys do. Glad to hear the growth story up over 2019. awesome to hear. And now a message from one of our sponsors. Blue Sky utility is a trusted solar partner of large national REITs and retail brands. Blue Sky utility develops, constructs and operates tailored self generation solar solutions. With a focus on the multi tenant retail real estate environment. Blue Sky combines extensive engineering knowledge with financial structuring expertise to create custom solutions, providing tenants and landlords
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Kmiec 25:33
I want to move to the story. You have a story about a location that opened somewhere. So what brand and what what town? Are we going to? Yeah, so you know, maybe if we do this again, you know, and however many months from now I’ll have a story to share with you about McDonald’s but Sure, but the story that I’m going to share with you dates back to my time with enhance Indians pretzels. Okay. When I saw I began my career at any encounter, we were we’re in Orlando, Orlando. Yeah, so this location is in Orlando, and I started my career with a in the hands it was in the operations department, and gave me a great foundation for understanding the brand, you know, interacting with the franchisees it was, it was a great experience, and I transitioned into real estate first region was the southeast region, it was the most mature, people would say, Oh, I don’t know how many deals you’re gonna get down there. You know, we got a lot of stores already. So for me, it was, you know, coming in and trying to find, you know, what that next business model the next evolution of, of Auntie Anne’s was going to look like and it was about that time that outlet centers were really they hadn’t exploded, they Premium Outlets and Tengger. You know, we take it for granted today. But back 2004 2005 outlet center still had that kind of a connotation of cardboard boxes on the ground that you know, you went through and the sleeve on your polo shirt, the left sleeve would be longer than the right. Right? Yes. So there was a an outlet center, International Drive and I drive that was small, was owned by bells, it flipped over to prime
prime outlets who, you know, it’s a brand that no longer exists, but Prime and bought them. And, you know, I looked at it and I thought, I think you know, it’s outdoors center, I think in any ants, you know, getting away from that traditional enclosed mall business model, I think any hands would would potentially do well here, but it was a matter of finding the right you know, the right location with within the, within the center and there wasn’t anything available, it’s pretty small.
Prime did a huge expansion. And trying to find a space that was in our, you know, in that sweet spot of size, you know, that five to 800 square feet was was really difficult. And they leased it, they leased it up quickly. There wasn’t, there wasn’t anything in there that I thought, you know, what would, you know, would lend itself well to a successful anti answer. And so, fortunately, for me, anyways, there was a restaurant, a local restaurant that was right at Main and me. And this was about the time that Prime was bought out by Premium Outlets. So this got reflagged as a as a premium mallet. So this is in the 2011 range. The thing about 2005 2011 Yeah, that’s every time I’d fly to Florida and go look at go look at space and visit with franchisees I drive by there to see what we could do and maintain the relationship with the with the different dealmakers to see what would come of it. So, you know, here we are in this six year window. So you want to talk about patience and perseverance and there was a local restaurant there that was right in pain in Maine, they had opened up a talk to the operator because it seemed like the space was was bigger than what he needed. So I said hey, you know, maybe we could carve out a an enhance and while this conversation is going on, he goes he goes bankrupt and closes he closes his store. So I called up the deal maker and I said hey, you know who’s who’s on the space and
you know who’s looking to come in and so I heard that polo and in gap was looking to expand and I said, Okay, look, you’ve got to you’ve got a an entryway, that’s out that’s exterior, but it’s under a tower. So why don’t we do a 200 square foot kiosk we can pull the utilities because it was a restaurant, pull utilities out of the space, we’ll figure out the storage piece. So took a lot of convincing as you can imagine dealing with Simon to to entertain that that idea. It wasn’t budgeted space for them which which really helped the cause. So then it was it was selling on that side and then finding the franchisee you know, internally who would buy into that idea of you know, this is a definitely a non traditional spot. So and I found that, you know, they that they’ve got other operations other
Patients in and around Orlando, visited the site, toured it with them. They bought into the idea that, you know, even at 200 square feet and an outdoor building in Orlando, you know, if thunderstorms after, you know, every afternoon in the summertime, they bought into that idea, they could see the vision, they could see, you know, the idea that they could push the volume out. And we did the deal. And it’s, it’s it opened up in 2013,
Ressa 30:28
