A Domino’s franchisee: Carlos Martinez pulling out of the recession


Domino’s franchisee

Name: Carlos Martinez

Family: wife, Carmen, and daughters: Nikki, 20, Cristina, 17, and Mia, 4.

Lives in: West Palm Beach

Occupation: Owner of two Domino’s franchises: 5452 N. University Drive, Lauderhill, and 2201 W. Sample Road, Pompano Beach

Employees: 35

Productivity measured by: “Pie hours.” At his stores, Martinez said an average pace is a 15-pie hour. “On Fridays, we do 100-pie hours.”

Best-selling topping: pepperoni

Best-selling combo: Hawaiian (pineapple and ham)

Carlos Martinez got his start in 1988 as a Domino’s driver with a bad sense of direction. His pizzas almost never made it to a front door in 30 minutes.

A supervisor decided to move Martinez inside to help make the pies, and he eventually climbed the management ranks to supervise a dozen Domino’s stores in western Broward County.

Pizza was so good to Martinez that he borrowed money from a family friend in 2004 to buy his own franchise in Lauderhill. Then came one in Pompano in 2007. That deal almost sunk him.

Despite selling some of the best-known discount pizza in the country, Martinez saw his sales drop to the point that he couldn’t afford his monthly loan payments.

“I thought pretty much that was it,’’ the 51-year-old father of three recalled of his nearly 30 years in the pizza business. “It was really hairy for a while.”

Martinez survived, and sales have rebounded enough that he is paying down the mountain of debt he acquired as part of a refinancing arrangement that brought temporary relief from a lender.

His brush with disaster in the economy’s darkest days — and his survival — help explain the status of business growth nearly six years after the official start of the recession in December 2007.

The latest Census data show South Florida only this year returned back to the pre-recession number of operating businesses. In the first quarter of 2013, the number of business establishments in Broward remained about 2 percent below a peak set in March 2008, while Miami-Dade hit a new record in early 2013 and now is about 1 percent better than its high in 2008. Combined, it was enough to put the region slightly ahead of where it was before 2008, as the Great Recession was gaining steam.

Between 2008 and 2010, the region saw the number of business establishments drop by 8,500, a nearly 6 percent decline. Now the count stands at about 157,000, compared to 154,000 in 2008.

“There is a Darwinian dimension to recessions. They really weed out businesses that were marginal,’’ said Sean Snaith, an economist at the University of Central Florida. “When you feel the stress of a bad economy, that’s the real test. You come out stronger on the other end of it.”

While the recession pushed him to the brink, Martinez describes the recovery as moving him back on track. He wants to buy own five franchises eventually, and Martinez said sales are growing enough that he can see buying his third by 2015.

Dressed in shorts and a Domino’s sport shirt and cap, Martinez sits in the cramped back office of his Pompano store reviewing a clipboard with his manager’s handwritten sales tallies from the night before. Sales are up a few percentage points from the same day of the week in 2012. But it’s another statistic that encourages Martinez even more: the portion of cash sales.

During the darkest days of the recession in 2008 and 2009, Martinez saw his credit-card transactions soar. At one point, 70 percent of pizza sales went on credit cards. “People just didn’t have money,’’ he said. “They were buying food on credit.”

Now the credit-card sales have crept back down to about 40 percent of Martinez’s business. He’s seeing the average ticket price go up too, with customers more susceptible to the “up-sells” that are crucial to profitability: along with one pizza, say, for $8, how about a side of breadsticks ($4.49), wings ($5.99), or a lava cake ($1.99), too?

Martinez tracks the progress of his Pompano and Lauderhill stores by the hour. At midnight, shift managers are expected to call him with the days’ sales, and again in the morning when the stores open. He rests his cell phone on the dry spot of a tile wall in his shower so he won’t miss a call. He required ankle surgery after taking a fall on a roof trying to fix one of the store’s vents.

Reliant on small-ticket items for his revenue, Martinez said he must hustle to chase sales. He tracked the recession’s pain on his regular walks hanging coupons on nearby door handles. More and more led to shuttered businesses.

When Hurricane Wilma hit in 2005, police came during the storm and ordered him to close. He drove to Orlando the next morning to buy an industrial generator, and he soon had his neon “Domino’s” sign glowing again out front of the Lauderhill store.

Even with deliveries impossible thanks to missing street signs, Martinez saw his sales more than double. The walk-in business was so strong, he had to call in police assistance to break-up fights between customers determined not to miss their chance for a hot meal. “People were going crazy,’’ he said.

On a trip to Peru for his father’s 80th birthday, Martinez’s cell phone plan made it too expensive to call his managers. Rather than enjoy the vacation, Martinez constantly logged onto his stores’ computer system and peered into the feeds from the security cameras.

“What can I tell you?” he said. “I’m a control freak.”

Growing up in an affluent family in Peru, Martinez never saw a career in pizza ahead of him. His parents sent him to college in Pennsylvania’s Millersville State College, and life was relatively easy for the young Martinez. But economic woes at home suddenly found Martinez without a spending account or a clear eye on his future. His grades weren’t hot, and his father didn’t have the money for him to burn anymore.

“My dad said it was time to come home and work in the family business,’’ Martinez recalled. “I said no. So he cut me off.”

Martinez eventually dropped out, tried his hand as a painter, got married and then, thanks to a messy divorce, decided to head south “in a beat-up Corolla” to Fort Lauderdale. He had a cousin there and thought he could find work painting houses.

He did, but he soon found the South Florida heat unbearable. “Guys were falling off of scaffolding, passed out,’’ he recalled.

Martinez eventually got a job as a driver for a Domino’s in Sweetwater. Not only could Martinez not find the customers’ houses: Sometimes he got so lost that another driver would have to come lead him back to the store.

Even so, Martinez proved himself as a reliable employee who presented himself well. That won him a slot as an assistant manager inside — a job that generally doesn’t pay as well as a driver job, given the tips, but did put Martinez in line to eventually run a store himself.

Larger management roles followed. As a district supervisor, Martinez had responsibility for a dozen stores from Pembroke Pines to Coral Springs. Sundays meant no sleep as he processed the weekly sales tallies from his territory to be ready for a Monday morning managers meeting.

Martinez said he was making about $70,000 a year then, thanks to bonuses. He gave up the security of a paycheck to own a franchise himself — borrowing the money from a family friend to purchase the Lauderhill store. It was 2004, during a real estate boom and when unemployment was on its way to 3 percent in Broward and 4 percent in Miami-Dade. Martinez won’t talk numbers, but a 2011 Forbes article said the typical Domino’s franchise owner invests $255,000 up front per location.

He saw no reason to stop growing.This time, he took turned to a corporate lender to acquire the Pompano location. He closed on the store in August 2007. Ninety days later, the recession officially began.

As sales took a hit, Martinez said his monthly debt payments were far too large for his revenue. His lender agreed to new terms that roughly cut his payments in half. But the lender tacked the reduced interest onto the original balance of the loan, so Martinez ended up owing more than when the downturn started.

He saw a turnaround in sales about two years ago. The credit-card sales still are too high to suggest a return to normal, but Martinez said he’s generating enough profit to get close to paying off one of his store’s notes. Once that’s clear, he’s ready for a third.

“We’re still not 100 percent,’’ Martinez said. “But we’re in the process of filling in the hole we got into during the recession.”

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