Corrections or additions?
This article by Deb Cooperman was prepared for the December 15,
2004 issue of U.S. 1 Newspaper. All rights reserved.
Sweet Deal: Kids Take the Chocolate Factory
In Roald Dahl’s best-selling book "Charlie and the Chocolate Factory,"
Willie Wonka invites five young people from around the globe inside
his factory for an exclusive tour after years of keeping the doors
tightly shut. Wonka is single and has no children – he’s devoted his
life to the art and science of making candy – and in the twilight of
his life, he realizes he has no one to succeed him in the business
that he loves, and he doesn’t want to see it die. So, long before
reality shows were invented, Wonka creates the ultimate "Survivor"
game: the last child standing on the factory tour will be gifted with
the business when he retires.
Windsor chocolatiers Marcy and Robert Hicks didn’t need to search the
globe for successors for their 25-year-old company, Sophisticated
Chocolates. The Hickses found their successors around their dinner
table. The Sophisticated Chocolates business – including the factory
at Windsor Industrial Park, five retail stores, factory retail store,
and online store – will be passed on to all three of their children.
Although there is no legal succession plan at the moment – Marcy and
Robert expect to meet with their lawyers "to work out the details"
("at the moment we’re just trying to get through the holidays," says
Marcy) – chocolate making is all in the family.
This year the company opened five retail stores under the name David
Bradley Chocolates (David and Bradley are the names of the sons), and
in August the company more than doubled its space – to nearly 7,000
feet – at Windsor Industrial Park. It employs 15 people, and in this
busy holiday season it has added 10 temporary workers. The family
declines to provide sales figures, except to say that it annually
transforms 90,000 pounds of raw chocolate into sweet-to-sell treats.
Counting the "center flavor" added to each candy, one can estimate
that the firm probably sells 180,000 pounds a year, and that does not
include the baskets, boxes, and gift tins that add to the profits.
Robert Hicks did not set out to be a chocolatier. Born in Penn Valley
outside of Philadelphia, Robert’s family moved to New York when he was
15. Hicks went to the New York Institute of Finance and got his
brokerage licenses. "I was in the right place at the right time," he
says. "I went down to Wall Street right out of school." Hicks met
Marcy, an Oklahoma native who was a flight attendant for TWA. The
couple married "way too long ago, almost 40 years ago" says Marcy, and
daughter Christine was born soon after.
A reservist in the army, Robert was sent to Vietnam in October, 1968.
When Hicks returned from Vietnam nine months later, the family began
expanding. Sons David and Bradley were born a year apart, and while
Robert went back to Wall Street, Marcy grounded herself to raise the
children.
Not long after, Robert’s mother retired from her career in sales with
RH Macy in New York, and his sister retired from her work as a
bookkeeper with Grand Union. "They were bored," Hicks recounts, "and I
said: ‘I’ll put up some money and you run the business.’" With his and
Marcy’s capital, Robert’s mother’s sales experience, and his sister’s
bookkeeping skills, all fronts were covered. Now they just had to
figure out what kind of business they wanted.
Hicks had a friend who was a pharmacist, and Robert remembers him
commenting on how brisk the sales were with wholesale chocolates in
his store. Robert and Marcy did some research, and when they went to a
chocolate trade show in Philadelphia to get the lay of the land, "the
people were so nice, we said why not?"
"We went backward," says Marcy. "Most people start out in
manufacturing . . . we started out in retail." The first Sophisticated
Chocolates shop contracted with wholesalers for their product, but
eventually the Hickses decided to manufacture their own chocolates.
"We could see there was more money in it," Robert says, "and we could
control the product."
The Hickses leased a factory in Broomall, Pennsylvania and eventually
franchised their stores. "At one point we had 11, but they became
difficult. We had little cafes…cappuccino, espresso, and desserts.
This was over 20 years ago, long before Starbucks. But the people who
owned the franchises wanted to put in hot dogs." That wasn’t what Hick
had in mind. He wanted an upscale cafe feel for his franchisees, and
even though some of them were located in malls, he wanted to
differentiate their stores from the usual food court fare. "That ended
everything – we dissolved the franchise."
