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Peterbrooke Chocolatier - A saga in
three articles:
PART 1: Peterbrooke Chocolatier owner faces challenges
of national expansion
The
Business Journal of Jacksonville
by Devan Stuart
Nearly two decades after Phyllis Lockwood Geiger founded Peterbrooke
Chocolatier in San Marco, she hopes to expand nationally.
Eight stores and a production facility generating $3.5 million
in annual sales are just the beginning, said Geiger, who adapts
her European-style training to the American palate. "There
were a lot of naysayers who said my concept was a little radical.
Failure was not an option."
The confections business can get sticky. Opening and operating
Peterbrooke's store in Winter Park near Orlando - Geiger's first
step into unfamiliar territory - proved pricier than any of her
Northeast Florida locations. "Rent in Winter Park went sky-high,"
Geiger said. "Everything is four times more expensive there."
Peterbrooke's Winter Park rent is nearly $8,000 a month - more
than double the $3,000 it pays for its most expensive Northeast
Florida location, said Peter Behringer, Geiger's son and the company's
CEO-in-training.
A remote location also means less hands-on control. Van Billington,
executive director of the Glenview, Ill.-based Retail Confectioners
International, a trade organization of which Peterbrooke is a
member, expresses skepticism. "Everybody's profitable with
one or two stores," Billington said. "When you're talking
about expanding ... it's a completely different set of ground
rules."
No matter, Geiger said, citing a prophetic caption beneath her
high school yearbook photograph that she recently rediscovered
at her 25th class reunion: "Everything in life is sweetened
by risk."
Taking a risque
Geiger's risk-taking nature became evident at Northampton (Mass.)
School for Girls where she served as the ringleader in a series
of practical jokes on her dorm's ultra-modest house mother. "It
could get very boring," said Geiger, who orchestrated rigging
doorknobs to fall off and a dorm-wide streaking incident. "She
was afraid of nakedness."
Following graduation, Geiger earned a liberal arts degree, majoring
in Latin at Oxford, Ohio's Wester College for Women, now part
of Miami of Ohio University. It was there that her penchant for
risks proved profitable. Geiger, who says she's in her 50s, worked
at a college store that sold dorm items in the late 1960s when
the hippie craze was all the rage. Geiger's manager gave her an
incentive - a trip to Mexico - if she doubled sales.
Geiger quickly revamped the store's image, stocking the sales
floor with hippie-inspired items such as sand candles, tie-dye
bed spreads and lantern lights. Before long, Geiger was on her
way to Mexico with a retail career in mind.
Summer stints as supervisor of a dining room at the Bald Hill
Grand View Lodge in Conway, N.H., inspired Geiger's eventual career
in food retailing - she founded San Marco's Cafe Carmon in 1985
and five years later sold it to partner Wayne Davis, a member
of Winn-Dixie's founding family. But that career would have to
wait for her to raise children, Peter and Brooke, the store's
namesakes.
Geiger's former husband's Procter & Gamble job brought the
couple, who later divorced, to Jacksonville. Once both children
hit elementary school, Geiger used $54,000 she inherited from
her mother and an undisclosed investment from Davis to open the
first Peterbrooke. "It took an awful lot of moxie and that
entrepreneurial spirit," said Geiger's current husband, orthodontist
Harry Geiger, whom she married in 1989. "But she knew she
had a good thing."
Today, Peterbrooke has stores in Atlantic Beach, Ponte Vedra
Beach, Avondale, Mandarin, Fernandina Beach and Fleming Island,
as well as San Marco and Winter Park. In 1997, the company opened
a 10,000-square-foot production facility on San Marco Boulevard,
where 10 employees mix and mold chocolate. That facility is "bursting
at the seams," Behringer said.
The family is scouting locations for a 20,000- to 30,000-square-foot
facility near I-95 or I-10, Geiger said. She expects to make the
move in two years.
Market meltdown?
Behringer projects the Winter Park store, which opened in November,
will turn a profit by year's end. The family is in early negotiations
for a second Orlando-area store it aims to open next summer and
is scouting locations for a third. Long-term plans include opening
Peterbrooke stores throughout the Southeast and eventually nationwide.
Geiger has turned down offers from several larger confectionery
companies and a Jacksonville businessman, she said, declining
to give names. "There isn't a month that goes by that we
don't have people call with private funds or commercial funds
who want in," said Ron Marino, former consultant brought
in full time last year to help spearhead the expansion.
