Walgreen to Buy NYC Drugstore Operator Duane Reade

Walgreen to Buy NYC Drugstore Operator Duane Reade
AP, 17-Feb-2010

Walgreen Co. said Wednesday it has agreed to buy the drugstore operator Duane Reade in a move that will more than quadruple the number of stores it has in the New York City metro area.

Walgreen, the nation's biggest drugstore operator, said it would pay about $623 million for Duane Reade Holdings Inc., which is the biggest drugstore chain in the city. Including $457 million in debt held by Duane Reade, the transaction is valued at $1.08 billion.

Duane Reade, which has been operating in New York for 50 years, is owned by a group that includes affiliates of the buyout firm Oak Hill Capital Partners. Walgreen said Duane Reade's sales totaled about $1.8 billion in 2009.

The deal, which requires regulatory approval, would include all 257 Duane Reade stores, along with the corporate office and two distribution centers. Most of those stores are in Manhattan, where Walgreen currently has 13 stores.

Walgreen, based in Deerfield, Ill., described the deal as its biggest retail acquisition ever. It operates 70 stores in the New York area and had 7,162 stores overall as of Jan. 31. The company opened a new store in Times Square in 2008, but said it would take many years to match the amount of stores and the quality locations Duane Reade already has.

Walgreen said Duane Reade stores will keep their name after the deal closes, and it will decide over time on how to combine the two brands.

The deal unites two chains that are in transition. Walgreen is trying to improve sales by converting thousands of stores to a new layout, and Duane Reade has done the same with 30 of its stores. Walgreen suggested it could get new ideas from Duane Reade. It plans to continue opening new Duane Reade stores and renovating older ones. All the stores should be converted to the new format in four or five years.

Walgreen also praised Duane Reade's FlexRewards customer loyalty program, its private label products, and its ''store within a store'' Look Boutique section, where cosmetics and skin care products are sold in an area that looks more like a department store than a drug store.

Some analysts feel Walgreen is struggling to sustain its sales while making changes to its store layouts and its array of products. It plans to convert 3,000 stores by fall 2010.

The company will fund the buyout with existing cash and expects the deal to close by Aug. 31, the end of its current fiscal year.

Walgreen expects the deal to cut its profit by close to 10 cents per share in fiscal 2010 and by about 3 cents per share in fiscal 2011. The buyout will cut costs between $120 million and $130 million by the third year.

Oak Hill Capital, which traces its roots to Robert M. Bass of the Bass family of Texas, acquired Duane Reade in 2004. The firm is based in Stamford, Conn., and its portfolio includes technology and software companies and restaurant operators among others.

The Oak Hill Web site lists American Skiing Co., Caribbean Restaurants Inc., Southern Air Holdings Inc. and The Container Store Inc. among current or previous holdings. Duane Reade was the only drugstore operator listed on the company's Web site.

Shares of Walgreen rose 15 cents to $34.23 in midday trading

Educational entrepreneurialism in the private tutoring industry

Educational entrepreneurialism in the private tutoring industry: balancing profitability with the humanistic face of schooling *.
The Canadian Review of Sociology and Anthropology, 01-NOV-04

IN THE PAST, TEACHERS' PROFESSIONAL AUTHORITY was built on the notion that educating children demanded the guidance of trained experts. Similar to other professions, institutional arrangements emerged to organize and co-ordinate the training of teachers' work and were seen to promise a degree of quality control, in addition to insulating teachers from external competition. These rights of "passage" include teacher colleges, licensing bodies, teacher federations and boards of education. While teachers have never enjoyed the same degree of professional autonomy and authority as more established, "full" professionals such as doctors, they have nevertheless been traditionally constructed as authority figures over educational concerns. This recognition is exemplified by their protected status in many government-sponsored education systems and teacher training programs. Achieving professional or even semi-professional status also often implies a "moral" component by signaling an adherence to the practice of social betterment and public service (Brint, 1994; Durkheim, 1957; Freidson, 2001; Larson, 1977; Lockhart, 1991; Lortie, 1977).

In recent years, however, the education sector has become increasingly informed by a market logic as governments attempt to respond to school choice movements and the intensified demand for education (see Freidson, 2001). For market advocates, public schools monopoly status and bureaucratized form and the presence of teachers' professional associations foster apathy and mediocrity to the detriment of education consumers (Persell, 2000; Stein, 2001). Additionally, since bureaucratized professions typically receive the lion's share of tax dollars, public schools are also criticized for constraining choice by limiting the range of publicly funded options (Witte, 2000). Beyond education, this market logic has increasingly shaped the nature of work in a variety of public organizations such as hospitals, universities and social service agencies in an attempt to rationalize their performance and naturally "weed out" inefficient agents through competition and stark performance indicators (see Freidson, 2001; see Leicht and Fennell, 2001: 22; Persell, 2000: Stein, 2001).

This context has provided fertile ground for educational entrepreneurialism, witnessed by the sharp growth of consultants and test prep companies, private preschools, tutoring businesses, private schools, proprietary colleges and corporate training ventures (Aurini and Davies, 2004a; Davies and Quirke, 2004; Monahan et al., 1994; Sweet and Gallagher, 1999). Supporters of school choice initiatives claim that eliminating public schools' monopoly status will lead to greater equality of choice for parents, improved student performance and greater cost-effectiveness (Ball, 1993; Brown, 1995; Brown and Hunter, 1995; Johnston, 1996; Simon and Lovrich 1996: 666). Consequently, "experts" are no longer limited to the teaching, medical or religious community (Wrigley, 1989; Zelizer, 1985), but now include psychologists, social workers, media representatives and self-proclaimed childrearing or education specialists, in addition to an array of private businesses that engage in the education marketplace.

