How did it all start? The journey from naval career to coffee chief began in the US in 1993 when Kenton Campbell spent two years in that traditional filling-in job, waiting on tables. And then there was one moment when his outlook to work changed; “IÍd put through $800 one day, and thought, I want that, not my pay. I want to have a business of my own.”
Campbell admits he hadnÍt accounted for the costs that are taken out of the turnover, but nonetheless had set himself on a new path to entrepreneurship.
In Seattle, he says, he found coffee, and set up with his first expresso cart. “In October 1995 the-then Retail Food Group chairman Tony Williams invited me over to consult on the coffee game. It didnÍt last. So I took jobs in cafes, and in Brisbane, noticed no-one was carrying around coffee.”
Within a few months Campbell had come up with the ZarraffaÍs name and brand.
The name means giraffe in Arabic, and the link with coffee comes from the Masai giraffes of Kenya and Ethopia, both countries traditional coffee sources. The idea of standing giraffe-like, head and shoulders above the rest, is the inspiration for the brand.
Capital and growth
The first store was set up in 1997, evolved and moved locations in the Gold CoastÍs Australia Fair, then a Harbour Town site was added. The business continued to grow, but slowly. As a new parent with no money, Campbell decided to review his prospects and consider another way to build his business.
“I had a look at franchising, and realised my brand was good. I could see the model could evolve, and it would force me to set up an operations manual, to allow it to grow without me. That excited me.
“I weighed up on a whiteboard the pros and cons of franchising. What IÍd have if I didnÍt go into franchising, five to 10 stores in five years. But I would have no money, my kids and my wife would hate me, because you always have to put back in.”
In contrast franchising offered him the opportunity to open 20 outlets in five years; in reality the 20th ZarraffaÍs Coffee outlet was opened within 24 months. “I knew I could hire people to help support me and spend time with family. The greater management structure of a franchise always outweighed the money potential.”
The focus on a support structure as a strength in business that eases the load is one that he employs when looking at multi-unit expansion within the network. “We have been working on how many stores people can manage and think three to four stores for an owner for the same reasons as my choice to franchise, to share the burden. There are other ways to grow financially: investment, pay off a mortgage”
A successful business unit rather than a network of stores growing for growthÍs sake is the key.
Financing the business has been challenging, he admits, adding “Funding is difficult until the point when you donÍt need the money. Then banks listen.”
While other systems have chosen to step in themselves if funding isnÍt forthcoming from the major institutions, CampbellÍs view is different. “I donÍt want to be a bank.”
Now the ZarraffaÍs business is seen as a good risk, with both Westpac and NAB accreditation making it easier for franchisees to get the finances necessary to invest.
Franchisee recruitment is about more than just the capital to hand. Work ethic, personality, ongoing ambition, life situation and expectations are all considered.
“We want them to know what itÍs like, we take the Tom Potter line [the founder of Eagle Boys Pizza, known for his direct approach]. ïWelcome to your own business. As a franchisor we can say this, you can forget weekends, forget golfÍ. These are the facts of business. People that like the brand, the industry, realise itÍs not a quick buck. Just because this a great brand, thatÍs no guarantee.”
Franchising reality
A franchise term is a five by five minimum, giving the franchise a solid 25 years to do business, or as Campbell puts it, to pick the real fruit on the tree, as it grows.
Commonly franchise systems offer either a three or five year term, with one or two options to renew. But, says Campbell, a franchisee needs the security of a long trading spell to make money.
Add in the often high rental costs and insecurity of some lease terms and itÍs clear why customers will increasingly see ZarraffaÍs Coffee outlets in suburban venues rather than high profile shopping centres.
“Rent shouldnÍt be the issue, just another cost. WeÍre in centres but if we canÍt give tenure, we canÍt give people a future.” He cites a franchisee who chose to relocate from Garden City, where the rents were “crazy, crazy prices”, and to balance the challenge of rebuilding their business with a $120,000 rent reduction over five years.
The move into suburban locations is by design, rather than default, and meets the twin requirements of commercially viable costs for the franchisee, and easy access for the consumer, whether thatÍs as a drive through or caf_ model.
The average franchise turnover is more than $1m, and when he compares costs and profits, Campbell is confident that the ZarraffaÍs Coffee system is holding its own in the competitive coffee/caf_ marketplace. The 50th store opened late 2011.
What ZarraffaÍs aims to do is to unite two elements of a coffee purchase: customised product and convenience. “There are some really strong reasons why I think our brand is loved by the customers. We are a specialty coffee company, we want to serve an individual coffee that the customer likes every time, as conveniently as possible. WeÍre not a caf_, itÍs not about food, itÍs convenience.
“Take what weÍve done in 10 years. Our 2020 vision is to be AustraliaÍs and New ZealandÍs premier coffee specialty chain. IÍm never going to confuse the issue, I always want to remain different. I want to be innovative.”
In 2012 keep your eyes on the radar, says Campbell. “We are looking to expand but to be considered about it. But once I push the button, IÍm like a bull at a gate.”