Robert continued to work on Wall Street for 15 years, but eventually
left to manage the growing company. After 10 years of building the
business, he went back to Wall Street. "The kids were growing up and I
needed money for college," he explains.
During that time, Marcy ran the factory, and Robert lent a hand on
evenings and weekends. He also distributed pamphlets to colleagues in
Manhattan and picked up a lot of corporate accounts. "He’s a very
ambitious guy," his wife says. "We do a lot of holiday baskets and
gift items," and the New York connections were a great source of
contacts. But "the commute from Pennsylvania to New York was too much
for Bob," Marcy says, and so the company reduced its retail business
to just one outlet and moved its wholesale manufacturing plant to a
2,500 square-foot space in Windsor Industrial Park in Windsor.
The Hicks children got their start in the business with seasonal work.
Christine had finished high school in Pennsylvania, but the boys were
both graduates of West Windsor-Plainsboro High School. "The kids used
to pack the gift boxes and earn a little extra money," says Hicks.
But, "I think that turned them to disliking the business." By the time
they were out of college and ready to embark on their own careers,
"they didn’t want to have anything to do with it," he recalls.
But that didn’t last long. Eventually, all Hicks children returned to
the fold.
In 2001, Robert was starting to think about retiring from Wall Street
for good, and after he and Marcy went on vacation to St. Martin, he
returned with an illness that dragged on and on. Because of that, he
decided to speed up his retirement. That was just two months before
the September 11th attacks. He lost several friends who worked in the
Towers, and he reflects that it was luck that he left when he did. "I
used to go through the World Trade Center every day."
Son David worked for Charles Schwab, surviving several rounds of
post-September 11th downsizing, but eventually one of the lay-offs
touched David and, says Marcy, "the more he thought about it, the more
he realized that he didn’t want to wear a tie any more. He didn’t
really care for the corporate world."
He began helping out at the factory and came up with the idea of
expanding the company to retail stores again. Only this time the
stores are all owned by the company. Sophisticated Chocolates has five
retail stores that bear the name David Bradley Chocolates; they are in
Edison, Cherry Hill, Manalapan, and Voorhees, and Springfield,
Pennsylvania. They began with the support of other son Bradley, who,
according to his mother, "is a computer whiz – pretty much self
taught" and came to the family business after working for several
different computer firms.
Daughter Christine came from the retail world, her last position as a
store manager for the now defunct Hit or Miss discount clothing chain.
"I had to go out and do my own thing," she says of her years in
retail. And although she was successful with her store (which was
located in Rocky Hill), she came to believe that "working for another
company is a weekly paycheck. This is working for my future. Every
reward is what you put into it." Maybe it would be different if her
parents had a plumbing company, she says. "That might not be as
exciting. But who’s going to be cranky here? We really put our hearts
into it." And on the off chance things get tough? "I’ll have a couple
of pieces (of chocolate). That keeps me happy!"
And working with her parents is not a problem at all. On the contrary.
"I consider myself very lucky," Christine says, "I get to see them all
the time. It’s very different from being the daughter. This is work.
We’re all really respectful toward work. Home is home…that’s where
you get the usual Mom and Dad."
When he’s not "Dad," the 63-year-old Robert runs the show as president
and is in charge of general operations; Marcy ("under 60") does the
bookkeeping, Christine, 37, is heavily involved in the look of the
company and the packaging, and she is in line to take the
manufacturing helm when her parents retire ("In one or two years,"
Marcy hopes.).
David (33) and Bradley (32) run the retail stores, with David focusing
on marketing, and Bradley managing the website and computer
operations. Gustavo Arce is the "head candy maker" and production
manager whom "we couldn’t live without," says Marcy. "He’s been with
us 10 years and he trains our people. It’s his expertise that gets us
through the holiday season." At this time of year, and during the
other busy seasons (including Valentine’s Day, Easter, and Mother’s
Day) they hire up to 10 more casual and part-time employees.