This paper examines these processes by focussing on one exemplary case study: private tutoring entrepreneurs in Ontario, Canada. Tutoring has evolved dramatically from its origins. In the past, tutoring in North America consisted of a peppering of "moonlighting" tutors and "test prep" companies such as Kaplan and Princeton Review. This form of tutoring has sometimes been referred to as "shadow education" to denote the ways in which it mimics the formal school system by providing services that closely follow or complement public-schooling offerings (Baker et al., 2001; Bray, 1999; Stevenson and Baker, 1992).

While shadow education continues to thrive, learning centres are emerging as a formidable presence in the private education market (Aurini and Davies, 2004a). These businesses offer a wide range of education services and often tout themselves as "learning centres." (1) Learning centre services include preschool programs, math and reading classes, writing and public-speaking programs and, in some instances, courses for accreditation. A highly evolved form of tutoring, these businesses are often developed as franchises, or morph into comprehensive private schools. In some instances these businesses have entered the post-secondary market and offer credits and degrees on-line (Aurini and Davies, 2004a). (2)

The growth and increased popularity of this industry is astounding. Once a small cottage industry, private tutoring has grown into a billion-dollar industry that now serves almost 2 million children a year in North America (Gubernick and Burger, 1997; www.sbomag.com). In the United States, the tutoring industry generated approximately $2.7 billion in 2001, and is an integral part of the larger $102 billion for-profit supplemental education market. (3)

In Ontario, older data shows that, in 1997, 17% of parents in Canada with school-age children had hired tutors at some time, 9% were currently using tutors and 50% of parents would have hired a tutor if they could have afforded it (Davies, 2004). More recent data shows that 24% of Ontario parents have hired tutors in the past three years t see www.oise.utoronto.ca/ OISE-Survey/2002/2002report.pdf); while the sheer number of tutoring businesses has increased by approximately 60%, from 245 to 396 locations in just the eight years between 1996 and 2003. At the local level, the number of private tutoring businesses in Toronto increased from 10 locations in the mid-1960s to 74 locations in 2000. This growth has occurred irrespective of enrollment levels or economic growth (Aurini and Davies, 2004a).

Formerly, tutoring served as a means to generate additional income. Today, private tutoring promises full-time business opportunities and careers for well-educated investors. This industry draws a diverse army of education enthusiasts and businesspersons alike, appealing to entrepreneurs' pedagogical and business aspirations. These entrepreneurs have remarkably varied biographies, hailing from such backgrounds as business, geography, psychology and physics, as well as teaching. Unlike Ontario public schools, entrepreneurs are not required to consult with professional educators or hire credentialed staff, nor are they subject to accountability mechanisms such as standardized tests, so common now in public education sectors (Aurini, 2004). Yet these businesses are growing and enjoying enormous legitimacy among parents, school choice movements and market advocates (see Hoxby, 2002; Stein, 2001). Lacking teachers' claim to professional authority, entrepreneurs justify their services largely on the basis of marketable specializations (see Brint 1994: 8) and ability to meet increased consumer demand for individualized education (Aurini and Davies, 2004a; 2004b; Davies and Quirke, 2004: Lareau, 2003; Stevens, 2001; Zelizer, 1985).

Research Questions and Contributions

This paper is guided by two main research questions. First, how is the nature of teaching transformed on the market? While the increased emphasis on markets, decentralization and consumer choice across professions has been well documented (Leicht and Fennell, 2001: 22: Hoxby, 2002; Labaree, 1997; Persell, 2000; Stein, 2001), newer is the increased encroachment of non-professional entrepreneurs who provide similar services and compete for clientele with professionals. Further, previous examinations of teachers have largely focussed on public education (Depaepe and Simon, 1997; Filson, 1988; Hargreaves, 1994: Ingersoll, 2003; Lockhart, 1991; Lortie, 1977; Raelin, 1989; Pace, 2003: Zeichner, 1991); while the literature on the professions has largely focussed on structural analyses of professionalization at the expense of empirical studies that examine the work of professions (see Abbott, 1988; 1991 for a critiquei. The impact of markets on the teaching profession has only recently been addressed in the literature (see Hoxby, 2002; see Persell, 2000).

Second, in the absence of professional authority claims, how do these businesses and their entrepreneurs garner their legitimacy? In part, the increasing use of these types of services reflects changing education consumer environments, highlighted by more novel sociology of the family and education literatures. With a few exceptions (Adler and Adler, 1994; Aurini and Davies, 2004b; Davies and Quirke, 2004; Hays, 1996; Lareau, 2003; Stevens, 2001; Zelizer, 1985), most studies provide a largely descriptive analysis of one aspect of home life, such as children's use of time (Juster and Stafford, 1985) and parent-child activities (Bianchi, 2000; Bianchi and Robinson, 1997; Zick and Bryant, 1996) or parents' contributions to child care (Hertz and Marshall, 2001; Jacobs and Gerson, 1998). Research that examines how these businesses reflect the new culture of intensive parenting and demands for customized education have only recently emerged and are in need of elaboration (Aurini and Davies, 2004b; Davies and Quirke, 2004; Hays, 1996; Lareau, 2003; Stevens, 2001).

