VOL 18 ISSUE 01 NOV/DEC 2023
Essential Ingredients
TO CREATE A SUCCESSFUL FOOD FRANCHISE BUSINESS FOOD AND FRANCHISING
IN THIS POST COVID RECOVERY
PEOPLE ALWAYS NEED TO EAT,
SO A FOOD FRANCHISE HAS TO BE GOOD, RIGHT?
LATEST NEWS
FOOD FRANCHISING
BUSINESS B USINE SSSS FRANCHISE FR ANCHISSEE M MA MAGAZINE AG A Z I N E 2 27 7
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CONTE NTS
FOOD & FR ANCHISING In Every Issue 30 What’s New! Announcements from the Industry
Snapshot 36 Gami Chicken Gami Chicken Increasing Value for Customers and Business 42 Graze Craze Graze Craze Launches its First Australian Location in St Ives, Sydney 46 Durk’s Café + Eatery Joins Forces with Ampol to Feed Hungry Travellers
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Expert Advice 32 Tony Meredith: Essential Ingredients to Create a Successful Food Franchise Business 34 Brian and Prue Keen: Food and Franchising in this Tricky Post Covid Recovery 38 Robert Toth: Food in Franchising 2023/2024 44 Doug Downer: People Always Need to Eat, So a Food Franchise Has to be Good, Right?
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FRANCHISING FEATURE
Driving on Thru: ZARRAFFA’S Opens in Maryborough Chip chip hooray! Say goodbye to soggy chips and hello to DOMINO’S NEW Crispy Chips
Australia’s leading specialty coffee retailer, Zarraffa’s Coffee, has opened the doors to its highly anticipated new store and drive thru in Maryborough on the Fraser Coast. This exciting addition to the Zarraffa’s Coffee network further strengthens the brand’s presence in the region and reinforces its commitment to delivering exceptional coffee experiences.
In a bid to solve one of the food delivery industry’s most crushing customer experiences, Domino’s has today unveiled its solution to soggy chips - Australia’s first ever Crispy Chips with Pizza Salt designed to be delivered. Domino’s new and improved Crispy Chips are the next step in the Company’s evolution of Oven Baked Chips; with the Crispy Chip tried and tested to withstand travel, maintain temperature and the same level of crunch you’d expect on Pick Up – except delivered, straight to your door! Domino’s ANZ Chief Marketing Officer Allan Collins said Domino’s had ‘cracked the code on crunch’. “We’ve all been there, waiting to receive a delivery of hot chips, only to open the box and be disappointed yet again by wet, soggy potato with no crunch, and even less flavour,” Mr Collins said. “The end result is a Crispy Chip that holds its heat and texture during the delivery process, so that when it arrives to the customer, they receive exactly what they ordered – Crispy Chips!” The best part? Domino’s new Crispy Chips with Pizza Salt are available nationwide for just $6.50 delivered. Here to redefine ‘fry-day’ nights, elevate your afternoon snack game, and make your taste buds tango with delight – Domino’s new Crispy Chips with Pizza Salt are simply ‘the chip’. To find your nearest Domino’s store, visit www.dominos.com.au 30 BUSINESS FRANCHISE MAGAZINE
Seasoned franchisees and cousins, Hoshang Gala and Chirag Thakur, have come together as business partners to open Zarraffa’s Coffee Maryborough after more than a decade of combined operating experience in stores throughout Queensland. Mr Gala’s first franchise was at Helensvale on the Gold Coast in 2015 before embarking on a second store, Hendra at Brisbane Airport, in 2019. While Mr Thakur started as a store manager at Palm Beach on the Gold Coast before owning his first franchise in 2022 at Sugarland in Bundaberg. With their passion for coffee and unwavering dedication to providing exceptional customer service, Mr Gala and Mr Thakur are looking forward to bringing their experience and passion for Zarraffa’s Coffee to a town rich in history. Local residents and visitors can expect a range of Zarraffa’s Coffee’s signature blends and specialty beverages, expertly crafted by skilled baristas who undergo rigorous training to ensure every cup meets the brand’s high standards. In addition to providing an exceptional coffee experience, the Maryborough store will also offer a delectable assortment of freshly baked savouries, sweets, and snacks, making it the ideal stop for a quick bite or a leisurely coffee break. Zarraffa’s Coffee Maryborough is located at 49 Ferry St, Maryborough. Opening hours: 5am – 8pm, 7 days a week. For more information about Zarraffa’s Coffee visit: www.zarraffas.com
