More than a decade ago, Dalal approached Nestlé about opening a dessert-themed franchise of cafes featuring the Toll House cookie. A year and half of negotiations and agreements would follow before Dalal could realize his vision and open the first location of Nestlé Toll House Café by Chip. The cafes are owned by Dalal’s company, Crest Foods, which licenses the branded products from Nestlé. From there, he says the brand took off. Franchises selling Nescafe coffee, soft drinks, and a full complement of homestyle baked goods popped up across Lebanon. International expansion quickly followed.
Now, Nestlé Toll House Café by Chip has more than 100 locations serving upwards of 60 million customers per year in the U.S., Canada, Kuwait, Lebanon, and Dubai, with plans to open additional cafes in Jordan and Saudi Arabia. Dalal estimates net sales hovered between $35 and $40 million last year. That’s a heck of a lot of chocolate chips, but Dalal hungers (literally and figuratively) for more.
Just before he jetted off to Dubai to supervise the opening of another Nestlé Toll House Café by Chip, Dalal sat down with Fast Company to discuss his journey from real estate rags to chocolate chip riches.
Dalal came to the U.S. in the 1980s to attend college. He laughs, admitting his parents wanted to see him become a doctor or an engineer. Though he excelled in science and math and got a masters in engineering, Dalal also pursued an MBA, which came in handy when he got his first business idea. “When I was in college and eating nasty food, I thought it would be a good idea to have a healthy fast food concept,” Dalal explains. Unfortunately, even as a newly minted grad student, he still had plenty to learn about real-world business. Dalal says his smoothie chain Frullati got caught in the real estate crash of 1987. “I lost my shirt. I was too young and too stupid,” he confesses.
What he had left were two Frullati locations and a strong desire to keep going. Six years and a lot of sweat equity saw Dalal through a growth phase that culminated in the move to franchising. Dalal quips that at the time he didn’t even know how to spell the word "franchise," but he hired some talented consultants and grew the concept to 100 locations. “I had to go through this fear of not knowing, but once we had the talent,” he says, everything fell into place.
Taking On the Mother of All Cookies
All good things must come to an end, but Dalal says even though “it was like selling my first born,” he eventually sold the Frullati chain to invest in a new idea. Ironically, Dalal’s first foray into the dessert cafe landscape came through Mrs. Fields, the juggernaut chain that’s been peddling cookies since the 1970s.
Thanks to his time in real estate, Dalal’s Frullati occupied some prime locations, and he was eventually approached to open a Mrs. Fields. He became a franchisee, but when he asked the company to open additional locations at Dallas-Fort Worth airport, for example, Mrs. Fields declined, saying that those outlets would remain company-owned.
Dalal saw this as a challenge. “I started to ask myself, 'What is the best brand that can compete with the 800-pound gorilla?” he recalls. It wasn’t long before he thought of Toll House. “It is the original chocolate chip cookie,” he enthuses, and “it was the only brand we could use to take it to a different level.” Dalal was convinced that consumers’ collective memories of baking at home would propel the cafes beyond the Mrs. Fields cookie kiosk experience.
He was right and in time, he says, Nestlé Toll House Café by Chip has been offered opportunities to replace underperforming Mrs. Fields locations.
Making the transition from a bag of chips on a grocery store shelf and a bake-at-home snack proved to be a bit more challenging. Dalal says the cafes were able to pull it off by leveraging the one thing that was associated with baked goods that could be duplicated anywhere—the fragrance. All the bakery items sold at Nestlé Toll House Café by Chip are made on the premises, so every time the oven door opens, out swirls the unmistakable smell of sweet treats.
But Dalal says the cafe couldn’t stop there. “We have a much bigger menu for all age groups,” that includes smoothies, frozen yogurt, soft drinks, coffee, and ice cream. “We have a strategic alliance with Haagen Daaz and we offer the best coffee brand globally—Nescafe.”
Speaking of Nescafe, Dalal rushes to point out how easily what could be perceived as an all-American brand was received in the Middle East. As a Lebanese native, Dalal understood that his global customers wanted a much more indulgent environment. “Middle Easterners are much more coffee-oriented, so we had to expand the offerings and present the desserts differently.” Latte artists and table-side drizzling of chocolate sauce followed on furnishing the spaces with comfortable chairs that invite lingering. “We had to sex it up and keep the costs down. It’s a fine balance.”
As for the coffee and chocolate, Dalal says that in Iraq the word for "chocolate" has become synonymous with Nestle. “I think they took it out of the dictionary,” he says adding that Nescafe is a top global brand, too. “I grew up on Nescafe black. If you cut me, I probably bleed Nescafe.”
And the Winning Location Is...
Dalal says the number one location in the world is a cafe in—wait for it—Kuwait. Before the location opened its doors, Dalal spent a lot of time worrying. “It was on an empty street. I just didn’t want the franchisee to have a bad experience.” He needn’t have lost sleep. When Dalal called the owner during Ramadan to offer good wishes for the holiday, he was hustled off the phone. “He couldn’t talk because he had a 45-minute wait just to get in the doors!”
As a leader, Dalal sees himself as a servant to his team. He in turn asks his executive team to serve their field managers, who serve the franchisees, who serve the customers. Ultimately, though he says every day is a day he feels like he can’t do it, the thrill of meeting the challenge keeps him going. He plans to open 50 more locations next year, and 75 in 2014.
To keep going, Dalal says he thinks of his father's wisdom. “When I was young my dad used to tell me a story about Napoleon burning his ships so his men couldn’t retreat from the enemy. They won. I have nowhere to go but realize my goal to be the premier global dessert cafe. I want to make history and I think we can do it.”
[Image: Flickr user Ginny]