Family Businesses

With hard work and some luck, these young executives demonstrate the power of family ties.

August, 2001

What happens when you build a convenience store in a popular resort destination, christen it with an easy-to-remember name, then stock it with tourist-friendly products and services?

You get a retail formula similar to the one Minnie and Sidney Kosasa concocted for their first ABC Store in Waikiki in 1965. So popular was their first mom-and-pop operation that similar stores were built within blocks of one another. Tourists these days do not have to walk very far to spot one of 37 ABC Stores in Waikiki.

There are 53 locations in Hawaii, two on Saipan in the Northern Mariana Islands and six in the United States territory of Guam. In addition, a 7,000-square-foot store is scheduled to open in Las Vegas by the end of this year. The founders of ABC Stores are optimistic their retail strategy for the Pacific will hit jackpot in the popular casino town, which hosts more than 30 million visitors annually.

“Our formula is all about convenience,” says Paul Kosasa, the youngest of the Kosasa children and president of ABC Stores since 1999. “Travelers have different needs. They like to enjoy shopping in a nice, clean environment, and they like to have gifts that they can purchase to remember their trip. If we can do all of that, then we’re successful.” The 600-staff company generated $155 million in sales in 2000, a 2.6% increase over 1999.

Retail was nothing foreign to Minnie and Sidney, a pharmacist by profession. In 1949, they opened their first Thrifty drug store, a successful operation (unrelated to the California company) that spanned the island of Oahu for more than two decades. Says Paul: “Mom and Dad are hardworking, progressive, with strong visions. They know the fundamentals of retail.”

Although Paul is the only child directly involved in the business, older siblings Thomas, Susan and Gloria hold company shares. “That’s not unusual,” he says about the corporate structure sans family members. “There’s a lot of good talent out there, and we try to make sure we hire the best people.”

Internal conflicts rarely arise, but when they do, they almost always result from miscommunication among siblings, Paul says. “The great thing about our parents is that they’re great communicators. We have family meetings so that everybody is kept abreast of what’s going on.” Paul has a college degree in electrical engineering, but his retail training began as a pre-teen, stocking ABC Store shelves and sweeping floors. He returned to Hawaii in 1980 to join the family business.

Unfortunately, Hawaii’s tourism took a nosedive in the late 1990s, and Paul and fellow managers were forced to cut personnel’s working hours. “We were able to keep all our people employed, but it was a challenge making sure we had enough revenue in keeping our employees employed while maintaining their benefits.” Store managers began breathing easier last year, when Hawaii’s visitor arrivals reached a record 6.98 million.

Innovation, customer service and brand recognition are what set ABC Stores apart from competitors. Staying abreast of technology and the Internet also is crucial. The company’s three-year-old Web site (See Hawaii Business January 2000 issue) offers everything from Hawaiian candies to T-shirts and mugs emblazoned with the ABC Stores logo. All are popular items with Japanese tourists. “It’s not the level of a Louis Vuitton,” Paul says. “But because ABC Stores is the only place where you can get it, it becomes a status thing. It shows that they’ve been to Hawaii.” And Guam, Saipan and Las Vegas.

Accelerated Growth: Tony Group consolidates its family operations

Stan Masamitsu was only 27 when he took over as president of the Tony Group in 1996. Albeit four years of company experience in varied positions—Masamitsu tried his hand at several positions, including customer service, finance manager and sales manager—it’s pretty safe to say that the boy was green. “No, I didn’t feel ready for the position,” he says, only half joking. “The plan was for me to work in the different departments a little longer, but my dad ran into some health problems, so I pretty much dove right in.”

And despite company-wide speculation as to whether he was “the best guy for the job, or just the owner’s son,” Masamitsu geared up to take on the biggest challenge of his life.