late 2012, early 2013. So they’re going to be coming up on their, their 10 year lease, but very successful store for them probably on top, top three, four stores. And they’re in their portfolio of maybe 90 or 180. And stores. Oh my god. Yeah. So you know, very happy, very happy they did. And every time I go to Orlando, and I go look at that store, I think to myself, you know, that is because of me that that thing is that that location, that story is sitting there. So what an excellent story about creativity, patience, perseverance. So I want to unpack it a little bit. So I think the message about you identified the market and the real estate, but the message about finding the right location is point well to begin, right. I don’t know that most people want to wait six, seven. The reality is it was almost a decade before sight was identified before they opened the doors. That’s a long time, some would argue well, did you miss out on a market share? And I write what sales did you miss during that period of time that you didn’t, you know, execute. But when you say now that it’s a top location out of the 90 that that operator has, I think the point is well taken that when you know your brand, and you know what works from real estate perspective, sticking to that make sense. However, that doesn’t mean that you can’t get creative to make it happen. Yeah, that’s right and change the game. One of the things that came in my head, when you started thinking and saying, Well, Simon was actually thinking about doing an expansion into the restaurant versus leasing it to you did the discussion or thought process calm that to get the real estate that you might buy the lease out of bankruptcy, you know, it was so expensive, you know, the volume of square footage in that restaurant, you know, they had polo, you know, they were getting them teed up. They’re getting get teed up for their expansion. So I knew that it was just way too big for us to try to bite off. And when you’re competing with, you know, brands, you know, national retailers like that, that have,
Kmiec 32:31
you know, relationships that, you know, maybe they’re trying to get something done, you know, in the assignment portfolio in another state. So you’re dealing with, you know, forces there that I recognized, and understanding our business model, I knew that for the rent, that we would end up paying for that spot, that it was best to go with this 200 square foot outdoor kiosk. And that was that was going to be our play that understanding recognize that we would never be able to compete with the with the poles of the world. So now I you know, when you go there, and you walk that center, and I drive, and you see that enhance sitting there at Maine and Maine, I’m sure more than one person has looked at it and thought,
just like you know how we started? How did how did they get their Auntie Anne’s Pretzels? How were they able to get that 200 square foot space smack dab next to Polo? You know, in this tower area? How are they able to do that? Well, well, that’s how it was done. I have more questions.
All right ahead. I gotta answer. So hopefully, you mentioned one of the innovations of duck donuts kind of accelerated through the pandemic was the online ordering mobile ordering.
I’ve seen all these like QSR stats, where people are like, we’re at 5% mobile ordering, and we’re trying to push that to 10. Is there a strategy internally? Where are you guys at today? Is it settled out somewhere? Do you guys know where you’re at, you know what percentage of our sales are coming from mobile versus walking. But you know, as far as settling down, that that hasn’t, that hasn’t happened, because you’re gonna have stores and states that have opened sooner than others. So you’ve got people who are out and about, you know, able to get back into a store that’s reopened, who wanted to get out who wanted to experience that in person again, that you know, the the ordering of the doughnuts, so there’s going to be some states that are going to be, you know, ahead of the game than others so that the jury’s still out on where this is going to end up, ultimately landing but I think it comes back to understanding our business model and really just trying to make sure that our franchisees are successful, and how does that look and what does that look like, you know, a year from now two years from now as we as we ventured on other business models, you know, food trucks and the drive throughs and the container stores, the shipping container stores
Ressa 35:00
You know, models like models like that, you know, as you expand your reach, and you grow the brand. You know, that’s why, you know, when you look at average unit volumes, average unit volume for a traditional store is this, you know, an average unit volume for food truck is that average unit volume for a concession trailer is going to be this, you know, ultimately, how successful are we, you know, how much money are the franchisees making? You know, what, what’s that return on investment look like? And, and, you know, the occupancy, that we’re paying from a rent perspective with, with the landlords, you know, what does that look like, you know, it’s, it’s always monitoring that business model, to make sure that we’re growing, we’re healthy, and we’re making the right decisions. As franchise brands grow in, you know, this more than most people, they start to explore different opportunities to extend the reach. Yeah. And you all are doing that. And I think you’re being innovative, the shipping container and food truck, I think, is really spot on for the brand. I totally get it. It makes a lot of sense. Has there been discussion about? And it’s probably not today, because you’re still at 106 units, and you gotta get some more. But has there been discussion with what the other brands in franchise