Don’t tell our dentists—NorthBay biz, in an effort to satisfy sweet-toothed readers, profiles Michael Powell’s wildly successful Powell’s Sweet Shoppe franchise.
When Michael Powell talks about the business he’s created, he exudes the energy and giddiness of a kid in a candy shop. Which, of course, is exactly what he is.
“I didn’t have candy in mind when I wandered into Windsor and saw what Orrin Thiessen was building around the Town Green,” he confesses. “But if you’ve ever read Small Is Beautiful [English economist E. F. Schumacher’s marvelous tome, subtitled “Economics as if People Mattered”], you understand the societal benefits of having people working where they live. At the time, I was living up in the hills of Wikiup, which isn’t very conducive to young kids. If my son missed the driveway while learning to ride his bicycle, he’d tumble 100 feet and end up in the creek!
“I looked at the shops that were being set up, with living quarters upstairs—just like in the old days—and I thought, ‘This is something I’d like to be involved in.’ My son [also Michael] and I had gone to one of the Movies on the Green in the summer of 2002—the screen may have been just a sheet hung between two poles—and we really liked the small town feel of it all. I’m an entrepreneur at heart, and I really liked what they were doing, so I sold my house and set up the candy shop.”
The sale of his house came at a good time, letting him buy the retail space, his residence upstairs (he and now-teen Michael still live there) and fund the new business. The elder Powell was born in Salt Lake City in July 1962, but the family moved to San Jose when he was a year old. “My father worked for IBM and was transferred there,” he remembers. “He was an electrical engineer and worked on those huge mainframes, the ones that used to take up a whole building. Mom also worked for IBM part-time when we kids got a little older.”
Powell attended Oak Grove High School in San Jose, then set off to UC Berkeley, where he began his college career with a religion major. “I didn’t really have much of an idea what I was going to do, so I switched to the social sciences with an emphasis on ethics. I took my time getting through college—I also took some classes at the Graduate Theological Union—most of the time working in the afternoons with kids in an after-school program.”
Shortly after earning his degree, after a stint at Kaiser Permanente in Oakland (as assistant to the director of medical economics—“a glorified secretary,” he explains), he started a small business called Fridge Fun in Santa Rosa. “We made little magnetic words that people would rearrange whimsically on their refrigerators to create short poems,” he says with a mirthful laugh. “We employed 20 people in a small industrial park near G&C Auto Body and kept the business going for 12 years, though the market had dropped off considerably by the final couple of years. I just closed the business then. Paid off the bills and just closed the doors. The business had run its course.”
That’s not likely to happen any time soon with Powell’s Sweet Shoppes. The original business, on the Windsor Town Green, was so immediately successful that customers were clamoring for the chance to replicate it in their own hometowns. After a time, Powell began to comply with those requests.
“Back up for a second, and take a look at what we’d created,” he says with a warming smile. “Some just say, ‘Oh, you’re just selling candy.’ But you can get candy at Safeway. What we’re selling, really, is memories. It’s a look back to the days of penny candy, a soda at the corner store and really good ice cream, gelato. It’s a small town thing. That’s the thing about nostalgia. It’s a filtered memory of the best of times. The human mind is good at painting a better picture of our past than really existed. What could be better than an old-fashioned ice cream parlor and candy store? Nothing that I could think of.”
A winning team
Over time, the candy gradually took precedence, and Powell was off and running. He was lucky to find a similarly minded compatriot in Print Cates, now director of franchise operations, who walked into the store while it was being built [the soundtrack of “Willy Wonka” playing in the background, really]…and stayed.
“My job is to physically open the new stores—unpack every box, train the new owners and their staff, and then follow up a few times each year to make sure things are going smoothly and according to our standards of operation,” says the raised-in-Spokane, Washington native. (Print is short for Printess, an old English form of Prentice, which is his father’s and grandfather’s name as well.) “I also go to all the candy shows to source new products and release them to our franchisees. Barbara is our information systems wizard. She’s been with us almost six years, and she’s the one who updates all the products and their prices and makes sure the catalogs are always up-to-date.”
Cates says he can merchandise anything. “After selling hardware for years, candy is easy,” says the father of three candy lovers 10 and under (including twins). “In actuality, it’s really dreams we’re selling.
“All of our franchisees have been to the first store in Windsor. That’s where the dream started for them, where the dream came alive. So they’re very receptive to our ideas. One of my merchandising mottoes is: Stack it high and watch it fly. I don’t know; I just have the ability to see how products ought to be presented. I think, too, that there’s an element of escapism at play here. People enter our stores, and they’re taken back to a happier place and time, even if part of that is a figment of their imagination. In our stores, it’s something of a dream, and that’s what’s great about it all.”