By addressing these questions, this paper attempts to capture these trends by extending Brint's (1994) work on the professions. Brint recognizes that the sphere in which an occupation resides justifies its practice (e.g., public-minded vs. market-oriented) and conditions of employment (e.g., for-profit vs. non-profit), as well as its relationship to the marketplace (e.g., public vs. private). This paper also builds on research that links trends in private education to the increased individualist stance parents are taking toward their children's personal and intellectual development (Adler and Adler, 1994; Aurini and Davies, 2004b; Davies and Quirke, 2004; Lareau, 2003; Stevens, 2001; West et al., 1998).

There is currently very little academic research on private tutoring. This omission is partly because unlike other education ventures (e.g., charter schools), the private tutoring industry operates in a largely unregulated market that is beyond the reach of most government data collection methods (Bray, 1999). The research that has been collected has largely been quantitative, focussing primarily on tutoring outside of the North American context. These studies connect the increased use of private tutoring with school entrance exams and tight school-to-work connections, or frame it as a market reaction to an underfunded education system (Baker et al., 2001; Bray, 1999; Stevenson and Baker, 1992). Further, these studies tend to solely focus on the rationales behind tutoring "use," rather than examining private tutoring as an "education business" in the context of other types of education innovation. (4)

Methods

Interviews with private tutoring business owners and a one-year participant observation study inform this research. From January 2001 to December 2003, 24 semi-structured, 60- to 90-minute interviews and site visits were conducted with owners of private tutoring businesses and franchises in the southern Ontario area. (5) The interview subjects were limited to only those businesses that provide for-profit instruction in academic subjects taught in mainstream elementary and secondary schools. Tutoring businesses that focussed on ESL (English as a second language), language instruction, music, art and other educational endeavours for personal development or pleasure were not considered in the scope of this study. Also not considered were publicly subsidized or informal volunteer tutoring networks provided through family, friends and libraries. Additionally, corporate training or "test prep" companies were also excluded.

These limitations were intentional and allowed me to focus on private tutoring businesses that provide services found in public schools. The remaining tutoring businesses provided my sampling frame. I randomly selected two representatives from each major franchise to interview, and contacted all of the remaining single-location tutoring businesses in the Toronto phone book. The standardization of the franchise form lent itself to uniformity of product and service, and the interviews with the franchisers or head office representatives from four leading franchises provided substantial biographical information about their franchisees.

Twenty-two of the interviews were conducted at the tutoring location and two of the interviews were conducted over the phone, at the interviewee's request. Four of the interviews were with the founders or representatives from the corporate office of a learning centre franchise (Interview 2001: 1-4); seven interviewees owned and operated tutoring franchises (Interview 2001: 5-11); one interviewee owned and operated a private school affiliated with a major tutoring company (Interview 2001: 12); and the remaining interviews consisted of a mixture of representatives and founders of single location tutoring businesses, private schools that had evolved from a tutoring business and one university student who conducted in-home tutoring (Interview 2001: 13-24).

This research has also been informed by data collected from a one-year participant observation study. Between May 2001 and May 2002, I tutored at one of the largest tutoring franchises in Canada and engaged in biweekly, three-hour tutoring sessions, participated in staff meetings, workshops and parent interviews, and had access to teaching manuals.

Finally, this paper also relied on promotional and informational material created by the tutoring businesses. All tutoring businesses produce a substantial array of brochures and flyers, while some also support Web sites. The larger learning centres also create an in-house magazine that is distributed to their franchises and to their customers. Data from these sources provided a non-obtrusive method to access learning centres' mission statements, program information, hiring practices, educational philosophies and methodologies.

Market Logic in Education: Suppliers of Private Tutoring

How is the nature of teaching transformed on the market? Educational entrepreneurialism marks a dramatic re-conceptualization from teaching as a "profession" to teaching as an "entrepreneurial" activity. The private tutoring industry transforms the nature of teaching in three ways, namely: 1) entrepreneurs do not necessarily possess professional credentials; 2) tutoring franchises provide a counter-supply of education that sometimes "competes" with public schools; and 3) private tutoring businesses lack professional or government regulation demanded in the public education sector.

In Ontario, public-school teachers are mandated to receive training and certification through government-sponsored programs. In the private tutoring industry, however, a professional degree or experience in an education-related field is not a prerequisite for purchasing a tutoring franchise or operating a tutoring business. Only eight of the tutoring business owners were certified teachers, while the remaining owners hailed from psychology, business, law and physics. Of the six franchises studied, only two required their tutors to hold a teaching certificate.

In the case of tutoring franchises, teachers are not viewed as the most desirable investor because they are seen to lack "entrepreneurial" or "commercial" ambition. The following quote is typical of all the franchisers interviewed:

We have some teachers in the system. Generally we find that teachers lack ambition, I mean commercial ambition, and they don't have a sense of business investment. They're used to an environment whereby your federation or your union guarantees. You don't put in extra effort unless you're paid sort of thing. It's a big paradigm shift for them.

To compensate for teachers' "lack" of commercial ambition, many franchises demand that teacher-franchisees hire a "business" person to fill the assistant manager role, sometimes referred to as an "education co-ordinator." (6)

Teaching qualifications are not necessary because franchisees are conceptualized as "managers," not teachers or educators. Although some franchise owners conduct tutoring sessions, most focus strictly on the administrative aspects of running a business. Indeed, franchisers uniformly stress that the primary function of the franchisee is not to "teach," but to manage. The franchiser often takes responsibility for providing at least initial training and guides franchisees towards effective business practices. As one franchiser explained:

What we teach them (franchisees) is how to run a business. So eventually we (the franchiser) become obsolete. The key is to give them the tools to market themselves, that they have a marketing plan and so on.

