KaBloom flower franchise opens in Maryland with a startup ka-boom

Daily Record, The (Baltimore), Apr 23, 2004 by Sofia Kosmetatos

Next door to a Safeway supermarket and near a liquor store, a Krispy Kreme, a Panera Bread and two hair salons, a purple-awninged flower franchise opened its doors in a Rockville shopping center in early April.

The KaBloom store, the first in Maryland, is one of dozens that have sprouted during the past year across the country, making it the nation's fastest-growing flower retailer, the company said.

KaBloom, founded in 1998 in Woburn, Mass., by office superstore executives Thomas G. Sternberg and David Hartstein, aims to convince Americans to adopt a very European habit of buying flowers for everyday enjoyment, rather than just for special occasions.

The company is banking on frequent business from customers who are drawn by the quality and selection for the price.

Purchasing power allows franchisers to select from hundreds of different plants and flowers.

Prices that range between those offered at supermarkets and traditional florists make KaBloom products relatively affordable, said KaBloom Chief Operating Officer and Chief Financial Officer Steven Siegel.

At the Rockville KaBloom, one dozen long-stem roses retails for $16.99. The local Safeway sells them for $9.99 and a nearby traditional florist sells them for $65. Prices will vary according to the location of the store and the season.

KaBloom flowers are boxed for specific stores and shipped directly from growers in South America or Holland, arriving just days after orders are placed. That makes their shelf-life longer than the competition's flowers, said Siegel.

At each store, customers are encouraged to walk into the 12-foot by 14-foot coolers to choose their own assortment of flowers or select a pre-made bouquet.

According to the Society of American Florists, most flower purchases in the United States are gifts. In 2003, 68 percent of flowers purchased were gifts, while 32 percent were self-purchases. That number is slightly up but not much higher than 28 percent in 1993.

Sales of flowers, plants and outdoor bedding and garden plants in the United States have been trending upward for the past 10 years, according to the Society of American Florists. In 2003, sales reached $19.1 billion, up from $18.5 billion in 2002 and $12.6 billion in 1993, spokeswoman Jennifer Sparks said.

But the United States, the No. 1 consumer in the world of many other products, ranks 12th in the world in flower consumption, said Siegel.

What's more, the flower industry in America does not have a national brand, he said, unlike the coffee industry's Starbucks.

In terms of creating a chain of brick and mortar stores, there was and still is this enormous opportunity to create a national brand, Siegel said. It's the same coffee. It's the same flowers. It's the same quality.

KaBloom has grown from one store that offered cash-and-carry flowers to 64 full-service stores - 54 of which were franchises as of February 2004, three years after it started offering franchise opportunities. Many of those stores have yet to be open a full year, but the company is planning at least another 100 stores in 2004 - 10 to 20 of those in or near Baltimore.

The total investment needed to start a franchise - including the franchise fee, working capital and a van - is $160,000 to $260,000, said Siegel. The franchise fee is $30,000 for a new franchise and is about $15,000 for a conversion.

KaBloom's closest competitor for a national brand, 1-800-FLOWERS, has stores only in four states, most of which are in California, Siegel said.

With what we have committed, we'll be far and away the largest by the end of the year, he said, noting that KaBloom is already in 19 states, and will be in 30 by year's end.

Lynn Biondi and Rita Ormasa, the owners of the new KaBloom in Falls Grove Village Center on the border of Rockville and Gaithersburg, are planning four more stores in the next four-and-a- half years, in Annapolis, Columbia, Gaithersburg and Bethesda/Chevy Chase.

The five owners of Maryland's second KaBloom, which opened last week in a shopping center across the road from mega-mall Arundel Mills, plan to open 10 stores by the end of 2007, according to the group's unofficial spokeswoman, Ann Mellynchuk. The group has inked two leases for stores in Towson and Reisterstown and is negotiating a third in Hunt Valley.

KaBloom has attracted a range of people interested in franchising, including many ex-corporate worker bees, Siegel said. But that is, in part, because franchising tends to be more popular after downsizing.

Ormasa heard about KaBloom through franchise agent FranNet. Formerly a product manager for Allfirst and other financial services and technology companies, she wanted to explore something very different from corporate America after her third layoff in seven years.

She met Biondi through a networking group last July. Biondi had been commuting from Maryland to Boston for nine months, after Invensys, a British resource-productivity company, moved its headquarters from Herndon, Va.