Powell notes that the team has suspended new franchise opportunities for the time being, but expects to open them up again in about 10 months. “We’ve been pretty busy, opening up almost one store a month for the last year or so. We have 15 stores in California, and one each in Colorado (Boulder), Idaho (Boise) and Oregon (Bend). We have four here in the North Bay—Healdsburg, Windsor, Petaluma and Novato. Three stores are in the site selection process—in Palo Alto, Walnut Creek and Gilroy—so that will bring us up to 21 stores in all. It’s time to take a breath.”
Last July, Powell sold the original Powell’s Sweet Shoppe in Windsor to its then-manager, Craig Christensen, to focus on the franchising business; the store continues to operate as a Powell’s franchise, and Christensen couldn’t be happier.
Sweet success
The Windsor store, opened in September 2003, was an immediate success. Powell’s not sure whether it was the so-called penny candies, the hand-made chocolates or the direct appeal to dreams and nostalgia, but the store had nearly a quarter million visitors in its first year alone. The town council dubbed Powell the “Willy Wonka of Windsor,” and the Chamber of Commerce named him “Business Person of the Year” for 2004-2005.
“We like being in the heart of the downtown here,” he says. “The library is right across the street, my son knows the Chief of Police…and he knows my son. We host birthday parties and fund-raisers, and we offer gift boxes that are very popular. Turns out, there are a lot of candy games—have you been online recently?—and that’s a new part of the business that we couldn’t have anticipated when we started. There are M&M games, Necco matching games, Cadbury Chocolate Factory games, one called Kit Kat Breakout and one called Bubble Gum Run. There’s also the Great Chocolate Chase that you can download from Yahoo! games. I’m not sure what the one called Candy Crisis is all about. Our newest challenge is that Print, Barbara and I are in the middle of writing three children’s books, all of which are set around Powell’s!”
The first franchise came with the Healdsburg store, which opened in 2006. “People really like the idea of running their own business,” says Powell, “and they come to us seeing a proven model, a business that really works. They do make the majority of the decisions about their individual stores, but the basic model has been pretty well tested out. And, of course, we do see the candy-dream business as being fairly recession-proof, which is kind of important in these times.”
The cost of obtaining a franchise, taken to the point of opening the store, is about $350,000, says Powell. “I average about one email a day from people interested in opening a shop, so we’re building quite a wait list for new stores, and probably 40 percent of those who took the time to actually fill out an application have actually gone ahead and opened a store! It’s amazing, but there’s a huge interest out there in our stores.
“It’s not cheap, you know, to build something new…and make it look old. The franchise fee is $30,000, which buys you the business rights in your territory, and our oversight person—Print—who’s there every step of the way, in terms of opening the store and all his follow-up visits. Inventory runs about $100,000, and the rest goes to the costs of actually putting together the store: displays, cabinetry, point-of-sales materials, hardware. For all of that, we get back 6 percent of all sales. In return, they come here to the Windsor store to get the hands-on training they’re going to need to run their own store and they get our buying power. Those savings alone—from the buying discount—offset the franchise fees. Plus our continuing interest in helping them run their stores in the best, most rewarding manner. It’s our job to help them make more money, simple as that.”
Powell notes he could have gone forward with a co-ownership model, but as a single father, he was looking to simplify his life, not make it more complicated. “So, the franchise model lets me spend a lot more time with my 13-year-old,” he says, the pleasure oozing out. “The other advantage of the franchise model is that each store is locally owned and managed, and these are people who are quick to take an active leadership role in their communities. When I owned the Windsor store, I was ready and willing to donate to local causes, because I live here and I want Windsor to be a nice place for all of us to live.
“We’re always looking to situate the stores in a downtown setting, where there’s foot traffic, where people really live. Healdsburg’s store is on the Plaza. What a wonderful place that is. Petaluma’s store is in that marvelously revitalized downtown area near the theater. The lady who owns the store near San Diego [La Jolla]—her child is in the local school—is really involved in her community and is doing a great job. People from Iowa want a store; people from the East Coast want a store. That’s going to take a whole other mindset on our part, but we’ll get there eventually. It’s just going to take a little more time, that’s all.”
Early on, Powell says he tried to be all things to all people, but has learned over the years that the candy—along with the dream—has to be the focus. “We used to have cookbooks [for chocolate and candy] and there were gourmet nuts and pet treats. But those things weren’t really why people were coming in the door. This is a very tactile place, and we encourage people to touch things. It’s all about the candy and it’s all about the fun, the whimsy, the nostalgia. It’s kind of like ‘Mayberry R.F.D.’ It’s nostalgia in the very best sense of letting us remember our dreams…and to then reach out to get them.”
