Chain to Quadruple in Size : Krause’s Sofa Factory Has Plans to Add Showrooms
A change of ownership has brought massive expansion plans at Krause’s Sofa Factory, a privately held, Fountain Valley-based chain that wants to quadruple its size nationally to about 200 retail showrooms.
Krause has a 1987 sales goal of $90 million and plans to add 150 outlets within the next five to 10 years, Doug Vunder, vice president of retail operations, said last week. The 12-year-old manufacturer and retailer now has about 56 showrooms--29 of those in California--and sells upholstered sofas in six Western states.
The expansion follows last year’s sale of a reported 80% of the furniture chain to a group of private investors. In January, founders Kalman and Bernelle Krause of Santa Ana--who retain a minority interest--turned over day-to-day operation of the company to its new president, Michael Solomon. Kalman Krause remains as chief executive officer.
The chain’s expansion plans could be a harsh setback for the Costa Mesa advertising agency of Chandler & Chandler, which has handled Krause’s advertising for about five years.
Vunder confirmed that incumbent Chandler & Chandler “is definitely out” and will not handle Krause’s fattened 1987 advertising budget of $5 million. Vunder praised Chandler & Chandler as “a very good local advertising agency” but said Krause needs “somebody who can give us national exposure to go nationwide.”
‘Wouldn’t Be Surprised’
Chandler’s president, Allan Chandler, said that Krause is his company’s largest account and has not yet canceled its contract with his agency. Chandler acknowledged, however, that he “wouldn’t be surprised” if his firm lost the sizable account.
Four of the 14 staffers at Chandler & Chandler now work full time on Krause’s advertising. But Chandler said his company last year billed seven clients for a total of $8.6 million and added that if Chandler & Chandler does lose the Krause billings, “we will be actively pursuing other business.”
News of Krause’s expansion--which has been rumored in the advertising community for weeks--has set off a frenzy of competition among Los Angeles agencies vying for the $5-million account. “The vultures are swooping on the carrion and the body isn’t cold,” said a Krause executive who asked not to be named. “There’s not an agency in town that wouldn’t want this account,” an advertising industry source said.
Vunder said Krause should choose a new advertising agency within 60 days. Finalists include the L.A. shops of Chiat/Day, Grey Advertising, D’Arcy Masius Benton & Bowles, Della Femina, Travisano & Partners, and Davis, Johnson, Mogul & Colombatto Advertising.
