So You're Marvelous. What's Next? Marvelous Markets wants to grow faster. We asked three experts to tell it how.
By Brian O'Reilly

(FORTUNE Small Business) – Michael Meyer owns Marvelous Markets, a small chain of profitable boutique food stores in the Washington, D.C., area. His nine stores, with annual sales of $10 million, sell fabulous breads, pastries, and sandwiches and fresh, ready-to-heat entrées to prosperous, busy yuppies. In Georgetown, DuPont Circle, and the D.C. 'burbs, you have to shuffle sideways around customers in the shops at lunchtime, and the lines are out the door on weekends. The demand for this kind of food is so strong, says Meyer, 39, that it's time to franchise the concept and spread it fast to dozens of cities.

Yet Meyer is worried that there's no catchy slogan to describe the stores. "The Little Fresh Food Store?" But they don't sell uncooked meat and dairy, so maybe that's confusing. Most customers see Marvelous as a bakery, but Dr. Atkins's protein diet has clobbered the bread biz, to Meyer's considerable irritation. ("People should exercise more!") So he's worried about putting the word "bakery" in the slogan. And so it goes. The cash registers and inventory-tracking systems are weak, allowing midday gaps in the sandwich supply. The two commissaries, where a lot of the food is prepared, are too big and underutilized. Marketing is "too word-of-mouth," and store revenues vary widely, depending on the oomph and attentiveness of the manager.

Meyer, a graduate of Yale with an MBA from the University of Virginia, has scrutinized and analyzed virtually everything. So much, in fact, that he worries that he worries too much: "I think sometimes that I'm looking for the perfect answer, rather than being satisfied with something that's 80% correct." Meyer felt he could use some smart food industry consultants to help him thrash out his problems--so FSB arranged just that for him (and plans to do the same for other small-business owners in future issues).

We invited consultant John Varsames of Boulder, who directed new-store openings for the Wild Oats chain of natural-food markets as it built 102 outlets in 23 states, to kick around the challenges of franchising. Neil Culbertson, president of Growth Partners in Greenwood Village, Colo., is a marketing and merchandising expert formerly with Taco Bell and Boston Markets and is now helping burnish the image of Bennigan's restaurant. He came to do the same for Marvelous Markets. And Randy Fields, co-founder of the Mrs. Fields Cookies chain, was supposed to discuss information technology, point-of-sale registers, and inventory management. Fields, it turns out, did much more than that.

Varsames looks a lot like the actor Keanu Reeves, and he attacked issues with the unsmiling intensity of a gunslinger. He visited one of the Marvelous Markets stores the day before he met with Meyer--he actually pressed the driver of the jitney bus from his hotel into taking him there and pulled the driver along into the store for a second opinion. Varsames disapproved of some of what he saw. Lots of popular items were missing from the shelves. He couldn't find a menu. It was hard to read the signboards behind the cash register. It took a while to realize he could get a sandwich. It wasn't all bad. Varsames was much more impressed when he and Meyer visited better-run stores the following day.

Seeing the sharp differences among stores, Varsames addressed the need for Meyer to set high standards for consistency once the company becomes a franchisor. Overly "creative" franchisees can be a headache, he warned, especially when they try to introduce new products on their own or market their wares in unusual ways. "The biggest challenge with franchisees is everyone's individuality," he noted. "You have to have a person on your staff who says, 'No. Your job is to operate to these standards.' You need a disciplinarian." Varsames offered to ship some training manuals to Meyer that spell out such basics as "Is the sidewalk clean? Are the hours clearly posted?" But don't let store managers spend too much time fiddling with manuals, he added. "They need to spend most of their hours out front, working the store, interacting with customers." Meyer nodded vigorously.

Culbertson, the consultant, who arrived the following day, could hardly be more different in temperament from Varsames. He has the air of a friendly uncle who happens to be in the food biz too, dropping by to schmooze with seldom-seen relatives. (In car rides between stores, Culbertson and Meyer discuss troubled food companies as though they were elderly aunts with medical problems: "Couldn't get financing ... Labor costs too high ... Who wants to go to the same singles bar your mother went to?")

At the Georgetown store Culbertson swiftly concluded that Marvelous Markets "isn't getting its story out. I come in interested, but I don't know what you stand for." He was puzzled by the store's napkins and coffee cups, which display photos of pleasant themes such as an Italian villa or a cozy chair and table. "What is this telling me?" he asked Meyer. "It's supposed to say 'Eat the good life every day,'" the CEO replied, but he quickly conceded that it doesn't say enough. "It doesn't communicate that we make it ourselves. That it's fresh."

Eventually Culbertson began to deliver a torrent of suggestions. Emphasize the stores' "commitment to convenience" by creating an e-mail-ahead program that lets customers order prepared dinners they can collect on the way home. When people come in for lunch food, stick a flier in their bag touting the store's great dinners. To drum up more business, hang advertisements on neighborhood doorknobs. The message inside the stores has to be better too. Although Meyer is proud of his "80 great wines for under $20," Culbertson was unimpressed by the simple black-metal display. "Nothing here tells me you're committed to wine," he complained. "I want to hear that you've found the best combination of quality and value. Same with the yogurt. Tell me you shopped the world to find the best moderately priced cheese and olives for me. I'm not hearing that. You should say it. Your coffee cups and napkins, your displays, your signs, all should reinforce that."