LONE STAR RIB HOUSE & BREWS Announces New Geelong Venue, Uday Kumar Appointed Franchisee Lone Star Rib House and Brews has this week announced a new store location, with the opening of its Geelong store, marking the hospitality chains’ first Victorian venue. The move comes as Lone Star experiences rapid growth amongst current NSW and SA markets. Uday Kumar, comments, “With a background in hospitality, I was personally intrigued by the idea of slow cooked, Texan-style ribs. There is no other venue in Victoria that offers this style of cuisine and I wanted to introduce it to Victorians and I’m positive they’ll love it!” With years of experience in hospitality, Kumar is a
passionate entrepreneur and is committed to exploring new ideas and perspectives, commenting: “I like to keep myself informed about the latest trends and developments and I’m always eager to learn and grow. I believe in the power of positivity and strive to spread it wherever I go.” Lone Star Rib House and Brews currently has 12 locations across NSW and SA, and a further 4 stores across WA and QLD. Gary Blyton, General Manager and Franchisor at Lone Star Rib House & Brews NSW, VIC, SA, TAS says, despite challenging cost of living circumstances, our franchise footprint has seen remarkable growth over
the last 12 months, with the launch of two new venues in South Australia, namely Gilles Plains and Munno Parra. “We have a very loyal customer base, which is testament to the value of our offering, the creativity of our menu and our focus on exceptional customer service which remains consistent throughout each of our franchises. Over the past year we have placed a large focus on delivering an affordable menu, to ensure the brand remains relevant and we’re incredibly excited to be bringing several new stores across the country, and expanding our customer base into additional Victoria locations with another two restaurants coming to Hallet Cove & Hawthorne. It’s an exciting time.” The brand prides itself on good ol’ fashioned hospitality accompanied by mouth watering food. Signature menu items include Lone Star’s 8-hour slow cooked ribs, Southern Style fried chicken burger, and their Golden Carolina spiced chicken wings. Lone Star also offers vegetarian options and trending salads, ensuring the menu is continually evolving and offers something for everyone to enjoy. Franchise opportunities are currently available at multiple locations across NSW, SA, VIC & TAS. For further information or to receive a copy of Lone Star’s franchisee kit, please email: gary@lonestarribhouse.com.au
ZAMBRERO’S Expansion Continues Zambrero, Australia’s largest Mexican quick-service restaurant group, has opened a new flagship restaurant in Kings Cross, Sydney. The new location will be increasing the brand’s presence across Sydney’s CBD, while also showcasing Zambrero’s new, refreshed visual identity. The Kings Cross restaurant adds to the existing network of over 200 Zambrero restaurants across Australia, as well as a number of international locations across the U.S., the UK Ireland & New Zealand. As a business, Zambrero is on an ambitious growth trajectory with plans to significantly expand the number of restaurants over the next five years. “As an Australian founded business, we are proud of our continued expansion across the country. With the arrival of our latest restaurant in Sydney’s CBD, we will be able to deliver even more exceptional QSR experiences to our customers every day.” says Matthew Kenny, CEO, Zambrero.
The opening comes hot off the heels of the news that Zambrero reached a new major milestone as part of their Plate 4 Plate social mission; distributing over 70 million meals to help end world hunger. Since the initiative’s inception, Plate 4 Plate has created a global movement to end hunger, mobilising Mexican food lovers across Australia and the globe to give back, with every regular or big burrito, bowl, retail item or kids Zam Box purchased at Zambrero restaurants across the globe resulting in a meal provided to someone in need. The milestone comes as Zambrero gets ready for their annual Plate 4 Plate Day in mid-October, where Meal Packing events will be held across Sydney, Melbourne, Perth, the Gold Coast and Adelaide. With a goal to smash last year’s record of packing over 430,000 meals in one day, this milestone sets the stage for volunteers to pack even more meals for vulnerable communities around the world.