Of the family members, "we each have our own little jobs," says
Robert, but there are no set-in-stone roles. "It’s not like a
corporate office where they have a meeting but the boss makes the
decision. If we have a new product or project, conversations can get
heated, but majority wins."
An example of this group process happened earlier this fall, says
Robert. The family decided to add a new hazelnut piece to their line.
"We were going to use flavoring," Robert says, "like a truffle. But
nobody really liked it, even though it was cost effective. Bradley got
some hazelnut paste, he blended it with chocolate." Everyone in the
family tried it "and it was night and day." Even though the process of
making the candy was labor intensive and expensive, the family decided
that it was worth it. They put the candy on sale in small boxes,
instead of selling it by the pound, says Robert, to keep the prices
low. "So they get a little less, but they get a high quality product."
The company is privately owned. In the past it had outside investors,
and as five new stores are added, it will take on more investment.
"Our children have brought people into the company that they knew.
Personal friends who had capital; some are loans, some are silent
partners," explains Marcy. "They don’t have a say in the day-to-day
operations. But when the interest rates sunk so low the investors came
out of the woodwork, willing to take a little risk. And they’re
confident because we’ve been so successful."
It is the attention to the details that makes Sophisticated Chocolates
successful, Marcy says. "We try to keep the packaging upscale, and the
chocolate is fresh and I think you can taste the freshness." All but
the fresh-dipped fruit products for the David Bradley stores are made
in the Windsor factory. "Each store has the ability to manufacture
fresh dipped fruits. Strawberries, oranges, raspberries,
blackberries," she pauses wistfully, "those blackberries were to die
for."
Some of the success of the company is the chocolate itself, but the
Windsor retail/factory location, which moved to a new 6,800
square-foot space in Windsor Industrial Park in August, also boasts a
window where visitors can see chocolate being made. And on the day we
spoke, Robert says he was out in the retail area asking customers for
feedback on different vanilla extracts that the company was
considering buying, and Marcy got called away during our conversation
to greet a regular customer.
There’s really no down side to the work, Marcy says. She recalls
reading an article in a New Jersey magazine a few years ago about the
best jobs in the state. "Chocolatier was number 1," she says. "And
it’s true. It’s one of the best jobs there is. Our customers are nice
to us, and even your competitors are your helpmates." Robert seconds
that and adds, "It’s a simple and happy business. Nobody walks into
our stores in a bad mood. They’re treating themselves, it’s not that
expensive, and they have fun."
And, as it seems, so do the Wonkas of Windsor.
Bradley Chocolates), Windsor Industrial Park, Building 19, Unit G, Box
458, Windsor 08561. Robert P. Hicks, president. 609-443-4747; Home
page: www.dbchocolate.com
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Sweet Legacies
When the owners of a family business are looking to retire and pass on
the business to their children, there are a lot of issues to consider
in the "how" of it. "They could sell it or give it as gifts to their
children," says Kester Pierson, partner at Mason, Griffin & Pierson on
Poor Farm Road. The most important factor, says Pierson, is to develop
a plan and start executing it. "If the owners want to pass on a
business to their children, they’ll first need to have it appraised –
get it valued."
Unlike having a house appraised, Pierson says, a business is a bit
more complicated, and you may need to do it several times. "If they
had it valued now, they could give each child shares worth $10,000
that would be their annual gift tax exclusion. In January they could
give another $10,000 gift." However, if they waited until the end of
2005 to give another gift, they’d need to have the business appraised
again. "If they sell or if they gift, it still has to be based on the
current fair market value of the business," Pierson says. And if the
Hickses sell shares of their business to their children, they will
have to deal with the tax consequences of the sales.
No matter how they decide to execute the transfer of the company,
planning is key. Such a transfer is important in any business, but in
a family business, "it’s a special concern," says Pierson, because
"what if the owner drops dead? Does his will pass on the business to a
spouse? To the children? In equal amounts?" These issues need to be
determined in order to facilitate a smooth transition for the
business. "A business is an asset like any asset, like real estate, or
a portfolio of stock."
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