Sushi, doughnut producer on mend
By Andrew Gomes
Advertiser Staff Writer
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| When Dunkin' Donuts franchisee ICH opened its Pearl City store, 20,000 doughnuts were sold that first day.
Advertiser library photo • March 16, 2001 |
Since a difficult Mainland expansion last year, the state's largest sushi manufacturer and Dunkin' Donuts franchisee ICH Group is working to repair its finances after an equipment leasing firm threatened to repossess machines necessary for food operations.
In the past five months, cash-flow problems of Iwilei-based ICH became public as three creditors filed lawsuits against the company, which also operates Catch of the Day Sushi restaurants and the prepared-foods wholesale business Sushi Chef.
The company said it has put most of the financial difficulties behind it.
The difficulties show how expansion can challenge established companies. ICH, an innovative 16-year-old business, became the state's largest sushi manufacturer by embracing automation.
In mid-November, the commercial equipment financing unit of First Hawaiian Bank sued to repossess about $431,000 in equipment, including doughnut production machines, a $60,000 manapua molder and a $17,000 sushi robot.
ICH also faced a December lawsuit from Kapolei-based H&W Foods for failing to pay $16,000 for baking ingredients. A third suit was filed in August by a landlord that had leased space to Dunkin' Donuts and Catch of the Day on Kapi'olani Boulevard.
Dean Matsushima, ICH representative and Sushi Chef executive director, said the First Hawaiian and H&W Foods delinquencies are being paid.
The landlord lawsuit, filed by M&H Corp., is being disputed by ICH, which filed a counterclaim to recover lost revenue and collect damages from M&H for allegedly telling consumers that Dunkin' Donuts was poorly managed and unprofitable and would be closing.
Matsushima said that Dunkin' Donuts had record year-end sales and that ICH is working to add a few more locations on O'ahu and expand to the Neighbor Islands with the doughnut franchise.
The cash-flow difficulties came from expanding Sushi Chef's wholesale operations to Las Vegas and Los Angeles last year, according to Matsushima, who said the growing pains are over and those operations will do well this year.
ICH was established by Ken Iong in 1988. The company makes and delivers sushi, manapua, musubi, bentos, bread, mochi and other foods to retailers, hotels, restaurants and airlines. Annual revenue in recent years from wholesale operations alone have ranged from $8 million to $10 million.
In 2000, ICH was selected by Dunkin' Donuts, owned by British distiller Allied Domecq Plc, to re-establish the brand in Hawai'i. Dunkin' Donuts officials regarded ICH's experience with highly automated centralized food processing and distribution as ideal for the doughnut business.
ICH leased and remodeled a warehouse next to Sushi Chef's main manufacturing facility and committed to opening at least 10 stores within five years under its franchise agreement.
Today ICH operates five Dunkin' Donuts stores, two next to its Catch of the Day restaurants and one next to a Baskin-Robbins.
Last summer, ICH closed the Dunkin' Donuts on Kapi'olani Boulevard across from the Hawai'i Convention Center. It also closed a Waikiki location at King's Village.
The Kapi'olani location became the subject of a lawsuit in which the landlord, M&H Corp., said Dunkin' Donuts and adjacent Catch of the Day failed to pay rent in August 2002. The landlord alleged that the restaurants made good on the default but fell behind again in early 2003, bouncing rent checks in March and May. M&H said Iong proposed a repayment plan in June.
Ronald Au, an attorney representing the ICH restaurants in the case, said the businesses paid all rent to a landlord agent who failed to transfer some rent money to the owner of a parking lot subleased from M&H. Au said the lot owner cut off essential parking access.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
