Comic Reality

Comic Reality

Startups by Janet Leiser | Senior Editor

Lamar Berry and Dean Young spent more than $4 million to build a franchise support system for Dagwood's before the first sandwich was served. Ambitious plans call for 4,900 locations within five years.

Imagine a new business venture based around the beloved character in a comic strip that makes as many as 280 million fans around the world chuckle daily.

No need to spend millions of dollars on marketing or advertising to build name recognition. The strip is published in 2,300 newspapers in more than 50 countries. As for brand loyalty, it's about as good as it gets.

Welcome to Dagwood's Sandwich Shoppes LLC, the hybrid fast-food, casual dining chain that's bringing the Blondie comic strip to life.

The first Dagwood's, replete with a bright decor and colorful comic strip art, opened in a strip mall in Pinellas County in November. It features the famous Dagwood sandwich, along with regional favorites such as the New Orleans Po-Boy and Tampa's Cuban.

A second shop opened last month in West Palm Beach. Beginning this month, the chain plans to open a store weekly. In addition to Florida, locations are under construction in Louisiana, Alabama, Pennsylvania and California. By August, two Dagwood's restaurants are expected to open weekly, and by the following January, one will open daily.

Lamar Berry, company co-founder and CEO, couldn't be blamed if he has pinched himself more than a few times since Blondie creator Dean Young asked him to partner on the restaurant concept that Young has talked about since he was in college more than 30 years ago.

"It's a dream that comes once in a lifetime," Berry says, from his corner office at Dagwood central on U.S. 19 in Clearwater. Office decorations include comic art, a multitude of cartoon figurines and a Mickey Mouse telephone.

"We've had over 1,000 franchise inquiries in four months," says Berry, who's casually dressed in a Hawaiian shirt and khakis. "We've already sold out 20% of the country."

Dagwood's has signed contracts with what it calls market partners on 17 of the company's 89 territories, he says. An estimated 700 stores will be built in those 17 areas. Market partners can build the units themselves or sell unit rights to others.

Out of the funnies

Bumbling Dagwood Bumstead has been known for his sandwich concoctions and penchant for naps on the couch since Chic Young (1901-1973) started the strip in the 1930s. Chic Young's son, Dean, took over the strip after his father's death.

"Dean truly is Dagwood Bumstead's alter ego," says Berry, 54. "He thinks for Dagwood every day of the week, every word he says. Everything he does comes out of Dean's head."

Webster's dictionary, which had an entry for Dagwood long before Dean Young and Berry began planning the first restaurant, defines Dagwood as "a multilayered sandwich with a variety of fillings. (After Dagwood Bumstead ...)"

"There's a synergy, an emotional attachment to what Dagwood represents," Berry says. "Really what we've got here is a challenge not to screw it up.

"The worst thing we could do is grow and grow not be able to handle the quality," he adds. "Our job is custodian of the most powerful brand in the industry."

Berry was in charge of marketing at Popeye's Fried Chicken in the 1970s and 1980s when the chain grew from 25 locations to about 1,000. For the last 17 years, he was chair of a New Orleans marketing firm where he worked with large companies, including Texaco. In the early 1990s, he wrote "The Power of Internal Marketing" about how to build a values-based culture in corporate America.

Berry, who then lived in his home state of Louisiana, and Young, who lives on Clearwater Beach, were introduced by a mutual business acquaintance and friend who worked for King Features Syndicate. King licenses the rights to Popeye the Sailor Man to the fried chicken chain; the syndicate also manages licensing for the Blondie strip.

Young sought advice on how he could set up a franchising system, Berry says, adding, "We courted each other more or less for about two months, talking about philosophy, what kind of sandwich concept, what kind of store, where in the restaurant industry would our niche be."

Then Young asked Berry to be his partner, not his adviser.

More than two decades after Berry helped create the Popeye's brand, he finds his life revolving around another comic character, except this time the character is an integral part of the business, as is the artist who creates the strip.

"The intrinsic qualities of Dagwood Bumstead are anchored in the food and sandwiches," he says. "The alter-ego of Dagwood is intrinsic to our operation."

