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The Honolulu Advertiser
Posted on: Monday, June 15, 2009

Bakery sweet on franchising

By Taylor Hall
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Leonard's Bakery President Leonard Rego Jr., center, poses with some of the staff at the Leonard's store in Yokohama. Rego traveled to Japan to teach the staff how to make the bakery's famous malassadas.

Leonard's Bakery

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Founded: 1952

Outlets: Three stores (two on O'ahu and one in Yokohama, Japan) and two mobile wagons (both on O'ahu)

Yokohama outlet opened: December 2008

Employees: 60 (total, all stores)

Malassadas sold per day: About 12,000 (total, all stores)

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After making a hit with its first licensed outlet in Japan, Leonard's Bakery best known for its malassadas is looking for more franchise opportunities.

Sales have been strong in the six months since the store in Yokohama opened, with lines often snaking out the door, said bakery President Leonard Rego Jr. At 150 yen ($1.50) apiece, a classic malassada in Japan is little more than double the 70 cents customers in Hawai'i pay for one of the deep-fried delicacies.

The Yokohama store sells 4,000 to 5,000 malassadas a day on average, although there have been days when sales have surpassed 5,000, Rego said. Average sales at the Japanese stores are slightly less than at Leonard's Kapahulu store, and the Japanese bakery does not carry other Leonard's baked goods.

"Just drinks and malassadas" classic style cinnamon or sugar no filling, Rego said.

There are plans to sell the flavored custard-stuffed malassadas in Japan, but there are no plans to sell other Leonard's baked goods such as pao doce and hot-cross buns, treats still reserved for O'ahu patrons only.

A group of Japanese investors approached Rego in March 2008, proposing to license the Leonard's brand in Japan.

"It was just perfect timing," he said, "just as the economy was getting worse, this deal came around and couldn't have been more perfect."

The deal was finalized in September and, while he may do a few things differently, Rego is happy with the agreement with the investor group, Forest Inc.

"They've just really impressed me," he said. "I couldn't have done a better job. The quality of the food and environment over there is just as good if not better than the stores over here (on O'ahu)."

Forest Inc. has told Rego that it plans to open more Japanese locations. The success of Leonard's in Japan has motivated Rego to consider expanding Leonard's to the Neighbor Islands. He said he is hopeful that more interested investors will come forward and help "push him along."

"I'm not moving really fast, but if someone was interested, I'd be moving a lot faster," he said.

Rego said he would love to open a Leonard's on Maui first since his grandparents, Arecnion and Amelia DoRego, were from there. Kaua'i and the Big Island are also under consideration, he said.

The Leonard's in Yokohama is the company's first outlet outside of O'ahu. Located in the Yokohama World Quarter Shopping Center, the store had its grand opening in December, a deadline Forest Inc. rushed to meet. The company had only three weeks to build the store, market the brand and learn how to make malassadas.

Rego said he flew to Japan and spent a week and a half training the staff on how to prepare the malassadas.