Marino served as senior vice president of Raleigh, N.C.-based
Investment Management Corp., where he led Golden Corral Family
Restaurants through its national expansion during the 1990s. When
Marino joined, Golden Corral was making $150 million in annual
sales. By the time he left three years later, the company reported
$900 million a year.
Marino and Behringer developed a strategy that involves penetrating
Florida's major markets and entering Georgia and Alabama within
five years. The next step involves determining "exactly how
far a production facility can take us," Marino said. The
company aims to set up strategically placed regional production
facilities and build retail centers around them.
Peterbrooke officials will fund much of the expansion with profits
and financing from SouthTrust Bank. Other funds likely will come
from private or corporate investors, but that round of fundraising
is four years off, Marino said. Geiger considered franchising,
but legalities and quality control issues changed her mind. She
may consider taking a partner "down the road," but wants
assurance a newcomer won't steer Peterbrooke in a direction that
compromises her vision.
Although a capital campaign is several years away, "we do
talk to every single person that comes along," Marino said.
"We want to keep our hands close to the pulse of the financial
world so that at the right time we're ready to go."
What's in a name?
Peterbrooke's Winter Park opening showed the company is developing
name recognition. Customers, many of whom had moved from Jacksonville
to the Orlando area, already were familiar with the Peterbrooke
brand. The company also is making a name for itself nationwide
via online orders, generating particular interest from New York
and New England, Geiger said. Still, the naysayers are out there.
"They'll be gone in a year," said Jon Foster Lanenga,
co-owner of Farris and Foster's Fine Chocolates in Winter Park.
Several other chocolate stores are in the area, including Chocolate
Connoisseur, Chocolat and Lady Godiva. "I don't think there
is the market to support all that chocolate," said Lanenga,
who considers Peterbrooke overpriced. Farris and Foster's customers
pay $19 for a pound of chocolate, Peterbrooke's fork over $26
a pound.
Most of Retail Confectioners International's 500-plus members
are small, family owned companies with local or regional scopes.
Fifteen are in Florida, including St. Augustine's Whetstone Chocolates.
San Francisco-based See's Famous Old Time Candies, which boasts
more than 400 stores and $306 million in annual revenues, is the
organization's largest member. The next largest company has 20
stores, Billington said. To succeed, Peterbrooke will have to
be "willing to take losses for the first five to 10 years,"
he said.
Peterbrooke officials already have had a taste of that. But Park
Avenue, one of Winter Park's retail hot spots, will help Peterbrooke
catch the customer base's attention, allowing it to fill in the
market in less expensive areas, Marino said. Across the board,
expansion costs should even out to $150,000 a store.
Despite the challenge, Geiger is convinced Peterbrooke eventually
could compete with $110 million Lady Godiva maker, Godiva Belgium.
Officials in Godiva's U.S. headquarters in New York did not return
phone calls.
Peterbrooke's neighborhood stores, modeled after trendy, upscale
shops that line European streets, will win over customers, Geiger
said. While Godiva serves European flavors, Peterbrooke uses European
candy-making practices to develop flavors familiar to the American
palette, such as Rocky Road. Chocolate-covered popcorn is among
Peterbrooke's best sellers. "You would never see that in
Europe," Geiger said. "They think popcorn is something
for barnyard animals to eat."
Geiger believes customers also favor an interactive experience,
noting Peter-brooke's tours of its production facility. "My
philosophy is do the best you can, focus on your vision and grow,"
Geiger said, "and everything else will take care of itself."
Part 2: Sales confection
Jacksonville chocolatier ready for crowded Bay area market
Tampa
Bay Business Journal
August 11, 2006
by Michael Brady and Lee S. EttlemanStaff interns
For Peterbrooke Chocolatier, Tampa Bay is looking pretty sweet.
The 23-year-old Jacksonville-based, family-owned company has
plans to open at least six franchises in the Bay area, with three
stores nearing the final development stage.
One store in Brandon is expected to open in November, and Peterbrooke
is in talks with a separate operator to open a group of five Tampa-area
stores, director of franchising Allison Behringer said.
Of the group of five, plans for two stores, to be located in
Westchase and Palm Harbor, have been finalized. Those two are
expected to open in December, Behringer said.
In 2005, Peterbrooke sold five franchises in the Orlando area
within two weeks of offering them, Peter Behringer, president,
said.
Typically, franchise rights outside of Jacksonville are sold
for an initial investment of $65,000 and a 6 percent royalty fee.
Those were the terms of the deal for the Brandon location. When
larger numbers of stores are franchised, as was the case with
the operator planning to open in Westchase and Palm Harbor, separate
terms can be negotiated, Allison Behringer said. She declined
to release specifics.
Competition not important?
