Shaping up to healthy eating franchises

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Healthy eating is open to many interpretations; it could be a balanced diet with all things in moderation. Perhaps to eat healthily means choosing low fat options, gluten free serves or low GI dishes? How does a meat based offering compare to stocking up on salads? Whether the food is prepared for casual dining out, part of the takeaway arena or is delivered fresh and direct to the customer, what we eat is increasingly under scrutiny.

And that is good news for anyone looking to buy into a healthy eating franchised concept because tastes are changing and the customer is becoming more demanding about product quality and choice.

Luke Baylis, co-founder of Sumo Salad, agrees.

"There has been a huge shift in consumers' eating habits, people are more aware of what they are putting in their bodies and are going into the food court and looking for a healthier environment. We offer a lot of low GI and low fat options. We are working closely with Tony Ferguson, Diabetes Australia and WeightWatchers to market to specific health issues. Our business caters for this specialist requirement."

On the one hand we have a focus on nutritional balance, on the other we are expanding, literally, as a nation.

"Healthy eating is an everywhere issue," asserts Janine Allis, founder of Boost Juice. "We have now topped the world chart of being the fattest nation in the world, which is terrible. It is not a great future for us if we do not do something about what we eat."

Healthy eating for Allis means balance. "It is about making being healthy being easy, it is about feeling good about yourself that you have chosen a healthy smoothie or juice instead of something fried."

A national story

Pizzas may have sat at the leaner end of the fast-food spectrum but one company has taken the fat issue seriously. Crust Gourmet Pizza founder Costa Anastasiadis says: "From day one Crust has been about providing customers with a healthier choice. Even before we launched our Heart Foundation Tick approved pizzas our standard pizzas already had up to 55 per cent less saturated fat than comparable products from our competitors. The launch of the Tick approved pizzas was a logical progression for us and offering our customers a higher quality, healthier pizza is one of our key points of differentiation in the market.

"In terms of our health offering, we don't see any other takeaway pizza outlets as competitors - pizzas from the top two Australian chains contain the equivalent saturated fat and salt content an adult should consume in a day, not in a single meal. We also don't advocate eating takeaway every day of the week so the home cooked meal isn't our competition either. Really our competitors are quality takeaway outlets which operate at a local level," he says.

Crust's metropolitan focus (stores in Sydney, Melbourne and Brisbane) ensures customers tend to be health conscious, time-poor inner-suburban professionals and families. They are often juggling professional life and family life, so for them takeaway isn't always a luxury he says.

"People want takeaway food that's convenient, high quality and good for them. For many people, particularly those living in or near the city, the health aspect of takeaway food is becoming mandatory rather than a luxury."

Nandos' marketing manager Justin Monaghan has seen the changes taking place. "In the past I'd say healthy eating was an urban issue but over the past five years or so, it's become very much a focal point for most Australians. Customers want to eat quality food which tastes great but is also good for them. That's something that crosses the borders of urban and rural. We're all a lot more conscious of what we're eating and drinking."

Baylis believes healthy eating was metro centric but has now gone beyond urban limits and he reveals that the male market now accounts for up to 35 per cent of his business: up from 22 percent in three and a half years.

"It's a growing segment of business. The demographics are still challenging. With Sumo Salad the key part of where we're positioned is healthy, volume of sales and stores growth and geographical presence.

"Our customer is typically a female aged 18 to 40 with a socio-economic AB grouping. That's where our stores perform the best. Other discretionary spending like KFC and McDonalds impacts on other socio-economic groupings."

Pocket calculations

Awareness of food and health issues are also compacted by budgetary restraints. People making their lunches may do so for a variety of reasons, and yet the homemade sandwich is competition for anyone in the foodcourt. Individual operators are the main competitors for Sumo Salad says Baylis. And this is where the range of menu choice is an advantage.

"We do gluten free products and dressings, have low sugar and low sodium products on the menu. The menu can be very tailored to dietary requirements without compromising on taste.

"We strive to maintain a sub $10 price point and this is pressured but we've established fixed pricing contracts for extended terms and that gives us some protection from the fluctuations."

Monaghan believes that when your business is food, you could say that anyone who sells food is a competitor, be it Coles, 7-Eleven, your local chicken shop or the local pub.

"At Nando's, rather than view everyone as a threat, we take the attitude that people have to eat. If customers have a great experience when they walk in the doors of our restaurants, we know they'll come back again and again."

The brand famous for its peri-peri chicken is continually introducing new products under the guidance of the food development teams which work both locally and internationally to keep the menu fresh and contemporary.

"Since inception, we have had a low fat product, and now we continue to improve on the health aspects without ever compromising on quality and freshness. We watch the trends of what consumers are buying in our restaurants and we also listen to their feedback. In the past year we have introduced two new products to the menu, our Portuguese BBQ Burger and the Vego Supremo burger. It's important that we offer new tastes and new products and continue to create some excitement around our menu," explains Monaghan.

Crust recently reinforced its positioning by launching a range of ultra premium pizzas called Upper Crust, explains Anastasiadis, which was a response to the global financial crisis. "We realised that people were looking for cheaper alternatives to eating out, but didn't want to compromise on quality."

Beyond the product

Franchised brands are ensuring healthier appetites are being fed and in the process growing their business.

Sumo Salad has plans for regional development. "In five years we're looking at growing our core Australian business," says Baylis. "We'd like to get 170 to 200 stores, and plan to have 80 by the end of 2009. We're seeing great growth, both same store sales and double digit comparative sales."

Boost Juice Bars has purchased 53 per cent of a Fresh Mex business called Salsas and is focused on growing that business in addition to the international arm of the juice brand which is already in 12 countries.

How are rising costs going to affect the business? Allis says this is always an issue for every business. "You continue to review all costs and look at all revenue streams to ensure that your business is robust and can withstand anything that life throws at it," she suggests.

Crust has seen an increase in the cost of imported goods such as olives and olive oil while flour and dairy prices have also increased and fuel prices have affected the delivery side of the business.

"So far, we've avoided passing any major price rises on to our customers by focusing on streamlining our operational efficiency to make cost savings in terms of minimising wastage and on-costs," says Anastasiadis.

Rising costs are a part of doing business agrees Monaghan, but working with suppliers to try to reduce the impact on franchisees' margins and customers' budgets is key.

"With regards to the rising costs associated with consumables, utilities and those other monthly expenses, we continue to work hard with the franchisees in getting them to control these variable expenses. The truth is that one needs to become more diligent in spending time on the systems and we have to minimise any inefficiencies that do exist," he says.

And of coursing helping franchisees build their sales includes local marketing initiatives such as sponsorships, cross promotions and community activities with other local establishments, including gyms and health clubs. "Many of our restaurants have strong partnerships with their local gyms that encourage their members to eat at Nando's."

A number of AFL clubs this year will be feeding their players Nando's after their matches too.

"Each of these local marketing activities has a direct link to the national marketing campaigns so that consumers are seeing a consistent message," says Monaghan.

"We encourage our franchisees to be the face of their restaurant, we all know that people like to shop and eat where the people behind the counter know your face and are a part of your local community."

Last year Nando's introduced a leasing department to work directly with external leasing consultants in each of the states. "The aim is to continue to achieve store on store growth through a number of programs including but not limited to new product development to drive consumers into our restaurants. We'll continue to ensure that franchisees are able to maintain their margins.

"We now have more than 200 restaurants across Australia and we're going to continue with our expansion in all states. In our coming financial year, we should continue our growth of three to four new restaurants each month. Our current store models will allow us to reach between 350 and 400 restaurants over the next five years."

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