The Cheesecake Shop launched 20 years ago with a simple concept: baked-on-the-premises cheesecakes inspired by founding brothers Robert and Warwick Konopacki's Polish mother, the figure of Mamuska. Now the network is undergoing a major refit to take it into the future. Mamuska, of course, remains the same welcoming face of the brand.
There is very strong brand awareness for The Cheesecake Shop among consumers, with a reported 90 percent recall when prompted, and 50 percent unprompted, general manager Ken Rosebery explains. "This is a very strong brand with a loyal customer base, a profitable model and happy franchisees by and large, so we didn't want to throw the baby out with the bathwater.
"Twenty years ago there was a rush of excitement as the brand took off and they couldn't build stores quick enough. Then there are 150 stores and you can't put a foot wrong. Then as time goes on, there is more competition, it's not a new concept and you have to work harder to make it work, and fine tune it.
"There has been evolution of the store design but not to the extent of a major program. It's crept along. This is the first major system-wide brand refresh. We're calling it a brand refresh, we're not wanting to take away from what has been so successful but recognise the need to significantly evolve to something modern and up-to-date," says Rosebery.
A classical revival
If you visualise your nearest outlet of The Cheesecake Shop (and most of us know the brand because there are 200 outlets around Australia and New Zealand) you will think dark green. The distinctive branding forged in 1991 has served the business well, but has been given a subtle makeover to take it into the next decade of Australian retailing: the green tone remains, but inside a refurbished outlet the dark mushroom coloured walls with recessed spotlights are a sophisticated backdrop to the latest showcase cabinets housing what Rosebery calls the "everyday treats" as well as the newest special event sweet treats.
Another open cabinet displays ready-packaged slices of the best-selling items tempting the core customer, the middle class mother aged 25 to 45, to upgrade her purchase with an extra treat for that day.
Add up the cost of refrigerated cabinets, internal decor, lighting and external branding, the work involved in a six-day refit, refresher training and new marketing, and the refit averages a $90,000 investment by the franchisee. That's a significant sum, admits Rosebery, but it's backed by the company's accountability for improved performance.
"We have to be accountable to franchisees on the effect on customer sales and figures. If you can't achieve improvements in performance, then why do it?"
Rosebery has been using the company's monthly newsletter to press home with facts and figures from refitted outlets the message of performance upgrade to those franchisees yet to undertake a refurbishment. As with most franchise network refits, each refurbishment is timed to coincide with either a term renewal or a re-sale. From July to December last year 38 stores were refurbished; 50 refits are planned for this year.
But the promise of improved profits is also matched with practical support from the franchisor. "With the franchisee's commitment to upgrade we'll provide greater security and tenure," reveals Rosebery. "Our landlords are small business owners so are usually delighted to have a national retail brand. We enjoy good relationships with them."
The Cheesecake Shop looks to provide a double term (five years plus five years) and tries to match the lease to this. The franchisee can also be given assistance in financing the upgrade, if necessary.
While some hand-holding has been inevitable through the process (underway for eight months now after initial trials) the chief emotion from franchisees has been excitement about the "overwhelming possibilities", Rosebery says. "Refits are costly, but we talk to the franchisees about the costs of upgrading a kitchen at home and compare the prices of appliances; you'd be unlikely to get a renovated kitchen for less than $50,000. We're upgrading a retail outlet with serious refrigeration equipment, painting, and doing a high quality refit. Franchisees recognise this.
"But I think the reward has been the extension of tenure and growing sales and a fresh looking store. Franchisees have the right and need to retain value in the business for resale purposes."
Average sales are going up because of the extension of products, helped by the open display fridges, reports Rosebery. And the menu additions give people a reason to return to the store, he says. The specialist celebration range, for instance, has been designed to add more pizzazz to the offer. "It's a higher ticket price, it looks expensive, it's an enhancement to the business. We're lifting the quality at the top end, and that's helping us to compete with the specialists."
There's a new tagline for the brand - made with love - and that works back to the cakes being baked and decorated on site, often for special events.
The high standard of product is controlled across the business with regular checks through the quality assurance system so the difference between a top performing store and an outlet not yet fulfilling its potential comes down to the attitude of the franchisee. Rosebery believes the key to running a successful franchise in The Cheesecake Shop network is the franchisee's combined excellence in customer service and local area marketing.
Many franchisees who buy into The Cheesecake Shop live within 30 minutes of an outlet, and have been loyal customers. Typically franchisees are couples or women. It's an ideal family franchise, where there's a role for teenagers, for men and women, and labour costs can be kept low, suggests Rosebery.
In Australia the ideal location is a dual carriageway with a slip road and parking for about 10 cars outside the premises.
It has proved different overseas. "We've dipped a toe in the water in Europe (Poland and the UK) with some success. It's more of a cafe experience in the UK and we have about eight stores.
"We have 200 stores here, do we want to get bigger? Yes, selectively," says Rosebery. "We're looking for quality stores, there are some gaps in the regions and in fast growing metropolitan areas. It will be gradual growth in Australia and New Zealand.
"We're lucky to have a product that's fun. It's one of our greatest strengths in recruitment," he admits. "What makes it joyous to work here is that when customers come in for an event, there's a sense of excitement. There's local interaction and women in particular enjoy this. We're selling celebration and it helps to connect in the community. There is a social aspect to it.
"And the making of cakes is creative. Franchisees have latitude on creativity in some cakes, and they are making something and then showcasing it. There are opportunities to upsell if you engage your customers. There's a business benefit but you connect in a really nice way."