These owners also adopted a more market-driven logic towards the franchises and reward systems. In their view, franchisees and their tutors/teachers should be paid for their ability, not guaranteed a wage through some unionized effort. As a principal of a school developed out of a franchise explained:

I think a lot of things need to be changed (in the teaching profession). The union has got to go. It's the only profession with a union. Imagine going to a lawyer, an accountant, or an engineer, and saying "this is how much you're going to make! I don't care if you work 80 hours a week, you're going to make this." A lawyer would laugh in your face! You do your job to the best of your ability, and if you do it well, you'll be compensated accordingly. That's a professional. You get paid what you're worth. The market decides what you're worth. And the good teachers will stay (in the private sector), and the bad teachers will get replaced by the good teachers.

These entrepreneurs also break with the ideological core of professionalism. Typical of established professions such as law and medicine, the teaching profession has adopted expansive social betterment ideals (see Labaree, 1997). (7) Yet private tutoring, as with other forms of private education, is a relatively "exclusive" activity. Although tutoring is markedly less expensive than private schooling (which can range from $8,000 to $30,000 per year) it is still prohibitive for many. Most private tutoring companies charge $250 to $400 per month for eight hours of tutoring. Contrary to the spirit behind public education, these services may promote, rather than reduce, inequality, since only the wealthiest and savviest parents are able to tap into their advantages (Davies et al., 2002) and "customize" their children's educational experience (see Lareau, 2003). In this way, markets transform the "business" of teaching from a professional to an entrepreneurial activity that simultaneously deprofessionalizes (e.g., franchises decrease discretion) and professionalizes (e.g., de-unionizes) the art of educating.

The content and delivery of tutoring franchise services represents a second type of transformation. While shadow educators adhere to teachers' professional authority by following public schools' curricula, tutoring franchises often develop their own curricula and evaluation tools. Based on internally designed diagnostic tests, tutoring franchises place students in a program, irrespective to what they are working on in school. Test preparation and homework support that relies upon school materials are discouraged. Many of the larger tutoring franchises have curriculum departments located at their head office that develop programs and various instructional manuals and workbooks for their clientele.

Instead of catering to individual school boards or classrooms, the creation of these materials is promoted by the need to standardize product offerings necessary for successful franchising and overall profitability. The imperative of the franchise form motivates a more centralized form of governance than the sole proprietorship arrangement, since the reputation of the entire franchise is at stake at each outlet. This standardization permits distant franchisers to control the delivery of products without being present. This standardization also makes the product (tutoring) more portable and reliable for customers who can expect similar a service from one location to the next, just as they might expect a uniform product offering from a McDonald's, Home Depot, Staples and so forth (Aurini and Davies, 2004a). In the process, however, learning centre franchises encroach upon teachers' professional authority by offering alternative, rather than supplemental, education.

The third transformation is the simultaneous force that markets place on public systems to become more tightly "coupled" (see Meyer and Rowan, 1978), while at the same time freeing private enterprises to remain relatively unregulated (and hence unaccountable), in the spirit of free market competition. For instance, in the public sector, perceived inefficiencies have fueled many initiatives such as standardized curricula and tests for both students and teachers. Additionally, parental involvement has not only increased, but also has been institutionalized in recent years with the introduction of a formal appraisal process for parents and students, the creation of the Ontario Parent Council and a parent survey (Ontario Ministry of Education, 2001-2002). These reforms are seen to strengthen the connection between the curriculum and the classroom by demanding schools demonstrate that they are meeting provincial standards (see Meyer and Rowan, 1977; 1978).

Conversely, the private education industry can be described as unregulated and unstandardized (Aurini, 2004). Entrepreneurs (and their tutors) are not necessarily certified teachers. Further, these businesses are not expected to conform to government-imposed education mandates. In fact, there are few (if any) mechanisms to ensure that these services are effective in terms of boosting education performance or stimulating children's cognitive development. Instead, some tutoring businesses offer internally defined yardsticks, such as retesting their students periodically (using their own diagnostic tests), or with more subjective measures, such as a tutor's assessment.

These businesses have also not been able to successfully garner government support, crucial to public schools' legitimacy and survival. Instead, many of these businesses opt to join associations that reflect their organizational structure (e.g., franchise) or with self-regulatory bodies (e.g., Canadian Education Standards Institute). For instance, most learning centre franchises in Canada are members of the Canadian Franchise Association (CFA), an organization that represents hundreds of Canadian franchises, including restaurants, car rental and parcel services. Without regulation or affiliations with educational bodies the act of education becomes consumer, rather than expert, driven, as parents are left to their own devices to navigate through a diverse labyrinth of private education offerings.

New Education Consumer Environments

Despite lacking the traditional basis of professional authority, private tutoring businesses have enjoyed enormous currency in recent years. On what grounds do these businesses and their entrepreneurs garner legitimacy and authority over education?

In part, educational entrepreneurialism has been facilitated by an emerging culture of intensive parenting and educational customization. Tutoring franchises and learning centres respond to this new consumer environment by offering a wide range of programs and services and small student-teacher ratios. These businesses espouse broad mission statements, produce an array of literature targeted at parents and market their services as highly customized. Common themes in learning centre literature include: "Developing your child's gifts and talents" ("FastTrackKids International," Academy of Mathematics and Science); "personalized program(s) to meet his or her individualized needs" ("Senior Math," Sylvan); and programs that "encourage creativity" by allowing children to "work at their own pace" in ways that "nurture" children's unique learning styles ("Improved Grades, Improved Confidence," Oxford Learning Centre). Typical of most franchises, Sylvan states that their services:

... identifies the learning style of your child--auditory, visual or tactile--and uses the most appropriate method to teach your child.... Sylvan personalizes programs, choosing from hundreds of materials and lesson plans, to teach your child in the way he or she will learn best (www.educate.com).