But back at the cheerless, spartan headquarters of Marvelous Markets on an industrial street in Fairfax, Va., Culbertson's and Meyer's efforts to come up with a catchy trademark were for naught. "Your neighborhood bakery and meal market?" Meyer didn't like the word "your." "Too pretentious," he complained. They concurred that the word "bakery" has lots of positive associations but that the anti-carbohydrate fad could hurt them. Meyer, who opened his meeting with Culbertson by declaring, "I'd like to walk out of here with a clear understanding of who we are," was pleased with the multitude of good ideas but still frustrated with his brand identity. As Culbertson departed for home in Denver, they agreed to stay in touch.

And then came Randy Fields. He was the co-founder, with his wife, of the Mrs. Fields Cookies chain, and his success in devising tech-driven management systems for the stores became the stuff of innumerable business school case studies. "I studied your case in grad school," Meyer told Fields. "It was among the two or three I remember best." He had singled out Fields as the person to consult about inventory-tracking systems for franchisees. But even though Fields now runs a company, Park City Group, that sells exactly that, he had something very different in mind for Marvelous Markets.

Two minutes into Meyer's opening remarks, as he was explaining inventory tracking headaches and store manager inconsistency, Fields interrupted brusquely: "You don't know what your real return on investment is." Fields said he was impressed with the stores' margins but observed that margins would be much better if they stopped putting out too few ham sandwiches and too many turkey sandwiches ("or whatever") and instead stocked what's selling every day.

Suddenly Fields drove a huge wooden stake into Meyer's cherished dream of going national. "Forget franchising. Either you're onto something good that can be tweaked, in which case grow it yourself. Or it's a fluke--a demographic thing--and it will get screwed up when you set it up elsewhere." He bored into Meyer's attitude toward store managers. Meyer has noted that a good one can boost sales by 15% above average, and a bad one can hurt them by that much. Fields blasted Meyer. "You want to franchise this because you think a franchisee will manage stores better than the current operators do. You're wrong. What makes you think some guy from Keokuk, Iowa, will do a better job than your managers? You just want his money." He launches into a profane analysis of the perils of franchise operations, from lawsuits to the headaches of being in "the store-opening business" to franchisees who quickly convince themselves they are smarter than anyone in the home office.

As Meyer and three of his lieutenants sat in stunned silence, Fields turned the attack to the cherished commissary operations, where company employees craft thousands of sandwiches, salads, and dinners every day, and master bakers turn out superb artisan breads every night. "Get rid of it," Fields said of the commissaries. "They're a distraction. Sell it, and use the money to open more stores. An independent operator will provide better quality and lower prices than the in-house commissaries." He added, "We did that at Mrs. Fields. We learned you can beat up on a supplier much better than you can your own employees." Besides, said Fields, running your own commissaries will backfire in other ways. Store managers, whose bonuses depend on store margins, will always suspect that Meyer is tweaking prices from the commissary to cheat them.

Finally, after he rested his forehead on the table for a few seconds of dramatic concentration, Fields made a pronouncement. He informed Meyer that his managers are pursuing all the wrong objectives and that he has hired all the wrong kind of managers. It's not their fault, Fields says, explaining that it's a product of the clumsy and tedious way the company tracks and rewards their performance. Managers are mired in paperwork and struggling to keep store margins high by guessing how much food to order for tomorrow and next week. They have neither the tools nor the information to do that properly now, he says. Instead of messing with paperwork, managers should be "sales maniacs," focused entirely on boosting sales any way they can. Without Meyer's realizing it, Fields warned, his antiquated technology has forced him to hire managers who not only tolerate paperwork but even prefer it to selling.

Meyer had been planning to get sophisticated point-of-sale cash registers to track inventory, and equally complicated software and systems for the commissaries to track how much food to make. But Fields noted that there is simpler software (sold by Fields, among others) designed to cut a food store's waste that would cost only a few hundred dollars a month per location. Those systems, says Meyer, "will tell me how many chocolate chip cookies to make in Bethesda on St. Patrick's Day if it's raining."

At one point Fields told a story that illustrates the kind of sales-driven store manager Meyer really wants. "When Debbi [Fields, his ex-wife] was hiring a store manager, she would ask the candidate to sing 'Happy Birthday.' Some of the candidates would make a face." (His face puckers into a look of disdain, confusion, and contempt.) "Others would stand right up and sing enthusiastically. Debbie would dismiss the first, and hire the second." The ones that sing, he said, instinctively know how to pursue sales. "They're the ones who will hire a trumpet player or a mime to stand outside the store, if that's what it takes."

There was a puzzled silence in the room. Then Meyer and his lieutenants suddenly burst into laughter. They got it. "We have two sets of tasks," said Meyer. "A couple of immediate ones. And then we blow up the current architecture." A few days later, at Culbertson's suggestion, Meyer invested $10,000 in a machine that will make more attractive, colorful labels for his products. And as Varsames recommended, he is spending a "few hundred dollars per store" to create slick signs for the various food sections.

As for Fields's advice, Meyer said he understands why he opposes franchising. Still, he's inclined to go ahead with it, but more slowly than he originally planned. The idea of selling the commissaries is also difficult for him to digest--it might be hard to find a reliable outside partner that can provide high-quality food--but intriguing. "The culture of the company has always been the production of food, not the selling of it. This could be very freeing," Meyer said. "What Fields is proposing is a breakout strategy. Information systems can let you transition to a sales culture. I was concentrating on branding." He pauses. "Fields might have given us the keys to the kingdom."

Stay tuned. We will revisit Michael Meyer and Marvelous Markets from time to time, and report back on just what that new kingdom looks like.