Unsung Hero: 2005 Hall of Fame Inductee David Friedman,
Paramount Restaurant Supply
Paramount’s David Friedman has one of the industry’s most storied and remarkable careers but you would never know it—until now.

By Joseph Carbonara, Editor in Chief

When visitors enter the reception area of Paramount Restaurant Supply in Warren, R.I., on one of the walls they see a plaque recognizing the annual recipient of the dealership’s Unsung Hero Award. Paramount’s associates select the winner from among their ranks based on the individual or department that went to the greatest lengths but received the least amount of acknowledgement in helping the company achieve its success over the past year.

If the foodservice equipment and supplies industry had such a designation, it would go to Paramount Chairman David Friedman, FE&S’ 2005 Hall of Fame inductee. If you have never met or heard of Friedman, you are not alone but there is little doubt that you are familiar with his work for it has touched virtually all corners of the foodservice industry.

David Friedman was born in 1922 in New York City and his family moved to Providence, R.I., two years later. Like many from that era, Friedman began learning the lessons of the business world at a very young age. His father was an auctioneer, liquidator and owner of dry goods stores. As a way of contributing to the family business, a 14-year-old Friedman began making trips to New York City via steamship to buy for his father’s stores.

Oddly enough, it was the auction portion of the family business that had a significant impact on Friedman. “In the auction business one learns a lot about why people go out of business,” Friedman says. “You hear the same excuses about why it was not their fault and soon learn that people never tell you the whole story. Ninety-nine percent of the time it was not their fault, which was a good first lesson for me as a businessman and is why we are always accountable to our customers.

“There is an old saying out there that goes, ‘The one who will put you out of business is your customer,’” Friedman says.

In 1940 at age 18, Friedman quit his job at National Paper Co. and gave in to his entrepreneurial spirit. “I knew a little something about the auction business so I bought a few lots of items and sold them,” he recalls. “I made more money doing that than I did in five weeks at National Paper.”

At the same time Friedman was testing the entrepreneurial waters, Eli Feingold was struggling to hire and retain a salesperson for Paramount Fountain and Restaurant Supply, a fledging company that distributed whipped cream machines to ice cream fountains in New England. After watching her husband hire nine different salespeople, none of whom stuck with the company for longer than a cup of coffee, Feingold’s wife suggested he meet with Friedman, whom she had come to know while the two worked at National Paper.

Feingold hired Friedman in September, paying him $22.50 per week. Friedman was given the farthest flung regions of the company’s territory and had to provide his own car and gas, which in 1940 cost $1 for eight gallons.

The relationship between the two men grew stronger by the day and paid immediate dividends as the dealership generated $80,000 in sales during their first year together. From that point, Friedman’s natural business and customer-service instincts kicked into high gear as he started adding paper goods and china items to the company’s fast-growing line of products.

“Everyone thought we were brothers so you could tell how closely we were working together,” Friedman recalls.

The Move to E&S
About seven years after Feingold and Friedman began working together, Paramount made its initial foray into the equipment and supplies industry, which proved to be the turning point for the young company. Feingold traveled to New York City’s famous Mott Street, near the Bowery, to purchase some booths for State Lunch, a Paramount customer that operated a luncheonette. Unfortunately, the transaction did not go as planned.

“When the booths were delivered they were such junk,” Friedman says. “I told the customer they could come see the booths but I was not going to sell them. Instead, we promised to build new booths.”

State Lunch’s owners insisted on seeing the booths, so they visited the Paramount warehouse. During inspection Friedman pointed out that the booths’ bottoms were made from wooden orange crates, so it was obvious that they would not withstand the wear and tear of a typical restaurant.

“After conferring amongst themselves, they turned to me and said, ‘give us a whole new restaurant,’” Friedman says with a smile. “And once we built the first one, people started coming to us.”

With Friedman continuing to serve as Paramount’s lone salesman, the company continued its pattern of rapid growth. To help ensure the operation kept running smoothly, which in this case meant that customers received their orders in a timely and accurate fashion, Leon Nahigian joined Paramount as its first office manager in 1948 and remains active within the company to this day, serving as vice president.