Similarly, All about Learning promises to give students "individualized attention" and "instruction tailored" to the needs of the student (www.allaboutlearning.ca); while the Academy for Mathematics & Science advertises that after an evaluation, "individualized programs are then developed to meet the needs of each student" (www.acadfor.com).

Part of learning centres' appeal is their ability to stay relatively small (approximately 100 students) and keep student-teacher ratios typically to a maximum of one teacher per three students. This arrangement permits...

Taquerias Arandas

Recipe for Successby
Portfolio, 19-Mar-08
Kate Murphy

An ethnic fast-food chain's success illustrates three key points of any ambitious startup: Find a niche, know your customers, and prepare a successor.

In a Hispanic neighborhood on Houston's east side, the parking lots of a Burger King and Church's Chicken were vacant during a recent lunch hour while the spaces at the nearby Taquerias Arandas were all full. Most of the customers' cars and trucks had little Mexican flags hanging from their rearview mirrors.

With 35 restaurants in five Texas cities — Houston, Dallas, Nacogdoches, Waco, and Bryan — Taquerias Arandas is a popular and rapidly expanding chain that appeals to immigrants craving authentic, inexpensive Mexican food. The chain has also generated a loyal following among second- and third-generation Latinos as well as non-Hispanics.

Started more than a quarter century ago by Jose Camarena, an immigrant from Mexico, Taquerias Arandas has survived — and thrived — by focusing on three elements that are key to any small business with big plans. It has a niche, knows its customers very well, and was able to survive its founder's retirement.

Now it is positioned to pursue its ambition of growing beyond Texas and becoming a national chain.

"Taquerias Arandas is definitely on our radar," says Darren Tristano, executive vice president of Technomic, the restaurant industry consulting and research firm in Chicago. "It's an emerging chain that's tapped into the fastest growing demographic in America."

Legal and illegal Hispanic immigrants in the U.S. are estimated to number between 17 million and 19 million. According to the U.S. Census Bureau, the nation's Hispanics, who total 44.5 million, will make up a quarter of the population by 2050 and are or will soon be the majority population in 35 of America's 50 largest cities.

"Hispanics are very much into authentic cuisine," Tristano says, "and aren't impressed when a mainstream chain puts something like queso [Spanish for cheese] on the menu."

Taquerias Arandas, which is named for the town closest to Jose Camarena's birthplace in the state of Jalisco, is nothing if not authentic. Its menu includes cabrito, or goat, and menudo, a tripe and bean soup. But the real draw is the savory soft tacos like those sold at taquerias and pushcarts throughout Mexico.

At Taquerias Arandas, three tacos — soft corn or flour tortillas stuffed with cabrito, pork, chicken, skirt steak, or beef tongue and topped with lettuce and tomato — go for $1.49. Large tostadas are $2.89 and giant burritos are $3.99.

Many diners are undocumented workers who have left their wives and children in Mexico to work in the U.S. "These guys are living five to an apartment and don't know how to cook and want a taste of home," says Neil Foley, a professor of Hispanic history and culture at the University of Texas at Austin. "They walk into something like a Taquerias Arandas and get a fistful of tacos at Mexican prices and it's like they're no longer in the U.S."

Robb Walsh, food critic for the Houston Press and author of The Tex-Mex Cookbook (Broadway Books, 2004), says taquerias are proliferating in the U.S. "Taquerias are the soul of Mexican street food offering hearty, home-cooked, well-made, inexpensive food that is spicy, garlicky, and wonderful," he says. "Taquerias Arandas is just the first that has managed to become a chain."

As successful as the business was under its founder, Taquerias Arandas ran into a problem common to many small businesses when its founder decided it was time to step down. When Camarena, who speaks mostly in Spanish and declined to be interviewed, wanted to retire to his Texas ranch in 2002, he reluctantly permitted the middle of his three daughters, Judy, to assume more control.

Judy Camarena, 25, has worked at the business since she was 12, and had advanced to a managerial position in the corporate office when she was in high school. Still, she says, her father was not eager for her to run the business. "He feels women are made to make babies and stay at home," she says.

Camarena and her father agreed on a yearlong trial period to see if she could run the company. The daughter quickly created a corporate structure, consolidated bank debt, standardized and catalogued recipes, and installed a point of sale software system to track expenses and inventory; profits more than tripled.

"When my father saw the numbers after that first year, he kind of realized that maybe I knew what I was doing," says Camarena, who is unmarried and often works 12- and 14-hour days. She doesn't have a college degree — she intends to pursue one some day — but her vendors say she's a shrewd businesswoman who is obsessed with quality, and, according to one vendor, "knows how to cut a deal."

The U.S. Minority Business Development Agency named Taquerias Arandas Minority Retail Firm of the Year in 2004.

"The old guy doesn't have a son and Judy knew the business, so I guess he gave her a shot," says Trey McHale, a Coca-Cola account manager who has worked with both father and daughter. "Judy's turned it up a notch through an expansion of the brand and maintaining consistency across all the restaurants."

Each taqueria is owned and managed by a member of the extended Camarena family or by former employees. Franchise agreements include a $65,000 fee up front and 6 percent of sales. By contrast, a McDonald's franchise requires an initial investment of $650,000 to $1.6 million, and at least 12.5 percent of sales.

