Busines Profile
Big Sky Business Journal
January 1, 2003
Excerpt from the Big Sky Business Journal:
Mountain Mudd and Mountain Manufacturing continues to be one of Billings’ most exciting business success stories.
Today, the company employs 300 people, has sales in almost every state, and is likely to be a commonly recognized name across the country in another three years, predicts one of its owners, Dennis Burkhartsmeier. That’s amazing growth, given the company’s rather innocuous start in 1994, when Dennis’ wife, Brenda and his sister, Louise, decided that they simply wanted to start a drive-up espresso stand. “I really thought it was a dumb idea,” said Dennis. He is forced to eat those words, with some regularity, these days.
What Brenda and Louise quickly discovered when they started searching for a kiosk for their business, was that there wasn’t any source for such things. “They found one stand and it was so poor that I said I would build them one,” said Dennis, who is an engineer. That was the beginning. He was quickly being asked to build others. They discovered that whatever market there might be in espresso stands, there was an even greater, almost completely untapped, market for kiosks. They started building kiosks, under the name Mountain Manufacturing.
At the same time, of course, they continued the Mountain Mudd Espresso part of the business, the popularity for which caught on very quickly. As it turns out, their involvement as retailers who use the kiosks themselves, helped them in refining the kiosk design to becoming, without doubt, the most functional and efficient kiosk on the market. “Others might build them cheaper,” said Dennis, “but they don’t build them any better.”
The company gets orders from all over the country for kiosks, most often for use as espresso stands, but quite often for other purposes. One of their most recent orders comes from another enterprising Billings-based business, Bruno’s — a popular pizza and Italian food restaurant that is expanding their endeavors into “take out” stands. Mountain Manufacturing is designing a kiosk specifically for their needs.
Other companies have ordered kiosks for use as laundry drop-offs, for movie rentals, locksmiths, or check cashing, in which case, they customized the booth with bullet-proof glass. They are building kiosks without windows for use in a mall in Austin, Texas.
Adapting to the needs of their customers is an important key to the success of the kiosk business, explained Dennis, because nothing drives the need for customization, as much as the maze of complicated and inconsistent regulations they encounter with each new city into which their kiosks are introduced. Much of the design (and hence cost) of the kiosks serves no other purpose than to appease building regulations, without that adaptation many would-be entrepreneurs wouldn’t be able to get past “square one.” In fact, as it turns out, one of the most vital aspects of the support Mountain Mudd gives to their leasing customers is their experience and knowledge in dealing with building regulators and how to meet the myriad of codes.
Part of that experience was hued right here in Billings, where they first encountered the inherent bureaucratic resistance to temporary structures, a resistance that is built into most city ordinances. With some controversy, some confusion and much cooperation, the company, city officials and protestors hammered out a new set of regulations that allowed room for the emerging new kind of business. As, Brenda pointed out at the time in pleading their case, the value of kiosk businesses is that they allow the use of under-utilized commercial property. It’s a new approach to business that brings added employment and creative new opportunities for entrepreneurs.
A significant portion of the Mountain Mudd and Mountain Manufacturing management staff, headquartered on the second floor of a Mountain Mudd store at 2923 Montana Avenue, does nothing more than interface with municipalities across the land on behalf of their customers.
In the process, over time, the company has developed a kiosk design in which every square inch, every corner, every switch, every conduit, has been closely examined and engineered to make the kiosks highly functional, efficient, durable, attractive and as safe as possible. Great thought is even given to potential future needs and accommodated, such as new computer technology.
A significant fact taken into account in designing the building is that the buildings are frequently struck by automobiles. “It’s like they are targets,” said Dennis, as he holds up a piece of the sturdy, square hollow length of steel, which comprises the basic frame for each structure. With that in mind, Dennis explains that it is important to minimize the impact for both the people inside and to protect the equipment. At the same time, repairs must be quick and easy. “People are depending on these buildings for a living,” he said, with the empathy of someone who’s been there.
Some of their greatest improvements in the evolution of the kiosks, weren’t even possible in the beginning because the materials didn’t exist at the time. But as their own experience as retailers reveal flaws, as they adapt for regulators, as they adapt to special uses and as new materials have become available, the design of the kiosk have steadily improved.
The kiosks are built, assembly line style, at the rate of about one and a half a day in a plant on Minnesota Avenue. Like mushrooms, the green, pointed-roof buildings cluster about the plant, that is bursting at its seams.
