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McClatchy-Tribune  05/29/2014 5:04 PM ET
From doughnuts to dollars: Demy Martin has found his sweet spot with Dunkin' franchises [The Florida Times-Union, Jacksonville :: ]

May 29--Demy Martin got his start in franchising with Blockbuster, but he knew that wouldn't last forever.

"I don't think I ever went to a cocktail party where someone wasn't worried about my future," he said. "I was worried, too. I knew my 3-year-old daughter wasn't going to be renting videos when she grew up."

Sure enough, the bottom fell out and he sold his stores.

Now, he's into Dunkin' Donuts.

"I've never met anyone who thinks that no one will be drinking coffee in 10-15 years," he said.

Martin now owns seven Dunkin' locations in Northeast Florida and expects to have four more by the end of June, his one-year anniversary in the Jacksonville doughnut business. But there's a lot more to this than doughnuts.

Most of the stores have Dunkin' Donuts and Baskin Robbins ice cream, both part of Dunkin' Brands. At his Hendricks Avenue store, for example, Dunkin' does about 85 percent of the business with Baskin Robbins the other 15 percent. And that's typical, he said.

Actually, he's got all the numbers in his head: Of Dunkin's 85 percent, 55 percent of his business is drink, 45 percent is food. Of food's 45 percent, only about half is doughnuts with the rest being sandwiches, bagels, cookies, muffins, etc.

About 65 percent of business at the Hendricks Avenue store comes through the drive-through.

"Every store is different," he said, "but every one is more than 50 percent."

Martin spent 19 years with Blockbuster and grew to 34 stores in New England.

"The first 17 years were fabulous," he said. So he sold those stores and started looking around for something else.

Though Martin still lives in Massachusetts, he started buying and opening Dunkin' stores in Orlando and grew that to 16 before selling them last year.

"I wasn't planning on selling," he said, "but a Dunkin' franchisee in New England wanted to move his family to Orlando. And the price was terrific."

Last July, he got back into the doughnut business. He bought three Dunkin' locations: Hendricks Avenue, Mayport Road and Philips Highway. Then he added four more.

Next week, he opens one at Monument and McCormick roads, in a former Blockbuster of all places. He's got another under construction at Beach and Hodges, is converting a former Wendy's in Fernandina Beach and plans to buy yet another one soon.

The chain itself is growing. Dunkin' has nearly 11,000 restaurants worldwide including 7,700 in the United States. After closings and openings, that's a gain of 371 new locations in the U.S. last year.

But some aren't so sure about the chain's future.

"I'm not bullish on them, whatsoever," said David Omholt, CEO of Entrepreneur Authority, a franchise consulting group.

He said it was once a strong brand with a good return on investment for the franchisee, but it now has several issues.

"One is the real and perceived litiguous nature of Dunkin' Donuts," he said. "I saw a statistic at one time that they had filed 350 lawsuits against their franchisees in a two-year period of time. Compare that to McDonalds, as large as they are. They only had 12 and even that was to me pretty high."

Omholt said he's also concerned about the future of something as sweet as doughnuts.

"In this country many people walking around are borderline or type 2 diabetes and they are just not going to be able to eat that kind of fare," he said.

Martin is undeterred. He commutes from the Northeast every other week, keeping an eye on things.

He said he has a lot of flexibility in what he offers, but it all has to come from the distribution center. He carries about 45 types of doughnuts -- about one-third of those are required -- of the 100 or so that Dunkin' offers.

At the end of each day, whatever is left is thrown away. His goal is 10-15 percent.

"If it's more than that," he said, "we're wasting too much. If it's less than 10 percent, that means we weren't meeting demand."

So he's got a computer program that tells him how many of each doughnut each store is likely to sell on each day. It varies by store and day.

Thursdays at Hendricks Avenue, for example, the overnight staff makes 88 glazed (always the most popular), 60 chocolate frosted and 56 Boston creams. The staff checks the stock a couple of times during the day and bakes more if needed.

And, no, Dunkin' Donuts are not fried as most doughnuts are. They come from the distribution center frozen, they're thawed in each store and baked.

There are other Dunkin' franchise owners in Jacksonville, but Martin said he plans to keep growing.

"I could see as many as 20-25 in the area," he said. "Then I could move south down 95 to Daytona, north in Georgia or west."

Roger Bull: (904) 359-4296


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