To celebrate the Kings Cross Grand opening on Saturday 19 August, the restaurant offered customers a one-day-only offer of $5 classic regular burritos and bowls. BUSINESS FRANCHISE MAGAZINE 31
FRANCHISING FEATURE
EXPERT ADVICE: Tony Meredith | Director and Head Coach | Tony Meredith Coaching
Essential Ingredients
TO CREATE A SUCCESSFUL FOOD FRANCHISE BUSINESS
The food industry remains a heavyweight in the world of franchises. Yet, as any seasoned franchise business owner knows, possessing a quality product isn’t the be-all and end-all. Growing and operating a food franchise requires a fusion of passion, strategy, and adaptability.
As a Business Coach, I’m fortunate to have a front row seat to what’s working in franchise businesses right now. In this article I share a number of strategies that food franchise business owners can devour and elevate their business to new gastronomic heights.
Understand your target market Know your customer. Australia’s multicultural society means diverse food preferences. Dive deep into demographics, preferences, and dining habits. For instance, if you’re opening a burger franchise in Sydney’s east, recognise the health-conscious vibe. Offer options like vegan patties, glutenfree buns, or a gourmet fish burger catering to local seafood lovers. Customise, adapt, and cater to your target audience. 32 BUSINESS FRANCHISE MAGAZINE
Prioritise digital presence In today’s digital age, a captivating online presence is paramount. Utilise the internet and social media to make your brand and products visible, engaging, and accessible online. Customers buy with their eyes, therefore leverage digital marketing to showcase your mouth-watering dishes. Another opportunity is to collaborate with Food Influencers and have them share appetising visuals of your food products to their followers, creating an immense buzz online.
Focus on quality and Consistency Regardless of the number of outlets in your franchise, consistency is the backbone of any
franchise. Ensure that the dining experience in Brisbane mirrors that in Perth. Regular training sessions, comprehensive operation manuals, and consistent quality checks can help maintain uniformity. If you’re an individual franchise operator, ensure that your outlet serves consistent, high-quality food, that is in line with the brand values and standards.
Implement a loyaltyprogram As a food franchise business owner, it’s important to recognise that customers have copious food options. Reward your regular customers to ensure they continually come back. Apart from selling high quality menu items or providing outstanding customer service, the use of loyalty promotions is an effective way to convert occasional visitors
Tony Meredith Coaching focuses on helping business owners Grow Sales, Increase Profits, and Regain Time. Tony Meredith Coaching started in 2018 and works with hundreds of small-medium businesses across Australia, in the areas of Franchising, Retail, Services, Manufacturing, and Trades. Tony has over 25 years’ experience working for some of the world’s largest corporations in a variety of senior sales and leadership roles. Contact Tony and his team if you want to grow an outstanding franchise business. info@tonymeredithcoaching.com.au https://tonymeredithcoaching.com.au/ https://www.linkedin.com/in/tony-meredith-coach/ https://www.facebook.com/tonymeredithcoaching
finishes when they contribute to the national fund. Wrong! Australians are community minded. Supporting local events or causes can result in immense goodwill. A pro-active and sustained Local Area Marketing program will increase the individual franchise business owners’ personal brand as a dynamic member of their community, whilst increasing the overall brand awareness of the franchise and the role it plays in the community.
Prioritisesustainability Consumers are increasingly conscious of sustainability. Franchise businesses need to embrace this movement by incorporating eco-friendly packaging, reducing food wastage, and sourcing ingredients from local producers. These behaviours demonstrate a commitment to both the environment and local communities. Franchise business owners that emphasise sustainable practices not only contribute to the planet but also appeal to a wider audience.
Franchisee support and Training into regulars. Brands like Starbucks thrive due to their loyalty programs, which offer freebies, discounts, and exclusive deals.
Diversify the menu While the menu classics remain beloved, a periodic menu shake-up keeps things fresh and exciting. Australia's seasons are distinct, and each brings unique produce and tastes. Adapting your menu seasonally can give your existing customers a reason to come back to your restaurant or help appeal to a wider audience.
The growth of your franchise business is closely tied to the quality of service. Constant training ensures that every outlet offers consistent product quality, service, and overall customer experience, which strengthens your brand's reputation. Provide regular training, both at the onset and periodically thereafter. Brands like McDonald’s, with its Management Training, set the gold standard in franchise training, ensuring global uniformity.