Founded in 1983 by Phyllis Geiger, the company operates eight
company-owned stores in the Jacksonville area and one in Winter
Park in addition to the Orlando area franchises.
"We originally had plans to go national with our franchises,"
Peter Behringer said. "But at the end of all our talk, we
thought a slower buildout that focused on Florida would work out
best in the long run."
After expanding to Orlando, the company set its sights on the
Bay area, citing good brand recognition from many Tampa area customers
who had ordered from Peterbrooke online, Allison Behringer said.
Peterbrooke won't arrive as the only chocolate store in the area.
National chain Godiva Chocolatier Inc. has locations in many area
malls including Westfield Brandon, and a number of other chocolate
and candy stores, many locally owned, also are open around the
Bay area.
That might not matter for Peterbrooke, though. Chocolate shops
seem almost immune to competitive pressure, with multiple shops
sometimes open in the same malls. Instead the problem becomes
making sure potential customers know the stores exist and come
in for a bite.
"We have 60 feet of counter," said Barbara Susalla,
owner of the Morrow's Nut House franchise, of her location in
Countryside Mall in Clearwater. "That's the purpose of the
store, to make it so tempting that it's tough to resist."
But just because other chocolate stores don't pose a great threat,
being isolated or off the beaten track can make business less
tasty.
Sugar Shack in Oldsmar is located in a shopping center and isn't
clearly visible from the road, owner Bill McGaughey said. He said
his business is slow because tourism is down this time of year
and because his store is hard to find.
"More chocolate stores? Not if they want to make any money
-- not here, anyway," he said. "Chocolate is kind of
an impulse item. People in malls selling chocolate have a lot
more success because they get more traffic."
Other chocolate store owners are even more pessimistic. Amanda
Sklar, owner of Chocolate Studios in Ozona, a small community
near Palm Harbor, said people are too health conscious now for
chocolate.
"I've had to give away ice cream to get people in the door
because everyone's on a diet," Sklar said. "I really
don't think there's a market for chocolate anymore."
Still, most store owners or managers interviewed did not notice
a trend toward increasing or decreasing numbers of chocolate or
candy shops, even though some say they've seen a high amount of
turnover.
"There's a lot of candy stores that have come and gone up
and down [U.S. Highway] 19 and even in the malls," said Kathy
Koskos, owner of Grandma's Candy Kitchen in Pasco County. Koskos
is planning on opening four to five additional locations within
a year, but she declined to say where.
Building the brand
As Peterbrooke looks to become a nationally recognized brand
of chocolates, it has become known by many in Florida for its
chocolate-covered popcorn, created by founder Phyllis Geiger under
the pressure of trying to provide samples for a street fair in
Jacksonville on short notice.
"It was the city's Holiday Magic celebration, and we needed
to put out samples for customers as they walked by," Geiger
said. "I picked up some popcorn from a nearby theater and
poured milk chocolate over it and, after letting it set a bit,
put it into bowls and gave it out to passers-by enjoying the night."
It turned out that this "new" creation was a hit, with
customers coming back in droves and asking for it. Three days
after the celebration, Geiger made it a permanent addition to
her line of chocolates. Chocolate-covered popcorn now represents
a third of all sales at Peterbrooke, Geiger said.
All Peterbrooke stores are set up to include large viewing areas
for customers to watch the confections being made. Hand-dipping
and molding of confections are all done in full view of patrons,
and more than 50 percent of all the candies are made in the individual
stores.
"Our big production center in Jacksonville is where we make
all the brittles, nougats and things that need to be batch cooked
in large kettles," Peterbrooke's Allison Behringer said.
"But we wanted to keep the open, interactive component that
making candy in stores adds to our customers' overall experience."
Part 3: Peterbrooke, selling franchises?
The Florida Times-Union
September 22, 2006
By Diana Middleton
The sweet-smelling footprint of Peterbrooke Chocolatier will
soon be tip-toeing across Florida - and if all goes as the company
hopes, across the country within five years.
The Jacksonville-based chocolatier has sold 14 freshly baked
franchises in Jacksonville, Orlando and Tampa since it began marketing
them in November, surpassing even the company's own initial expectations.
The first franchise store, located in Julington Creek, had its
grand opening last week, and the company says that it's entertaining
offers from potential franchisees in Fort Lauderdale, Nashville,
Tenn. and Birmingham, Ala. The second franchise, located at the
St. Johns Town Center, will open Oct. 9.
