Competition | May 2013 | By Daniel P. Smith

Standout Store: Dunkin’ Donuts

Paterson, New Jersey, location undergoes major brand overhaul.

A New Jersey Dunkin Donuts unit improved profits after a major store overhaul.
Employees at this Dunkin’ Donuts in Paterson, New Jersey, were determined to turn a struggling unit around with a focus on fresh product and customer outreach. Dunkin’ Donuts
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Adam Goldman entered the Dunkin’ Donuts system in 2010, purchasing a pair of stores in Paterson, New Jersey, that included a forgotten downtown spot.

With an entrepreneurial spirit, Goldman raised the downtown unit’s prospects with an unrelenting focus on fresh product and high-level customer service. Today, Goldman’s shop is enjoying its second consecutive year of double-digit sales growth.

The 45-year-old former IBM executive discusses his store’s turnaround.

What immediate changes did you make?

The store never had an oven or freezer to support on-site baking. Products were brought in once a day, creating poor selection and less-than-fresh product. This was not acceptable. Days after purchasing the store, I bought a compact, efficient oven that required no venting and squeezed a 6-by-4-[foot] walk-in freezer into our kitchen. Now we’re constantly baking in small batches, which helps freshness and minimizes waste. I also retrained staff and added new workers. While labor costs went up, we vastly improved our speed of service.

I didn’t look short term at these investments. They were long-term plays and ones I believed would pay for themselves and result in a better store.

Were those changes enough?

Absolutely not. We had to get more customers in the door.

I went full force against the new mall that had shut us off—visually and physically—from Main Street and the nearby courthouse. I walked into each mall store and offered a 10 percent discount to every employee. Whenever a new store moves in, we send over a welcome breakfast. The mall employees are now our regulars.

We then added delivery to our repertoire and began delivering to the nearby civic buildings, as well as Paterson’s lone high-rise office building, all of which are within a three-minute walk from our door. Delivery has not only produced increased sales and satisfaction, but has also jumpstarted our catering.

With so many aggressive moves, what was the reaction from Dunkin’ Donuts?

There’s this mistaken thought that you can’t be entrepreneurial in a franchised system. I feel fortunate that Dunkin’ provides a solid framework, but also allows its franchisees a certain amount of flexibility to be entrepreneurial.

Franchisors can sometimes have tunnel vision because they’re focused on what will serve the masses, but franchisees can’t be afraid to think out of the box. All franchisees need to look at their individual needs and opportunities. While staying true to the brand and working with corporate, ask, How can I better serve my customers? How can I pick up new customers? Everybody wins when those questions are answered.