Camarena says her focus now is finding sites for new locations. She has opened 10 restaurants in the past four years and is looking to expand outside of Texas. Moreover, she hopes to attract more non-Hispanic customers via promotional events with TV and radio stations.

One thing Camarena says she does not plan to do: Americanize the menu to draw a wider following. "I'm biased in that I love Mexican culture and food," she says. "I know that if people try it they will like it." She also doesn't want to alienate her core Hispanic base, which she fears would bolt if the food loses its authenticity.

Taquerias Arandas, which is privately held, declined to release sales or any other figures. Tristano, the Technomic restaurant consultant, estimates sales are at least $1 million per restaurant, though he says that number is probably low since the chain, unlike most other fast-food franchises, sells beer.

The company also has four Arandas Bakeries, which specialize in Mexican breads, tortillas, and pastries. They supply both the retail stores and wholesale customers, including Wal-Mart stores in Texas. There are also two Mexican-style seafood restaurants called Ostioneria Arandas Seafood. All the divisions operate under the name Arandas Franchises Inc., which is headquartered in Houston.

Its success will depend on whether the company can sustain its growth in an age of tightening credit for opening new locations, soaring food prices, and stricter immigration enforcement, which has slackened sales. "It has definitely cut into our business," Camarena said. "People are afraid to come out."

Attracting non-Hispanics like Cathy Williams, an account executive with a rock radio station in Houston, will be essential. Williams says she had never heard of Taquerias Arandas before she orchestrated a promotion at one of its locations. Most of the station's target audience who came to the event, Anglo men in their 20s and 30s, had never been there either.

"Everyone was sort of blown away by how good and how incredibly reasonably priced the food was," she says. "It's way better than something like Taco Cabana or Taco Bell."

However, Williams adds that she will continue to go to Taco Cabana when she's in the mood for Mexican fast food because there isn't a Taquerias Arandas near where she lives. Camarena says she's working on it.

Trotters take test drive on Chester Downs track

Trotters take test drive on Chester Downs track
Tim Logue
Daily Times, Aug 29, 2006

There was no money on the line, but Bobnoxious and Corporate Rrraider seemed to enjoy the honor of being the first horses to ever trot at Harrah’s new racetrack. "We warmed them up and got them exercised a little bit," said Corporate Rrraider’s driver, Sam Beegle, a director with the U.S.Trotting Association. "It’s going to be a beautiful track. They are doing a wonderful job down there."

Both horses are expected to compete when the track opens for business Sept. 10. It will mark the first harness race in the Delaware Valley since the closing of Brandywine Raceway in 1989 and first new racetrack built in the area since Philadelphia Park in 1974.

While the facility awaits a gaming license from the Pennsylvania Gaming Control Board, Harrah’s will front most of the purse money for the racing season, which runs Sundays, Mondays and Thursdays through Dec. 18.

Harrah’s officials expect the casino’s 2,750 slot machines to open for business early next year.

"Our purses are going to average $70,000 per day at the start and once the slot machines go online, we expect the purses to increase significantly," said Michael Tanner, director of racing operations. "The (slots) are crucial to the success of the whole facility. Our goal is to marry the best in slot machines with the world class harness racing in a way that has never been done before."

County and city officials are also hoping for a happy marriage between Harrah’s and the people of Chester.

"There’s the $10 million revenue piece for the city which isn’t going to come until they have the slots," said Jim Turner, Chester’s director of economic development, "but, in the bigger picture, we want to see how (Harrah’s) helps businesses -- from restaurants to banks to hotels and other service entities.

"The more of these types of businesses we can attract, the better it will be for Chester and its residents."

Turner could not estimate the number of Chester residents hired by Harrah’s, "but I have seen a preliminary list of people who have been offered jobs and I recognize a lot of the names," he said. "A lot of the jobs are in food service, simulcasting and landscaping. The Harness Racing Commission hired 20-30 people just to work around the horses."

Turner said the snack bar in the paddock area will be run by a Chester business. A local company will also provide many of the floor mats for the facility. "They are definitely working with Chester businesses," he said.

Cheryl Stevens, owner of Cheryl’s Southern Style, a popular takeout restaurant in the 500 block of Welsh Street, did not fare as well.

"I put in an application for a snack bar location but I wasn’t selected," she said. "They said they were going in a different direction but would keep my information if there was a need for catering."

Stevens said she has received lunch orders from Harrah’s employees and hopes her close proximity to the Chester Transportation Center will yield new customers as they come and go from the track and casino.

"We’ll have to wait and see how things unfold," she said.

All five members of Delaware County Council made the trek to the track Monday and took in the views of the Delaware River from Harrah’s 20,000-square-foot outdoor deck.

"Harrah’s will be a great boost to the county’s revitalization of our waterfront communities," said council Chairman Andrew Reilly.

The county expects to rake in between $6 million and $10 million annually once the slot machines are up and running.

"Seeing the racetrack and casino become a reality from the ground up is a very positive sign for Chester and Delaware County," said council Vice Chair Linda Cartisano, a Chester resident.

Beegle believes Delaware County residents will take to harness racing on the riverfront. "Thoroughbred racing is called the sport of kings but harness racing is the sport for everyone else," he said.

Tanner, who spent 12 years among thoroughbreds at Gulfstream Park in Hallandale Beach, Fla., is also looking forward to watching the trotters in Chester.

"It’s a uniquely American sport, developed in this country," he said. "If you have ever watched NASCAR drivers draft and plot their moves, it’s the same thing here, except they are going 30 mph instead of 180 mph."

While some harness tracks are thriving, Tanner said horseracing no longer monopolizes the gambling dollar the way it did in the 1960s, when Las Vegas and the local bookie were the chief alternatives for bettors.

