A Tale Of Two Companies

There's more than one way to bake a cookie -- and build a business.

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David Liederman makes a remarkable soft-and-chewy chocolate chip cookie. So does Debbi Fields. Some people prefer one to the other.

Cookie eaters who enjoy large chunks of chocolate in a thin, very buttery cookie with just a hint of crispiness at the edges will buy theirs at Liederman's David's Cookies stores. Connoisseurs who prefer a more traditional chip in a thicker cookie -- still a bit doughy on the inside -- will patronize a Mrs. Fields Chocolate Chippery store. A cookie from David's can vary in size from large to small and in shape from circular to oblong. A Mrs. Fields cookie will always be round and within one-quarter inch of three inches in diameter. At Mrs. Fields you are encouraged to buy cookies still warm from the oven. At David's they won't sell a cookie until it cools.

This year, American snackers will spend at least $200 million on fresh-baked, soft-and-chewy, over-the-counter cookies, twice what they spent just two years ago and half what cookie makers expect them to spend next year. Liederman and Fields are both baking big batches of this business, but that is about all they have in common. For in addition to having distinctly different tastes in cookies, they have radically different notions of how to grow a cookie company.

Wheeler-dealer entrepreneurs will admire Liederman's franchising and licensing strategy. Apostles of corporate culture will applaud Fields's insistence on company-owned-and-operated stores. Automation fans will marvel at David's cookie production system, while the more idiosyncratic will appreciate the flexibility that Mrs. Fields gives its employees. People who appreciate cute corporate aphorisms, such as "Good enough never is," will love Mrs. Fields. People who are embarrassed by them can take refuge at David's.

After a point, greatness in a cookie simply comes down to individual taste. Maybe that is true of cookie companies, too. Debbi Fields couldn't run David Liederman's company for a day; but neither could he run hers. Their companies, like their cookies, reflect the individuals.

Walk toward the river on East 50th Street in Manhattan to a gray, four-story townhouse. In front, double-parked, is a chauffeured Cadillac limousine, a Sony television set built in behind the front seat. Within the house is one of midtown's rare private garages. Ring the bell, and when you have passed inspection over the hidden TV camera, walk through the garage and past the family Mercedes 300 TD station wagon to a two-room office area. One room, which is long and narrow, is filled with three or four people working at electronic office machines. The other, larger, room is filled with 35-year-old David Liederman -- you can recognize him by his bulk -- who is likely to be shouting shorthand into a telephone that beeps more or less continuously through the day. A typical Liederman conversation might be: "What . . . Yeah. . . . No. . . . Tell him Toronto is gone. . . . Yeah."

On Liederman's desk is a catalog from Marks and Spencer, the British retailing giant that soon will begin baking and selling David's Cookies in its London store. On a shelf near the desk is an album of photographs recording the recent opening of David's Cookies's first suburban Tokyo store. Liederman, in the photos, is all smiles.

In the office, he is on the phone again. "CBS Morning News" wants him, but, he says, he will call back. He is busy. He has to decide which of four competing bidders will get his Princeton, N.J., store, and he has a complicated European chocolate-buying and store-opening trip to arrange. An assistant brings in the day's batch of checks. He questions most, signs some, and sends the others back for one reason or another. His wife brings the baby, their second daughter, down for a kiss and a visit.

From here Liederman presides over the growth of his cookie empire. At the moment it consists of a management office on 42nd Street and a Long Island City plant that manufactures and ships cookie dough to roughly 150 (and growing) David's Cookies stores. Of the 150 stores, 31 are in Manhattan and are company-owned. The rest, spread unevenly across the country, either are owned by territorial franchisees or are operated by department store employees in such places as Macy's. The four (and also growing) Japanese stores are operated by Liederman's joint-venture partner, Nissho Iwai Corp.

There is a reason why the empire looks that way, and it reflects Liederman's view of how the business works. It has, as he sees it, two parts: First you have to make the cookie, and then you have to sell it. In both parts you want to minimize the probability of error. In Liederman's mind, that means either minimizing the number of people involved or, when that is not practical, supervising them as closely as possible.

In part one, you minimize the number of people involved. You do that by making all the cookie dough in a single nearby plant where you can keep an eye on the process. Then you chill it and ship it to the stores, where all an employee must do is put the dough on a baking tray, put the tray into an automatic oven, and collect it when the finished cookies emerge 7 1/2 minutes later.

Part two of the business -- selling the freshly baked cookies -- still requires lots of people, and you can't easily manage hourly counter help in Tennessee, for example, from a Manhattan townhouse. So you turn the retailing end of the business over to someone in Tennessee, a franchisee or licensee, whose livelihood depends on how well he or she manages.

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