Diversify revenue streams
Engage with the community
Placing all your eggs in one basket can be a risky proposition for a food franchise, hence an opportunity is to diversifying revenue streams beyond the primary service. This ensures a more resilient financial structure, whilst tapping into various customer needs.
A lot of franchisees believe their marketing
Food franchise revenue diversification could
Another alternative to spice up your menu is to introduce limited time food items that align to events, ie. Australia Day, Mother’s Day, September Footy Finals.
include catering services, merchandise, cooking classes, or even meal kits. These addons can boost revenue and strengthen brand loyalty.
Customer feedback is gold Always listen to your customers and staff, and view any constructive criticism as positive. Incorporate feedback mechanisms, be it through comment cards, online reviews, or direct interactions. Listening to customers and staff can offer insights into areas of improvement and spark innovative ideas.
Conclusion Investing in a food franchise can be a highly successful business opportunity. The best food franchise business owners are not only passionate about the food they serve, but the people they serve it to. Success in a food franchise requires passion, innovation, dedication, and adaptability. Get these ingredients right and you don’t just feed people’s stomachs, you feed their souls. Y BUSINESS FRANCHISE MAGAZINE 33
FRANCHISING FEATURE
EXPERT ADVICE: Brian Keen | Founder | Franchise Simply
FOOD AND FRANCHISING IN THIS TRICKY POST COVID RECOVERY
wellness and heathy eating is in direct conflict with much of the offerings from the fast-food sector. So ‘Healthy Food’ Magazine sent a dietitian off to find out just how difficult it was to eat healthy in Australia’s fast-food chains. The result is surprising. There are better choices, and you can make them even better by asking for extra veg and skipping the fries. Yes, even Maccas has a healthy grilled chicken wrap that meets the requirement.
We deal with food franchises a lot. Mostly fast food but restaurants as well and over the years we have watched many as they take their journey as a franchise group. It’s exciting. This year though, we are seeing a couple of trends which we think will lead the industry and set some apart from others.
First – the growing trend towards eating healthier And yes, even Maccas has jumped onto this band wagon which means it’s important. Like many other trends now, this trend has been around for a while, but it was COVID which has given it a big push. People are concerned about wellness, and it is affecting every area of their lives – fitness, food and 34 BUSINESS FRANCHISE MAGAZINE
drink, mental health, lifestyle – this list goes on. Unsurprisingly, fast food does not have a reputation for healthy eating though. And, of course, some of the big names are giving this some thought. “Most often, when we ask consumers about wellness, what they eat and drink sits at the top of the list,” says Mark Brandau of market research firm Datassential. “They mention things like clean labels, food quality, and weight management.” As a result, in the States and it’s beginning to show here, some fast-food brands are paying attention to fresh ingredients, publicising nutritional data and sourcing information, addressing different dietary restrictions, and putting in substantial resources towards R&D around increasing nutritional value. However, did you know that Australians eat takeaway or restaurant food an average of four times a week? And this move towards
The bottom line is, people want an element of choice in what they order and in response, some brands have increased customers’ ability to customise, replace, and substitute items, often at the expense of service speed and streamlined operations. Vegan Margherita or Vegan Spicy Vege Supreme or make your own veg with no cheese from Domino’s anyone?
Healthy eating restaurants The thing is this trend is not going away. Look here at Soul Origin – as they say - “Our philosophy is that everyone deserves to eat fresh food, every day… after all – your body deserves it. We have a vision to lead the way in re-educating the world about how they think about fast food.” Their salad bars are a relief to see at most airports and shopping centres around Australia. No need to go home after an overdose of fast food following a bout of travelling. Sushi Train and Rolled with their offerings of Pho and rice paper veg filled rolls are other examples.
The last we ran was a disaster. Not the fault of the staff attending to us but because they had given us new restaurant staff at the last minute. And they were given tasks which they had no idea how to do because they had not been trained in them. The room was not cleared during breaks, the tea water was cold, the coffee even worse, things were not delivered, we couldn’t get the AV to work. Needless to say, the staff concerned were distressed with the situation because they knew they just didn’t know what to do and relied on us to tell them – often when it was too late. Over the years we have helped many budding food-based franchisors put franchisee operations manuals in place. Without exception the budding franchisor said, ‘This is a waste of time – we train on the job’.