It's a healthy start to a nationwide expansion, especially for
a company that lost a much-publicized bid for the downtown Haydon
Burns Library building last year. That snuffed the company's grand
plans for a downtown chocolate-themed tourist attraction and candy-making
operation that Peterbrooke estimated would attract three bus-loads
of visitors a day.
If things had gone as planned, Peterbrooke would be in the thick
of opening a chocolate factory and museum akin to something out
of a certain Roald Dahl novel. It was also to house production
facilities that would churn out chocolate-drizzled popcorn and
toffees meant for the network of still-nascent franchises that
would finance the move downtown and Peterbrooke's growing ambitions
to go national.
But things did not go as planned.
In its proposal to the city last year, the company projected
that it would sell 72 franchises within three years, central to
funding the move to the downtown building. Twelve franchises were
planned for the first year alone, a number that was met with skepticism
from businesspeople and analysts alike who questioned the company's
ability to sell that many franchises, and wondered about the company's
estimates that doing so would catapult their earnings from $25,000
to $16 million.
The critics weren't altogether wrong.
Peterbrooke's hopes for a multi-faceted chocolate facility quickly
melted when the chocolatier lost the bid for the Haydon Burns
building to the Atkins Group, which planned to demolish the retro-looking
building and erect a condo tower instead. That plan was later
scrapped, and the city turned to Peterbrooke.
But a host of environmental hazards, like asbestos, proved to
be too expensive for the chocolatier to remove and still develop
the factory. They bowed out and local developer Main Branch LLC
has since stepped to the plate. Now, a grocery store and condos
are planned for the site.
"I hope to [open a museum] someday still," said Peterbrooke
founder Phyllis Lockwood Geiger, while whipping up a caramel sauce
at her home. "But we had to move on."
Back to basics
Without the expanded production space the library would have
afforded, the company was forced to retool its business model,
says Peter Behringer, president of Peterbrooke. Determined to
plow ahead with the franchising plans, they looked for an option
that would be able to support the vision of a national brand and
still provide inventory for a network of franchisees. The company's
San Marco production center, at one time producing 92 products,
was straining to keep up with the company's eight corporate stores
already.
The result was a return to Peterbrooke's roots - when the stores
were also working kitchens. When Geiger opened the first Peterbrooke,
she did everything in-store: hand tempering liquefied chocolate
on marble slabs, dipping pretzels and fruits and popping the company's
famous popcorn. Now, franchises will have product demonstrations
and in-store "showcases" for products.
"It's more profitable and more exciting to the customer,"
Geiger explained. Plus, she added, it smells great.
Per the originally conceptualized franchising plan, franchisees
were to purchase most of their inventory from the production centers
in San Marco and the ill-fated downtown location. Now, franchisees
will only purchase more complex items like chocolate-covered popcorn,
fondants and cherry cordials from the central production center.
The rest will be made in-house at each store - or purchased from
outside vendors expressly approved by Peterbrooke management (to
keep inventory consistent among stores).
"It could be a blessing in disguise because [products] are
fresher," said Marshall Reddy, president of Ponte Vedra Beach-based
consulting firm Franchise Network. "It's the difference between
something sitting in a warehouse versus something that's being
made in front of you."
Peterbrooke insists that the in-store manufacturing of products
will make the franchises more profitable.
"We're cutting out the middle man," said Allison Behringer,
Peterbrooke's director of franchise relations.
Orlando franchisee Scott Barr purchased five franchises, paying
$65,000 apiece for the first two that are slated to open, the
first of which will debut in December (other costs, like equipment,
could top $200,000, not uncommon for franchises). In addition,
Barr paid a $6,000 deposit for each of the remaining three stores,
a figure that will be applied to the remaining stores' initial
franchise fees as they open. And, Barr, like all Peterbrooke franchisees,
will send 6 percent of all sales back to the corporate office,
plus commit 1 percent of sales to advertising in the local market.
He says the in-house production may increase upfront labor costs,
but he sees those as investments, not financial slowdowns.
"This cuts out the transportation and packaging costs, as
opposed to it being made centrally and then shipped," Barr
said.
Chris Sams, Peterbooke's spokesperson and owner of the Julington
Creek franchise, agrees. "Sure, the initial investment is
more, but when I buy those raw goods and make them a Peterbrooke
product, my margin is so much greater," he said. "I'm
the factory."
On the whole, Peterbrooke franchises are far pricier than, say,
Mrs. Fields Cookies or TCBY franchises. Those companies' initial
franchise fees range from $25,000 to $30,000. Subway franchisees
pay $15,000 as their initial fee. But those companies also tack
on a 5 percent or 6 percent sales royalty on top of advertising
fees that range from 1 percent to 5 percent of gross sales.