world have done? Like food halls, and airports, and all those types of things? And I know you’re very familiar with that stuff. Yeah, yeah, I am. You know, from my past experience, certainly, I’ve had opportunities to work on that kind of real estate. It’s knowing our demographic, knowing our customers, and where are those customers at? It’s the analytics, it’s the, you know, the cell phone data, the mobile attics, it’s those types of things and understanding, you know, the, the dma’s that we want to grow in, as you mentioned, two things before, obviously, millennials seem to love donuts. So that and the local feel Made to Order premium brand. Yeah, obviously, as millennials, you mentioned the mom, is that like, the core demographic, those two cohorts? Yeah, in office heroes, you know, as people are now getting back into the office, you know,
Kmiec 37:03
it’s the stopping and grabbing a dozen doughnuts on the way into the office, it’s, you know, grabbing something and grabbing a treat in the in the afternoon. I think that for me, personally, I don’t I’ve always enjoyed, you know, like at dinnertime, I’ve enjoyed an omelet, pancakes, I can eat breakfast all day long. And I think that there’s that mindset, you know, over the past few years, where traditionally, foods that were associated with breakfast are now being enjoyed all day long. And I think when you look at the dessert concept as well, with with duck donuts, I think it’s filling, you know, some different, some different tastes, their doughnuts have been around forever, you know, they’ve been around for decades and decades and decades. So doughnuts aren’t going in, where the how they’re presented and packaged. And all that might change a little bit. But you know, the that indulgent treat,
Ressa 37:59
you know, at our price point, that’s always going to be that’s always going to be there so that it’s a matter of okay, well, building off of that idea, you know, how are we looking to grow? What’s the next, you know, what’s that next step for us? And understanding the demographics and understanding who our customers certainly feeds into that? Well, that is a great spot, I think to end that was a great closing right there on duck donuts. And I think you mentioned the word disrupt earlier and you mentioned donuts have been around forever. I think duck Donuts has disrupted the doughnut market. And they’ve been innovative on a market that’s been probably stale for a long time. Oh, that’s there. And duct Donuts has been part of the donut revitalization and making it an exciting segment. So kudos to you all good luck in the new role, and I think you’re going to be an excellent addition for them. Appreciate that. The last part of the show, I got three fun questions for you. We call it retail wisdom. Are you ready? I’m ready. Let’s hit it. All right. Question one. What extinct retailer Do you wish would come back from the dead? So I grew up with a department store called Kaufman’s it was a regional I don’t know you’re out of Jersey. So I don’t know if you remember familiar though. Yeah, familiar with the brand and Kaufman’s was was a regional player they were bought up by by Macy’s and the reason why Miss Kaufman’s but my mom would always bribe me to go shopping with her at the mall. And so, you know, my wife got fond remembrances of Kaufman’s going to Westmoreland mall in western Pennsylvania and then downtown Pittsburgh Christmas time to go check out the storefront so that’s you know, I’ve got great remembrances of that and I also remember my mom saying when when Macy’s bought them out and reflagged them and got away with it more regional
Kmiec 39:49
apparel and apparel and goods that were in there and when to you know, just kind of that broad, you know, across the board, ordering that Macy’s does I remember her saying I’ll never stop
And when they see store so cheap, so that was, yeah, that’s why that sticks out my mind. Great answer. I don’t think we’ve ever heard that on the show. So great answer. Question two. What is the last item over $20 You bought in a store? Well, you know, that’s an easy one. So I we’ve got a smoker and I like to, I like to smoke you know, ribs and pork shoulder and brisket and all that kind of good stuff. So I, we’ve we’ve got we’ve got buddies coming in this weekend for for a gathering. So I went last week and bought mesquite and hickory chips. I usually smoke with wood.
But, you know, it’s it’s, it can be challenging to control the temperature and the smoke and all that. So I thought I’d try the chips. So I’ll let you in on the jury, the jury I’ll know this weekend, whether or not it’s going to be successful. But we went to a local hardware store to to get the to get the chips. So yeah, that was that was the last purchase over 20 bucks. Okay. And last question. If Andy and Chris was shopping at Target
Ressa 41:05
and I lost you
when i Oh, would I find you in?
Kmiec 41:11
So I’m making a PA announcement looking for me at the front. You know, after this conversation, you know, for the last hour about about food, you’d find me in the snack food you eat with the you know, with the candy bars and the you know, all that good stuff. Yeah, my goodness. Yeah. Well, now I know. So that’s great.
Ressa 41:35
Listen, this has been excellent. Thank you so much. Really appreciate it. Great insights, excited for you excited for the brand. And we’ll have to stay in touch and you know, see where our paths cross. Definitely. I love it. Thanks for reaching out. This has been a lot of fun. Thank you, man.
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