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Nathan’s Famous Hotdog: The First 100 Years

William Handwerker, Nathan's Famous, Kevin Bacon, Vagabond Shoes

With William Handwerker, Grandson of Nathan Handwerker, Author of  Nathan’s Famous: The First 100 Years, An Unauthorized View of America’s Favorite Frankfurter Company

A hundred years after its founding, the most famous hot dog stand in the country, Nathan’s Famous, is still one of the best.

Nathan’s grandson, Bill Handwerker has penned a new book, Nathan’s Famous: The First 100 Years, An Unauthorized View of America’s Favorite Frankfurter Company.  In it, he walks us through the history of this iconic hot dog company and the many challenges it had to overcome along the way.

Early Struggles

Nathan’s Famous was founded by Polish immigrant, Nathan Handwerker, in 1916.  In 1912, Nathan Handwerker was part of the European immigrant wave that swept into the U.S. in 1912.  When he arrived, Nathan did not know how to speak, read, or write in English.  Ill-equipped to make a living in his new adopted land, Nathan opened a food stand on Brooklyn’s Coney Island.  The stand served French fries, malted milkshakes, and frankfurters.  This was traditional fare offered by everyone else along the busy stretch of Coney Island.  The competition was intense.

Entrepreneurial Ingenuity

So what made Nathan’s Famous go on to become a household name?— entrepreneurial ingenuity and the willingness to take on risk.

While everyone sold hot dogs for ten cents apiece, Nathan boldly slashed his price to five cents.  His competitors were livid and slandered the quality of his hot dogs.  To overcome that misperception, Nathan reacted with the spirit of a pioneer American entrepreneur.  He hired a few people, dressed them up as doctors—complete with white coats and stethoscopes—and got them to regularly eat at his stand.

When customers saw these “doctors” eating Nathan’s five-cent hot dogs, they figured the product was healthy enough for them too.  Sales boomed, and Nathan’s was on its way to becoming the iconic brand we know today.

Challenges Along The Way

In Nathan’s Famous, Bill writes that it wasn’t exactly a straight path to success.  As in most longtime businesses, there were ups and downs.  Nathan concentrated on combining quick service and quality food, and that was the key to his success.

When Bill’s own father came back from World War II, he recognized that a simple stand on Coney Island couldn’t sustain their growing family.  With returning GIs moving out of Brooklyn to Long Island and beyond, a second store made sense.  So Bill’s father convinced Nathan’s to join the mass migration to the suburbs.  That led to the second Nathan’s Famous store location, on Long Island.

Expansion Parallels Gucci

Steve sees a parallel between Nathan’s Famous GI-driven growth and luxury brand Gucci’s expansion.  In Gucci’s case, the founder, Guccio Gucci, focused just on the local Florence market.  Then, when his son, Aldo Gucci, returned from the war, he urged his father to expand.

Supermarkets Drove Growth

By the time Bill Handwerker joined his grandfather’s business, Nathan’s Famous had expanded into supermarkets with packaged frankfurters.  This was a shrewd move.  It fit well with the nation’s demand for quality packaged foods and boosted sales.

But Bill needed more to truly break out.  So he hired a two-person public relations team.  The team was made up of Morty Matz and Max Rosey.  Matz and Rosey did PR for Hess’s Department Store at the time, where they had run a successful doughnut eating competition.  For  Nathan’s, they sponsored a hot dog eating contest also at Hess’s.  The competition was wildly successful, and Nathan’s Famous had won a major PR victory.

Acquisition Debacle

Nathan’s business was growing slowly and steadily.  But, in 1975, the company made a strategic mistake.  It acquired the Wetson’s chain of hamburger fast food outlets in New York, Connecticut, and New Jersey.  But Wetson’s had a problem.  They had over-expanded and set up Wetson’s restaurants in less than prime locations.

It would take several painful years to unwind its negative effects.  Nathan’s survived this setback through a lot of hard work and an uncompromising dedication to quality and service.

Today, Nathan’s Famous is no longer family-owned but still produces some of our nation’s best hot dogs.  Nathan Handwerker’s legacy and his iconic brand live on as a true American success story.

Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

Read The Entire Transcript Here

Steve Pomeranz: From a meager frankfurter stand in Coney Island, New York in 1916, to America’s most loved and iconic household brand, Nathan’s Famous is an icon we all know.  My next guest is the grandson of the founder of Nathan’s Famous, and he has written a book, Nathan’s Famous: The First 100 Years. It chronicles the milestones and centennial history and business strategies of the company’s founder Nathan Handwerker.  My guest, Bill Handwerker.  Welcome to the show, Bill.

Bill Handwerker: Thank you for having me.

Steve Pomeranz:  Bill, how did it all start way back when in 1916 in Coney Island?  Give us kind of a picture of the way things were back then.

Bill Handwerker: My grandfather, Nathan, came to this country in 1912, not knowing how to speak, read, or write.  He was able to overcome that and got into the food service business via a luncheonette in Max’s Busy Bee.  In 1914, he went to Coney Island during the summer to try and make some more money and eventually in 1916 opened up his own restaurant.

Steve Pomeranz: The restaurant was …  served what in particular?

Bill Handwerker: He served frankfurters, French fries, and malted milkshakes.

Steve Pomeranz: That was a pretty popular fare back then?

Bill Handwerker: Yes, throughout Coney Island, they were selling frankfurters for 10 cents, and he felt that in order to grow his business, he had to charge something different.  He opened it up for 5 cents.  The rest is history.

