COMPANY PROFILE

When a Starbucks scanner goes on the fritz, DBK steps in

 

When a Starbucks store needs a new scanner for its wildly popular electronic payment system, DBK Concepts in Kendall makes no money. But when one of those devices goes bad, it heads straight to the 25-year-old repair outfit.

DBK has a contract to service all 25,000 of Starbucks’ scanners, which can read a customer’s pre-paid account from a gift card or from a phone. It’s arguably the most high-profile account for DBK, which has been in the scanner business since the late 1980s and has repair contracts with companies throughout the Fortune 500 list.

Its 80 engineers and technicians toil day and night in the industrial area attached to DBK’s offices, which employs about 150 people in all. Men and women wearing magnifying visors peer down onto emerald-green circuit boards of various scanning guns, hand-held computers and other small gizmos. DBK runs three shifts, from 7 a.m. to 1 a.m., a 19-hour stretch of operations.

It’s not a factory — none of the devices are made there — but a large workshop dedicated to extending the life of gadgets, often beyond the warranty period provided by the original manufacturers. Despite the high-tech razzle of the Starbucks account, most of the equipment looks decidedly dated — a reflection of DBK’s niche repairing “legacy” (read: old) devices.

“We have equipment out there now that has been in the field for 15 or 20 years,’’ said founder and CEO Danny B. Katz. “We still maintain it.”

For DBK, named after its founder, most revenue comes from retailers, warehouses and others wanting to extend the life of their scanners. Often, manufacturers will turn to DBK to service its products, preferring to out-source the warranty functions rather than handle it in-house. Honeywell sells Starbucks its scanners, but DBK has the maintenance contract. Katz would only describe the Starbucks revenues as “substantial,” and a Starbucks spokeswoman said nobody from the company was available for an interview.

The system places DBK in an interesting spot in the tech time line. Scanning is becoming far more widespread than just five years ago as more retailers see cellphones as payment devices. That bodes well for DBK. At the same time, the technology that lets consumers pay for goods on their phone also is making the scanning device itself cheaper and easier to incorporate in a phone. That could pose a threat to DBK as the tech shifts from away from the hardware the company services and into software uploaded into a company phone.

“It is a threat. I’m not going to lie,’’ said Katz, 65, who worked in the tech department for a food distributor before starting his own business. “But there are still way more applications out there where a phone won’t work.”

The company talked about leaving Miami-Dade for Texas in the late 1990s, but won a package of incentives to stay and expand its headquarters, according to Miami-Dade County documents. DBK never started the expansion or collected the $375,000 subsidy package from Florida and Miami-Dade.

Now, after some rocky years in the recession, DBK says it sees enough revenue growth ahead to plan a 20,000-square-foot expansion on its existing 20,000-square-foot lakefront campus in southwest Miami-Dade. The new facility will let DBK give back a 10,000 square-foot facility it rents off campus and add space for 70 workers during the next three years. It hasn’t pursued the county and state incentives again, but the company has applied for Florida tax credits tied to workforce training, said Maria Camacho, a spokeswoman for the county’s economic-development agency, the Beacon Council.

In a 2005 document filed with the county, DBK listed it average wage for workers at $30,000 -- adjusted for inflation, that would be about $36,000 in today’s dollars. Katz said the wage roughly matches what the typical DBK worker makes today.

DBK’s key position on the far reaches of the Starbucks empire belies its humble, family-shop environs off the 129th block of SW 129th Avenue.

A display case of price scanners through the years dominates the lobby, along with framed articles on DBK and thank-you letters from vendors and customers. A hallway leading to Katz’s office displays photos from the company’s annual Halloween party. They’re featured on DBK’s website, too: there’s Katz looking like a ‘50s greaser, and his son and top executive, Eric, dressed in an orange prison jumpsuit. Another photo gallery shows the company Thanksgiving picnic, eaten on folding tables in the parking lot. Katz keeps a worn-down putting green outside his office, overlooking a lake.

Though it has reached into the Fortune 500 with its clients, DBK operates with a low profile in the local business scene. “We suck at marketing,’’ Katz said. “We really do.”

In an economy where skilled labor is seen as a hurdle to the manufacturing sector, DBK counts a corps of veteran workers trained in repairing devices from some of the largest names in retail and shipping.

Alexandra Suarez began working at DBK in 1998. She’s seated with a bin of pricing guns and package scanners next to her, a day’s worth of work as she tinkers with two scanners. “I have Perry Ellis here,’’ she said. “And here’s Sherwin Williams.”

Major brand names populate the bins throughout DBK’s workspace. The company has contracts with Winn-Dixie, Ryder, Starbucks, McDonalds, Coca-Cola, Saks Fifth Avenue, Prada and Sears.

Those national clients did not shield DBK from the full brunt of the recession. With a heavy reliance on the retail sector, DBK found its top clients desperate to cut costs and its competitors eager to slash prices.

“A lot of our big accounts went under or consolidated,’’ said Luis Barroso, the company’s president. “A lot of companies were giving away the service just to not to lose the business.”

The squeeze prompted DBK to lay off about 20 to 25 employees in 2008, Katz said, plus move employees from a 40-hour work week to 35 hours. Katz said the earning cuts allowed the company to avoid as many as 20 additional lay-offs, and that work weeks were back to normal after about a year. Hiring has recovered, too.

“We’re back to where we before the bad times,’’ said Eric Katz, 38, and the company’s executive vice president.

The Starbucks contract arrived about three years ago. The deal isn’t the biggest for DBK. NCR, formerly National Cash Register, retains DBK to service 300,000 to 400,000 scanners and printers, including some for the U.S. Postal Service and Kmart. DBK has about 100,00 UPS scanners under repair contract, compared to 25,000 for Starbucks.

But with Starbucks still in a growth mode as it opens an average of two stores a day this year, DBK feels confident about its future in the coffee business. Starbucks reports that its loyalty-card payments now account for about 33 cents of every dollar of sales inside its stores, with customers loading $4 billion worth onto their accounts in 2013, according to the company’s latest earnings call.

Still, DBK executives don’t expect a wave of new retailers adding pay-by-phone to their cash registers. Convincing customers to tie up cash in a debit account the way Starbucks does is a retail feat that may be hard to replicate.

“They have fans,” the elder Katz said. Starbucks “can get away with putting something on the Internet where you pre-pay for coffee.”

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