"But you never know what could happen," he said. "Everyone thought poker was dead five years ago and now it’s the trendiest thing going. Times change."

Confessions of a self-made multimillionaire

Confessions of a self-made multimillionaire
Stefan Stern
The Financial Times August 22 2006

“How To Get Rich: The Distilled Wisdom of One of Britain’s Wealthiest Self-made Entrepreneurs” By Felix Dennis, Ebury Press, $32.40

Know thyself, the Delphic oracle instructed her visitors. The German poet Goethe refused to follow her advice. “This has always seemed to me a deception practised by a secret order of priests, who wished to confuse humanity with impossible demands,” he said.

I feel almost the same way about Felix Dennis’s new book How To Get Rich. On the cover he grins out at readers, with confidence written all over his face. The word “rich” is printed in two inch-high red capitals.

In the course of 275 pages Dennis offers some very helpful advice, based on hard-won experience. You cannot fault the clarity of his writing, the sincerity of his views or the validity of the many and varied examples he provides.

And Dennis is very rich indeed – one of the 100 richest people in the UK, according to the famous “rich lists” (more of them later). Publishing has proved fruitful for him. He used to own Personal Computer World and MacUser, and still owns Maxim, Auto Express and The Week among other titles. Dennis feels unable to put a precise figure on his wealth, estimating it to lie somewhere “between $400m and $900m of net worth before tax”. So, pretty rich.

And yet, towards the end of the book, we read this: “The rich are not happy. I have yet to meet a single really rich happy man or woman – and I have met many rich people.... Am I happy? No. Or, at least, only occasionally....”

It is not until page 239, after we have learnt all there is to know about overcoming fear, “cutting loose”, focusing on execution not ideas, maintaining 100 per cent ownership of every venture, “living small and thinking big”, that the truth about this quest to be rich is revealed: “Seeking substantial wealth is almost always a fool’s game,” Dennis says. “Ask me what I will give you if you could wave a magic wand and give me my youth back. The answer would be everything I own and everything I will ever own.”

Before this gloom comes the good advice. Getting rich will almost certainly require extraordinarily hard work: there is no real luck in­volved. He quotes Seneca approvingly: “Luck is what happens when preparation meets opportunity.”

Fear of failure is what holds people back. “If you are unwilling to fail, sometimes publicly, and even catastrophically, you stand very little chance of ever getting rich,” Dennis says.

You do not need a great idea to get rich. You do need to able to put ideas into practice. Not giving up is vital. Here Churchill is the author’s guide: “If you are going though hell, keep going,” the old man said.

Be ruthless on costs. “Keep payroll down to an absolute minimum,” Dennis says. “Overhead walks on two legs.” Every cost and outlay should be scrutinised. “Never buy a business meal if the other side offers to. You can show off later.” That applies to other misguided acquisitions too: “If it flies, floats or fornicates, always rent it. It’s cheaper in the long run.”

Never allow your self-belief to falter. “Without self-belief nothing can be accomplished,” Dennis says. “With it, nothing is impossible.” Hire talented people and then delegate as much to them as you possibly can. Cling on to 100 per cent ownership of your ventures: “Ownership is not the most important thing. IT IS THE ONLY THING THAT COUNTS.”

All Dennis’s homilies and nuggets of advice are well-founded, based on his own 30 years as a successful entrepreneur. He has even identified what the psychologist Abraham Maslow discovered about motivation and our “hierarchy of needs” – although Dennis does not mention Maslow by name. Do not waste money trying to “incentivise” people who are not interested in money, Dennis says. Try courtesy, praise and fairness instead.

Having lived the life he has, there are few subjects on which Dennis cannot speak with some authority. “There’s nothing intrinsically wrong with orgies, parties, narcotics and booze – but they will kill you in the end,” he warns.

Dennis sends us these thoughts from his home in Mustique (one of several around the world). But just how rich is rich really? Dennis says the richer you are, the harder it is to know how much you are worth.

“If our paid armies of accountants cannot agree upon a figure, then compilers of lists and financial journalists certainly cannot do so with any real accuracy.” But he does know that he is rich in time.

In the end, the reader puts this book down richer (metaphorically speaking), but also sadder. “Never have I met a self-made rich man or woman whose family or relationships were not plagued by the burden of creating a fortune, even a small fortune,” the childless Dennis writes. “Somewhere in the invisible heart of all self-made wealthy men and women is a sliver of razored ice.”

“Know thyself?” Goethe said. “If I knew myself I’d run away.” I get the feeling that this is what Felix Dennis would like to do, too.

The CEO Fast Track

The CEO Fast Track
By Constance Gustke
BusinessWeek, Summer 2006

Like many recent MBA graduates, Joshua Greenberg wanted to run a company. There were just two problems: He didn't have a bright idea that he could turn into a business, and he didn't have the money to buy someone else's company and install himself as CEO.

Greenberg didn't let those minor details stand in his way. Instead, he teamed up with former classmate John Fowler to launch what is known as a search fund. The two Stanford University grads raised $400,000 from 12 investors, mostly members of Stanford's robust alumni network, to start San Francisco-based Montebello Capital. Their mission: buy a company, help it grow substantially, sell out in five to seven years, and distribute big gains all around.

Greenberg and Fowler, both 34, scouted for companies in the logistics industry, hoping they would find a diamond in the rough. Eighteen months later they bought Aero Logistics, a 10-employee trucking company in South San Francisco, for $4 million. "The owner wanted to cash out," says Greenberg, who was a strategy analyst with Charles Schwab before getting his MBA. "We could step in with a fresh set of eyes and see untapped potential. We wanted to rebuild the sales force, rebrand the company, and standardize accounting procedures."