Just remember though, it is associated with a wider trend for sustainability, plant foods, vegan, and vegetarian eating. This is a growth area and the growing customer segment looking for it will only support outlets which meet their values. Customers are also looking for other things to go hand in hand with this movement such as a significant reduction in food waste, sustainably sourced ingredients, sustainable packaging. And around the corner in Australia, and well-engrained in Europe, is the carbon footprint. These values need to be shown front and centre for this market. What this means is there is room for improvement in both established and new restaurant groups and the space for specialist healthy eating offerings and restaurants is wide open.
Since COVID, we have watched the food industry struggle with untrained staff and no experienced managers to train them on the job. You are hoisted by your own petard people. Put in good operations manuals and give your new managers and newbie staff a chance. This is not something that is just a pet niggle of ours. QSR Magazine has a review each year of the top 50 QSR restaurants in the US and one of their categories is guest satisfaction. The top 50 restaurants fall into three groups – leaders, stragglers and chasers. Last year the leaders held their own in a difficult year for staffing as everyone knows. The stragglers and chasers, however, who form the vast majority in this list, fell backwards in scores given and the gap between them and the leaders is significant. Why? Well, QSR also looked at ratings for staff satisfaction.
Brian and Prue Keen Brian Keen has been involved in the franchise industry for more than 30 years and Prue has been involved with systems and business for as long. Together they founded Franchise Simply, Systems2Grow and Microloan Foundation Australia. Brian’s on-the-ground business experience as a multi-unit franchisee, franchisor and consultant helping many of the big names create their own franchise systems and growth over the years combined with Prue’s structured approach has been fed into Franchise Simply, helping today’s SMEs and Franchisors grow their business by franchising. www.franchisesimply.com.au | www.systems2grow.com
And no surprise there is a link between the two lists. Leaders measured higher staff satisfaction and retainment than the others along with higher guest satisfaction. Maccas with their strong documented systems were at the top of the list closely followed by other big names – Subway, Starbucks, Burger King, Domino’s all in the top 10. Look after your teams folks; give them good documented systems, train them well and support them to give your guests the best service possible. And make sure this includes both your franchisee partners and their staff teams. Then everyone will be happy – staff will stay, guests will like the service – your outlets will be more profitable, and your franchisees will be glad to pay you the royalties you deserve. Y
Service with a smile A second trend we see does not have such a happy story to tell. Following COVID, there is no doubt there is a significant shortage of staff for the hospitality industry. Yes, we know the Government is finally doing its best to bring in visa-workers and new migrants to meet this need. But you know what – the food industry across the board is not just finding it hard to get staff - it is really feeling the loss of its experienced managers – and it shows. Probably the worst experience we have had recently was at an event run by us at a major hotel chain in Surfers. We have been running these for years in the same hotel and used to know the staff by name. BUSINESS FRANCHISE MAGAZINE 35
FRANCHISING FEATURE
SNAPSHOT: Gami Chicken
GAMI CHICKEN INCREASING VALUE FOR CUSTOMERS AND BUSINESS
Since launching its first restaurant in Melbourne in 2006, Gami Chicken now boasts 38 casual dining restaurants across Australia, each serving highquality traditional Korean family recipes mixed with a dash of Melbourne Laneway culture. The company is targeting $50 million in brand revenue through its franchise-based business and is pushing towards four new locations in the remaining three months of 2023. To achieve these ambitious targets, increasing value to customers is an objective which drives Jun Lee, Gami Chicken’s Co-Founder and Executive Director, especially with inflationary pressure impacting his costs, and more importantly, the ability of customers to enjoy Gami Chicken. With inflation sitting between 6-8% over the past 12 months, new individual dishes, lunch menu items, and share plates have been launched to resonate with customers and maintain and drive revenue. “Value has been created without increasing menu prices,” said Jun, who has also avoided meal size reductions as the only way to appeal to price conscious customers. “New menu items and revised inclusions ensure customers receive greater value, while our store owners can maintain their profit.” 36 BUSINESS FRANCHISE MAGAZINE
Individual Menu Options and Price Points while Building Korean Identity Creating value for customers and franchisees is always a challenge, but one that was amplified since Covid-19 and more recently, cost of living increases. The “shareability” of Gami Chicken’s meals, while preserving the Korean value of ‘sharing’ meals and adding value to group dining, was often misunderstood by some who saw share plates of chicken for $50 as prices for an individual dish and quickly moved on. “To improve value and communicate with customers better, we enhanced our signature menu share dishes,” said Jun. “Introducing higher quality gourmet food while identifying alternative menu items other than sharing dishes has also assisted Gami Chicken’s value proposition.” Individual menu items offer greater choice to customers who are dining solo or as a small group, while also assisting with lunch covers. “Individual menu items such as Bibimbap and Gochujang Chicken offer healthier choices while catering to those seeking a traditional Korean dish, and lighter chicken and burger options are resonating with customers at the sub-$16 price point– so far sales of individual menu items have increased 52% since April,” said Jun. Gami Chicken’s lunch turnover has also increased 18% since the casual dining outfit began focusing on individual menu items and healthier, traditional Korean dishes.