Bodacious move

Berry initially planned to locate the company in New Orleans. Then Hurricane Katrina destroyed the city. Headquarters were set up in Clearwater in late 2005, although the company's test kitchen and marketing department remain in New Orleans.

The CEO says there are no plans to move the company back to Louisiana. "We're very happy here. This is a robust business climate," he adds.

Young, who has the final say on research and development, and Berry began building Dagwood's infrastructure about 13 months prior to the opening of the first store last November. A private placement raised $4 million from about a dozen investors within three months.

"It's fairly unprecedented what we've done in the franchising restaurant world," Young says. "Before we had the store we started building the full support structure corporately. It's bodacious. It certainly shows great confidence in the brand to take a lot of investment capital and build a franchising company before you even have a store."

Market studies show Dagwood's has better recognition than two more established sandwich chains, Subway and Quizno's, Berry says. When asked which name would have the best sandwich, he says, three times as many people chose Dagwood's over the other two.

Dagwood's employs about 30 people at its headquarters. Downstairs from the corporate office is Dagwood University, where franchisees and others are trained. Nearby is a training kitchen that's a replica of a store.

Building a franchise support system hasn't been easy, Berry says. It's a challenge that causes him to toss and turn at night. Another is maintaining food quality at the flagship store, as well as new locations.

"The other thing that keeps me awake is to make sure we continually evolve the value-added support system at headquarters," Berry says. "That's what we'll live or die by. If we don't have the best sandwiches on the planet, we're going to let the image of Dagwood down."

Ever confident, he adds, "But we do have the planet's best sandwiches."

Review summary

Entrepreneurs. Dean Young, creator of the Blondie comic strip, and partner Lamar Berry

Business. Hybrid fast-food, casual dining chain featuring "the planet's best sandwiches," including the Dagwood

Key. With instant brand recognition, thanks to the Blondie comic strip, the challenge is to ensure the food, service and fanciful experience live up to customers' expectations.

BOOMER-DRIVEN GROWTH

Dagwood's Sandwich Shoppes CEO Lamar Berry says the sandwich category grew by $10.6 billion over the past three years, thanks in large part to aging Baby Boomers.

"Now that the boomers have evolved out of the 18 to 34 bubble," he says. "They're into healthier foods and different tastes after decades of eating the same thing."

That's why the Baby Boomers are Dagwood's primary target client.

He says the sandwich category is growing 1,600% faster than the chicken category, 400% faster than hamburgers and 229% faster than the pizza category. The U.S. food service industry took in an estimated $470 billion in 2006, compared to $115.9 billion in the sandwich category.

It cost about $20,000 to buy an individual Dagwood's franchise and another $325,000 or so to get it up and running.

Berry contends the first Dagwood's, which opened in November in Palm Harbor, is doing about 75% more volume than the average sandwich shop. Quizno's average annual store sales are about $400,000 to $425,000, and Subway reports average annual store sales in the mid $300,000s, he says.

"If you used Quizno's average as a benchmark, we're doing twice that," Berry says. "We're between $700,000 and $1 million. When you think of the kind of volume the model we've built will accommodate, it just has a very solid earnings potential."

Quality control is one of Berry's biggest concerns, especially with such a fast-growing concept.

Dagwood's field operation group spends most of its time in the field working with market partners, who in turn work with franchisees.

The company has "just in time" shipping based on a computerized purchasing and distribution system. Breads from five regions are flash frozen at the bakeries prior to shipping.

And the dean of Dagwood University, Valerie Oberle, is a former vice president of Walt Disney World.

What better company to emulate, Berry asks.

"If a large or growing company does not pay attention to its corporate culture and to its service culture, it's destined for many rocky roads," Berry says. "From the very beginning here we've been focused on building the right culture."

Are there plans to eventually take the company public?

"Our exit strategy is honestly to enter right," Berry says. "If we enter right and build this company to support franchisees, and the right franchisees come on board, and we keep the quality of the food right, the exit strategy will take care of itself."