Quick Printers Reproduce Too Fast, Then Fade : Franchises: The industry has lost a third of its shops. Abundance of fast-print firms, new technologies have forced it to adopt new strategies.

When Don Lowe, president of the Sir Speedy printing chain, talks about the franchise company’s overseas expansion, he leans toward the edge of his seat.

“If you really want to see the pioneering spirit re-created,” he says, “it’s in other countries. The American spirit is being reborn there.”

By contrast, the domestic quick-print industry has lost the fire of youth and is settling into the complexities of middle age.

They were once the wildcatters and mavericks of the printing trade. As a group, these entrepreneurs revolutionized printing in the late 1960s and 1970s by offering while-you-wait service instead of several days’ wait. They embraced new technologies--facsimile machines, digital color printing and electronic desktop publishing--in the 1980s rather than let others capitalize on those new markets.

But, today, the growing number of quick-print businesses has suddenly become a decline. In fact, the industry lost several hundred quick printers last year, according to Quick Printing magazine, a trade publication based in Fort Pierce, Fla.

Quick-print shops no longer achieve the double-digit annual sales increases they enjoyed through 1990. And the industry, an $8.5-billion subset of the commercial printing field, has hired itself its first Washington lobbyist.

“There’s been a shakeout,” said Carol LaPorta, marketing director for Agoura Hills-based PIP, the third-largest quick-print chain. “And it’s probably going to get more severe and continue.”

According to figures from the National Assn. of Quick Printers, the number of shops has dropped from a high of nearly 30,000 nationwide in 1990 to slightly more than 20,000 today. Independent shops represent about half the industry, with 14 franchise chains making up the other half.

PIP, which is carrying debt from a $68-million leveraged buyout in 1989, has had more than its share of troubles. It was once the industry’s leading chain with more than 1,100 stores. It now reports that it has franchise agreements with 851 stores, 13 of which are in Orange County.

Current industry leader Kwik Kopy of Cypress, Texas, has also lost market share, but not as much as PIP. Its numbers have dropped from just over 1,000 stores to 940. It has a single Orange County location.

“In this economy, a center has had to be a reasonably high achiever, otherwise they just didn’t make it,” said Steve Hammerstein, Kwik Kopy president. “Bigger is better. Mom-and-pop operations have become extinct.”

Sir Speedy Inc., which has its headquarters in Laguna Hills, has lost only about two dozen franchisees nationally: from 900 to 875. Its franchisees operate 27 Sir Speedy and Copies Now shops in Orange County.

The quick-printing market has matured, said Sir Speedy’s Lowe, who adds that he does not believe it is saturated. He said the lull in franchise growth will last only until new technologies heat things up again--which he said is likely in the next five years.

A so-called expert said in 1981 that the market was saturated, Lowe recalls. Ironically, the industry was on the verge of its biggest boom, growing 35% between 1983 and 1986.

The market is “no more saturated today than it was then,” Lowe said.

Whether the villain is a saturated market, a depressed economy or competition from home office computer systems, quick-print franchisees in the United States have had to change the way they do business.

German Diaz operated two Sir Speedy quick-print outlets in Costa Mesa for several years. By the mid-1980s, things were so good that he was considering opening a third shop.

“There was a high demand” for copying services, he said. “But in ’89 things got pretty bad. There were a ton of printers in the market, and they were all going after the same business.”

He eventually closed one store, and said that he works harder now than he ever did.

“It used to be location, location, location,” Diaz said about the strategy for success. “Now it’s marketing, marketing, marketing.”

But at the same time that quick printers were facing more competition, technology advances have helped them boost their sales.

The average revenue per shop--including the half of the industry that is not part of a franchise system--has risen from an annual average of about $75,000 in the early 1970s to nearly $350,000 today, according to Quick Printing magazine.

“Across the board, the idea of growing a (chain) system by opening new units is dead,” said Bob Hall, editor. “The industry lost in number of units last year, but revenue per shop keeps going up.”

Another industry source, Nan S. Hallock of the National Assn. of Quick Printers in Chicago, said most members’ annual revenue is around $500,000 per shop.

