Branching Out
There's a saying that if something ain't broke, don't fix it. It isn't an opinion subscribed to by everyone, nor is the view that if you can do something well, you should stick to it. Just think of the number of models who have been seduced by Hollywood to turn screen hopeful (Aussie girl Gemma Ward the latest with The Black Balloon movie) or the homegrown tv soapstars (from Kylie to the two Natalies) transformed into pop poppets. It is only natural when we have conquered one task to assume we can tackle the next one successfully. But we can't all attain these goals.
So when does healthy ambition become misguided self-confidence? Let's turn it back to business. When does a company over-reach itself in the process of trying to do more for its shareholders, employees, franchisees or customers?
Some franchisors have no interest in sailing over the horizon for a better opportunity. Companies like Snap-On Tools Quest accommodation group.
Work out what you do, and whether you are building for your customer. He cautions against building the business for the business' sake: you can change the business focus or forget your customers. For him the first rule is to create plans to ensure your existing business continues to be healthy.
The Quest customer is clearly defined as the business spending some time in one destination for work and wanting good service in a recognised accommodation brand. Most of the locations are unglamorous – think Albury Maitland Mascot – and are purely accommodation.
"You can add value to it by integration, making your understand how you do business and help develop products that make the customer's experience better, to be more efficient," he advises.
Current experiments are providing a full food and beverage facility onsite and trialling a small gym.
"We are working with other franchise restaurants like La Porchetta restaurant franchise to form strategic alliances as there are similarities in the locations, in customers doing business. This means they can charge back to the room and the corporates like it, they know the restaurant brand."
Constantinou is adamant that the introduction of full service food and beverages by Quest itself would require a change of system. Another take on the issue is to operate, as at Mascot, a club lounge with a complementary morning buffet, and early evening drinks.
"It's about understanding your customer's needs. A spin off would kill us," insists Constantinou, who speaks with authority. "We tried a few leisure destinations in Queensland but you communicate differently to a leisure customer than to a business client. It is likely to be the wife planning a trip around a destination and she doesn't care where you stay for business, she doesn't care about the brand."
Diversifying into the leisure market didn't work. "Stick to what you're good at," reiterates Constantinou. "If you want to buy and run businesses together, you're becoming a consultant. Not many businesses can diversify and do well, they spend time trying to justify it.
"There is no danger in not diversifying – the grass is always greener on your own side of the fence – just water yours more. The opportunities are staring you in the face. Every time we introduce a better process we build the value of the company –what happens, when you spread too thin, you go back to your core business in lean times." There are plenty of franchisors out there who would plan to prove him wrong.
Trios
David Elia at takeaway business Trios is diversifying by building on the heart of the brand. "We are intentionally getting a lot deeper into our core, laffe wraps. We are positioned to the lunchtime segment, and we've uncovered a big opportunity and we're just taking the initial steps."
Trios has expanded its offer to cater for the breakfast and early evening consumer following on from intense auditing of performance and customers. The toasted wrap, thick laffe bread filled and grilled, will appeal to a breakfast and morning tea customer, believes Elia.
"It's an exceptionally good product with the softness and warmth that makes it palatable to a morning offering," he explains.
Now the outlets are grilling meat to provide an evening and weekend menu. "I believe people will try on the weekend when they have more time and they are out for an experience, they want more preparation."
The company has spent six months shooting food photography and implementing the changes which are now into 90 per cent of stores. Elia is happy with the improvements – 20 per cent increased business on the same time last year. Crucially for the franchisees, for whom this is intended to be a big benefit, the hours are mostly the same but with more competitive blocks of time there will be a marginal increase in employment.
He says changes have been generated by international partners – Middle East stores trade in the evening, while in the US the company is drawing up standalone locations, likely to appear here later.
Trios will introduce coffee as a major component for the breakfast offer because it is an essential ingredient for a business looking to be super competitive, insists Elia. "Our core will be food rather than coffee as a primary. I think you have to build a stronger, more complete model, and provide the franchisee and the customer with more reason to visit."
The future at Trios may involve tables but not crockery, and some table service when the outlet is very busy. But the offer remains focused on one product with various sub offers that appeal to the consumer, insists Elia.
Under wraps now is dessert – watch out for fruit options and a Trios version of a pancake.
"We're not changing how our product is produced or served – each is still made to order. The systems will only improve."
Ali Baba
Managing director Robert Marjan describes Ali Baba as a typical kebab and wrap franchise that is very successful in food courts. The plan is to continue the company's momentum and expand across the country in both strip and food courts with the aim of enabling ultimate success for franchisees.
