What’s More Basic Than Hot Dogs And Lemonade? A Uniform
ENTERPRISE: Restaurants
BY TANYA RODRIGUES
Staff Writer
Industry insiders and customers alike know Hot Dog on a Stick for at least one thing: those red, yellow, blue and white-striped uniforms.
Beyond the colors, there does seem to be something primary about the business.
Maybe it’s the lemonade being hand-pumped by employees, or the young families who are the chain’s main market.
It could be the simple corn dog fare, based on a cornbread recipe the company’s founder got from his mother more than a half-century ago.
The mix notwithstanding, basic seems to work for locally based HDOS Enterprises, which also has 12 stores under a newer Muscle Beach Lemonade & Hot Dogs brand, and a chain of hamburger drive-thru’s in Ft. Myers, Fla., called Juicy Lucy’s.
There are 110 Hot Dog on a Stick shops. All stores are company owned and operated.
HDOS, which was founded in 1946, saw $43 million in sales last year. The figures were up from $39 million in 2000. It has 1,500-2,000 employees, depending on the season.
The company also announced a deal with Pasadena-based Wetzel’s Pretzels last year to launch co-branded franchises.
HDOS’ projections are for $45 million this year and along with five new stores, said company President Fredrica Thode.
They’ve been scaled down from a more ambitious plan of $60 million in sales by 2003 and 10-15 new stores each year.
Moderate Expansion Planned
“One of the things that 9/11 brought to everybody was a huge slowdown to what they’re doing and a refocusing on their core,” Thode said. “It’s happening everywhere.”
Now, HDOS hopes to achieve those $60 million sales levels by 2005, Thode said.
The shops had already been feeling the economy’s slowdown before the terrorist attacks, she said.
Thode recently found some upbeat results, however. Average sales of stores open for more than a year are up 5.5 percent or more since January.
HDOS has developed a comfortable place in the food service business.
“I think they’ve carved out a nice niche, primarily in the malls, and it’s been around for quite a while,” said Randy Hiatt, a Costa Mesa-based restaurant consultant.
“I think the industry respects that they’ve been able to do a very limited menu , corn dogs and fried cheese and lemonade , and kind of stick to their guns there,” he said, comparing HDOS to hamburger chain In-N-Out.
“The other thing that a lot of people talk about is the show value,” Hiatt said. “They just don’t make lemonade by squeezing lemons in the back. They make it in a tub and they pound it. If you walk by, the floor shakes.”
Recognizable Uniforms
Still, head into the vicinity of a Hot Dog on a Stick shop, even mention the company’s name, and the first anyone sees or talks about are the brightly striped outfits.
According to Thode, the outfits were launched with the first mall location in 1973. After many repeat calls, HDOS founder Dave Barham finally convinced San Diego developer Ernie Hahn to rent him space for a Hot Dog on a Stick in Fashion Mall Place in Salt Lake City, Thode said.
The See’s Candies employees inspired the idea for the uniforms.
“Dave thought they looked so crisp and so clean,” Thode recalled. “It’s perception. That uniform has really been our trademark. When people ask me about it, I say ‘The reason they’re in the uniform is because you’re asking the question.'”
HDOS also pays entry-level employees more than minimum wage , $7.50 in California, for instance , and emphasizes a policy of promoting from within. It also treats employees with more respect than they might find in similar jobs, Thode said.
Employees Own the Company
She tells a tender story of the HDOS’ founder, an entrepreneur so attached to his employees that he left the business to them in his will.
A yearning for life on the beach brought Barham to California from Detroit in the 1940s.
After starting Hot Dog on a Stick on the Santa Monica Pier in 1946, Barham developed the brand at carnivals and country fairs, and later began opening the mall locations.
When he died in March 1991, Barham left the employees an option to buy the business. They took the option in June of that year, and the company paid off the loan in 1997.
Besides Thode and CEO Rod Barham, the founder’s nephew, HDOS has a board of directors that includes Barham’s children.
Employees are fully vested after five years, and their shares depend on their jobs and salaries, Thode said. If they leave the company, they sell the shares back to HDOS.
Of the 1,500-plus employees, generally 300-500 are vested, Thode said.
Barham’s idea to will HDOS to the employees wasn’t a surprise. Even as the chain mushroomed, Barham had maintained the personal touch with workers and took their role in the company seriously.
Thode, who joined the company 21 years ago, recalled that her own job interview with Barham took five hours.
She herself embodies the company’s philosophies of promoting from within.
From Receptionist To President
Barham originally hired her to be the company’s receptionist. At the time, she was the sixth staff member.
She began taking on additional responsibilities, first monitoring construction of new locations, then leasing. Having been in virtually every area of the company, Thode eventually became executive vice president. She was named company president last year.
Thode reflects on Barham’s influence constantly.
“I think, what would he be doing today if he was alive he wouldn’t be sitting in this office, no way.”
She continued, “He tried something new all the time. Inventing was what he loved to do. I think that’s true of any entrepreneur.”
In an effort to diversify in recent years, HDOS launched the Muscle Beach Lemonade brand in 1999 and bought Juicy Lucy’s in 2000.
Muscle Beach was an option HDOS developed because lemonade sales had been 55 percent of the corn dog shops’ income, Thode said. Also, it established a way to sell products through other formats, such as kiosks.
The company is currently developing frozen corn dogs to sell in grocery stores and in shops not equipped for deep-frying, Thode said. It’s also in the early stages of creating a frozen lemonade product.
The Wetzel’s deal is one way HDOS hopes to expand to the East Coast. Wetzel’s and Muscle Beach’s brands are being integrated with a “Twist & Squeeze” logo. Shops were opened last fall in a Scottsdale, Ariz., Wal Mart and the International Plaza Mall in Tampa, Fla.
HDOS had always found owning and operating their stores more profitable than franchising, but when Wetzel’s broached the Twist & Squeeze co-branding deal to them, they decided to do the new locations as franchises.
The decision has HDOS enjoying the flip side of franchising , it’s a lower risk by not making the initial investment of building the shop, but the company won’t make nearly as much profit once the shop is established. Also, Thode said, running the East Coast stores would be much more difficult.
Deals are being negotiated for three Twist & Squeeze locations in Connecticut, New Jersey and Massachusetts.
When it comes to the expansion of the company-owned stores, HDOS is known for being aggressive, said Arlene Kukowski, Westfield Shoppingtown’s vice president of leasing for the San Diego region.
“Anytime we go into redevelopment of a food court, they are probably one of the first phone calls that are made,” Kukowski said.
HDOS is as strategic in the way it approaches its target market , which Thode describes as “Mom-stroller-children.” Eschewing TV or print advertising, HDOS spends an average of $250,000 annually.
“We’re an impulse item,” Thode explained.
Marketing efforts are low key , in-mall ads, elementary school outreach through student recognition and reading programs, offers through dentists, and other outreach to a four-mile radius around the mall.
There are also programs like birthday clubs, frequent shopper cards and coupons.
Mall employees make up a large amount of sales as well, so HDOS offers them a discount.
James Gartner, a Santa Ana-based architect who’s designed almost all of HDOS’ locations since 1992, recalled instantly liking their approach to business , even while setting up the relationship.
“When I asked (Thode) if I should send her a formal contract, she said. ‘Well, I know what architects do.’ And that was the end of that,” he said.
