With 128 stores in Australia and five in New Zealand, The Coffee Club is enjoying considerable success in the extremely competitive coffee sector. Tell us what shape you believe the coffee sector to be in and if there is enough room for more franchisees?
There’s always room for good competition in every market, whether it be in Brisbane, in the Sunshine Coast, Gold Coast, Bundaberg, Albury-Wodonga, etc. And there’s always room for competitors. When we go into a site, we try and create a destination point for that particular strip, so it gives the consumer a relatively good choice. The Coffee Club franchise will always be where there is hub, i.e. a strip of coffee shops, a strip of restaurants, and a strip that would attract a maximum amount of people.
In which state does The Coffee Club enjoy maximum exposure and where do you think in Australia there is specific room for growth?
Naturally we started off in Brisbane, back in 1989 so it is there that we probably enjoy maximum exposure. In fact in Queensland The Coffee Club is a household name. We’ve done recent surveys that have proven that eight out of 10 people have visited the Coffee Club. That’s the sort of numbers that we’re trying to achieve in the southern states and also in New Zealand.
Of the 130-plus franchisee units, how many are owned by The Coffee Club?
We have some nine stores.
Can you walk us through your “Six Building Block” program, a course your company claims has proven tremendously successful for your franchisees.
Six Building Blocks encompasses the six key areas for a successful business. Naturally we have our mission and core values, we have marketing, operations, property, financial management and there’s a template that we require and we can ascertain how that business is travelling. Because it is a new business, we can understand exactly where the money is being spent and if there is overspend in different areas. The Six Building Blocks is a very important part of the business.
With respect to market share, how does The Coffee Club compare with the likes of Gloria Jeans Coffee and Starbucks?
We believe that we have a product that’s uniquely different. We offer that little bit more than just a take away cup of coffee in a foam cup. We’re offering a complete experience. We have a much larger range of designer cakes; we have light meals in all the Coffee Clubs; our café bar restaurants have a full kitchen with a chef and fully licensed table service. So we’re all about creating a meeting place as opposed to a cup of coffee.
How do you think your prices compare to the competition?
Our prices are probably on par with many of the other different competitors that we have. We’re not overpriced.
On average what do your franchisees earn per year?
That’s the million dollar question. The turnover in stores varies. We have some smaller type kiosks that owners/operators stand to make a really good amount of money.
Can you give specifics?
No, I can’t give specifics. However, I will say that not too many of our franchisees are disappointed with the turnover. Again, like any business, you will only get out of it what you put into it. How long is a piece of string?
Take us through the costs involved in starting up a Coffee Club franchise, including royalty, marketing and any ongoing monthly and/or quarterly fees?
We have different types of Coffee Clubs. There are kiosks, which are smaller type operations. The there are Coffee Clubs which are like a full store with walls within a shopping centre, and then there are freestanding Coffee Clubs within a strip and we also have our Coffee Club café bar restaurant with a full kitchen. Let’s just say that there’s probably around $380,000 required and of course the larger the store the more the expense of starting up. As far as on-going fees go, they are all the same and we have a 6 per cent franchise fee which is on a weekly gross turnover, and a 2 per cent marketing fee again which is a weekly turnover and that’s automatically debited from our franchisee’s accounts.
Is there a target profit margin you expect your franchisees to fulfil?
There is. Again, we have a template that considers percentages, i.e. the percentages of rent, the percentage of rent to sales, cost of goods to sales, costs of wages to sales and then we ascertain and ensure that each franchisee is within those guidelines and they should be making whatever the percentage is on their money.
Let’s discuss some of your export initiatives. Can you identify some of your target countries?
We have master franchisees for Dubai which is very exciting and Korea. Naturally, documentation takes a lot longer than we had originally anticipated and it’s probably the one thing that we weren’t expecting to take so long. We’re hoping that either by the end of this year or early next year, our first stores in Korea and Dubai have in fact opened.
How have your local franchisees reacted to the export initiatives. Have any voiced concerns with respect to how this may impact local attention to strategies moving forward?
All our franchisees are behind this move 100 per cent because they are part of a global brand which makes them very, very proud. It can only benefit their business.
What are some of the key criteria you look out for in prospective franchisees?
The first and foremost is attitude, followed by personality and presentation. We can teach them everything else but you can not teach a prospective franchisee a good attitude. Presentation you work on, but the attitude needs to be there. A very positive attitude on life and business is needed as is someone who is able to work with people because we are in a hospitality-based industry.
Walk us through some of your first interview processes. If I wanted to join your network, what are the first few steps I should take?
You should probably be meeting with one of my partners, Emmanuel Drivas who is responsible for the property area. He would show you a particular site and at the same time ascertain whether you would be suitable as a franchisee. Then you would come into the office and meet the rest and we would all have a bit of a discussion. Once you’ve got the big tick and you’re interested in that site then the extensive training programs starts, which is probably anywhere between four to eight weeks of serious training.
What kind of funding or finance structure do you recommend to first-time franchisees?
If you are over committing and you don’t have adequate funds for a business that doesn’t take off from day one, then you’re behind the eight ball. You must make sure that your repayments for your new business just aren’t overpowering and affecting your lifestyle that you had, prior to go into business, because automatically that creates negativity. So we want to make sure that they’re not burying themselves with their repayments.
Any particular franchisee success story that springs to mind?
Yes, there’s Brad. He was a young lad of 19 (he’s now 26) who went from a dishwasher after school to being our Master Franchisee of New Zealand.
Lastly, what is The Coffee Club’s success rate and why have some, if any, failed?
We have closed two stores and relocated two stores within the 17 years that we’ve been trading. A total of four. The success rate of the stores also comes down to position, position, position…but it means nothing if your staff and the service and the product are not right.
Read on about buying a franchise and running a franchise.
27-Nov-2006