Golden Krust Caribbean Bakery, Inc. Business Information, Profile, and History

Company Perspectives:

In 1989 the Hawthorne family had a dream, that is, to offer the most sought after Caribbean cuisine in New York.

History of Golden Krust Caribbean Bakery, Inc.

Based in the borough of the Bronx in New York City, Golden Krust Caribbean Bakery, Inc., operates a chain of company-owned and franchised Golden Krust Caribbean Bakery restaurants. All told, there are some 75 units located in New York, New Jersey, Philadelphia, Atlanta, and Florida. Stores were also slated to open in Boston, Chicago, and California. Golden Krust's signature product is the Jamaican beef patty, but the pocket pastry also is offered with chicken and vegetable fillings. In addition to patties, the restaurants offer jerk chicken, stewed chicken, curried chicken, curried goat, escoveitch fish, sliced fish, and ox tail. Baked goods include coconut cake, sponge cake, spice bun, Antiguan bread, gizzarda, fruit cake, and tuti fruiti. Golden Krust is owned and operated by the Hawthorne family.

Company's Founding by a 1980s Immigrant

Golden Krust was founded by Lowell Hawthorne, one of 11 siblings born in St. Andrews, Jamaica. His parents, Mavis and Ephraim, ran a successful bakery, Hawthorne & Sons Bakery, which they started in St. Andrews in 1949 and where Lowell learned the business. But the bakery could employ only so many children and the 1970s brought difficult economic conditions to Jamaica, prompting nine of the Hawthorne children to immigrate to the United States. Lowell arrived in New York in 1981, determined to one day run his own business. In the meantime, Hawthorne earned a degree from Bronx Community College and took a job as a junior accountant with the New York City Police Department, a position he would hold for eight years. Like his siblings Hawthorne saved his money diligently. All of them bought homes. One of his brothers, Lloyd, worked for Royal Caribbean, the largest West Indian bakery in New York, and had a feel for the local retail situation. He realized that Royal Caribbean and the other bakeries were interested in doing business with wholesalers only and they failed to realize how large the Caribbean population in the city had become. Moreover, West Indian baked goods were not sold close enough to where the customers actually lived.

Sensing an opening in the market, Hawthorne took a leave of absence from the Police Department to start his own bakery. He would never return to the job. Nevertheless, launching the business did not come easily. With so many restaurants failing in the 1980s, banks were not interested in loaning money to someone who wanted to open an eatery in a working class section of the Bronx targeting West Indians. Undeterred, Hawthorne called a family meeting, and his eight brothers and sisters agreed to mortgage their homes and deplete their savings to raise the funding for the new business, $107,000 in all. "We recognized the idea's profitability," Hawthorne told Emerge in a 1997 profile. "We knew it was a risk, but it was a calculated risk."

The first Golden Krust Caribbean Bakery opened in 1989 on East Gunhill Road in the Bronx, in the heart of a major West Indian neighborhood. With ovens and racks in the basement and a coffee shop on the ground floor, the store was an immediate success. In the first year, the business rang up $100,000 in sales and the company was already expanding. It opened another bakery next door to handle delivery routes and expanded beyond the Hudson River to open another store in New Jersey. The Hawthornes also paid attention to where their customers came from, the ones who ordered patties in bulk, and began scouting out new locations in the city. By the end of the second year, Golden Krust was operating five stores and sales had grown to $1 million.

Steady Growth in the Early 1990s

As Golden Krust proved successful, it was able to secure a $1 million bank loan and contribute a portion of earnings to build a new plant. In keeping with a desire to help bring opportunities to minorities, the facility, which opened in 1992, was located in one of the most disadvantaged sections of the Bronx. Whereas Ephraim Hawthorne was able to produce only a few hundred meat patties each day in Jamaica, the new Bronx plant could turn out as many as 300 each minute. They were then flash-frozen, distributed, and heated at the stores for serving. The extra production capacity would be needed, not only to supply the needs of the growing chain of Golden Krust restaurants, which spread to the other New York boroughs, but to meet large orders. Inmates at the Rikers Island prison were served Jamaican patties, consuming more than 50,000 each month. In 1995 New York City schoolchildren would start eating the patties as part of the school lunch program. Later city hospitals, Mount Vernon, New York-Schools, Rockland County jails, and supermarkets in some 30 states also would be added as customers.

By the end of 1996 Golden Krust was generating sales in excess of $10 million from 13 company-owned stores. The chain also had established a beachhead in Florida and opened a production plant in Fort Lauderdale. In addition, the company was taking steps to grow the Golden Krust chain through franchising, something that Hawthorne had not envisioned originally. As he explained to Black Enterprise in 2002, "Suddenly, calls started coming in from all over; people were interested in the concept. So we sought information on franchising." It was a move few minority business owners were willing to make, due to the expense and time it took to set up a viable franchising structure and the danger of losing focus on running the core business. But Hawthorne once again displayed his business acumen by putting together a program. Golden Krust licensed franchises for $20,000 and received 5 percent of profits, with 2 percent earmarked for cable television advertising.

