With 53 countries under his jurisdiction global chairman and CEO of Dunkin’ Brands Nigel Travis is a well-travelled man; necessarily his visits to any one location are infrequent. Jetting into our shores for a few days to meet the new management team at the Australian business Baskin-Robbins, he shared his thoughts on the business, the Australian market and expansion.
The Baskin-Robbins business here has been down a bumpy path over the last few years. But in February former Coles operations manager David Jordan was appointed by Palm Oasis Ventures as general manager and he has added to the management team. The new line up gives Travis confidence.
Palm Oasis is a joint venture between the UAE based Galadari Brothers Group, which owns 80 percent, and the US based Dunkin’ Brands Group now the 20 percent shareholder.
Nigel Travis [pictured] explains why he is pleased with the venture. “We’ve tried to get the business back on an even keel, which we have with the joint venture last year. The Galadari Brothers Group are true professionals so we were happy to be minority shareholders.”
It’s all good news for franchisees, says Travis who is predicting “genuine growth” for the ice-cream network: 200 stores in total in 10 years, eight stores by 2015 and 15 to 20 outlets next year.
The benefit is more marketing dollars, a greater critical mass, greater brand awareness and a focus on franchisee economics, he says.
“The real measure of success is if franchisees want to grow with us. In franchising you need a balance. You need local people who know the area, but you also need those people who want to expand. If people can’t expand in your business, they will go elsewhere.”
So what does he expect to see when he returns in a couple of years? “I’d like to believe the business has reached a new level, in the quality of operations, in the measurements in place. There will be some digital marketing initiated to take us to a new level.
“Another 40 or 50 stores and this will add more dollars into the media budget, and in turn see higher average weekly sales.”
He describes the Australian economy as remarkable but admits there are obstacles. “Everyone talks about the high costs of labour, it’s a challenge and you have to focus on productivity and having the right people.”
Travis believes franchisors need to get into a position where they can reject what won’t work for the business.
“Any franchisor has to say no – no to bad locations, no to people you think won’t make good franchisees, and no to bad business practices.”
For any franchisor considering expansion into overseas territories the risk of getting something wrong can cast a long shadow. So what tips would Travis offer?
TIPS FOR EXPANDING OVERSEAS
1. Know the market
If you’re a franchisor you might not know the market you’re planning on entering. One of the biggest mistakes I made at Blockbuster was going into Germany, and not understanding the impact it would have that video stores couldn’t open on Sundays or public holidays. We lost more than 20 days trading in a year.
2. Work on franchisee economics. You have to work out what they will be ahead of time. It will never be perfect but it gives you a guide.
3. Limit the number of countries. You don’t want to open too many at once. We’re focused on Europe – the UK, Sweden, Austria – and Brazil, because of high consumer prices. You want a high GDP and weekly sales, that gives flexibility. If the average ticket is high, you effectively give yourself room to move on the bottom line.
4. Think about the supply chain. This is critical. We have found a way to consolidate the supply chain in Europe. It often gets overlooked but it can be a tough part of the business.
When it comes to picking a joint venture partner, Travis admits “Joint ventures can be difficult and can create uncertainty.” He has experienced failure and success in joint ventures and has three points to highlight:
3 STEPS TO GETTING A JOINT VENTURE RIGHT
1. Know your partner and trust them. The Galidari brothers have been in our system for so long, we trust them and they have a great track record.
2. Have a plan. In Australia we had a clear plan that we wanted about 15 percent corporate stores; that demonstrates to franchisees we’re not just taking royalties, we’re operators.
3. Management is key. People do joint ventures and then think, well that’s done. But management is crucial, you need to have clarity about how senior management appointments will be made.