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Sale of franchises allows Kesslers to change focus

Rochester Business Journal
August 1, 2014


Dennis Kessler, left, and his brother Laurence once owned and operated 69 franchise restaurants and employed 3,000 workers. (RBJ file photo)

Their plan was just to earn a living.

In 1975, brothers Laurence and Dennis Kessler borrowed $5,000 from their uncle to launch their first Burger King Restaurant franchise.

Nearly 40 years later, the brothers are exiting the operations side of an industry in which they once owned and operated 69 franchise restaurants and employed 3,000 workers.

Today, they have dialed down to four employees and inked a deal to sell the last of their Burger King Restaurant locations—21 stores in and around Rochester—to Syracuse-based Carrols Restaurant Group Inc.

“We didn’t have to sell them off; this was a strategic goal,” said Laurence Kessler, who with his brother co-founded and co-owned Kessler Family Restaurants LLC and the Kessler Group Inc. “Carrols was in an acquisitive mode (and) we were in that mode (of) divestiture, so we met at that corner and everything was good for everybody.”

Along with their Burger King restaurants, the Kesslers held franchises of Friendly’s Ice Cream LLC, Del Taco Holdings Inc. and Tony Roma’s Inc. At one time, Kessler Family Restaurants was the largest Friendly’s franchisee, with 48 locations in the upstate region. The brothers sold 35 locations to Friendly’s a year ago and closed eight others.

“If we had a plan we would have been dangerous,” Laurence Kessler said. “We knew Burger King was a very strong brand back in the mid-’70s. McDonald’s was the big gun even then, and then Burger King started about the same time.”

The brothers, who shared a bedroom growing up and an office to this day, now plan to focus their attention on restaurant development with their company, Kessler Real Estate Co.

Growing up in New York City, the Kesslers learned the restaurant business from their father, David Kessler, owner of two New York City delicatessens called Wolf’s.

“He was our MBA,” Dennis Kessler said.

Their father’s axioms remain ingrained in the brothers, who credit him with helping them make difficult business decisions.

“At the Simon School, where I teach, I’m often quoting our father and (students) say, ‘That’s pretty cool. Where did you get that from?’ I say it comes from the school of hard knocks,” Dennis Kessler said. “I remember early on I complained to him about problems and he was not really sympathetic. He said, ‘If you don’t want problems in business, deliver the mail.’”

Added Laurence Kessler: “The reason I believe we are so successful in business is because we both learned from the same teacher. So we didn’t have conflicts.”

When entering the franchise business, the brothers had their pick of three places to go: Southern California, southern Connecticut or Upstate New York.

Knowing next to nothing about the region, they chose Rochester based on the advice of a Burger King rep.

“(Southern California) has a lot of sex appeal, but the reality set in—we knew we didn’t have any money to do the reconnaissance necessary, so we said that’s out of the question,” Laurence Kessler recalled. “And then I said, ‘I’m not going up to the Bronx.’ Because we New York City people (thought) anything north of 96th Street was upstate.”

Business was not without its share of challenges over the years.

Laurence Kessler recalls an early mistake. Never having eaten a burger with both ketchup and mustard on it—a trademark of the Burger King Whopper— he directed his employees to stop putting mustard on the burgers the day before the restaurant’s opening.

“So we’re open for business now and Burger King bigwigs are all there,” he said. “The guy said, ‘Hey, Larry, how come they aren’t putting mustard on the burger?’ I said, ‘I told them not to.’ The guy says to me, ‘You can do that if you want, but you’ve got to remove the Burger King sign off the door. Put Larry’s Hamburgers on it (and) you can do whatever you want.’”

The decision to operate three Del Tacos in the Upstate New York market also brought lessons.

“We exported (Del Taco) from experiences in California (and) it was a failure,” Laurence Kessler said. “We thought it would represent a wonderful competitor to Taco Bell.”

One way the Kesslers left their mark on the Burger King Restaurant empire was by introducing the vegetarian burger to the menu in the late 1980s. Prompted by a customer’s request, the brothers pushed for the veggie burger to join the menu.

“(Corporate) said, ‘That’s ridiculous—you’ll lose money on every burger,’” Dennis Kessler said. “I said, ‘We’ll do it.’ So we called their bluff, (and) now it’s part of the menu.”

Thirty-six years ago, Marcia Williams first worked as a cashier for one of the Kessler restaurants. She started when the brothers had three franchises. Today, she is the company’s payroll manager.

“I couldn’t find two better people to work for,” Williams said. “They’re the best businessmen I’ve ever known. (The growth) really wasn’t surprising to me because as I got to know them over the years, it just seemed a natural progression for them.”

The sweetest aspect of their success was what it allowed them to do, the Kesslers say.

The brothers have donated upwards of $4 million to the University of Rochester Medical Center, which opened the Kessler Burn & Trauma Center at Strong Memorial Hospital. They also funded the Kessler Center in Irondequoit to help Easter Seals, an organization that assists individuals with disabilities or special needs and their families. At the time of the dedication of the Kessler Center, the brothers were the largest donor to Easter Seals in New York outside of New York City.

“The best thing that came about from our being in this business was our contributions to our community,” Dennis Kessler said. “We came here with nothing. We came here with borrowed money, and this community was very good to us and we felt an obligation to share that.”

The restaurants owned and operated by the Kesslers stretched from Rome and Utica to Buffalo and from northern Monroe County to the Southern Tier.

Shifting to the development side of the business is something the brothers have been thinking about for many years. However, operating the franchises required most of their attention until recently.

Building locations and leasing them to restaurateurs is the main focus now.

“We’ve been doing that in bits and pieces over the years, but we were restaurant people in operations, so we stayed focused. NowP we have the opportunity to change our focus (to development),” Laurence Kessler said.

He added: “We’re in the restaurant business. We have a good handle on what we think are good concepts or bad. We know good real estate from bad locations, so we think we have a head start in that area.”

Though finished with the franchise business for now, the brothers say they are open to fresh opportunities.

“I wouldn’t close the door to other restaurant concepts that come our way that we find interesting,” Dennis Kessler said. “Retirement is not in our lexicon. It’s just not.”

8/1/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.




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