Client News

LAKELAND | There’s more to breakfast than coffee and doughnuts. Randy Fernandez and his father, Alex, are banking their future on it.

So is Dunkin’ Donuts, which has just inked a deal giving the Davenport duo exclusive first rights to further develop franchises in Polk County. Initial plans call for five stores over the next five years, with the first to open sometime next year.

Their interest isn’t fueled solely by lattes, bagels and French crullers. Like many dash-in, dash-out restaurants, Dunkin’ is vying for a share of the breakfast sandwich market, considered one of the fastest-growing segments of the quick serve industry.

Breakfast accounted for 60 percent of growth in overall food service traffic over the past five years, according to Nation’s Restaurant News, citing a study by the marketing firm NPD Group.

Dunkin’, a brand synonymous with a steaming cup of morning joe and a chocolate-frosted with sprinkles, has ramped up its stable of breakfast offerings.

“The breakfast segment is our sweet spot,” said Grant Benson, vice president of franchising and market planning for Dunkin’ Brands. “We’re second in the U.S. next to McDonald’s in terms of breakfast sandwiches sold.”

For the weight-conscious consumer Dunkin’ offers a 280-calorie egg white and turkey sausage flatbread, and at the other end of the spectrum is the 580-calorie Big N’ Toasty, featuring two fried eggs, four slices of bacon and American cheese on Texas toast. Want hash browns on the side? No problem. But add 200 more calories.

Randy Fernandez, 34, a lawyer and a native of Hollywood, Fla., hopes to cash in on America’s clamor for an ample, tidy, inexpensive breakfast on the run. He’s no stranger to the fast-food industry, having owned and operated two McDonald’s franchises in Santiago, Chile, where an older brother has five McDonald’s.

“But I have to learn a new product,” Fernandez said of the doughnut chain that boasts 9,700 restaurants in 31 countries and 2010 sales of $6 billion. “A lot of people don’t realize that a majority of their business is breakfast, somewhere from 60 (percent) to 70 percent.”

Owners of the six Dunkin’ Donuts stores that currently exist in Polk cannot extend the brand in the county without the permission of the Fernandezes, said Benson, the chain’s spokesman. “We’re very excited about them and the opportunity for spreading in Polk.”

That exclusivity is what attracted the Fernandezes to the Dunkin’ brand.

“I never really looked into opening a McDonald’s here,” Randy Fernandez said, “but they don’t give out territories the way we were looking for. I was looking for something that I could get my teeth into.”

Consumers are doing their part by chomping on a plethora of grab-and-go breakfast offerings. McDonald’s, once the kingpin with its Egg McMuffin, now faces a host of competitors like Starbucks, Burger King and Subway.

Even 7-Eleven is in on the act, said Larry Ross, a business professor at Florida Southern College and a restaurant consultant. “It’s almost socially the norm to eat on the run,” he said.

While Dunkin’ remains popular in the Northeast region and mid-Atlantic states, it has only recently begun to expand into the Southeast, Ross said, and the company appears to be beating arch rival Starbucks in the breakfast foods category.

“Coffee wasn’t going anywhere until Starbucks gave it sort of a double shot of caffeine and reinvented the coffee market,” Ross said. “Dunkin’ had to wake up and, no pun intended, smell the coffee. And they’ve done a much better job on the food side.”

Before joining his son in the doughnut business, Alex Fernandez worked as president and CEO of Latin American operations for American International Group, the large insurance company that was spared bankruptcy by a considerable government bailout.

Fernandez, 60, a native of Chile, retired just prior to A.I.G.’s problems in 2008, and had been looking for a business in which he and his wife, Gloria Lengyel, could prosper.
“A lot of my compensation was in A.I.G. stock,” he said. “We got hurt, but we’ve got to move on to the next phase.”

Step one was to buy a Dunkin’ Donuts store in Plant City, 2307 James L. Redman Parkway. It’s combined with a Baskin-Robbins ice cream store, another brand of parent company Dunkin Brands Inc.

Father and son are in New York this week for additional training, and later they’ll travel to Los Angeles for several more weeks of getting to know the ins and outs of the doughnut business.

A year from now they hope to have open their second shop somewhere in Polk.
“Dunkin’ serves a billion cups of coffee a year,” Alex Fernandez said. “That’s a lot of coffee and there’s lots more to be served.”