Capital Access: Branca Family Expansion Is Heading West

Robert Branca, Jr., is part of the Dunkin' Donuts family...seriously. Branca and his family own 60 Dunkin' Donuts in New England. But count his extended family, including in-laws, their siblings, spouses, children, and cousins, and they own more than 700 Dunkin' Donuts in all and dominate the brand throughout New York and New England.

The 48-year-old Branca is now looking at opportunities to expand west of the Mississippi. He's also developing an original concept "based on European tradition" that he'll grow through franchising.

Branca attributes the success of the family to the way in which they've leaned on each other. "There are huge resources among these franchisees. We have our own independent franchisee association with strong educational components and other assistance. Profitability for us with this concept has been good. If you do it properly, it works," he says.

How has the most recent economic cycle affected you, your employees, your customers?
We have invested in newly available systems that more closely and specifically manage costs to make us more nimble in response to rapidly changing environments. We have been through other downturns, but we didn't have the same software tools then that we do now. These new tools enable us to react more quickly than ever before. Gas prices seem to be the biggest impact factor for our customers.

Are you experiencing economic growth/recovery in your market?
We have been generally unaffected by the disruption in terms of sales, but increasing commodities costs have hurt our margins. Our absorbing the costs has largely been rewarded by our loyal guests with continued patronage and sales growth. We clearly communicate that we are part of the community and experience the same effects our guests do. We believe that this has resonated in the communities in which we do business.

What did you change or do differently in today's economy that you plan to continue?
We worked with our franchisor to implement new tools--some theirs, some our own--to more nimbly react to the economic environment and to the new metrics on guest perceptions that we never had available before.

How do you forecast for your business in this economy?
We rely on our experience. My father-in-law has been in business for 40 years and his knowledge is helpful. We also have data on sales, weather patterns, seasonality, and software that helps us forecast how much to produce.

Where do you find capital for expansion?
We have nurtured lending relationships over the years. We also partnered with our banker, who left the bank to expand to Ohio with us. He can analyze the lending environment and shape focused, cost-saving credit proposals in ways that we could never achieve before.

Is capital getting easier to access? Why/why not?
Yes. The difficulties we encountered with excessive paperwork in 2009 have eased for the bank's more reliable customers.

Have you used private equity, local banks, national banks, other institutions? Why/why not?
We've used regional and national banks because of their predictability and consistency with requirements.

What kind of exit strategy do you have in place?
We generally require that we control our real estate and have tried to diversify our investments to businesses outside of our franchise enterprises. We're also looking at more growth.