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Shop Owners Shudder When the Big Chains Roll In

May 14, 1990

SALEM, Mass. (AP) _ Burger King, Wal-Mart, Kinney Shoes, Dunkin’ Donuts are hardly names that stir feelings of fear and loathing in the masses.

But for Joseph and Lorrie Liani, the owners of a quaint doughnut shop down the road from Salem State College, the names are like a punch in the stomach. It’s the feeling that strikes any mom-and-pop business when a national franchise - Liani calls them the ″big boys″ - rides into town.

Dunkin’ Donuts is the newcomer in their case, and it has hitched itself up right across the street from the Lianis’ little shop.

″What you’ve really got here is two countries fighting a war and one’s fighting with sticks and the other country has guns,″ said Liani, 31.

The Lianis have poured their adult lives into the Donut Ring, a shoe-box- size diner with 10 swivel stools, a formica counter and freshly brewed coffee.

″There was always security knowing that we had our own business,″ said Lorrie Liani, 30. ″There wasn’t a threat - until now. Somebody’s next door, taking our customers away and taking money out of our pockets and taking food out of our mouths.″

The Lianis said their business has dropped 10 percent to 15 percent over the first month. ″So it’s not as bad as I thought it might be,″ Liani said.

Much of the Donut Ring’s business comes from the morning traffic of professors and students to Salem State, and from commuters on their way to Boston, about 20 miles to the south.

The Lianis depend on the shop to pay for their home, their two cars and the hundreds of other debts that come from raising two children and running a business.

″Basically we’re just working people like everybody else. It’s not like we’re making more money than we know what to do with,″ Liani said. ″We have mortgages. We have car payments. Like everybody else, we rely on a weekly paycheck to pay for all that.″

Patrick Kaufmann, an assistant professor of business administration and marketing at Harvard University who specializes in franchises, said there’s not much more to say than ″That’s business.″

He said about one-third of all retail dollars in the United States are spent at franchises each year.

″The numbers suggest a homogenization of our society and our tastes and our mobility,″ he said. ″Standardization is something that is being sought. Franchising is a huge business.″

Kaufmann said that while the situation the Lianis face is sad, it should be remembered that most franchises also are owned by small-business men and women with their own families.

″I don’t see much evidence that franchises actively try to threaten independent businesses. Large franchises look for good retail space and potential customers. If they find them, they compete with everyone nearby,″ he said. ″But I’m sure when these small independents find themselves competing with the franchises it can be quite daunting.″

Liani is frustrated by the money franchises have behind them - money for advertising, facilities and equipment. It’s hard for independent shops to compete, he says.

″And, you know, I can’t afford to lose money as long as that guy because he might have three or four more successful stores. If one’s losing money the others make up for it,″ he said.

Fernando Cafua, a businessman from North Andover, runs the Dunkin’ Donuts across from the Lianis. He also owns three franchises in Lawrence and is planning more.

Dunkin’ Donuts, which speaks for its franchises, has 1,651 shops in the United States and 191 in Massachusetts, said Lawrence Hantman, a vice president and general counsel for the company.

There are four Dunkin’ Donuts in Salem, a city of more than 38,200 people best known for the witch trials of the 1690s. A fifth is on the way.

Hantman said for the most part franchise owners decide on their own locations. ″We have no real estate involvement in it,″ he said.

The Lianis aren’t giving up. So far they haven’t had to worry about a price war - both doughnut shops charge about the same prices. The Donut Ring, for example, has cheaper coffee but more expensive filled doughnuts.

And they upgraded their shop. They bought a new refrigerated display case and expanded and remodeled. They also added specialty items like pie crusts and croissants.

″We’re going to try and offer thigs that they don’t have. Like if you want a chocolate cupcake with real whipped cream like mom used to make, you’d be able to get it here - not there,″ Liani said.

″I have 11 years of my life here,″ he said. ″I have a loyal following. I’m not going to give my business away because someone’s threatening to put me out of business. I’d rather go out fighting than give up.″

End Adv for Monday PMs, May 14

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