12 February 2011 » dentaltown.com

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My four boys and I always have a huge dinner around 6 p.m., and because I have four boys, they’re starving by 9 p.m. In typical Farran family fashion, we’ll pile into the car and speed off to one of our favorite restaurants to grab another bite. This happens just about every night. Recently we made a late-night burrito run to Chipotle Mexican Grill. I love Chipotle, and so do my boys; you can get a burrito the size of your forearm packed with fresh ingredients in
about two minutes. They’ve got one heck of a process – and they do it well!

As we devoured our second dinner, I recalled the burrito chain’s history: Started by Steve Ellis in 1993 in Denver, Colorado, Chipotle grew at a slow and steady pace until 1998 when McDonald’s bought a minority share and then a majority share one year later. By 2003, with McDonald’s financial backing,
Chipotle expanded to 300 locations. Then around 2007, McDonald’s announced it was selling 21 percent of its companyowned restaurants including Chipotle, Boston Market and its minority interest in Pret a Manger.

Why?

I mean, Chipotle is a wildly popular food chain, as is Boston Market. Why would McDonald’s offload these properties?

Answer: The same reason Target sold off Mervyn’s in 2004. The same reason Ford Motor Company sold off its Aston Martin division.

Companies like McDonald’s, Ford and Target figured out the best return on investment they will ever get will be by a strict focus on their core business. McDonald’s has some of the toughest competition out there with Burger King, Wendy’s, In-N-Out Burger, Sonic and dozens of other fast food entities nipping at its heels. McDonald’s has a major war on its hands, and realizing this, it looked inward and decided it wasn’t really in the company’s best interest to spend its time trying to master making burritos and rotisserie chicken on the side.

Target had good people working at its Mervyn’s subsidiary, which wasn’t doing anything for Target as it struggled to compete against city-size Wal-Mart. Mervyn’s also had major big-box competition in Kohl’s, Sears, JCPenney and about a dozen other chains that were soundly beating it at its own game. So Target brought all of its Mervyn’s superstars back to the mothership and offloaded the weak department store chain.

Same thing goes for Ford. Consultants told the car maker that its best people were working on Astin Martins – a luxury line that caters to a miniscule market and makes little profit. Ford was convinced that it needed to spin off Astin Martin, and move those engineers over to design Lincolns and Mercurys where they could sell 10 times the amount of its higher-end vehicles.

In selling off these secondary properties, McDonald’s, Target and Ford were able to retool and bring the focus back to what made them awesome in the first place.

For more than 20 years, I’ve met dentists from all over the world who are trying to make money on the side. These are dentists who average about $500,000 in collections and take home about $200,000 each year. They have it in their heads that they can make more money and achieve amazing success if they invest
some of their time and money into some other venture. They want to start a new restaurant in town, even though, according to the 2007 article “The Restaurant-Failure Myth” in Bloomberg Businessweek, one in four restaurants will close or change ownership in the first year of business (and get this: it rises to three in
five over the first three years… a 60 percent failure rate). Or maybe the dentists don’t want to get into the food business, but instead want to invest in real estate or grow soybeans or become part-time cattle farmers (don’t laugh at the last two, these are seriously ideas I’ve heard). These distractions are ridiculous.

I know hundreds of dentists who collect $1.5 million a year in their practices alone, but you think you can do it by getting into real estate? Do you have your real estate license? Have you been doing real estate eight hours a day for 20 years, because that is who you’re competing with – people who live this stuff!
Think about the cattle farmer idea. There are third-generation cattle farmers out there who have a thousand head of cattle and have thought only about cattle every single day of their lives for more than 20 years. You’ve thought about it for about 20 minutes and you have zero experience, but you still think it’s a lucrative deal? Please…

You’re not a restaurateur! You’re not a real estate agent!

You’re not a cattle rancher or a soybean farmer! You’re a dentist!

Embrace it! Go with what you know! (As a side note, I should stress how important “go with what you know” is. If you think jumping into something you know little to nothing about is going to pay off dividends, you’re mistaken. However, if it’s a life-long dream of yours to own your own restaurant, go for it - but put on your learning cap and know the business before you get down to business. After all, had I not followed my dreams and done my homework, there’d be no Dentaltown.) You want to make more money? That’s great! So why don’t you invest in your dental practice. Hit the message boards on Dentaltown.com and see what your peers are doing to increase revenue, productivity and the “wow” factor for their patients. Look into technologies like CAD/CAM and lasers, and when you’re done doing that, go get trained on them! Then, when you’re proficient on these new technologies, invest three percent of your collections and market them to potential patients! (A marketing aside: Guys, here’s what I don’t understand about us and marketing. A lot of us won’t even blink when signing up for a PPO insurance that cuts our fees by about 25 percent, but we won’t even dream of investing three percent of our collections on advertising our own practices? Are you kidding me? Hello out there! And by the way, signing on to that PPO might be landing you those patients who do carry insurance, but what about those who are uninsured? According to the article “Time for a Dental Insurance Checkup” in The Wall Street Journal, as of 2006 only 57 percent of Americans have dental insurance – and that percentage is shrinking.)

A little time, investment in and marketing of technologies like CAD/CAM and lasers makes a lot more sense than renting out or buying another property, hiring a wait staff and cooks, learning the restaurant business in five minutes and hoping someone comes in to order your daily special. As for property, are you still renting office space? Why?! Our forefathers came to the new country so they could live on a piece of their own land and quit squatting on a noble landlord’s farm… and you’re renting? Real estate is at a 25-year low, why don’t you go buy a 3,000 or a 5,000-square-foot building and plumb it for six or seven or eight operatories? Upgrade the location of your business! Be seen by passersby. My practice, Today’s Dental, averages about one walk-in a day just because people see it.

If you don’t want to go out and buy some real estate, then why not refurbish your existing space and build another operatory? You’re standing there in your office waiting for your team to dismiss a patient, clean up afterward, set up the room from the next patient and then seat the patient. You’re back there doing nothing for 20 minutes because you don’t have an extra operatory? Seriously? Why in the world are you buying a condo or a townhouse (as another property) when you’re not adding onto your office?

Focus on your core competency. You’re a dentist, not a real estate developer. Learn how to do more and better endo. Check out Class I orthodontics. Check out TMD. Learn how to place implants. Invest in new technologies and get trained on them. Make your life easier. Make it your goal to be the best dentist you can be by investing in your continuing education and your practice. Then later on, when you’re netting more than $1.5 million a year and you want to branch out and make more money, instead of opening up Dr. Smith’s Good Eats, you might actually consider opening up another dental practice.

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Howard Farran, DDS, MBA, MAGD, is an international speaker who has written dozens of published articles. To schedule Howard to speak to your next national, state or local dental meeting, e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. .