But bigger moves have taken place. Shoppers and workers around Sydney's busy George Street may have seen the new AB restaurant, what Marjan describes as the black label edition. "It's like Westfield at Bondi Junction compared to Westfield in Liverpool." So what is AB? On top of the takeaway element, running here as a parallel business, AB is a full-service restaurant utilising the infrastructure and service already in place, says Marjan. This is an upper market solution to the problem of eating a Lebanese meal in a casual dining environment.
So why now? Firstly, he explains, "rents in centres are increasing to a point where it's a burden. We need to find remote locations and diversify. Secondly, there is more guaranteed business – doubling the potential turnover. We have the infrastructure – little training is required, and very little labour."
Marjan actually sees this as a return to the business origins.
"Our first business in 1979 was a restaurant in the ACT. Now we have 60 fast food outlets. The full service restaurant will offer an extended range with different dips and salads on the menu.
"There's been a trend of late where our lifestyle has changed, customers want to spend time out with friends and this concept fits in. We don't have an extension for that in the evenings."
With a different service aimed at a different customer experience, the new business will require different franchisees with a more outgoing personality, says Marjan.
"Obviously a restaurant business has a lifestyle – if you don't want to stay up late and build customer rapport, this is not right for you."
The $350,000-plus turnkey operation for both takeaway and restaurant is one of six planned immediately across Sydney, Melbourne and Canberra. Marjan is confident. "We could easily open up 30 in Sydney," he predicts.
But surely something could go wrong along the way? He believes the main danger is customers walking out with an unsatisfactory experience caused by poor management or inferior food. But he sees the development of the restaurant as an inevitable step after the investment of $10.5m in a centralised food facility that allows for a better managed supply chain.
"It opens doors to new ideas, we knew we could go down this route. We will continue to open food courts. If anything, the restaurant should be a plus, increasing market dollars, and that can build a brand quicker."
Yarra Valley Farm
Bill Kolotos has found a niche in Victoria providing fresh fruit and veg to the restaurant industry, delivering the personal touch of an owner-driver but with the economic benefits of a big scale business —just what the chefs wanted. Now, five years after starting franchising, he is moving further afield and opening fully branded fruit shops.
"I think in everything we do we assess, who is the natural owner? Who would be the best? Who would claim the gold medal if they could? Some view being a franchisor as being good administrators of franchisees; we're not, we're not getting in to the franchising of food. What we're very good at is food distribution. I believe getting into retail enhances, not takes away, from this."
The company delivers six days a week and can therefore keep wastage to a minimum, servicing upwards of 400 restaurants. He predicts the retail outlet benefit from the large choice of produce available. A fruit store gives a satellite contact point for the franchisee, he explains and gives them a competitive advantage.
"We had an attractive story, we're ready to diversify. There is benefit for the existing business, it opens up another market. There is no real disadvantage if we didn’t get into it but real benefits to do it."
The Geelong retail outlet should be joined by another five stores this year, he says. But the business is also expanding to Sydney, then Brisbane and each time will launch retail before moving on to the next state.
"We've assessed it, it only enhances core competency," he insists. "Diversification is a danger, in our case fits well, it leverages firstly our hospitality, secondly retail, thirdly interstate then retail again."
"We are in a position of critical mass people, turnover to support the strategic business unit. There's only one unknown variable — that's retailing."
To contain the variables as much as possible the distributor has been opera a fruit shop for a few months testing competencies. Kolotos has even hired retailer to close the gap.
Kolotos, who had a background in IT before setting up the business, views the logistics and produce competency as the defining differential. "No-one has been able to imitate our IT", he says.
"We need happy franchisees and we know how to manage them. We have to make sure diversification is good for the franchisees. We chose to do this [open retail] before going to Sydney, it helps them more directly."
This article appears courtesy of Franchising Magazine.
The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.
21.06.2008
FCA Member
Franchise Council of Australia News
FCA announces winners of 2011 Westpac FCA Excellence in Franchising Awards
14/10/2011 - The Franchise Council of Australia (FCA) has announced the winners ...
Federal Minister finds new SA Franchising Rules ‘unwise and unfathomable’
12/10/2011 - Federal Minister for Small Business, Senator Nick Sherry, has ...
FCA cautions risks of conflict in SA Small Business Commissioner Bill
11/10/2011 - Franchise Council of Australia’s legal symposium recommends ...
Prominent Franchisees Reject SA Small Business Commissioner Bill Agenda
28/09/2011 - A group of five prominent franchisees have rejected the South ...
SA Franchisees adds their voice to the Small Business Commissioner debate
27/09/2011 - South Australian Franchisees have voiced their concerns amongst ...
SA Franchise Sector Voices concerns about SBC Bill
26/09/2011 - Prominent SA franchises have voiced their united concern on ...
Contact Franchise Council of Australia
Suite 6, 307-313 Wattletree Rd
Malvern East
VIC 3145
Tel: 1300 906 479
Fax: +61 3 9508 0899