For aspiring entrepreneurs who are short on ideas but big on connections, search funds can be a quick route to CEO-dom. Since H. Irving Grousbeck, professor of management at Stanford University's Graduate School of Business, hatched the idea in 1984, some 71 funds have been formed. Twelve are operating now. So far, the idea hasn't spread beyond the campuses of elite MBA programs, but the method could be copied by anyone with access to investors and deep industry knowledge. "The funds have a proven track record of helping young entrepreneurs take the helm of operating companies," says Jim Ellis, a lecturer in management at Stanford who mentors many searchers.

The search fund model is straightforward: Searchers tap their networks to raise about $200,000 to $400,000 in first-round funding. That money supports them as they comb fragmented industries -- such as trucking, waste management, and sprinkler systems companies -- hoping to find businesses in the $5 million to $20 million range that have sticky succession issues but solid growth prospects. When they find a good candidate, searchers go back to their investors for a second round of financing that will enable them to buy the company. A 2005 study by Stanford's Center for Entrepreneurial Studies found that the funds had an average annualized rate of return of 37.3%.

The promise of high returns makes finding investors the easy part. Landing a company that is profitable, growing, and has an aging founder willing to sell to a couple of fresh-faced MBAs is much trickier. Deals often collapse near the finish line. Many searchers make bids only to find bogus financials or CEOs with cold feet. Rich Kelley, a principal at private-equity firm Search Fund Partners in Menlo Park, Calif., who invested in Greenberg's fund, says heated competition for small companies has driven up prices in recent years. "It takes unbelievable determination" to buy one of these companies, says Kelley. "The mechanics of doing the deal are tricky, and there's a lot of competition." In fact, about one-quarter of search funds closed without making an acquisition, according to the Stanford study. "The actual search is like boot camp," recalls Greenberg. "It's nerve-racking, and the bank accounts get drained. It's lonely and long."

THE RIGHT TEAM
The grueling process is one reason most searchers form partnerships. The partners then develop a formal proposal to woo investors, including an executive summary, company criteria, and a hoped-for timeline for exiting the business. First-round financing should be enough to cover a two-year search, the amount of time Grousbeck thought was needed to find a company. Money goes to salaries of around $75,000, office expenses, and bare-bones travel. "Searchers are notoriously frugal," says Janet M. Dunlap, an attorney at Goodwin Procter in Boston who prepares offering documents for searchers."One client was living in his mom's basement."

Most searchers se-cure first-round funding within five months, according to Ellis. Investors typically plunk down $25,000 in the first round, says Dunlap. In return, they get equity positions of 5% to 10% in the fund.

Savvy searchers look for investors who will bring more than money to the table. Marshall Johnson, 36, started a search fund called North Point Capital Partners with fellow Duke University MBA Frank Young in the spring of 2005. To help him scour deals, Johnson enlisted investors who were ex-CEOs, including Joe McErlane, a former head of health-care reinsurer National Benefit Resources. Johnson also brought in Arthur Monaghan, a principal at Granite Equity Partners in Minneapolis, whom he met through a classmate. Now Monaghan is alerting the searchers to potential deals. He has shown Johnson and Young six so far. "We can insert Marshall [Johnson] in a company because we've already vetted him as part of our due diligence for investing in his fund," he says. "That gives us leverage."

After homing in on an industry, searchers can shorten their learning curve by finding an expert to open doors for them. "Find a river guide," counsels Ellis, one who will allow you to use his name while setting up meetings and who can educate you quickly about a sector's ins and outs. Narrowing a search by geography is also common. Johnson and Young, who have raised $400,000 from 14 investors in three months, are scouting for companies in the recycling industry in the upper Midwest.

Malte Bernholz decided to cast a wider net. Before launching his Boston-based fund in August, 2004, with partner Joel Milne, Bernholz interviewed 40 searchers who had been through the process. Once they learned that limiting a search regionally had hurt some funds, they decided instead to look at candidates nationwide. And because most searchers have at least one deal crumple, Bernholz decided he would keep searching for the right fit -- even while negotiating. "There's a risk of settling for deals that aren't good," he says. Early on, Bernholz, 34, and Milne, 31, focused on litigation support companies. "The industry is growing 11% a year and is very fragmented," says Bernholz. The partners raised $600,000 to finance their search. A year and a half later, they went back to their investors and raised enough money to buy Action Legal Document Services in Charlotte, N.C., in January. "The company had good management, was profitable and revenues were growing over 20% a year," says Bernholz.

As early as possible, advises Ellis, searchers should size up sellers. Are they willing to write a term sheet? They should also allow you to talk to customers and employees, as well as to collect financial information. And searchers shouldn't get caught up trying to snag a bargain. "Pay a good price for a good company," says Ellis. "And don't try to be a good manager in a bad industry."

THE PAYOFF
Staying open to possibilities that may not be in your original plan can help your odds of success. Ellis offers his own experience as an example. In 1993 he and partner Kevin Taweel launched a search fund and started targeting towing companies. Their research eventually led them to dispatch services, and they bought Houston-based Road Rescue for $8 million in 1995. The company blossomed into Asurion, a wireless player as well as dispatcher, with revenues of more than $700 million. "We were able to expand our products, tap into wireless growth, and make acquisitions," says Ellis. "That accounts for our success." And it's the kind of payoff that makes many searchers' entrepreneurial boot camp all worthwhile.