“David would go out and get the accounts and I would make sure things got done,” Nahigian says. Oftentimes Friedman would sketch out a kitchen and the subsequent order on the back of a placemat and hand it over to Nahigian, who would take it from there.

As Paramount’s equipment and supplies business grew, the company started to maintain a decent inventory. And in 1949 when the company moved into a foundry building, which was considerably larger than its previous home, Paramount put the newfound space to use by creating its first-ever showroom. “People thought our new facilities and the move cost a fortune but it cost us almost nothing,” Friedman says. “And we did not lose a day of business.”

Then, in 1950, fortune smiled on Paramount once again. Long-time customer Bill Rosenberg owned Industrial Catering, a company specializing in providing luncheon, catering and cafeteria services. As part of its scope, Industrial Catering sold plenty of sandwiches and pastries to workers at factories and other large companies in the Boston area. Two of Rosenberg’s largest-selling items were coffee and donuts. With Paramount as one of New England’s largest paper cup distributors at the time, Friedman and Rosenberg had gotten to know each other well.

Rosenberg had hired someone to design his donut shop and asked its long-time vendor Paramount to provide the equipment and supplies. With his company having designed and equipped other similar businesses in the area, including an operation known as Donut Kettle, Friedman suggested to Rosenberg that Paramount might fill both roles. And after showing him some of Paramount’s completed projects, Rosenberg went along with the program.

According to Friedman, he received a phone call from Rosenberg at 3 a.m. on the day he was opening his first shop, called Open Kettle. The baker had shown up intoxicated and was not able to light the fryers. So Friedman contacted the manufacturers’ rep for the line of fryers. Luckily, he lived not too far from Rosenberg’s shop and was able to help fire up a business that is now know as Dunkin Donuts, a Paramount customer for more than 55 years.

Dunkin Donuts was also the customer that helped Friedman realize that his business opportunities were not limited by geography. At the time the chain got started, most dealerships throughout the United States did business within a radius of 200 miles or fewer from their offices. But when Rosenberg asked if Friedman knew any dealers who could design and equip a store they planned to open in Long Island, N.Y., FE&S’ 2005 Hall of Famer said his company was up to the task.

“In those days, almost nobody crossed the state line,” Friedman recalls. “And those companies that did were usually good-sized and were working on hotels. The restaurant equipment business was entirely different.”

So as Dunkin Donuts grew, so too did Paramount, which led to the dealership offering to tackle its customers’ projects from concept to completion, regardless of location. Paramount and its related companies could design, construct, equip and even finance any foodservice operation most anywhere in the country, making it a pioneer in this aspect of the business.

“For me, it might have been the adventure of doing a job away from home,” Friedman says. “Here was a company that was a good customer that was looking to grow. So I thought, ‘Why shouldn’t we grow with it?’ It is better to be lucky than smart.”

Of course the learning curve for this was not without its setbacks. Figuring out the proper way to price a job that was taking place outside of your primary market can be more complex when compared to other similar projects. Friedman and Paramount learned this lesson the hard way after taking a loss on a pair of Dunkin Donuts shops it built in Indiana. “We finished them but quickly changed our approach,” Friedman says.

Starting New Ventures
Over the years, Paramount has operated a series of related companies, the number of which has expanded and contracted as opportunities inside the foodservice industry have evolved. All of this was part of Friedman’s unflinching commitment to servicing Paramount’s customers and his willingness to take a chance in doing so. Anything Paramount tried — from financing to construction — was done with the intent of supporting the company’s customers.

Two such examples are Crown Mortgage Co. and Regency Financial, which made Paramount one of the few dealerships in the country to finance equipment purchases and construction for its customers thus creating additional revenue.

Like any business venture, some finance deals worked out better than others. Situations like this made Friedman and Feingold a little wary that some of the ancillary businesses, like financing, could drag down Paramount. To help alleviate this concern, the partners agreed that Friedman would take responsibility for or ownership of the other companies. That way if the worst happened, Paramount and Feingold would be safe.

