Bruster's Real Ice Cream, Inc.

views updated

Bruster's Real Ice Cream, Inc.

730 Mulberry Street
Bridgewater, Pennsylvania 15009
U.S.A.
Telephone: (724) 774-4250
Fax: (724) 774-0666
Web site: http://www.brustersicecream.com/

Private Company
Founded: 1989
Employees: 1,700 (est.)
Sales: $39 million (2004 est.)
NAIC: 311520 Ice Cream and Frozen Dessert Manufacturing

Bruster's Real Ice Cream, Inc., is a Bridgewater, Pennsylvania-based private company that operates and franchises a chain of more than 215 walk-up ice cream stores located in the eastern United States. Half a dozen are company-owned units. Bruster's prides itself on making fresh ice cream at each of its stores and baking its own waffle cones and bowls on the premises. Each Bruster's store offers as many as 38 rotating ice cream flavors from a stock of some 150 recipes. Flavors include Chocolate Lovers Trash, Stick in the Mud, Peanut Butter Puddles, Key Lime Pie, Lemon Meringue Pie, Peanut Butter and Jelly, Purple Dinosaur, and Cotton Candy Explosion. Seasonal flavors like Pumpkin, Caramel Apple, Peach, and Winter Wonder are also available. In addition, Bruster's sells frozen yogurt, shakes, smoothies, Blasts (milkshakes with mixed-in cookies or candy), sundaes and banana splits, ice cream cakes and pies, low-carb and fat-free ice cream, and hand-packed takeout ice cream available in pints, quarts, and half-gallon containers. Bruster's is also known for its lighthearted promotions, such as free dog and cat sundaes; free cones for children under 40 inches in height; Banana Thursday, when every week customers can bring in their own banana and buy a half-price banana split; and PJ Weekend, a March event when anyone who wears pajamas to the store receives a free single-scoop waffle cone.

ENTREPRENEUR AT HEART

By the time Bruster's founder Bruce Reed opened his first ice cream store in 1989, he was already a successful businessman. He grew up in Chippewa, located northwest of Pittsburgh, and learned about the food service business and entrepreneurship at an early age. In 1947 his father, Jerry, returning home from a stint in the Air Force, became enamored with the drive-in restaurants he saw in Fort Wayne, Indiana. He and his wife, Donna, started a restaurant in nearby Bridgewater called Jerry's Curb Service, an eatery where carhop waitresses served burgers, fries, and milk shakes to customers in their vehicles on trays that clipped to the windows. In the 1960s the eatery introduced its signature menu item, the steak salad: thin steak, fries, and salad dressing, served on a bed of lettuce. Bruce Reed witnessed his parents devotion to the business, telling SBN Magazine Pittsburgh, "I was raised by babysitters." As a youngster he developed an interest in business, and was known to sell his Halloween candy rather than eat it. When he was just 14 years old, Reed bought unclaimed soldier duffel bags at the Pittsburgh airport and sold the Army clothing inside. At the age of 16 he developed a passion for a Chevrolet Corvette and learned a major business lesson from an uncle, a used car salesman. According to SBN Magazine Pittsburgh, the uncle "drove him to a house that was for sale, pointed to it and said, 'There's your Corvette.' Reed didn't understand at first, but his uncle explained that if he bought the house and converted it into three apartments, he could rent the units and have enough cash flow to buy the car of his dreams." With the help of his parents, who agreed to co-sign a loan, he was able to buy the house for $10,000, rent the apartments, and generate enough cash to meet his $200 monthly car payments.

Reed now envisioned buying another ten buildings, in this way generating $2,000 a month and retiring at a young age. He took a job pumping gas at a local service station, and on the side sold Bestline cleaning products. Along the way he picked up another mentor, an auctioneer who schooled him on the art of deal-making. School did not prove as interesting to Reed, however. He had already failed third grade, and as a self-admitted class clown, he was expelled from school during his junior year. He now went to work for his father, who paid him $125 a week to launch a lunchtime business for the restaurant, which to this point was only open at nights. The youngster not only succeeded in the task, he proved to be a better manager than his father. "Dad was a really great guy," Reed told QSR, "and he gave everything away. If you wore a uniform, for instance, you ate for free. I didn't think it was run like a business, so I told him it was either him or me. He said to go ahead and take it over."

For several years the high school dropout ran Jerry's, continued to dabble in real estate, and became involved in a number of other business ventures. Even before he was old enough to drink in Pennsylvania he owned a pair of bars. He also ran a vending machine business and a used furniture store. He was making so much money that instead of a Corvette he now bought a Rolls Royce. However, he grew a little too ambitious in the 1970s, investing heavily in gold futures. His timing was poor. The gold market crashed and he was all but bankrupt. Reed soon bounced back, again enjoying success in real estate, and by the late 1970s he was able to afford to buy a farm, where he began raising Clydesdale horses. Over the next decade he continued to run Jerry's and other small businesses, and invest in real estate.

FINDING FUN AND PROFIT IN ICE CREAM

In the late 1980s Reed's sister, Candy Young, was divorced, and to help her out he decided to launch a small business she could manage. He considered a TCBY franchise, but backed away because he simply did not like the chain's frozen yogurt product. Instead he decided to become a franchisee of Handel's Homemade Ice Cream & Yogurt chain, a popular regional chain founded around the same time as Jerry's. Reed estimated that the shop, which was located near Jerry's Curb Service, would generate about $200,000 in sales that first year. Instead, it did $600,000 in business, and he realized that the homemade ice cream was a concept worth pursing further. He elected not to sign the Handel's franchise agreement and changed the name to Bruster's, a play on his first name. His plan was to offer freshly made ice cream using premium ingredients, served in generous portions in a fun atmosphere.