When he was first approached by someone who wanted him to build a kiosk but didn’t want to do business under the Mountain Mudd name, Dennis said they quickly understood the dilemma. If they refused to build a kiosk under such circumstances, it would essentially create a fertile environment for a would-be competitor, who could copy what they were doing, and would have no qualms about to whom they sold kiosks. “We decided we would prefer to, at least, get the kiosk business,” he said.
That decision has much to do with the rapid growth of the business. Less expensive kiosks are available on the market, “and we readily admit that to our customers,” said Dennis, “But price is irrelevant if you make your money back right away. It’s much cheaper in the long run to go with quality, and if you buy a kiosk from us you don’t have to re-invent the wheel, and inventing the wheel is expensive. We know; we have invented lots of them.”
Licenses for Mountain Mudd come with far fewer strings attached than typical franchises. The licensee is not required to buy their products from Mountain Mudd, and can operate their business as they think best, but Mountain Mudd support is there. Hopefully, said Dennis, the convenience of their competitively priced products will be the best deal the licensee can get. “It doesn’t make sense to charge extravagant prices,” he said, “In setting everything up we always looked at from the perspective of how we would like to have it. We aren’t idiots and our customers aren’t idiots.”
Within the next three years, there will be between 500 to 600 Mountain Mudd kiosks scattered about the country, said Dennis, adding “we may not be quite as well known as McDonalds, but our name will be commonly known.”
Mountain Mudd owns and operates slightly less than a hundred espresso stands themselves, primarily in Montana cities. They operate in 14 locations in Billings.
PART II – Mountain Mft. also Sells Expertise in Traversing the World of Regulations
Just as much as the structures themselves, a significant part of manufacturing kiosks has to do with finessing regulations and regulators. It’s an area of specialization for Mountain Manufacturing, who has a staff of six people who work full time doing nothing more than interfacing on behalf of their customers, with municipal building departments across the country. It’s not at all what the company anticipated they would be doing when they started business.
Almost every new city into which their kiosks are introduced poses new rules and regulations, new obstacles and challenges, says company owner, Dennis Burkhartsmeier. Most cities have regulations that resist “temporary” structures, which is how they see a kiosk. For Mountain Manufacturing’s customers it means additional costs and delays. The process is “perfectly ludicrous,” sums up Burkhartsmeier.
It’s not that he is opposed to building kiosks that are safe and healthy — in fact, in most respects, Mountain Manufacturing kiosks far exceed regulatory requirements, not because of regulations, but because it’s good business to be the best they can be. “We design them to be compliant everywhere,” said Burkhartsmeier, but there is little consistency in city ordinances. Over and over, they discover that what one city doesn’t care about at all, is anathema to another.
“The regulations start out with good intentions,” said Burkhartsmeier, “To want to make sure that things are safe and healthy makes sense, but over time the intent is lost, and all it’s about is dotting i’s and crossing t’s and covering behinds.” Far too often they lose sight of the goal, points out Burhartsmeier. For example, “They say you have to have journeyman electricians…but if it’s done up to the codes…if it’s done perfectly.. better than perfect, why? The law does not say you have to hire a journeyman electrician. Do you think the manufacturers of motor homes or mobile homes in the Midwest have an army of journeyman electricians? No, they just meet the specifications.”
Far from objective standards, the regulations become issues of authoritative egos, sometimes used as tools to manipulate jobs, curb competition, or to halt economic growth. Because the standards are subjective is the reason that “attitude” is so important. In some cities compliance officers and general policies are more reasonable than others. Dealing with them and determining the likelihood of success is a service that is built into the service that Mountain Manufacturing gives their customers. “We do regulations. We are in uncharted territory,” says Burkhartsmeier.
“Sometimes we have to tell our customers, that in all honesty, we can’t advise going into a certain city to do business,” he said. Such is the case with Boulder, Colorado, where they are simply opposed to economic growth, he said.
Dealing with regulations can be a very volatile thing. “We usually tell our customers to let us be the first to approach the city,” said Burkhartsmeier — it doesn’t serve any purpose to rankle feathers and that can happen pretty easily — especially when men are involved, he says, only half jokingly. “I don’t want to be ‘sexist’ about it, but the fact is, men get their egos involved rather quickly,” he said. Burkhartsmeier suspects that is the reason that most of their staff who deal with the regulators, wind up being women — not all of them, but most.
Typically it takes about two months to iron out the regulatory details with each new city, according to Burkhartsmeier — not intensively, but just the back-and-forth communications that usually wear most people down. To some extent, he said, “They count on that. You are just a problem and if they can make you go away, it’s just that much less work for them. But we don’t wear down.”
