Return to story

doughnuts chain expanding here Old name's new lookgoes beyond dunkin' FRANCHISE GROWTH

February 22, 2007 12:35 am

BY CATHY JETT

Central Park was still Shannon Green the last time entrepreneur Rich Contessa visited Fredericksburg.

So he was in for a shock when he and his partners took the State Route 3 exit off Interstate 95 two years ago to see whether they wanted to buy the Dunkin' Donuts/Baskin-Robbins franchise for the area.

"My first thought was, 'Man, what happened to the golf course?'" Contessa said. "Fredericksburg is just a booming town."

He, Minesh Patel and Al Patel quickly decided the area would mesh perfectly with Dunkin' Donuts' plans to expand in a "wave" from Washington through Fredericksburg to Richmond.

Over the past 18 months, the Richmond businessmen have opened five Dunkin' Donuts/Baskin-Robbins stores in Fredericksburg and have started opening the first of 25 stores planned for their hometown.

"We're trying to get them built in five years, but we have seven," Contessa said. "That's pretty aggressive."

He and his partners are the new breed of Dunkin' Donuts franchise owners. They're required to have at least five years of managerial experience and roll out new products such as lattes and lunch sandwiches instead of serving just regular and decaf coffee and pastries.

"That's one thing that appealed to me," said Contessa, who also owns a string of gas stations, convenience stores and car washes in Richmond with his partners. "They're bringing new products in; they're always evolving; they're innovative."

Those changes helped fuel the 57-year-old Canton, Mass.-based chain's recent rise to second place in Entrepreneur.com's 2007 ranking of the top franchises in the country. Only Subway placed higher.

"With impressive growth of 765 units and a leap from No. 6 in last year's Franchise 500 ranking to No. 2 this year, Dunkin' Donuts is well on its way to becoming a fast-food powerhouse known for more than its glazed treats," said an article on the Web site for franchise buyers and owners.

The chain's primary customers are still blue-collar workers, Contessa said. But it has started targeting commuters who want to grab an espresso and breakfast sandwich on the way to work, and soccer moms who enjoy drinking a cappuccino while picking up doughnuts for the team or buying an ice cream cone for a toddler.

"Baskin-Robbins is a good addition to the brand," he said. "It gives us the ability to market well into the evening. It also gives us the opportunity to do cakes, which Baskin-Robbins is known for."

Contessa and his partners sought out locationsconvenient for people who wanted to stop in on their way to work and near I-95 exits.

The first was on Salem Church Road, and was followed by stores in Fredericksburg Shopping Center, Breezewood Shopping Center on Courthouse Road in Spotsylvania County and a strip shopping center on Route 3 near Wendy's in Fredericksburg.

There's even another Route 3 location in Village Center, which is just down the road from an Einstein Bros. and a Starbucks. That doesn't worry Contessa, despite the fact that beverages now account for about 64 percent of Dunkin's sales.

"I don't see us going head-to-head on the coffee business," he said. "You're either a Starbucks fan or a Dunkin' Donuts fan. Starbucks did us a favor by giving us the $4 cup of coffee."

While the Salem Church store has an older Dunkin' look, others feature variations of the chain's newer "Federal" design. It includes such details as cherry paneling, a fireplace and a wall-mounted TV.

And they'll eventually get even more locations to do just that. Dunkin' Donuts plans to triple its U.S. store count to 15,000 in the next 10 to 15 years. Among the new openings are likely to be two Contessa and his partners are eyeing for Lake of the Woods and Culpeper.

Cathy Jett: 540/374-5407
Email: cjett@freelancestar.com