That annual figure would likely have been just a dream for many of the early quick printers.

The industry was born in the mid-1960s when Itek Inc. of Rochester, N.Y., shortened the process of making printing plates by creating a so-called “daylight camera.” Negatives, darkrooms and developing solutions were no longer needed.

The process was faster and cheaper, and it opened the market to customers with small print orders. Quick printers ran off small orders of flyers, resumes, menus, business cards, price lists and other printed material that commercial shops charged much more to produce.

Many of the major quick-print franchise chains were formed in the late 1960s: Kwik Kopy in 1967, and PIP and Sir Speedy in 1968. At the time, PIP called itself Postal Instant Press.

Ventura-based Kinko’s Service Corp., which was founded in 1970, is another large quick printer, with 650 shops. But it is a partnership, not a franchise chain, and does not have the same obligations to disclose information about its operation.

In addition to printing presses, the early shops were equipped with photocopiers--so customers could stop in and run off a few dozen maps to the church picnic. This was before every post office, public library and mini-mart outfitted itself with a copier.

Until the early 1980s, a quick-print shop could be run by a couple of people with little experience. They were ideal mom-and-pop businesses, many believed.

The franchisers reflected this boot-strap mentality. Sir Speedy rang a large school bell in its office every time a franchise was sold. Texas-based Kwik Kopy, to this day, holds training seminars inside a replica of the Alamo.

By 1985, additional technological advances further changed the quick-print scene. Fax machines, digital color copiers and electronic desktop publishing made it more expensive to open and run a quick printer.

The quality of copies, which were then available in many places, began approaching that of printed materials.

Also, in-home computer systems--with high-quality laser printers--were satisfying some former customers’ need to visit the quick-print shop.

“The 1980s brought unprecedented information processing power to individuals, and the impact of this change has been felt profoundly in the graphic arts,” the National Assn. of Quick Printers writes in a manual for its members.

In the mid-1980s, Sir Speedy, PIP and others began calling themselves “business printers” to better market themselves to business people. They began to cater to businesses with sales visits and delivery service.

Today, quick printers provide some services that home offices and smaller businesses don’t have in-house: high-volume, high-quality sheet-fed copiers, desktop publishing systems, laser typesetters, color copiers and other high-tech equipment.

In spite of the advances, there are still several types of jobs quick printers cannot perform, that are left to the commercial printer. Lacking web presses, quick printers generally can’t produce press runs of more than 100,000 copies. They can’t compete with larger printers for some complex jobs, and the commercial printers can usually do higher volume for less cost.

Still, the quick-print industry is expected to continue its previous growth, albeit more slowly than before.

From 1977 to 1987, the quick-printing industry grew at an annual average rate of 12.2%, according to the Printing Industries of America, an umbrella trade group in Arlington, Va. The association expects a 5% to 8% annual growth for this segment through the 1990s.

Sir Speedy reported systemwide sales (including international sales) of $377 million in 1992. PIP and Kwik Kopy declined to say what their sales were.

Most of the quick print franchise chains are looking abroad for new markets. At home, they have turned their efforts from selling franchises, at about $130,000 each, to supporting higher sales in the existing shops.

PIP has begun organizing franchisees into groups that can share equipment. One group of 16 shops in Indiana and Tennessee, for example, shares a production site.

The individual shops do their own sales, marketing and desktop publishing work. The production center does binding and finishing. A courier service keeps them connected.

“We figure we’ll have 800 to 1,000 shops in the future,” said PIP’s LaPorta, “but we don’t want 800 to 1,000 production centers. We’re retrenching and retooling to serve the needs of our existing owner network.”

PIP is also investing in a national advertising campaign to aid name-recognition, but LaPorta declined to say how much is being spent.

Lowe of Sir Speedy said his company is aiming to be the first to invest in new technology.

Two years ago, the company formed its subsidiary Digital Quickcolor Inc., which has reduced color printing to four computerized steps instead of 11 complex, labor-intensive steps in conventional color printing.

It’s less expensive to produce color material of 500 to 5,000 copies, according to Sir Speedy, and it takes half the time. About 200 franchisees use the service now.