The first Bruster's operation was so successful that it helped to spur Jerry's business, which increased 21 percent the first year and another 17 percent the second year. Reed explained to QSR how Bruster's boosted traffic for Jerry's: "You're standing there with an ice cream cone smelling fresh French fries from next door, or vice versa. I think they played off each other really well." During the summer months, business was so heavy outside Jerry's and Bruster's, that two traffic cops were needed seven nights a week. Jerry's was shut down in 1991 and a new 1,400-square-foot version was built to replace the 600—square-foot restaurant that had been in operation since 1964. As a result sales more than doubled at the revamped drive-in. During this time a second Bruster's store opened as well.

COMPANY PERSPECTIVES

Bruce Reed, the founder of Bruster's, is a real ice cream guy. You can see it in his eyes and sometimes you can see it in his beard too! If you think real hard about it, you might be able to figure out where the name came from.

Reed quickly learned that ice cream was very much a seasonal business, with meager sales from Thanksgiving to Valentine's Day, but he found it was still cost effective to keep the stores open year round. To attract customers during the slow season, Bruster's began to conduct store tours so customers could see for themselves the fresh ingredients that were being used and how the product was made on site. In addition, the program promoted Bruster's hand-decorated cakes and pies that customers were more likely to purchase year round. The stores also began running some of their playful promotions, like giving out dog sundaes with a biscuit inside.

GROWTH THROUGH FRANCHISING

Bruster's added two more units in the early 1990s, and Reed found it increasingly frustrating to run a chain, even a small one. After seeing the manager's position turn over three times during the first year of operation of his fourth unit, he decided to investigate a franchising option. This would allow him to transfer the start-up costs and some of the managerial headaches to others. He hired a consultant named Dave Guido to help him put together a plan and in 1993 they began franchising Bruster's Real Ice Cream shops.

Bruster's added franchisees at a solid clip over the next several years, so that in 2000 it was named by Entrepreneur magazine as one of America's top 500 franchise chains. A year later there were 85 franchised units in the chain, to go with five company-owned stores, and it was spreading widely, from New England to Florida. Franchisees were lined up in untouched markets in central Ohio, central Pennsylvania, New Hampshire, Georgia, North Carolina, South Carolina, Tennessee, Ohio, Virginia, Florida, and Maryland. It was at this point Reed believed that a change was in order, well aware of his own limitations. "I'm not really a person who thinks too far ahead when I start something," he told Pittsburgh's Tribune-Review. "With me it's: Ready, aim, fire. And then after I get into something, I start to think about what to do next." According to SBN Magazine Pittsburgh, he decided "it was time to bring on a CEO with the experience, skill and interest to do the strategic planning and develop the systems and procedural guides needed to more than double the number of Bruster's units by the end of 2003."

Reed found his man in 41-year-old Jim Sahene, former president and chief operating officer of TCBY Systems Inc., who was hired by Reed in February 2002. Sahene was born in the Pittsburgh area and still had many family members there. He left at the age of seven when his father, a U.S. Steel executive, was transferred to run an operation in the Bahamas. Sahene returned to the area as an adult, working for the Sheetz convenience store chain. His tenure with TCBY began in 1986 when he became a store manager in Little Rock, Arkansas, at a time when the TCBY operation, which was launched in 1981, totaled 200 units. Sahene rose through the ranks, making president and COO by 1994. By the start of the 2000s TCBY had grown to 3,000 units. It faced increasing competition, sales began to slip, and a decision was made to sell the business. Sahene left after Mrs. Fields Original Cookies Inc. acquired TCBY in June 2000.

Reed learned that Sahene, who was living in Little Rock running a pair of TCBY franchises he bought, might be available and contacted him about taking over as Bruster's CEO. Reed was unfamiliar with Bruster's but liked what he saw when he flew to Pennsylvania for a visit. He was not hired right away, however. The idiosyncratic Reed made sure that all 12 people at his headquarters had a chance to interview Sahene and agreed that he would fit in.

Once on board, Sahene worked to refine Bruster's strategy and organizing systems as the chain grew at a steady pace: 29 franchises added in 2003, 38 in 2004, and 36 in 2005.

For Sahene it was a second chance to grow a franchise, and hopefully avoid the pitfalls he discovered during his time at TCBY. Moreover, he could apply some lessons learned in the past year and a half on the other side of the divide, operating as a franchisee. For Reed it was a chance to spend more time at his 700-acre farm and pursue other business ideas. "What's nice is," he told SBN Magazine Pittsburgh, "as you grow a company, you start hiring people to do what you don't like to do." So at mid-decade, with the growth of the Bruster's franchise operation in Sahene's hands, Reed, with consultant Guido, began to focus on his next big idea: franchising the Jerry's Curb Service concept.

PRINCIPAL COMPETITORS

Ben & Jerry's Homemade, Inc.; Handel's Homemade Ice Cream & Yogurt; Friendly Ice Cream Corporation; International Dairy Queen, Inc.

KEY DATES

1973:: Bruce Reed takes over his father's drive-in restaurant, Jerry's Curb Service.
1989:: Reed opens the first Bruster's ice cream store next to Jerry's.
1993:: Bruster's begins franchising.
2002:: Jim Sahene is named CEO.