NY Bagel Cafe, and there expansion throughout the North East as orchestrated by Joe Smith, CEO and Founder with a little help from his friends!

1. Mid Atlantic REAL ESTATE JOURNAL
COVERING THE STATES OF NEW JERSEY, PENNSYLVANIA, DELAWARE, MARYLAND, D.C. AND VIRGINIA Vol. 21, Issue 8
SHOPPING CENTERS
By Jack Intrator, CPM, RAM, ARM, Zommick McMahon
NY Bagel Café, Inc.,
thriving in a volatile market
W
hat makes NY Bagel York Bagel Café’s concept franchise operators. mitted to the client. We rely from 1995 to 2007 Joe has
Café Inc. (NYBC) a was developed by Joseph Once the prospective fran- on their business contacts opened and sold 2 dozen loca-
continued success Smith, the founder and CEO, chisee has been selected the throughout the process. tions before deciding to get
in compari- who continues its franchise task of site selection is passed Above and beyond involved in franchising. Joe’s
son to other expansion throughout the to the next level of the sup- An example of going above business acumen and exten-
national Northeast. In comparison to port chain. I first speak with and beyond what a typical sive construction background
restaurant the larger operations, NYBC and interview the prospective retail broker does was dem- has been vital to NY Bagel
retail op- clearly demonstrates its suc- partner broker. Most retail onstrated recently by Joel Café’s continued growth. He
erators? cess in their deliberate and brokers are accustomed to Dicker and his partner at knows what areas that we
W h i l e calculated business model dealing with the Dunkin Do- Sperry Van Ness Britney Da- are able to save money on
brands like and support programs for the nuts or Subway Operators nahy. A franchisee signed a for the fit- out of each BYBC
Dunkin start-up entrepreneur. where there is corporate site lease and, as typical putting franchise.”
D o n u t s Currently, NYBC’s core selection, construction, and together their architect with According to Joe, especially
are either Jack Intrator stores are located in upstate development teams and busi- a general contractor. The bids in these rough economic times,
downsizing, New York. It has been expand- ness development managers. submitted were abnormally you need to keep your costs
closing franchisee-owned loca- ing franchise locations with The retail brokers are also ac- high considering the limited down and keep the quality of
tions or devaluing their core the newest store opening in customed to dealing with the scope of work. I immediately your product and presentation
products NYBC is thriving Parsippany, NJ, with two oth- big box corporate tenants as reached out to Joel Dicker to the highest level possible.
due to its unique operat- ers on the way in Westfield, well and they are often focused and his partner Brittany. She “It is very important to keep
ing concept. Even within the Lodi and central New Jersey only on introducing a prospect was so enthusiastic in her you customers happy and keep
corporate structure larger as well as two new franchise to a site and once the lease is response and within 24 hours them coming back. N.Y Bagel
national restaurant retail operations in Delaware, sched- signed they simply walk away. she provided the contact infor- keeps continuing to grow in
operations are often locked uled to open in the fall of 2009 Their focus is more on prepar- mation for an architect and a these times by keeping the
into expansion not by choice and January 2010. Each fran- ing a “tour book” rather than contractor licensed to perform franchisees costs down. An av-
of the operator or even their chisee has the right to open up listening to both the franchi- the required fit out work. erage fit-out for a N.Y. Bagel is
own specific market condi- to three locations and several see and franchisor. What did I learn? Local between $125k to $175k com-
tions, but instead to maintain new franchisee operators have That is not how I operate; market knowledge is vital pared, to a Manhattan bagel or
market share or market posi- committed to new locations I take the relationship to the for continued expansion and an Einstein bagel is between
tion as dictated by Wall Street. within each region. next level with both NYBC franchise development. When $300k to $600k,” Joe said.
