Honey Dew sees sweet spot in N.E.

ACQUIRED TASTE: The Honey Dew Donuts shop on North Main Street in 
Providence. The franchise is looking to expand in the region. /
ACQUIRED TASTE: The Honey Dew Donuts shop on North Main Street in Providence. The franchise is looking to expand in the region. /

Think there are too many coffee shops in Rhode Island? Larry Flaherty would beg to differ.
Hired by Honey Dew Donuts last year as the doughnut shop’s first director of franchise development, Flaherty has launched a drive to expand the chain’s operations across New England, including in Rhode Island.
Flaherty said Honey Dew Associates Inc., the manager of the franchise, sees an opportunity during the poor economy to capitalize on low real estate prices, competitive construction costs, a large and willing labor market and Honey Dew’s 37 years in the coffee shop industry.
To find willing franchise owners, Plainville, Mass.-based Honey Dew Associates tapped Flaherty – a former executive at franchise operations such as Papa Gino’s, D’Angelo and Kabloom Flowers – who took the position effective Dec. 1.
“The principal reason was to really ratchet up our presence in the market-place and let people know we are a franchise and we are out there … looking to expand,” Flaherty said, explaining his hiring.
Flaherty said Honey Dew Donuts already counts about 150 stores across New England, with about 28 in Rhode Island. Flaherty said that Honey Dew Associates holds no specific growth goal, but generally wants to expand into areas it considers underserved because existing shops are too few or too far away from a customer base.
The company also made a conscious decision to focus on its existing market, New England, rather than expand into new areas, figuring customers here already know the brand, Flaherty said. The company also knows that the fight for the wallets, and stomachs, of customers will come from competition that includes Dunkin’ Donuts, Starbucks, Tim Hortons and independent coffee shops. Dunkin’ Donuts alone has 180 shops in the state.
“Do you have enough McDonalds? Do you have enough Burger Kings? There’s always room for alternatives,” Flaherty said. “People want choices and we just want to provide them a choice.”
And there is little doubt that Rhode Islanders love coffee and doughnuts. Market research firm NPD says the Providence metropolitan area has the highest number of doughnut shops per capita of any metro area in the United States, according to a survey conducted last fall. The official state drink is coffee milk. The state’s chief entertainment venue is called the Dunkin’ Donuts Center. But to become part of the Honey Dew Donuts coffee scene, potential franchise owners will need to pass muster with Flaherty and his team. A love for doughnuts, muffins and coffee is not necessarily a requirement. But a commitment to customer service, $100,000 in unencumbered cash and $400,000 in net worth generally is required. Honey Dew Associates estimates the initial investment to open a shop ranges from $240,000 to $794,500, depending on location.
“We’re looking for probably a husband and wife team that are really looking to start a business and start with one operation, one shop and have goals of developing multiple shops over the next few years,” Flaherty said.
Honey Dew Associates does not provide financing, but will help new franchisees with the design of the shop, renovation advice and finding equipment and supplies. New owners are also expected to spend three weeks at the company’s corporate-training store in Plainville, Mass. Honey Dew Associates will also provide marketing support in an effort to turn residents into patrons.
And just who comes to a Honey Dew shop? Flaherty said the company is popular with blue-collar workers looking for a place to gather and shoot the breeze.
“What we find is people tend to congregate at a Honey Dew because … it’s part of their local community,” Flaherty said. “They don’t feel it’s a corporate come-in, get-out kind of feel.”
Local or not, to be successful, Honey Dew will need to carve out a niche that differentiates itself from its two looming competitors, Dunkin’ Donuts and Starbucks, said Bryant University management professor Michael Roberto.
Roberto said Dunkin’ has shown success in branding its products while Starbucks created an atmosphere that draws people in. But during the past decade the two have started taking pages from each other’s playbooks – Starbucks adding drive-thrus and Dunkin’ adding wireless Internet, for example.
“Because of the fact that Dunkin’ and Starbucks are [competing for customers], there may be an opportunity for somebody else,” Roberto said. &#8226

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