For example, one customer Paramount financially backed opened 62 snack bars from Maine to Colorado in the 1950s. Unfortunately, the company did not do very well and Paramount wound up taking ownership of the struggling foodservice provider. “We never made five cents on the deal,” Friedman recalls.

The 1964 World’s Fair in the New York City borough of Queens represented another opportunity for Friedman and Paramount, one that yielded better dividends for Paramount and the industry as a whole. The company, which Friedman took full ownership of in 1962 when Feingold retired, built many of the restaurants on the fair grounds, shipping trailer after trailer of equipment and supplies from its Rhode Island operations. Once the fair was over, though, the operators were required to have the equipment and furnishings removed at their cost.

Naturally, many of them were not interested in or unable to incorporate the equipment into their operations. So Friedman offered to have Paramount remove the items at no cost to the operators, so long as the dealership could assume ownership of the individual pieces. Most of the operators agreed and Friedman used the items to open what is now known as Buy Rite, the dealership’s used equipment arm. Little did Friedman realize at the time that he would leverage the used equipment company as a springboard for a bigger initiative, one that would impact the entire foodservice community.

An Industry-Shaping Investment
In 1971 Paramount owned acres of used foodservice equipment and an empty building adjacent to a shipyard in Providence, now known as Harborside Park. The company also possessed the ability to design and build a state-of-the-art foodservice environment. At the same time, the foodservice industry was enjoying a period of growth and there was a need for new people across all segments, specifically chefs.

Feeling that the foodservice industry had been good to him and it was time to give something back to it, Friedman approached Morris Gaebe, then president of Johnson & Wales, a small business school in downtown Providence. Friedman proposed that Paramount would build and equip a culinary and restaurant management school and lease it back to Johnson & Wales for $5 a square-foot. All Johnson & Wales had to do was recruit the students and run the school.

“I told Mr. Gaebe that I could see there was a need for all types of jobs in our industry,” Friedman says. “If the school was successful, they could do what they wanted. And if after one year the school was not successful, they would owe me $35,000 and could break the lease with no further obligation.

“At the time, Johnson & Wales did not know anything about the culinary arts and neither did I,” Friedman says, “but I knew it was important.”

After many discussions and meetings between representatives of Johnson & Wales and Paramount to develop the idea further, Gaebe gave the proposal the go-ahead, which meant it was time to present the idea to the school’s board of directors.

Naturally, the board promptly rejected the proposal, feeling this type of training was best suited for trade schools and not a business college like J&W. The day after the J&W board rejected Friedman’s proposal he called a dejected Gaebe.

“I told Mr. Gaebe this was one of the best meetings I had ever attended,” Friedman recalls. This came as a surprise to Gaebe, who had a decidedly different take on the meeting.

“I said to him, ‘On my way to the meeting I thought my company was getting big enough that we, too, should have a board of directors — but after last night it will be over my dead body,’” Friedman recalls with a laugh.

Friedman went on to tell Gaebe that he planned to move forward with the creation of the school, with or without Johnson & Wales. A surprised Gaebe asked Friedman for some additional time and began to caucus the individual members of J&W’s board. And by the time of the next meeting he had the necessary votes to gain board approval, with the stipulation that the school recruit 80 students.

In 1973, J&W’s inaugural culinary school class had 141 students. Enrollment grew to 400 students and then 800 over the next two years.

Today, the internationally known J&W has more than 5,600 full- and part-time culinary arts students from 90 countries enrolled in undergraduate programs at campuses in Providence, R.I.; Charleston, S.C.; Norfolk, Va.; North Miami, Fla.; and Denver. In addition, each year representatives from more than 200 companies serving the foodservice industry come to J&W to recruit its graduates.

Friedman remains a trusted friend of J&W, serving on its Board of Trustees and having received an honorary doctorate from the university.

Lessons Learned
Throughout his 65 years in the foodservice industry, Friedman and Paramount have had to weather their fair share of economic booms and busts. Fortunately for them, the good times have outnumbered the bad. “Every time the economy went down we did better and I think it is because when that happened our people worked harder,” Friedman says. “It was almost as if we did not want to hear that the economy was bad.”