And although it was one of his toughest challenges to date, Masamitsu also cites downsizing as one of his biggest accomplishments. He says: “Although that was very difficult, I also see it as an accomplishment because it was something difficult that we overcame and it also allowed us to concentrate our resources on the businesses that we felt had more of an upside for potential.”Totaling $166 million, 1997 sales figures for the Tony Group were down 6.3 percent from the year prior, following a statewide trend of waning revenues during Hawaii’s economic downturn. “We had a lot of areas that we weren’t profitable in,” he says. “So the first couple years was difficult in that it really involved downsizing.” That year, Masamitsu began nipping and tucking at several of the company’s auto shops, resulting in the eventual layoff of roughly 50 of the company’s 310 employees.

Masamitsu says that despite nearly a 10 percent decrease in sales from last year, with 2000 revenues topping off at $147 million, the company actually cut costs and increased its market share. Beyond the financial hurdles he’s had to clear, Masamitsu says he is especially proud of the company’s recent venture into real estate. In June, Tony Group consolidated its leasehold properties (including Tony Honda, Tony Nissan, and Tony Volkswagen) from Aiea to a six-acre fee-simple property in Waipio, which became the island’s first “autoplex.”

And as the result of a 1998 decision to not replace the company’s chief operating officer, Masamitsu has had his hands full with the move. “All of my training involved the operations of an automobile dealership, but I’ve had to learn a lot about law, real estate and tax management,” he says.

Despite receiving his bachelor’s degree in business administration, it was really a lifelong fascination with cars that paved the path for Masamitsu. “My dad, Tony, was in the business basically since I was born,” he says. “Whereas other kids grow up looking at picture books, I’ve always liked to look at car brochures.”

Nowadays though, he spends less time test-driving the company demos he receives every other month or so, and more time with his newborn daughter, Alisa. Lucky for her, there’ll be no pressure from dad to fill his shoes when the day comes. “The company shouldn’t be run by a person that’s not interested in it,” he says. “If it just so happens that my children or my sisters’ children have no interest in the business, I don’t think it’d be right to stay in the family.”

The Show Must Go On: Fernandez Entertainment Inc. takes its act to Asia.

When carnival king Kane Fernandez passed away Jan. 9, 2001, at age 64, he was in the middle of planning a big second act. And thanks to the hard work of his family and employees, the show will continue. Earlier this year, E.K. Fernandez Entertainment Inc. took its show on the road — very far along the road, going on a five-city tour of Taiwan this spring and bringing the big top to the Far East.

“This was Kane’s dream, and it’s sad that he wasn’t able to see it come to fruition,” says Scott Fernandez, chief operating officer for Fernandez Entertainment and Kane’s son. “E.K. took the carnival to the Philippines and China. And Kane took the operation to the Philippines also, but there was no money in Asia then. We’ve started a totally different unit, about the size of our Hawaii operation, and it is a whooper.”

“The crowds are really, really big. Many have never seen a carnival,” Scott says. “People just sit down and watch for a little while before joining in. If I could charge admission for just watching, I would really make a killing.”According to Scott, the Taiwan operation costs the company between $7 million to $10 million, a daunting challenge. But the rewards are high. Scott is expecting the enterprise to gross revenues higher than the $28.6 million that Fernandez Entertainment Inc. earned last year. (All that in only six months.) Kane felt that unlike he and his father’s earlier forays into Asia, the time was right for Taiwan with a lot of high-tech money flowing through the island. After several trips there, Scott agrees, pointing out that the country has the population of Canada but has a stronger currency than our northern neighbor.

Although he has worked in the family business since he was 10, Scott never felt that a career at the carnival was a foregone conclusion. (He is joined by sister, Shelly, who is in charge of the distribution of the company’s merchandise. Linda, their mother, runs the family’s arcades.) But around the time that he was in college, Scott realized that he had cotton candy in his blood. Today, as chief operating officer, he is at the carnival when the tents are pitched, when the rides are running and when it finally comes down. When on vacation, he goes to other carnivals and festivals to keep abreast of latest developments in the business.

“My father’s dream is alive. It looks like we will be down there for many more years to come. My father was a great visionary, and my mother, who taught me everything about operations, was the administrator. They made a great team,” Scott says. “And we continue to be a great team.”

 

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