Big Dreams: Slicing Up The Golden Pear

Keith Davis, the owner of the Golden Pear Cafe, sees the day when as many as 150 franchises will be serving his muffins, homemade soups, and sandwiches across the country, and he wants to take local investors along for what he hopes is an entrepreneurial success story.

Mr. Davis, who announced plans last summer to take his Pear Tree Group Inc. public, outlined a 12-year growth plan and took time out to celebrate his first restaurant's 10th anniversary at Southampton's Polish Hall on Friday.

"We believe we have a brand and a concept that have some potential," he said. "We think we are going to penetrate upscale markets - the main street, malls, and cities."

Mr. Davis started his first cafe on Main Street in Southampton. He has since added branches in East Hampton, Bridgehampton, and Westhampton Beach.

To raise start-up capital for the proposal, he launched a private stock offering in September through First Summit Securities Inc. of New Jersey, which will allow investors to buy a stake in his company for as little as $625.

Known as a small-business offering, or 504-D, the method was approved by the Federal Government in 1992. It allows businesses to raise up to $1 million without incurring the expenses associated with large-scale underwritings.

Stock Offering

The entrepreneur said he was about halfway to his $900,000 goal already.

Investors have until Dec. 15 to purchase a minimum of 250 shares of stock at $2.50 apiece. Each share carries the right to buy another share at the same price, $2.50, over a two-year period beginning Dec. 15, 1998.

Mr. Davis would like to see more than a dozen Golden Pear franchises operating on Long Island and in the metropolitan area by Dec. 15, 2000.

His plan is to raise additional capital at that time through an initial public offering in the over-the counter market.

Heading West

"That will give us a chance to stop, look around, and take a good look at the company," he said. "It's one thing to manage a store 15 minutes away from you, it's something else to set up shop in Manhattan."

Long-range, he plans to expand further along the Eastern Seaboard before heading west.

"It will take a good seven years to get over to California," he said. "But that's part of the growth plan. We want to expand intelligently."

Along the way, he will be seeking investors who are willing to put up between $190,000 and $250,000 to own a Golden Pear franchise and do things his way, including following proprietary recipes and buying from approved suppliers.

Turnaround

Although Mr. Davis admits it is far too early to peg a value on the stock, he is aiming for a price range from $7 to $10 at the time of the public offering.

While that would represent a nifty turnaround for investors, Mr. Davis, 34, hopes those who buy into the company have as long-term a viewpoint as he does.

"I'm in no hurry," he said. "I intend to be president and C.E.O. of this company for the rest of my working life. I plan to spend the next 25 to 30 years transforming this into a national brand."

Going National

Using as an example Boston Market, a similar restaurant business that quickly established 1,200 franchises and then experienced problems, Mr. Davis said a common mistake was to try to expand too fast, and perhaps lose control of quality.

Mr. Davis began thinking of franchising several years ago. The idea of going national is more recent. "I went to a conference," he said, "and I was challenged in a big way to develop a big, bold goal."