A Tale Of Two Companies

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David Liederman is tired toward the end of another frenetic day. "This may have started out as a joke," he observes with uncharacteristic seriousness. "It's no longer a joke." He had spent several hours at the Long Island City cookie dough plant testing a new, smaller oven that would occupy less space in the freestanding David's Cookies outlets in supermarkets, in department stores, and -- a hot possibility -- in ballpark and sports-arena concession stands. With a needle-thin probe he had taken the internal temperature of each test batch as they came out of the oven. They were about 190 degrees, not well-enough baked for him. "Of course, at Mrs. Fields, they come out 145 degrees," he said. "How do I know that? What, you think I don't have people working in her organization?"

Everything doesn't always work right for the customer at either David's or Mrs. Fields. David's 42nd Street store in Manhattan sells sandwiches as well as ice cream and cookies, but the traffic flow is a confusing mess. You can't buy a cookie in the sandwich line; to get a cookie and a sandwich, you have to stand in two lines. At Mrs. Fields's Brookline, Mass., store, the cookie person behind the counter one day was as helpful and friendly as the average city bus driver. Having a Mrs. Fields experience there may not be a treat.

David's and Mrs. Fields compete, but not head-to-head yet. The market for high-quality, premium-price, over-the-counter, hand-dropped, soft-and-chewy cookies is too big and growing too fast. "We're in a race," Liederman says, "but we're both going to win. It's comical to me that all we're both doing is selling pretty good cookies -- in my case very good cookies, in her case pretty good cookies. . . .

"The problem with the cookie business is that there are four companies that are all trying to be the McDonald's. Which is not to say that Wendy's and Burger King don't make a living, but to be the clear-cut leader you have to have stores, outlets, and there's not a cookie company in the United States that has more than 160 now. By way of comparison, Baskin-Robbins has 3,200 stores. There are nine domestic ice cream companies that have more than 300 stores. The cookie business is just starting, and we're all running around like chickens with our heads cut off picking up one location at a time. At the rate we're going, it's highly conceivable that [David's] could have more stores in Japan than in the United States, which doesn't mean we won't be doing well in the United States, but it does mean that we will not have been able to get the big deal. We're talking about 7-Eleven or maybe a supermarket chain that can open up 300, 400, 500 outlets at once."

"Oh," says Fields, "you're going to ask me those questions like . . . See, that's one of the reasons I don't read those corporate-strategy books. Most people will ask me, 'Aren't cookies a fad? Isn't there a saturation point? Isn't there a product life cycle?' I think that's all baloney. My view of the market is quite simply: Are our cookies incredibly fabulous? Yes. Do they make people happy? Yes. Are they as good as homemade? In my opinion, yes. Do people love to eat them? Yes. Are they going to give up the things they love to eat? I think that's very doubtful. . . . I mean, really, if something is fresh, warm, and wonderful and it makes you feel good, are you going to stop buying cookies? You grew up with cookies. Your mom made you cookies."

"Check this out," says Liederman. "Go pick 10 people off the street. Ask them when's the last time they had a piece of apple pie and when's the last time they had a chocolate-chip cookie. Ninety percent will say they had a chocolate-chip cookie since they had a piece of apple pie, and what is more American than apple pie?"

Both companies are adding noncookie products to their retail repertoires. David's New York stores carry ice cream, and Liederman promises to start "the biggest ice cream war this city has ever seen" this summer. "Buy a pound of my cookies, and I'll give you a cone for 25?. What's Haagen-Dazs going to give away?" Most Mrs. Fields stores have introduced a fudge-type brownie and something called a Mrs. Fields Frost-Bite: vanilla or chocolate mousse sitting on a base of crushed cookies, all dipped in dark chocolate and then frozen. Fields says the company may go into the candy retailing business in a new, separate chain of stores. There is a strong possibility, she says, of introducing Mrs. Fields brand products into supermarkets, but the products won't be cookies.

Both companies are opening more stores. Each expects to have twice as many outlets by year end as it did in early 1984, even without Liederman's "big deal." Unlike American steel and automobiles, American cookies sell well overseas. David's, says Liederman, will be in 10 more countries by December. "My Japanese partner wants the whole Far East perimeter. They want to buy a few franchises in Oregon, open up western Canada.'And while we're at it,' they say, 'why not sell us a couple of stores in New York. 'You don't have to be a brain surgeon to see that sooner or later I'll be learning to speak Japanese, and I'm not sure I want that right now.

"You know what? There's still no plan. The plan is I want to get hundreds of stores open . . . and to maintain controlling interest in the company. How do we get there? I don't have the answer to that. Maybe I should marry Debbi Fields."

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