Of course, their first encounter with the regulatory snafus that are triggered by the introduction of kiosks was in Billings. How did Billings deal with the situation? Very well, says Burkhartsmeier. “Billings has a pretty positive outlook, almost progressive. They don’t fight tooth and nail against you,” he said. “They took a chance and look at the outcome,” he said, “We are likely to become one of the state’s largest employers.” The company currently employs about 300 people.
“The city of Billings had the foresight,” said Burkhartsmeier. A lack of foresight is the real problem with regulations, he believes — they don’t allow forward movement. “If this opportunity is sitting there. There must be a hundred others that have been lost because of a lack of vision,” he said.
Burkhartsmeier is particularly frustrated and puzzled by that “lack of vision” evident in another Montana city — Great Falls. The company has encountered some of their most difficult problems there.
Mountain Manufacturing kiosks come in two basic styles. One that is designed to be picked up and moved by a forklift, on and off a truck. Another that is mobile — with two wheels and an axle. An expensive and space consuming adaptation for which there is absolutely no need, except to comply with regulations — regulations like those found in Great Falls, where they will only allow “mobile” structures, which are defined as having an axle.
Great Falls looks at the adaptations that Mountain Manufacturing has made to comply with their regulations as “finding loopholes,” said Burkhartsmeier. That they should see a business managing to comply and stay in business as a “loophole” speaks volumes as to their anti-business attitude, said Burkhartsmeier, in amazement.
Over a period of time — “instead of working with us” — the city has simply escalated the requirements they place on the company. “In order to be considered mobile we have had to move the kiosks every day. We do that. Every day we tow all our kiosks to a central location to be serviced. But it’s a very dangerous, costly and wasteful process.” (Moving mobile kiosks on city streets is by far a greater risk than any risk a temporary structure could pose, believes Burkhartsmeier.)
“Now they have passed a law specifically aimed at trying to put us out of business in their city,” he said. They want to require that kiosks be moved every four hours. The action is one that will probably lead the company, finally, to court, said Burkhartsmeier. “But why should they want to do that,” he muses. “We have four or five kiosks in Great Falls and we hire 25 people. Comparing that to Billings where we have 14 kiosks, you could project that we could have that many in Great Falls, which would probably be providing another 70 people with jobs.” And — as was Billings’ experience — who knows what other opportunities might further result.
Initially Mountain Manufacturing encountered similar resistance in Houston, Texas, said Burkhartsmeier, “But the minute we pointed out that it could mean employing as many as 600 people in their city, they changed their attitude.”
Burkhartsmeier tells of Sioux Falls, South Dakota where an inspector insisted on a change that served no beneficial purpose but cost the customer $20,000. “Unfortunately,” said Burkhartsmeier, “there is no way that we can build a kiosk to accommodate the handicapped.”
The Americans with Disabilities Act allows for that possibility and says “in black and white” that if it can’t be, it can’t be, but that made no impression on the Sioux Falls inspector. He wanted them to install a handicap access door — “even though a wheelchair would be able to go no more than four inches through the door, and would then have to back out,” said Burkhartsmeier. “I asked him if he realized that what he was requiring would benefit absolutely no one, whatsoever, but would cost my customer an additional $20,000. He said ‘yes’ he did, and stuck to his guns,” said Burkhartsmeier. In the end they installed the door. “He then gave us his stamp of approval and everything was just fine after that,” he said, adding, “We run into things like that daily.”
“We could have challenged it,” he said, “hired lawyers and all, but the customer said he would rather just pay the $20,000 and get on with it.” That’s probably why these things are never challenged and are allowed to go on as they do, mused Burkhartsmeier. A business person doesn’t have time to challenge them, and more likely than not the cost of doing so would exceed the cost of just going ahead and complying.
Burkhartsmeier pulls out a bill from a local architect for $20,089. The bill he says is one incurred in trying to appease a North Carolina regulator, who insisted that the kiosks be technically described with drawings and calculations — “thousands of calculations.” The architects weren’t redesigning the kiosk, noted Burkhartsmeier, they were simply describing it, he said, “to comply with a foolish code… on a few wisps of paper… that in all likelihood will never even be read. They will just be put into a file and into a drawer so that they are there to cover some bureaucratic bottom.”
In this case, the costs will not be passed onto their customer. “We won’t make as much money on this deal,” he said, “but hopefully our customer will do well and will be buying more kiosks in the future.” Sometimes, it seems that all this is just “make work” for engineers and architects, Burkartsmeier muses.