New book by Robert Rosenberg, son of the founder, highlights Dunkin’ Donuts’ early growth
After a 35-year career devoted to the restaurant industry, it’s only fitting that Robert Rosenberg, describes his new book as “…a buffet.”
“There’s something for everyone, from the hopeful entrepreneur, to the company that’s scaling, to the large company with a board of directors—even the individual, planning their own life,” the former Dunkin' CEO told Independent Joe in a recent interview.
Released in October, Rosenberg’s book, Around the Corner to Around the World: A Dozen Lessons I Learned Running Dunkin’ Donuts, offers something for every audience. Fans of Dunkin’ history will enjoy the narrative of the brand’s evolution through the decades. Those with an interest in business get a valuable assortment of ideas, solutions, and strategies. The book promises to share 12 lessons, including “The 4 most important responsibilities for an effective CEO.”
A youth with an eye for business
Around the Corner begins with a brief look at a teenage Rosenberg already showing his instinct for business. He shares an early memory of his father, Dunkin’ Donuts founder William Rosenberg, contemplating whether to sell his 50 percent share of the Universal Food Systems business, or to buy it outright. Rosenberg recalls thinking, “Clearly, I was not an un-involved, independent observer. But I also had a strong sense for what I thought was right for my father. He was still a young man at 38, and his identity was tied to his business. I reasoned he would be miserable if he were separated from the thing he had worked so hard to create.”
He gave his Dad a pep talk in favor of buying Universal, then went to school, wondering what the outcome would be.
Eight years later in 1963, age 25 and holding a Harvard MBA, Rosenberg accepted his father’s offer to become President of Universal Food Systems. William had built the business from an industrial catering company to a diversified portfolio of food service businesses, which included burger stores, pancake houses, a deli, and 100 Dunkin’ Donuts shops – all of which were facing some growing pains. Assuming the leadership of a company right out of graduate school caused the young Rosenberg his own case of nerves, as he describes in the book, but through his efforts, Rosenberg not only cemented a successful career of his own, but also positioned Dunkin’ Donuts for tremendous growth.
Stepping into the role: early changes
The Dunkin’ stores of the early 1960s were not like those of today. Menus at some included pancakes and grilled foods, in addition to coffee and donuts; the restaurants seated anywhere from 18 to 90 guests. One of Rosenberg’s early focuses was to standardize things, eventually transitioning all stores to coffee-and-donut-only shops, with a “20-seat counter in a question mark configuration.” A new menu was created, featuring 52 varieties of donuts and a standard six-ounce cup of coffee. As he writes in the book, these steps proved “we were committing to be the best in the world at delivering the world’s most delicious coffee and donuts.”
He had the chance to prove his concept when the owner of a new franchise in South Bend, Indiana backed out of his purchase because he wasn’t on board with Rosenberg’s change in focus. So, as he writes, Rosenberg refunded the franchisee his deposit and opened the location as a company-run coffee and donut shop, in line with the brand’s new standard.
“In an era where the average volume for our 100 [Dunkin’ Donuts] locations was around $2,200 per week, South Bend came roaring out of the gate at $9,000 per week, and we made a $9,000 profit as a company-owned store in the first month of operation,” Rosenberg writes.
In those early days, he recalls, advertising was an area of concern. Franchisees wanted control over how the contribution they made to advertising was spent. Most believed the right strategy was to place coupons in local newspapers. Although new to the business world, Rosenberg recognized the broader role advertising could play to unifying a brand message and worked to steer all parties in line with that belief.
“We agreed to build our advertising fund and launch a comprehensive campaign that would showcase our brand,” he writes. Things started coming together when Rosenberg hired Carl Zucker, who had been the marketing chief at then-competitor Mister Donut. Zucker recommended adding a 10-ounce coffee to Dunkin’s current offering. Zucker spearheaded a widely popular “Jumbo Java” ad campaign, which Rosenberg says proved to be a much-needed spark for igniting faith in combined ad dollars.
“This first campaign enabled us to prove dramatically to our franchise owners the unquestionable benefits of combining our ad dollars in mass media campaigns rather than squandering it in local newspapers,” he writes, adding these early decisions proved successful. “Same store sales skyrocketed by over 12 percent during my first 12 months on the job. This same store sales gain was better than twice as much growth as any in our history.”
Preventing a takeover
“No story of Dunkin’ Donuts would be complete without telling the story of its franchise owners,” Rosenberg writes on p. 138, adding “Especially in the early years, it was their courage and willingness to bet their capital on a new business idea combined with hard work that lit a fire under our company.”
Rosenberg cites Manny Andrade’s move to New England from the Azores “after volcanic eruptions on the small island of San Miguel,” and how his family members – and others – saved their money and “demonstrated a real skill at running a retail business.” He also notes “Early franchise owners also came out of our parent company’s middle manager ranks. Owners like John Boujoukos… Randy Plante, Steve Gabellieri, George Zografos and Ed Bailey."
The author is clear that times were not always rosy. “The year 1989 was to prove one of the most dangerous in the company’s history. Risks to the business and its franchise owners rivaled the near-death experience posed by the class action suit 15 years earlier.” Indeed, mergers and acquisitions boomed in the late 1980s, led by “Drexel Burnham Lambert investment bank’s financial whizz kid Michael Milken,” later known as the junk bond king.