In 1997 the first handful of franchised operations began to open. An early success story was Jamaican-born Hillary D. Hurbs, an acquaintance of Hawthorne. She already had experience at the Pepsi-Cola Company and with a consulting firm before deciding to become a Golden Krust franchisee and going to work for herself. Most Golden Krust outlets were small affairs, some as small as 600 square feet, located in enclaves of West Indian immigrants. But Hurbs's restaurant was 4,350 square feet in size and capable of seating 74. It was located in lower Manhattan on Chambers Street, much closer to Wall Street than to the Bronx or Brooklyn. She also would provide catering to nearby City Hall, as well as the mayor's residence at Gracie Mansion.

With a business background, Hurbs was an unusual Golden Krust franchisee. A large number of other women launched Golden Krust restaurants, but many of them were nurses. It was an understandable connection on a number of levels. Many West Indians worked in hospitals, leading Golden Krust to locate many of its units close by. As a result a lot of registered nurses became regular customers, and some took an interest in going into business for themselves. Moreover, many nurses developed strong leadership skills and brought other attributes to the table. In a New York Times profile of the company, Jeffrey E. Kolton, a lawyer specializing in franchising, explained why nurses made ideal candidates: "Good franchisees are people who want to follow systems. Nurses take pride in their work, are good at following orders and manuals, and they're customer service oriented."

By mid-1999 the Golden Krust chain was 35 units strong, 24 of which were franchise stores. The company also had a new 60,000-square-foot Bronx plant, funded by $1.2 million in city-backed business development loans. The chain was now moving well beyond its base of Caribbean customers and appealing to the general public. In an effort to reach everyone, the chain modified its menu to meet the tastes of a neighborhood. For instance, it offered soy protein patty fillings for vegetarians and halal patties for Muslims. In Hurbs's Chambers Street outlet, customers could find cold cuts as well as curried goat. Golden Krust's success did not go unnoticed. In 1999 Ernst & Young named the company its Entrepreneur of the Year in New York City.

Continued Expansion in the 2000s

Golden Krust continued to make strides in the new century. It entered the Philadelphia market, where it hoped to open more than 20 stores within five years. The first Philadelphia outlet also would introduce the chain's jerk chicken dish and be the first to use the Golden Krust Caribbean Bakery & Grill name. The management of the company to this point had been dominated by members of the Hawthorne family, but in early 2003 Golden Krust hired experienced outside management help to take the business to the next level. Brought in were a vice-president of franchising; director of research, development, and training; director of marketing and public relations; and a director of franchise sales and development. The immediate goal was to better promote the Golden Krust brand and grow the franchise operation. The chain also was improving its advertising program with the signing of a spokesperson, Tiki Barber, star football player of the New York Giants.

Later in 2003 Golden Krust demonstrated that it had reached a new level of credibility when it signed a seven-year agreement with Pepsi USA. Pepsi would install soda fountains in all of the Golden Krust stores, help the chain redesign its menu boards, provide assistance in marketing, and also help in analyzing demographics for use in selecting new store locations. The chain was also in line to receive rebates based on the volume of Pepsi products it sold. Several months later Golden Krust, in conjunction with Pepsi, introduced combo meals to drive sales for both parties. To support the program, the company launched a major advertising campaign, making full use of Tiki Barber in all media, including radio, television, newspapers, billboards, and buses.

As Golden Krust entered 2004, the chain consisted of 73 stores located with five states. Another 12 units were under construction. But management was aiming at a much loftier goal: 250 stores in operation within the next five years. Essentially, this meant opening three units each month. Because Florida, with its large Caribbean population, held great potential for the Golden Krust concept, the company conducted one-day "Franchise Opportunity Seminars" in Fort Lauderdale and Orlando. The hope was to land area developers, people willing to open five or more stores, rather than just individual franchisees. Not only did people receive a presentation about the concept, they also had a chance to meet individually with top Golden Krust officials.

Later in 2004 Golden Krust granted territorial rights to a franchisee for the first time in its history. Moreover, the ten-store deal was slated for the Los Angeles, California, market, in effect giving Golden Krust a coast-to-coast presence. These new units would also be the first to employ a drive-through window for takeout. The new franchisees were partners Donald Royes, June Royes, and Carl Ashman, who collectively had a great deal of experience in marketing and restaurant management. Earlier in the year they had become aware of the Golden Krust concept, and after conducting some research into the company and its leadership, decided to sign on.

The company also launched a variation on its original concept. In partnership with the Mid Bronx Senior Citizen Center it made plans to open a Golden Krust Café, a true sit-down restaurant that would offer a seafood grill in addition to the chain's traditional fare. Golden Krust had come a long way in 15 years; the American appetite for Jamaican food appeared to be the only limiting factor in determining the company's long-term potential.

Principal Subsidiaries: Golden Krust Patties, Inc.; Golden Krust Franchising Inc.

Principal Competitors: Caribbean Food Delights; Royal Caribbean Bakery; Tower Isles.

Chronology

• Key Dates:
• 1989: The first Golden Krust Caribbean Bakery opens.
• 1992: The Bronx manufacturing plant opens.
• 1997: The first franchised units open.
• 2003: An alliance is forged with Pepsi USA.
• 2004: Golden Krust expands to the West Coast.