Some franchisees are prodded While other larger franchise franchisor and franchisee. working with a franchise like Joe emphasized that when
to expand so the Franchisor operations have several layers The new franchisee learns NY Bagel café the level of you consider the costs in com-
may attain loans that often of management and varied very quickly that they are service goes above and beyond parison, for every competitor’s
are counterproductive to its support within their structure, not alone. If they need refer- any of the competition. new location, a NY Bagel Café
core growth and long-term NYBC provides accessibility rals for contractors, help in Recently in the months of can open two to four new oper-
viability. to all levels of the business negotiations even providing June, July and August, while ations, depending on size and
Consider the following model that includes training, the right connection for sup- other national branded fran- location: “It all comes down to
excerpt from a recent marketing, and advertising to plies we are there with them chisees have closed stores, the costs. It is much easier to
New York Post article: promote brand awareness. and are members of the same have lost potential new candi- get involved in a franchise that
“Four Dunkin’ Donuts fran- Owner Joe Smith points out team every step of the process. dates, NY Bagel Café, Inc. has has a lower start up cost. The
chise operators have filed that, “New York Bagel Cafe’ & A big part is networking. I been expanding its operation lower start-up costs directly
for bankruptcy since June. Deli is an easy, workable sys- participate in national net- and its presence within New relates to the pro-forma factors
Kainos Partners Holding Co., tem that’s simple to learn and working conferences, which is Jersey basically expanding that include obtaining financ-
which runs 56 stores in New train for. Because the bagels instrumental in providing the overall market share in the ing to projecting a breakeven
York, Nevada and South Caro- are delivered to the store par- professional contacts through- northeast. point and we are even offering
lina, filed for Chapter 11, baked, preparing the bagels out the United States. The Goldstein Group, with a a 2 for 1 franchise fee oppor-
joining three other franchise is, pardon the expression – ‘a I think more of the operators team of very qualified brokers tunity, that means pay one
operators in Tennessee and piece of cake.’ As a New York will come to use the network- headed by CJ Huter has been franchise fee and you have the
Florida. Bagel Cafe’ & Deli franchisee, ing and affiliate connections instrumental in this expan- right to open a second location.
Aside from the econom- you’ll receive complete train- within the Pennsylvania Res- sion. Several new Franchisees New York Bagel Café offers
ic downturn, banks have ing and counsel every step taurant Association (PRA). have signed up and three new a great opportunity. Like we
clamped down on financing, of the way. Everything from The support for the new fran- locations are under agreement say Great Bagel. Great Place,”
making it hard for franchisees recommendations with site se- chisee doesn’t stop at site including Parsippany, Lodi said Joe.
to open new stores. lection and lease negotiations selection. When working with and Westfield with several Jack Intrator is a CPM,
What’s more, the precari- to help with staff selection and and making a commitment to more under consideration. RAM, ARM and restau-
ous situation facing CIT -- a marketing development built a NY Bagel Franchisees, it Other brokers within my re- rant leasing specialist,
long- time commercial lender into your support,” said Joe. goes beyond this to managing ferral network include Joel A. Zommick McMahon Com-
to many Dunkin’ Donuts fran- What does this means for expectations and negotiations Dicker of Sperry Van Ness in mercial Real Estate Inc. a
chisees -- has only complicated the new franchisee? Most and even speaking with and Delaware, Robert Frischman, Commercial Real Estate
matters. importantly the typical lay- assisting, and helping the JDF Associates in NYC and firm located PA. Jack is a
In May, the Zale family, ers of corporate support are franchisee attain the neces- Shalom Zuckerbrat in Long board member of the PA
which owns the Zales jew- consolidated within a small sary financing to enable them Island, New York. The most Restaurant Association,
elry-store chain and is one of group and the accessibility to fit-out there locations. recent addition to the team DE Valley and a member
the lead players in Dunkin’ to the CEO and training pro- I can’t tell you how many of real estate professionals of Brandywine Chapters,
Donuts’ expansion into Texas, vides for the expansion of the times Joe and I have calls that are servicing NY Bagel which is an affiliate of
abandoned plans to open 70 concept. Consider the layers with lenders, loan officers, Café is Michael Alberico of the National Restaurant
stores.” and the business dynamic for construction managers, and Paramount Partners who Association. He is also a
Recipe for success a new operator. general contractors. When is assigned with site selec- member of International
As the Master Broker for Opening a New York we select a real estate profes- tion within the New England Council of Shopping Cen-
New York Bagel Café Inc., and Bagel Café sional as a partner we do so States. ters, Institute of Real Es-
as an experienced restaurant There are two franchisee by geographic region. By as- “NY Bagel was founded in tate Management. Tri-state
professional, I have worked business brokers who are signing a certain market to the 1995 by Joe Smith with one Association of Realtors and
with and have seen a lot of tasked with marketing, pre- real estate broker they become store in upstate N.Y. and National association of
concepts come and go. New qualifying, and signing new vested in the process and com- began Franchising in 2007 Home Builders. ■
Reprinted from Mid Atlantic Real Estate Journal • 781-871-5298 • 800-584-1062 • 781-871-5299 (fax) • marejournal.com