Steve Pomeranz: I would think he was pretty smart about business. So he tried this 5 cents, but wasn’t he worried that people would think that the quality was inferior? There’s a story in the book about how he got some white coats from the local hospital.  Tell us about that.

Bill Handwerker: Yes.  The competitors were not too happy with my grandfather.  They spread rumors that he was using inferior meats and that’s the only way he could afford to sell them for 5 cents.  He went to Coney Island Hospital, and he borrowed doctor’s coats and stethoscopes and gave them to people in front of the restaurant and gave them free franks.  When people passed by and saw that doctors were eating the franks they said, “Well if it’s good enough for doctors, it’s good enough for me.”

Steve Pomeranz: Those were simple times weren’t they?

Bill Handwerker: You would think so.

Steve Pomeranz: What particularly interests me—I know there’s a lot to this story, but we have limited time—what particularly interests me that I think is important for those of us in business today is that here he entered a business where there was a lot of competition and he was trying to figure out a way to differentiate himself.  One way he did was through price for sure, but there had to be more than that.  What else was different about Nathan’s hot dogs at the time?

Bill Handwerker: I think it was not just the hot dogs, but that he was …  he concentrated on the service of it and I believe that quality of combining quick service and quality food was the difference. I tell people that I think my grandfather’s stand was really the first true fast food restaurant.

Steve Pomeranz: He understood how to make a consistent product in a clean atmosphere and get it to the customer fast.  Was there a point in time when, let’s say, a movie star or someone famous picked up on it that launched the brand even further?

Bill Handwerker: There were several people throughout the company’s history.  Right from the get-go when he was working at Felton’s Beer Gardens, Eddie Cantor and Jimmy Durante were singing waiters.  As the story goes, he tried to convince them and they were going to lend him the money to open up his own restaurant and charge for a nickel. He did it on his own and throughout history, from politicos like Nelson Rockefeller who said, “You can’t hope to be elected in New York State without eating a frankfurter out in front of Nathan’s” to Bobby Kennedy’s first run. Barbra Streisand sent them over to London. The kicker is Walter Matthau had them served at his funeral.

Steve Pomeranz:  Talk about iconic brands and the meaning behind your plain, old fashioned, good-quality hot dog.  There was more to it, though. When did the hot dog eating contest actually start?

Bill Handwerker: It was in the early 1970s.  Yes, in terms of PR, Nathan’s reputation was much larger than the actual business and our monies had to be spent as efficiently as possible.  He had these two gentlemen, PR people, Morty Matz and Max Rosey, who thought up the idea by they had a client, Hess’s Department Store and they ran a doughnut eating contest, and it was successful.  They thought that if that was successful, can you imagine how successful a hot dog eating contest would be?  That’s how it began.

Steve Pomeranz: The book is Nathan’s Famous: The First 100 Years, an unauthorized view of America’s favorite frankfurter company.  Bill, you worked in the business for quite a while.  Tell us a little bit about your father and your experience working there.

Bill Handwerker: My pleasure.  My father, when he came back from World War II, was surely the impetus for the expansion of the company.  The generation of my grandparents and that generation of immigrants felt that it was most important to take care of the immediate family and the extended family and that Coney Island was sufficient.  When my father came back from the war, he said, “Pop, we have to grow.” All the GIs coming back are moving out of Brooklyn.  A lot were moving out of Brooklyn to Long Island and Westchester and so forth.  It was his impetus to expand the restaurant itself.

Going further than that, when I came onboard full time, we had just begun a major effort in the supermarket program of packaged frankfurters.  Basically, that’s how the company grew to where it is today.  Going through many different gyrations, obviously, the ups and the downs.  The bottom line is that the quality of the product is what kept this company going and expanding to where it is today.

Steve Pomeranz: You know, you’ll find this interesting, but a few weeks ago I interviewed Patricia Gucci from the Gucci family.  Your family’s story is very, very similar.  There was Guccio Gucci who started the business, very local in Florence.  The son, Aldo Gucci, came in after the war, saw the GIs, and expanded.  It’s a very similar story.  You may want to get that book to read a little bit about that.  Talk about different businesses, but very common story, perhaps, way back when.

Things weren’t always smooth.  You write in the book about something called the “Wetson Effect”.  I’d like to know what lessons were learned from that experience.

Bill Handwerker: Well, at that time, my father had growth plans in his mind, and Wetson’s was in the New York market and Connecticut and New Jersey, North Jersey, as really the primary hamburger fast food outlet, and they had troubled times.  We purchased the company, but it was too many locations and, as everyone knows, location, location, location.  The bottom line is that was a lesson learned.  Fortunately, through a lot of hard work and effort, we were able to work through that over-expansion back to consolidation and the brand moved forward.  The lesson learned there is that infamous or a famous expression, “location, location, location” and Wetson’s stores that were not successful, as Wetson’s were not as successful as Nathans.  That was a lesson well learned.

Steve Pomeranz: From reading the book, too, it was, I think, also a question of cash flow in order to sustain and to actually create the synergies between the Wetson’s and the Nathan’s brand.  My guest is Bill Handwerker, he’s the grandson of Famous Nathan.  The book he wrote is called Nathan’s Famous: The First 100 Years, An Unauthorized View of America’s Favorite Frankfurter Company. Bill Handwerker, thank you so much for joining me.

Bill Handwerker: My pleasure.  If anyone is looking, is interested in getting a hold of me, you can get me on Facebook, Nathan’s Famous The First 100 Years.

Steve Pomeranz: Very good, thank you.