DC Strategy’s Healthy Habit

Healthy Habits franchisor Katherine Sampson’s entrepreneurial streak surfaced with her first baby. The thought of returning to a law firm — and the long and inflexible hours that went with it — was unbearable, so she left the legal profession and started making sandwiches.

Just eight months after starting work in a relative’s sandwich shop, Sampson, 40, bought the owners out. In 1998, she kicked off an aggressive expansion plan that saw three shops open in Melbourne shopping centres within a year. Sampson now owns one of the fastest growing sandwich chains, Healthy Habits. Two of Australia’s most successful entrepreneurs, Crazy John’s John Ilhan and Boost Juice ’s Janine Allis, have asked her to sell them a stake. “It’s incredible that I have something they want,” Sampson says.

There are 20 Healthy Habits stores operating across Australia. The stores collectively generated revenue of $9.2 million in 2004-05, and average revenue growth over the past three years is 99.7%. Sampson is aiming to have 40 stores by December 2006, and is working towards a five-year expansion plan that would see 110 stores across Australia by 2010. She is also considering a leap overseas to New Zealand and Dubai. Franchisees pay $250,000 for the right to trade under the Healthy Habits brand.

Sampson started franchising her sandwich shops because owning and operating four of them on her own as a single mum was stressful and risky. “The banks stopped lending me money and I felt really burnt out,” Sampson says. She wanted to share the pressure and excitement with franchisees, and she could see the potential for expansion. “I knew I was on to something because we were always the busiest shop after Red Rooster and McDonald’s ,” she says.

To make sure franchising was the right business structure, Sampson spent eight months and $117,000 working with franchise consultant Rod Young of DC Strategy . Young had helped Janine Allis structure her Boost Juice Bars franchise chain and he steered Sampson through the same process. He estimated set-up costs for each store and analysed Sampson’s revenue over the previous six years. Once they were confident that franchising would work, they drew up a business plan for the franchised business, an operations manual for franchisees and staff induction kits and training manuals. “It was a huge amount of work,” Sampson says.

In a fragmented industry — sandwich shops dot food courts in shopping centres all over Australia — Sampson says branding is the most important part of the business. “You really need a point of difference and a consistent model that can be rolled out. We want people to know what they can buy when they see our brand,” she says.

Sampson’s original brand differed across the four stores and left customers confused. “The shops looked independent; they were geared around the manager,” Sampson says. She hired a brand consultant Jess Logan, who had also worked for Boost Juice Bars and asked her to come up with a catchy image. Logan proposed bright smiley faces in purple, green, orange and blue, and lines like “Walk, don’t drive” and “Laugh out loud” that convey a healthy message. We don’t promote sandwiches. They don’t appear anywhere near our name or logo; we promote a way of life,” she says.

One of Sampson’s biggest hurdles is leasing. Healthy Habits stores work best in food courts, but shopping centres dictate what the business owner can and cannot sell in the lease. In one of Sampson’s shops in Queensland, they cannot sell toasted sandwiches; in another they cannot sell yoghurt. “Each store has the menu attached to it, so you have to buy the store that has the sandwich menu,” she says.

Sampson has expanded the chain by buying shops that are established, but it is an expensive strategy. “It’s been a huge financial issue,” Sampson says- “Just buying the store costs a fortune, and I have no support from the banks.” Finance has always given Sampson a headache. “As a single, white female it has been a nightmare. Banks are very, very conservative and they don’t believe I can achieve what I set out to achieve,” she says.

Sampson has been forced to rely on her parents for funding. “They have basically funded the business’s growth. They borrowed against their property for me because banks just don’t treat the business as an asset,” Sampson says.

More information can be acquired in regards to buying a franchise and running a franchise.