Friedman feels that one reason Paramount has weathered the turbulent times well is due to the fact that it has a sound business infrastructure. “You have to build a strong organization and that runs the business,” he says. “You don’t run the business. If you did, you would need to be in 20 different seats at once and that’s not possible. You build a big business by letting your people know they can build a method of doing business they can depend on.”

And over the years he has come to realize that one of the most important skills a businessperson can develop is learning when to walk away from a situation. “You can’t win all the time,” Friedman says. “You have to know how to take a loss. It is part of this business. I have taken many of them.”

And if a business is successful, its wins come in quantities greater than the losses. “A good businessman makes six right decisions out of 10,” Friedman says. “Anyone who does not take chances does not get anywhere. But you have to be lucky, too.”

Another reason for Paramount’s sustained success is Friedman’s ability to listen to others’ ideas and look beyond today. This has allowed the company to adapt to the changing landscape of the foodservice industry. “You can learn a lot by listening to smart people,” Friedman says.

For example, when the company first started out, its primary customer base consisted of small, independently run ice cream fountains. Today, the majority of Paramount’s business comes from large, multi-unit operators like Dunkin Donuts, Panera Bread and others.

“You are dealing with a different caliber of person,” says Nahigian, who continues to ride the waves of business with Friedman. “Now, you get 20 orders by dealing with one person. So you adapt your organization to meet their needs.”

Clients’ profiles may have changed, but the formula for keeping them happy remains the same. “We give our customers value and that can be more important than price,” Friedman says. “Things are a lot different then they were, but a customer still wants value.”

Doing this is easier said than done, so it is up to management to work with its customers to manage their expectations accordingly. And in those occurrences when problems do arise, Friedman feels it is important to own up to them quickly, not wasting any time. “You don’t hit the mark all the time,” Friedman says.

As he readily admits, Friedman’s 65-year career in the foodservice industry is a testimony to hard work and perseverance, which he knows is not for everyone. But at 83 years old he shows no signs of slowing down and continues to work closely with Paramount President and CEO Steve McGarry about plans for the company’s future. “We run at a very good pace around here and not everyone can handle it,” Friedman says.

But apparently Paramount’s pace suits McGarry, who has been with the company for more than 30 years, including 14 as president and CEO. McGarry closely follows Friedman’s credo of “the customer is king” and leverages his unwavering dedication to it in growing Paramount. “This will be our best year,” Friedman says of 2005.

And thanks to the organization Friedman has built, Paramount will continue to maintain a good pace for generations to come.

Paramount Timeline

In April, Paramount Restaurant Supply celebrated its 65th anniversary. The following timeline features some of the milestones from the organization’s storied past.

1940

• Paramount Fountain and Restaurant Supply opens for business. David Friedman joins the company in September.

1944

• David Friedman becomes a partner in Paramount.

1947

• Paramount completes its first equipment job in Fall River, R.I.

1950

• Paramount equips the first Open Kettle store, which later changes its name to Dunkin Donuts.

1955

• Paramount opens stainless-steel fabrication shop.

1960

• Paramount now has six locations.

1962

• Eli Feingold retires and David Friedman takes sole ownership of Paramount.

1963

• Paramount equips many restaurants at the World’s Fair in New York City.

1965

• Paramount purchases equipment from World’s Fair and uses it to start Buy Rite, its used equipment subsidiary.
• Paramount opens Party & Pantry Stores, a cash ‘n carry operation.

1972

• David Friedman introduces culinary school concept to Johnson & Wales and 141 students enroll in the fall.

1975

• Stephen McGarry joins Paramount as a sales trainee.

1992

• McGarry

  Stephen McGarry becomes president and CEO of Paramount.

1998

• Paramount moves into the Larry Friedman building (below), named after David Friedman’s late son.

2000

• Paramount celebrates 60th anniversary.

2005

• David Friedman inducted into FE&S’ Hall of Fame as Paramount celebrates 65th anniversary.