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Startup starving for cash infusion

Dagwood's lays off most of its staff as it seeks a CEO and new investors.

By MARK ALBRIGHT, Times Staff Writer
Published December 18, 2007

CLEARWATER - A startup facing a severe cash shortage, Dagwood's Sandwich Shoppes has laid off all but a skeleton crew of four at corporate headquarters and launched a search for new investors and a top executive.

In May 2006, Dean Young, Clearwater-based creator of the Blondie comic strip, called Dagwood's the realization of his dream of a quick-serve restaurant chain that celebrates his main character's love affair with all sandwiches great and small.

Since then, an investor group that put up most of the money took charge in September. It pressed Lamar Berry, a Popeye's Famous Fried Chicken veteran and Young's hand-picked choice to get the chain off the ground, to step down as chief executive officer. Young also stepped aside as chairman of the restaurant company in place of another investor in the venture, Bill Ryan of Alexandria, La.

The company laid off about two dozen workers at its corporate headquarters Thursday and on Monday briefed area franchisees about the quest for new investors and the CEO search.

Ryan answered all of a reporter's questions: "No comment."

Young and Berry remain on the Dagwood board and own stakes in the company.

"I am still involved, but not in the day-to-day operation," said Berry, who indicated the board is talking with several investor groups this week.

One of the company's initial problems was building an infrastructure to support a growing group of franchisees before Dagwood's had enough stores open to generate cash to pay for it.

Indeed, 18 months after launch the chain has only 13 stores. Only one restaurant in Palm Harbor has been open a full year.

"The demand is there and business at our stores has been pretty good," said Bob Coston, Young's son-in-law, who holds the Tampa Bay franchise. "The problem is the company was under capitalized, then expanded too quickly."

The company's 33 area franchisees continue to open new stores, but are anxious about their investment during a period of uncertainty.

"I think it's just temporary growing pains," said Tony Ratliffe, the Atlanta franchise holder.

Some employees said they first learned they were losing their jobs when the company's outsourced employee benefits firm notified them by registered letter they would not be paid for work already done. Now they wonder if they can get their jobs back if new investors sign up.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

[Last modified December 17, 2007, 22:48:51]