Back from the brink

It was a restaurant owner’s worst nightmare.

In 1996, a customer contracted salmonella after eating at one of five Duke Sandwich Shop locations then owned by the Smart family in the former textile town of Greenville, S.C. And then another person got sick. And then another.

Within a few days, the state health department determined that the salmonella outbreak, traced to spreads made at the restaurant, had affected more than 200 people. It was the worst outbreak of salmonella in South Carolina history, a state record that stood until 2005.

Day after day, the local media chronicled the bad news. The Greenville News reported that an elderly woman died from complications of salmonella, and an infant was born with salmonella because of the outbreak. According to the newspaper, nearly 600 people contacted the health department. Many guests who had gotten sick sued the restaurant.

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Facing what appeared to be irreparable harm to the company name, many business owners likely would have closed up shop. But Richard Smart, then the company’s president, wouldn’t let that happen. Richard brought flowers to sick customers, helped with medical bills and tightened the company’s belt in preparation for rough times, ultimately scaling back from five restaurants to three.

Despite all the bad press, Richard Smart never called attention to what he was doing behind the scenes, says his son Andrew, 27, now the company’s president and co-owner along with his mother, Cheryl, 53. “My dad did it because he knew it was the right thing to do,” Andrew says. In fact, he notes, family members didn’t know how far his father went to help outbreak victims until after Richard’s death in 2002. “People would just come along and tell us what Dad did,” says Andrew, who began his family business career at age five by taking out the trash and packing away bread.

Jim Edwards, one of the customers who got sick, says he never thought about suing the restaurant. He’s been eating Duke’s egg-salad spread sandwiches for almost three decades.

“They were always good to me, so I stayed good to them,” says Edwards, who remembers getting several phone calls from Richard Smart while recovering.

The late restaurant owner never sought a consultant’s advice on how to respond to the crisis. But his instincts were good, notes Steven Fink, president of Los Angeles-based Lexicon Communications, a crisis-management firm that worked with the Jack in the Box chain during an E. coli outbreak in the early 1990s. “He showed compassion, which was the right thing to do,” Fink says. The consultant says he also would have advised Smart to let the public know what the company was doing to rectify the situation, but in hindsight Richard’s low-key approach didn’t seem to hurt Duke Sandwich.

Ultimately, the courts found that Duke Sandwich was not at fault for the salmonella, which had originated in tainted eggs sold to the restaurant by one of its suppliers. All 53 lawsuits against the restaurant were eventually dismissed, according to Greenville County court records. The other companies involved paid $4.5 million to settle the various suits.

Andrew Smart says there was a small hiccup in sales the first few months after the salmonella outbreak, but within a short time after the news reports appeared, customer traffic returned to normal. He says reports on exactly how much business was lost are not available.

Smart reports that the family learned the power of dealing with an issue head-on and honestly after the outbreak. “My dad was someone who always believed in dealing with people directly,” he explains. “That was how he believed businesses should be run.” Andrew Smart says his father rarely spoke about what happened. By the time Andrew took the company’s reins in 2002, the lawsuits had been settled.

By 2003, he was looking for a way to get the business growing. “I was just praying for a direction to go in,” he recalls. He decided on franchising, he says, because it would allow the company to expand without opening new stores that would be owned by the family.

The first franchises were sold across South Carolina in 2004. Today, the restaurant is offering its recipes and business system throughout the Southeast. “The business is stronger today than it ever was,” Smart says.

From wholesale to retail to franchise

Duke Sandwich Co. was founded in 1917 by Eugenia Duke, who sold her homemade spread-style sandwiches to textile mills, military bases and drugstore chains. Her business quickly boomed, and soon she had to make a decision. Her mayonnaise brand was doing as well as the sandwiches. Which one to keep? She decided to stake her claim in mayonnaise and sold the sandwich company and the recipes to her bookkeeper, Alan Hart, in 1920. While the companies have remained separate since then, Duke Sandwich uses only Duke’s Mayonnaise, according to Andrew Smart.

In 1964, Hart sold the company to his brother-in-law Loran Smart (Andrew’s grandfather), who invented a sandwich-wrapping machine that sped up the production process and expanded its wholesale business. By this time, the company had also opened its first restaurant, located on Poinsett Highway, which leads north out of Greenville toward the mountains.

Loran’s son Richard, who had been a professor at Georgia Tech, bought the company in 1978 and moved the restaurant across Poinsett to a one-story brick building he built himself. With its white columns and 18-foot-high sign, it stands out from the auto repair shops, car lots and thrift stores along the highway. It’s the largest of the Duke restaurants, with 17 tables and a lunch counter.

Jim Miller stops by at least once a week to get a pimento cheese sandwich and watch the cars and trucks passing by on Poinsett. “There is something different about this restaurant,” he says, nibbling up some spread that had gotten on his hands. “It’s not fancy, but it’s not cheap. I guess you can say it feels like home.”

Andrew Smart’s office at the company headquarters behind the Poinsett Highway restaurant is decorated with black-and-white photos of the company’s trucks parked along a busy Main Street. Other photos on the walls depict Eugenia Duke; vendor carts known as “dope wagons,” which sold her sandwiches to textile workers; and various members of the Smart family, as well as some images of the future: Andrew Smart shaking hands with franchisees.

“Franchising is very big right now,” Smart says. “People want to be part of a company that is doing well.”

Smart feels several things are driving the demand for franchises. One is the company’s distinctive menu, which gives customers an alternative to the hoagies and burgers available at countless restaurants nationwide. Duke’s offerings include chicken salad, pimento cheese, cream cheese with pineapple and pecan, deviled egg and minced barbecue.

A second advantage comes from Duke’s wholesale catering services, run from its sandwich packing plant in Shelby, N.C. It’s a lucrative second income on top of drop-in sales, Smart says.

Franchise owners need not have a food industry background; spreads and soups are provided for the owners, Smart notes. All the franchisee has to do is make and wrap the sandwiches.

Even so, Smart says, prospective franchise owners must undergo a screening process designed to determine their willingness to succeed. “I’ve turned down about three times as many as I have accepted,” he reports. So far, Duke has sold 12 franchises; Smart says he plans to add 20 more in 2006.

And within ten years? “I have no doubt we can be nationwide,” he says.

John Boyanoski is a writer based in Piedmont, S.C.

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