Behind the scenes at 3 bakery franchises

By Nick Hall | 29 Aug 2019 View comments

There’s more to being a top notch baker than kneading dough.

Inside Franchise Business spoke to three of the biggest bakery franchises in Australia to find out their thoughts on product, profitability and the benefits of positive franchising.

Ferguson Plarre Bakehouses

The Ferguson Plarre Bakehouses chain has been owned and operated by the Plarre family since 2012. But the family baking history extends more than 110 years … way back to 1901 when Mrs Ferguson advertised herself as a pastry cook, confectioner and caterer in Lygon Street. The home of the traditional pasty, the Tiddly Oggie, Ferguson Plarre today has 71 bakeries across Victoria.

Q: What is your most popular bakery item and how many were sold in 2018? 

A: The great Aussie classic meat pie! We make a variety of flavours and sizes and have been making them for over 100 years. We sold over 2 million of them last year.

Q: How many kilos of flour does a franchisee stock at any one time? 

A: None! We do all the baking for them. Interestingly, though, Ferguson Plarre spends more every year on fresh strawberries than we do on flour.

Q: What happens to the leftover product? 

A: We make use of leftovers in a range of ways:

  • New staff are encouraged to trial all products so if they haven’t tried something that is leftover, we encourage them to take it home and try it so they can discuss the flavours and quality with customers from their first-hand experience.
  • Some stores have a relationship with charity partners and will offer leftover products to them. Our main bakery provides any leftover products to the Salvation Army.

Q: How many team members does a franchisee typically require? 

A: Ten to 15 on the roster with two to six staff present at any one time depending on the store size and time of day.

Q: What technical requirements are there for a bakery fitout? 

A: As there is no baking or cooking required our stores are relatively easy to build and cost efficient so long as we can install our cool storage, display units and a coffee machine.

Q: For a greenfield site, what capital investment is required in equipment? 

A: Complete store build will vary pending format and size but starts from $260,000 up to $350,000.

Bakers Delight

Elise Gillespie and her husband David Christie head up Bakers Delight,  one of the biggest the family-owned bakery franchises in Australia. Bakers Delight began from a shop in Hawthorn back in 1980 and today counts more than 700 bakeries across Australia, New Zealand, the US and Canada (where it trades as COBS). When in 1988 the Gillespies wanted to grow beyond their 15 bakeries they turned to franchising.

The business has given us such delights as the Cheesymite Scroll, received business and industry awards, and in 1999 initiated the pink bun campaign which has raised more than $18 million for Breast Cancer Network Australia.

Q: How many kilos of flour does a franchisee stock at any one time?

A: A typical bakery would go through anywhere between 1.5 and 1.8 tonnes of flour per week. However, this depends largely on the size of the bakery, product range and turnover.

Q: What happens to the leftover product?

A: All of our franchisees are strongly connected to the community around them and go out of their way to support those groups that need a helping hand, from local sporting clubs and schools through to major charities and welfare organisations. Wherever possible, our end-of-day waste is donated to an organisation that is working towards building a better community. For example, one of our bakeries in Mount Gambier (SA) regularly donates bread to the needy via the local food bank service, while our franchisees in Ellenbrook (WA) donate leftover bread to a group dedicated to rescuing injured native animals.

Q: How are bakery staff trained?

A: All of our staff are trained to varying levels dependent upon the engagement of their employment. Bakers Delight has created a dedicated e-learning platform “Breaducate”. This valuable resource allows franchisees to track staff training-module completion in key areas such as OH&S, marketing campaigns and food handling, to name a few.

Q: For a greenfield site, what capital investment is required in equipment?

A: Franchisee fee = $50,000 + GST

Bakery fitout, equipment and start-up costs = $500,000 – $550,000 + GST

Training $10,000 + GST

Q: What are the monthly franchise fees and marketing levy?

A: Royalty = 6.5 per cent of net sales + GST on the Friday of each week.

Advertising contribution = 2 per cent of net sales + GST on the Friday of each week.

Q: What new business models are in the pipeline?

A: In 2020, Bakers Delight will celebrate its 40th anniversary, so we know our model works and works well. Having said that, we are always on the lookout to innovate in both the way we do things and our product offering.

Brumby’s Bakery

Another bakery story that began in Victoria … but really took off in Queensland. The Old Style Bread Centre was opened in Melbourne suburb Ashburton in 1975 by Roger Gillespie, who would go on to co-found Bakers Delight. In the next decade it expanded to Queensland, took on a stronger Australian identity, rebranding as Brumby’s, and embraced the franchise model.

It went through several changes of ownership and in 2007 was acquired by multi-brand franchisor, Retail Food Group, which has faced troubles over the last few years. New management at RFG acknowledged that there was work to be done to improve the performance of the company, with a “renewed focus on our franchisees and their own profitability”.

Q: How are staff trained?

A: Ongoing training and support is a crucial deliverable for the Brumby’s business. Before a franchisee enters one of our bakery franchises to start trading, we provide them with a training intensive spanning compliance, product, sales and marketing. Further to that, the business provides the franchisee with ongoing training and support for all of their employees. This can include workshops and events, online and video walkthroughs and includes access to a library of resources via an e-learning platform that is available to anyone connected with a Brumby’s store.

Q: What is the process for franchisees to find a site and secure a lease?

A: Brumby’s has a dedicated team of sales and leasing professionals who work with major landlords around the country. There have been many times, too, when Brumby’s has been approached to open a store in a region that hasn’t had the brand previously. This is where the team really goes to work, sourcing and negotiating rates with landlords to get the best rental agreements for the franchisee. During a time where the industry has faced challenging retail conditions, the team has continued to work closely with franchisees and negotiate with landlords to secure better occupancy arrangements.

Q: What technical requirements are needed for a bakery fitout?

A: Bakery franchises require reasonably sized back-of-house and preparation areas owing to the equipment required to create freshly baked products daily. An appealing point-of-sale area, easy site entry point, and the availability of parking are also key considerations for fitout scoping.