Sir Speedy is the only quick printer so far to make such an investment in digital color printing, and others have challenged that decision.

“It’s a very expensive process, and I really don’t see it as being suitable within a franchise operation,” said Kwik Kopy’s Hammerstein.

“I hope he keeps thinking that way,” Lowe said, with a laugh. “There’s going to be a major shift in technology. The job five years from now won’t even resemble the job today.”

Lowe predicts an evolution among quick printers. They will eventually become communications companies, producing compact disks for customers, sending the information to a company’s regional offices, and outputting their documents in any number of locations.

With such services, quick printers would begin making inroads with larger companies, Lowe said. Currently, quick printers serve only companies with 50 or fewer employees. Or they handle overflow printing for companies with more than 1,000 employees, which generally do most of their own printing in-house.

“There are lots of ideas in this business world--there’s no shortage of ideas or directions,” Lowe said.

Lowe proved his vision dramatically once before.

In 1987, Sir Speedy was the first chain to introduce a facsimile machine network, just months after Federal Express failed at and closed a similar venture, taking a $350-million write-off.

Within three years, the other quick printers had followed Sir Speedy’s lead.

Kwik Kopy has also been working to improve its franchisees’ financial picture. The franchiser did a mass survey of franchise owners in 1989 to discover what they were doing in terms of marketing themselves. For many, the answer was, nothing.

So, the company produced and distributed what it calls “ad agency in a box”: direct-mail pieces, point-of-sale material, a newsletter and regular promotions.

“Before you can have a bottom line,” Hammerstein said, “you’ve got to have a top line.”

Whose strategy will work? “If I had to pick one, it would be Sir Speedy,” said Quick Printing magazine editor Hall.

The chains and the independents are also working together to champion their industry. In September, they hired lobbyist Jeff Hayzlett to represent them on Capitol Hill.

He is working to reduce workers’ compensation premiums from quick printers. He argues that quick printing is a less hazardous business than the overall printing industry. Currently, insurers use one rate for all printers.

“It could reduce by half what quick printers pay insurers,” Hayzlett said.

He is also in discussions with the Environmental Protection Agency, which is seeking to regulate chemical use among quick printers.

A former congressional staffer, Hayzlett also owned two quick-print shops for four years, under the Copy Print name, in Sioux Falls, S.D. He sold them when he took his present job.

The quick-print industry is changing, he said. “We used to refer to them as mom-and-pops, but now some have as many as 40 or 50 employees,” he said. “Becoming more politically involved is part of that change.

“These people are all entrepreneurs, they’re all fireballs. Nothing can get them down.”

Quick-Printing Industry Slowing Down

The while-you-wait printing industry is in the midst of a fallout after reaching its peak in 1990. Average start-up costs increased by nearly 30% between 1988 and 1992, while average sales per shop declined by 10%. As a result, shop closures more than tripled and the number of new shops declined by more than half over the same period. 1992 Company: Shops Kwik Kopy: 940 Sir Speedy: 875 PIP: 851 Minuteman: 759* American Speedy: 554 *1991

PIP: 1,060 Kwik Kopy: 963 Sir Speedy: 885 American Speedy: 669 Minuteman: 441* *1990 PIP: 1,143 Kwik Kopy: 1,001 Sir Speedy: 900 Minuteman: 917* American Speedy: 740 *1989 PIP: 1,160 Kwik Kopy: 1,000 Minuteman: 900* Sir Speedy: 900 American Speedy: 700 *1988 PIP: 1,167 Kwik Kopy: 1,021 Minuteman: 800* Sir Speedy: 783 American Speedy: 469 *Average sales per shop 1992: $349,080 1991: 338,477 1990: 365,000 1989: 389,700 *Average start-up costs 1992: $60,500 1991: $54,850 1990: $57,300 1989: $55,900 1988: $47,000 *Shop closures 1992: 427 1991: 322 1990: 120 *New shop openings 1992: 168 1991: 216 1990: 378 * Minuteman figures are estimates Sources: Individual companies; Quick Printing magazine; Researched by ANNE MICHAUD/Los Angeles Times