Talking Doughnuts, Coffee, and Canada With Über Restaurateur Dennis Riese

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Oh, Canada! First poutine spreads like chicken gravy, and today theres word that by Monday, Riese Organization, the citys largest restaurant company, will replace its thirteen Dunkin' Donuts franchises with Tim Hortons the coffee, doughnut, and baked-goods eatery started in 1964 by the onetime Toronto Maple Leafs player of the same name. (Starting at 6 a.m. on Monday, the Penn Station location will give out free coffee all day.) In Canada, Tim Hortons sells two billion cups of coffee a year; and it introduced the "Timbit," a bite-sized doughnut ball, over 40 years before Hardees inflicted the biscuit hole upon us. We gave Dennis Riese a ring to see why he ditched Dunkin' for a Canuck company, and to talk about the state of his empire in general.

So why ditch Dunkin? Does this have something to do with their monstrous expansion in New York?
It partially does. We were a franchisee from the early eighties when Dunkin was a smaller company run by founder Bill Rosenberg and his son. Through the years it got very large and corporate, [and] we had a couple of incidents that created a lot of acrimony between the two companies. They initiated a lawsuit at one point to try to terminate us, which they lost. There was a lot of bitterness for several years, and we thought it would be best to disengage. We signed an agreement with Dunkin Donuts five years ago where both of us agreed to terminate five years hence. I decided we had to replace a doughnut with a doughnut.

Why stick with doughnuts? Arent people more calorie-conscious these days? What about something trendier? Like cupcakes!
My family brought flavored popcorns and chocolate croissants to New York, and we lost a lot of money with both because we were trying to reeducate consumers' tongues to products they werent familiar with. Your best bet is to serve someone a product theyre familiar with. Until the Magnolias and the trendies of the cupcakes become mainstream, theyll be questioned. The mainstream products are the ones that have gained full acceptance, and yes, they are very profitable. Also when people go out to a restaurant they dont want to be told Im paying for something that might not taste as good, but its healthier. Theyll sacrifice for healthiness at their house, but not at a restaurant.

But what about the whole calorie-posting thing? How do things like that Good Morning America segment about narrowing arteries affect your business?
Given the possibility that calorie counts can help our society have less cancer and heart disease, youre not going to hear Dennis Riese coming out against something like that. I only want to know that everyones doing it. And thats not happening right now. Everybody should be posting these numbers. Apparently it already has some effect that people are rethinking what theyre ordering. But look, if a restaurant makes a $1 profit on a dozen doughnuts before, now theyre going to make a $1 profit off of a dozen whole-wheat doughnuts.

So are these doughnuts any healthier? Is the calorie count about the same as a Dunkin doughnut?
I would say that I dont know the exact answer, but I would think theyre very comparable.

Tim Hortons is also known for its coffee. Did you taste-test it against Dunkin? Is there big money in coffee, given the current craze?
The coffee was not the thing. My decision to convert starts with the fact that they bake their doughnuts on premises, whereas Dunkin probably bakes on their premises at way less than 50 percent of their stores. Tim Hortons were built with kitchens, so they bake fresh doughnuts all morning long. And they offer a much more extended product line for lunch and dinner, which was very appealing with the type of rents we pay. As good as Dunkin is, its really only busy in the morning.

Do you now have to build a bunch of new kitchens?
We were baking our doughnuts for Dunkin in a Long Island City commissary and trucking it in ironically, every one of our locations has a kitchen, so were now putting every one of those to use.

Chefs seem to be getting more into hot dogs these days. Are people buying more of them at Nathans? Can we expect more stores?
No, in fact Im surprised youd say that. Thats a trendy thing for the chefs themselves, but Ive been selling hot dogs for 35 years myself. Ive been up and down with them, and if anything, the trends are way down for people to be going out to a restaurant and eating a hot dog. On the other hand, on your backyard barbecue grill, sales are booming.

But hamburgers are still going strong?
The total quantity has remained very high. You know what the first of the top five foods in America is? The hamburger. You know what the second is? The cheeseburger.