Taking a bite out of other markets
Bagel chain planning new commissary,
stores in Indianapolis and Nashville

Terry Boyd

Seated in the front of the Dooley's Bagel & Deli store in the Louisville Galleria, Bill Squitieri, Dooley's president, eyes the
lengthening morning rush queue to the cash register in the rear.

Squitieri keeps talking about his plans for a new $500,000 commissary/office building and an expansion of the 4-year-old,
11-store Louisville-based bagel and sandwich chain into Nashville, Tenn., and Indianapolis.

But his mind clearly is on how well the Galleria store is working in the here and now.

Attention to systems and keeping costs down to franchisees are why his company is expanding while other bagel chains are
history or have switched emphasis away from bagels, said the 36-year-old New York native.

Dooley's parent company, Dooley's Franchise Inc., is in negotiations to buy a 1.5-acre site in Bluegrass Research and Industrial Park, where Squitieri wants to build a 10,000-square-foot headquarters and dough-manufacturing factory four times the size of its current facility.

He declined to identify the site or owner while negotiations are ongoing. But he said he hopes to sign a contract next month.

Squitieri said he plans to open the new facility by early next April, at which time Dooley's would move from its
2,500-square-foot office/commissary space at 1370 Belmar Drive in south Louisville.

Dooley's needs the new facility to keep up with the demands of having grown from two stores in 1994 to 11 stores with a total
of about 150 employees.

Dooley's also is advertising for franchisees in the Nashville market, where Squitieri hopes to open five stores by 2000.

That Squitieri is planning to expand Dooley's at all makes his small chain exceptional in an industry that is contracting locally and nationally.

In Louisville, Dooley's is the lone surviving chain focused on bagels.

Syd's Hot Bagels, which opened in 1993, a year before Dooley's, sold out to Bruegger's Bagel Bakery in 1996.

Bruegger's closed its Louisville stores in March after its parent company, Quality Dining Inc. of Mishawaka, Ind., sold the chain
back to its Vermont-based founder for $100 million less than it paid for it 18 months before.

Bagel Station Market & Cafe changed its name to Somerset's Fresh Baked Cafe in August and broadened its menu to
sandwiches and other foods after company executives decided the bagel business was not broad enough for franchising. (See
Business First's Aug. 31 issue.)

Squitieri is adamant that his business isn't headed down the same road as Syd's and Bagel Station. Instead, he points out, it's
attracting well-financed, experienced restaurant franchisees, such as Louisville investors Richard Reeves and David Roth.

Reeves and Roth own two Dooley's stores -- the downtown Galleria store and a store at Holiday Manor shopping center in
eastern Jefferson County. And they also are investors in Oldenberg Superior Grille, Texas Roadhouse and Tumbleweed
franchises.

Restaurant entrepreneur Reeves said he, Roth and operating partner Joe Mooney bought their first store, the Galleria location, as DoDowntown LLC. in early 1997, then opened Dooley's newest store in July at Holiday Manor shopping center as DoHoliday
LLC.

Reeves said Squitieri's best innovations have been adding sub sandwiches for greater lunch sales and July remodels of some
stores, moving sandwich ingredients to the serving line from behind the service counters.

"It's what he does that enables franchisees to focus on sales and guest services," Reeves said.

Franchisees buy what Squitieri describes as "turnkey operations" -- up and operating -- for prices ranging from $140,000 for a
900-square-foot store up to $170,000 for a 1,500-square-foot Dooley's.

The cost includes a $20,000 up-front franchising fee, equipment and a $5,000 budget for grand-opening advertising. Franchisees
also pay Dooley's Franchise Inc. 5 percent of gross sales.

The best performing Dooley's locations had 1997 gross sales between $850,000 and $1 million, with the average stores grossing
between $475,000 and $575,000, Squitieri said.

All stores are profitable, he added.

Dooley's had about $6 million in gross 1997 sales, all generated by average tickets of only about $4.40, Squitieri said.

His explanation of why his company is doing well boils down to holding down prices to franchisees, and Squitieri calls hiring a
purchasing agent as best move in four years.

That purchasing agent's job is to cut deals on everything from tenant finish work at new Dooley's to getting a vegetable supplier
to process food before shipping to save store owners preparation time and labor.

And don't look for Dooley's interiors to be as fancy as some competitors, he said.

Squitieri said he "studied" Bruegger's and was "shocked it went down as fast as it did."

But, he added, Bruegger's stores cost about $375,000 to open, including interior finishes that were lavish compared with
Dooley's.

"When your average transaction is $4," Squitieri said, "how are you going to get a return on your investment?"

He said he strives to keep business simple and slow growing since he bought Dooley's Delicatessen in West Babylon, N.Y., in
1994 and changed the name to Dooley's Bagelcatessen.

Renamed Dooley's Bagels & Deli earlier this year, the business now has eight stores in the Louisville market, mostly in eastern
Jefferson County.

Dooley's also operates a southern Jefferson County store at 7519 Outer Loop, inside a Valu Market grocery store, as well as a
New Albany store at 2241 State St.

Three Dooley's stores are in operation outside Louisville -- the original at West Babylon on Long Island and stores in Lexington
and Bowling Green, Ky.

Dooley's Franchise Inc. owns three stores -- the New York location, the original Louisville store at 980 Breckinridge Lane in St. Matthew's, and a location at 11550 Bluegrass Industrial Parkway in Jeffersontown. The other eight stores are owned by
franchisees.

Squitieri said he's made mistakes along the way, including buying ovens that were too large and too expensive for bagel baking,
and leasing sites larger than what he says is the optimum size of about 1,000 square feet.

He also said the 9-month-old Dooley's in Valu Market grocery, which he terms an "experiment," has sales that are "OK, but just
OK." And he hints it's a move he isn't likely to repeat.

"We're still a very small company with a long way to grow," Squitieri said.

But, he added, "we're not just another company that's going to be a flash in the pan. We're going to stay around a long time.