Rocky Road?
Baskin-Robbins USA Co.’s highly touted plan to update its age-old circus-and-confetti image has many local franchise owners fretting over the financial scoop the make-over might take from their coffers.
Within the next five years, the Glendale-based company’s 2,600 stores nationwide will be outfitted in pastels and soft light, in the more contemporary style of Starbucks Coffee. Halogen lamps will replace fluorescent rods, plastic seats will give way to restaurant-style booths and bar stools and, more significantly, ice cream at many stores will play second fiddle to increasingly popular coffee drinks and juice smoothies.
Company officials estimate the price of the make-over for each store will run between $40,000 and $100,000, and franchise owners are expected to pick up the tab.
“Oh my God,” exclaimed Don Tipps of the high-ball figure. “That’s like buying a new store and starting all over again.”
Tipps owns a Baskin-Robbins franchise in Hollywood and said he makes just enough money to support himself.
Even the low-end figure worries one Eastside franchisee, who, with two young children, said she has to work hard to stretch summer-rush profits over the winter lull to make ends meet.
The owner declined to give her name, given the financial uncertainty she faces.
“It’s good that they’re doing everything to make Baskin-Robbins really nice to attract customers,” she said. “It’s just too much money for us. We can’t afford it.”
Don Skeoch, the company’s vice president of marketing, said Baskin-Robbins would help franchisees find “access to capital,” but he said he could not specify the steps the company would take.
Regardless of where the money comes from, however, Skeoch said all stores would be required to undergo the make-over.
“We don’t want to have half our stores with one look and the other half with an older, more outdated look. We really do want to upgrade our image,” he said.
Skeoch said the company will tie the make-over to contract renewal for individual franchises when their agreements expire at the end of five years.
Such practice is common among franchised businesses, and franchisees have little recourse but to accept the requirement if they want to maintain their chain identity, said Susan Kezios of the advocacy group American Franchisee Assn.
“Ninety percent of [franchisees] upon renewal of a contract require new and different changes to existing franchise businesses,” she said. “It’s standard operating procedure.”
Indeed, remodeling is nothing new to Baskin-Robbins stores. Just a few years ago, some franchisees were required to sack their brown-and-orange color scheme for new pink-and-blue cabinets and tile when they renewed their contract with the company.
One San Gabriel Valley store owner said she spent $30,000 on her last round of improvements, which among other things included installation of a new frozen yogurt machine.
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But those changes were merely cosmetic compared to the major reconfiguration the company envisions for the “Store of the Future.”
Skeoch said the top-to-bottom redesign was fueled by market reports that consumers spent more money on cappuccinos and guava “vita-boosters” than ice cream. Company planners concluded the easiest way to incorporate these new beverages into their refreshment offerings was to separate them from ice cream altogether. Under the new concept, coffee and fruit drinks will be made and served at counters separate from the traditional ice cream dipping cabinet.
Existing stores should be between 1,600 and 2,000 square feet to accommodate the new design, Skeoch said. But many local outlets fall well below that threshold, and a good number will likely be asked to relocate.
The company hopes to soften that request with reports showing that, despite higher overhead costs, larger revamped stores earn higher profits than their smaller forerunners.
“If we can show moving would be more profitable, I think a lot of [franchisees] would be willing to make that move,” he said.
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Janice Creger wasn’t willing to make that move, and she claims she lost her franchise of 20 years because of it. When the contract for her Pasadena store came up for renewal last September, Creger said she turned down a company request to relocate because she felt the cost was too high.
“They told me they weren’t going to renew me at this location,” she said. “They said it was too small.”
The 1,000-square-foot store, now Heavenly Desserts, peddles Dreyers ice cream, which Creger says costs her less wholesale than 31 Flavors.
Gone are royalty and advertising fees--2.5% of all gross receipts--but Creger acknowledges her decision cost her customers loyal to Baskin-Robbins.
“It’s hard to start all over,” she said.
Sebastian Tom, owner of a Larchmont-area store for eight years, said he might follow Creger’s lead when his own contract comes up for renewal in 2001.
“Can I get the money by staying with Baskin-Robbins?” he said.
“Or can I make more money shutting down and turning it into ‘Tom’s Ice Cream’? My attitude is just wait and see how the numbers are. It’s all economics; it’s nothing to get emotional about.”
Tipps, just north of Tom on Western Avenue, has been happy with his store’s location of 33 years. A nearby high school and a film institute provide him a steady flow of repeat customers. Busy Western Avenue means lots of impulse cones for passing motorists.
“The sales are pretty good for a store this size,” he said.
That’s just what worries him. The store is only 1,000 square feet, and Tipps fears the company will eventually ask him to move.
“I like this location,” he said. “Going to a new location, you’re taking a chance.”
Sean Bahar takes a different view. Although he spent $50,000 two years ago refurbishing his Westside store, he welcomes whatever design and relocation request Baskin-Robbins throws at him.
“Every time we’ve remodeled, our sales have gone up,” said Bahar, who, in eight years as owner, has revamped the franchise three times.
“It’ll bring more money. The community wants to see a clean store, a more exciting store,” he said. “If you don’t do it, the community won’t like you.”