During that time, Dunkin’ Donuts became a target. As Rosenberg recalls, his business school classmate Peter Solomon warned him “Rosey, someone is buying up your stock and you are going to be the target of a hostile attack.” As Rosenberg maneuvered to withstand a takeover and find a white knight to ultimately buy the company, he took steps to also protect franchisee interests.
“Throughout this whole process, the Dunkin’ Donuts franchisees were becoming increasingly concerned about their future,” he writes. “In early May, a group of franchise leaders came to headquarters. I suggested they retain an attorney and take whatever steps they felt were legal and necessary to protect themselves.” That meeting led to the formation of DDIFO. “They raised funds as well as wrote letters to Knightsbridge strongly voicing their opposition to the takeover. On May 24, 1989, they took out a full-page ad in the Wall Street Journal telling the world they were 1700 strong and opposed to the takeover, and they listed all the reasons they had faith in current management and the direction of the company."
In our interview with Rosenberg, he fondly recalls the value the franchisees have brought to the Dunkin’ system over the years, specifically crediting them with realizing the potential for Munchkins and iced coffee. “They’ve always been our partners and I’m thankful for their massive contribution,” he says.
Working for the boss
DDIFO hall-of-fame franchisee Bill Daly was among those who earned his stripes working for Rosenberg before venturing into store ownership. When we interviewed him, he hadn’t finished reading his copy of Rosenberg’s book (an early Christmas gift from his daughter), but he was certain the management tips Rosenberg shared will be sound, based on his experiences working for the boss.
“His approach and philosophy on leadership reflect the traits that came down through the ranks at that time,” Daly says. “He had a positive and direct way of communicating between upper and middle management, which trickled down to the franchisees. For example, in the 1970s, there were some problems; competitors were growing, some franchisees were having difficulties. One trait that was communicated down was, ‘Don’t pull any punches with the franchisees. Tell them the truth.’”
Daily, who was working as a district manager for Dunkin’, spent most of those days interacting with franchisees. He recalls that this open communication strategy was effective. “Franchisees respected the fact that the brand owners were honest, and that they were working hard to keep the franchisees going and build sales.”
Timely advice for a changing world
“The world constantly changes, and if an enterprise doesn’t change with the times, it will perish.”
With these words, Rosenberg begins Lesson 9 and solidifies the book’s common theme that change is inevitable. He details many changes Dunkin’ experienced over the six eras he describes and he organizes each era around the four essential functions of a leader he learned while at the Dunkin’ helm: Strategy, Organization, Communication, and Crisis Management. Throughout the book he shares the lessons learned, underscoring that in order to thrive through the years, you have to be willing to adapt.
For Dunkin’ franchisees, the message of acclimating to change guided them through the coronavirus pandemic, which has jolted restaurant owners everywhere into new ways of doing business. During our interview, we asked Rosenberg his thoughts on having a successful business during this most-challenging time.
“Change is just a part of us. The customer keeps changing, and the job of businesses is to solve issues for customers. Restaurants today need to find solutions to help customers access their fine products,” he says.
“Businesses, like Dunkin’, that understood the notion of ‘the third wave’, digitization, and invested their efforts that way – with online methods, mobile ordering, drive thru, delivery and use of social media, – when the dust settles, those businesses will thrive,” he says. “Dunkin’ invested early in the third wave, and will come back bigger and stronger.”
Like a buffet, the book is a generous offering of nourishment. Sound business advice is served (directly and indirectly) with a healthy dose of history and aspiration. It was the writer’s hope his readers would be left with an excellent grasp of the qualities that make a successful leader.
“I get a lot of good information from books, but I usually walk away with two or three really useful nuggets,” says Rosenberg. “It depends on what hits home at the time. If something isn’t hitting home, it won’t resonate with you, but you can come back to it. If you’re living with an issue, wrestling with it, [the advice] will resonate.”
Rosenberg retired from Dunkin’ in 1998. Since then, he served on the board of directors for Sonic Corp. and Domino’s Pizza. He was also an adjunct professor at Babson College's F. W. Olin Graduate School of Business. Having been at the center of one of the greatest franchise concepts of all time, Rosenberg still thinks about how to apply what he’s learned.
“I’m considering revisiting an idea I had in the late 1960s, which was to help bring franchising into underserved neighborhoods, to help revitalize those neighborhoods. I was only in my 30s then and didn’t have the skills [to implement the idea]. But if there’s still gas in the tank,” he chuckles, “I would like to circle back to that.”
Around the Corner to Around the World: A Dozen Lessons I Learned Running Dunkin’ Donuts is available for purchase at Amazon, Barnes and Noble and most other book sellers.
A Sneak Peek at The Lessons
Here are snippets of three lessons Robert Rosenberg highlights in his book:
Family businesses pose unique challenges. Rosenberg pinpoints some common problems families in business face. He doesn’t attempt to offer a quick fix, but suggests, “Today, unlike the 1960s, there are many well-qualified consultants specializing in family enterprises who can help families sort out these very knotty issues.”
Suggestions for an effective planning process. “Planning is a crucial need,” Rosenberg emphasized throughout the book and reiterated to Independent Joe. The steps he outlines can be applied to businesses of any size, even solo-practitioners. “Many of the steps I describe on planning can even be used as you move from stage to stage in your own life, and face choices.”
The exceptional benefits of franchising. He highlights the positive aspects of franchising, not only to franchisor and franchisee, but also to the community and the customer. “It’s been a wonderful relationship,” he says of his own experiences with Dunkin’ franchisees. He acknowledges that not all franchise offerings are the same, and shares his own test to identify a promising opportunity.