Peter Behringer says the heftier initial fee means more personal
attention for franchisees.
"They're not on their own," he said. "We organize
the build-out and send our staff down there to assist and create
their inventory."
Sarasota-based Franchising Consultants initially helped streamline
Peterbrooke's franchise offering - taking a 30 percent cut of
the initial franchising fee, too. After the library deal fell
through, Peterbrooke decided to shift the franchising operation
internally. The first order of business: snipping $20,000 off
the initial franchise fee to its current price tag of $65,000.
Although Peterbrooke is still under contract with Franchise Consultants,
the firm is now involved only peripherally in the venture.
"We're more competent to sell the franchises," Behringer
said. "We made strides after we put them on the sidelines."
Peter Wolf, president of Franchise Consultants, seemed unconcerned
when asked about his company's dramatically reduced role in the
chocolatier's franchising efforts. His firm, which is under contract
with Peterbrooke through 2007, will receive its financial cut
regardless of whether it is directly involved in selling the franchises.
"Whatever [Peter] feels is best for the company, I'm going
to have to go with," Wolf said.
To lure in potential franchise owners, Peterbrooke hosts wine
and chocolate tastings in various cities. It's a strategy that
netted them six franchise sales in Tampa, in addition to the five
sold in Orlando.
And although the company contends it has groomed a loyal cross-country
following, and trade publication Candy Industry featured Peterbrooke
on the magazine's cover in 1997, the company still has not attained
the national recognition that precipitates companies like Hershey
or Godiva.
To achieve that, the company says it will grow in "concentric
circles," filling out the rest of the state's major markets
- particularly the South Florida area - before moving into Southeastern
cities like Atlanta, said Allison Behringer.
"That's smart," said consultant Reddy. "The worst
thing they can do is try to be everywhere right away. There's
just too many growing pains."
diana.middleton@jacksonville.com, (904) 359-4404
This story can be found on Jacksonville.com
Devonport Chocolates
Chocolate-makers crave bite of overseas market
New Zealand Harold
13.09.2002
By Ellen Read
Gourmet chocolates handmade in an Auckland suburb are setting
sail for the global market. Well, the Australian and United States
markets for a start. Devonport Chocolates is well known locally
for its rich, sumptuous truffle logs but the company is now on
its way to becoming an exporter. Stephanie Everitt (who owns the
business with husband Terry) and daughter Caroline are at present
in Melbourne exploring the scene at the Fine Food Fair and looking
for possible outlets.
Terry, holding the fort at home, says there are 600 exhibitors
and the pair are looking at where to position the Devonport chocolates.
So far, the business, which was established in 1991 and bought
by the Everitts in 1999, has concentrated on gift stores, pharmacies
and florists nationwide.
The development of a new truffle recipe has helped it to expand
into the hospitality and food industry, trebling the regular customer
list to 300. Devonport Chocolates has also made small exports
to Australia and America already, largely as a result of word
of mouth spread by visitors to its shop.
Which in itself is new. When the Everitts bought the business,
it was solely a manufacturing operation based in Glenfield. The
company's steady growth - turnover is up 400 per cent since they
took over - meant larger premises became a must.
An industrial property in Devonport came on the market and the
Everitts - who live in that area - jumped at the chance to move.
The Glenfield premises had been leased and the decision to buy
the new building was made because they were reluctant to spend
money fitting out a rented space. With room to spare after the
production area was put in, they decided to add a retail outlet.
Daughter Caroline runs the shop, which operates as a separate
business. "It's important for us to know where our costs
and profits are," Mr Everitt says.
The success of the shop and the factory has increased staff numbers
- there are now five permanent workers and up to 30 part-timers
in the peak seasons. With production constantly on the go, the
staff are kept busy as every chocolate product is handmade.
The chocolate is imported in 5kg blocks from Singapore and the
range of truffles and filled chocolates is created in the factory.
"We import the actual chocolate and focus on the other end
here," Mr Everitt says. "We use our own recipes and
local product and hand manufacturing. It's labour intensive but
that's us - hand-crafted is our market."
His biggest learning curve has been managing costs - especially
labour costs. With his wife and daughter both having sales and
marketing backgrounds, the promotional side of the business is
in good hands.
The shop is small in size but big on attitude, fitted out in
bright colours and with a regularly changing window display. Similarly,
Mr Everitt says it's important to keep updating the look of the
finished product. "We redo the packaging because it gets
stale." New food labelling laws have also affected the firm,
and a food technologist has been contracted to bring the labels
up to the soon-to-be-imposed new standard.
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