Jun and his team focused on ensuring value continued to be delivered to guests. “As pricing remains the key determinant when choosing products, value packs and a wider range of budget-friendly menu options have delivered 254% sales growth between April and September 2023,” says Jun. Part of that success is down to providing an accessible price range of $20-$29 for customers. This price range has allowed Gami Chicken to attract new market segments. 'PS NPSF JOGPSNBUJPO WJTJU XXX JOOPWFJMHBNJ DPN BV
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FRANCHISING FEATURE
EXPERT ADVICE: Robert Toth | Special Counsel | Sanicki Lawyers
FOOD IN FRANCHISING 2023/24
One year on from my article in 2022 its interesting to see how the hospitality sector has bounced back from the days of lockdowns, business shut downs and lock outs by Landlords and how digital technology has advanced in the delivery of food services. I usually start my article with a line from a song that connects to the topic…Hmm food and song…how about “I heard it through the grapevine”. Written by Norman Whitfield and Barrett Strong for Motown Records in 1966. The first recording was produced by Whitfield for Gladys Knight & the Pips in September 1967. It was also made famous by Creedence Clearwater Revival… oops I have strayed! One year on and the challenges to those in the food and franchise sector continue but at the same time new and exciting opportunities open up.
Challenges for business The key concerns affecting the sector remain: t 4UBê TIPSUBHFT t %JHJUBM BEPQUJPO DPNQFUJUJPO o DPOUBDUMFTT payments; 38 BUSINESS FRANCHISE MAGAZINE
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attractive in a very competitive market.
t *ODSFBTFE ëYFE PQFSBUJPOBM DPTUT BOE inflationary pressures;
Recent NAB research found that 4 in 10 consumers made conscious adjustments to non-essential spending such as eating out to combat the rising cost of living. This becomes a negative cycle as inflation forces businesses to raise prices.
t 3FHVMBUPSZ DPTUT MJDFOTF BOE QFSNJUT t 8PSLQMBDF )FBMUI BOE TBGFUZ JTTVFT TVDI BT increased staff costs; and t .BLJOH B QSPëU It is still the case that around 45% of businesses in the accommodation and food services sector are in desperate need of staff which has led to reducing operating hours and some businesses only offering lunch or dinner services, not both. One positive of this is that businesses now have to compete for staff and offer better and more flexible working conditions, training and other incentives to retain good staff. We have all experienced going to a café or a restaurant recently seeing the lack of table staff and training that affects the dining experience as well as the increased menu prices. Certain sectors such as fine dining restaurants have also been affected with inflation and fixed costs increasing for business. The returns to franchisees have been squeezed due to increased operating costs after also having to cover their royalty and marketing fees. Franchisors need to ensure they can negotiate competitive supply arrangements for their franchisees so that franchises can remain
The market size of the hospitality /restaurant sector in Australia is around $14.1 billion in 2023, with an expected growth rate of 1.2%. The bigger franchise systems such as Subway, Dominos, McDonalds can adapt to the market and they have resources (financial and otherwise) to manage these challenges whereas newer franchise systems may not have the same resilience. Australia is a multicultural society, embracing foods from many countries from Asia, Greece to Italy, Spain, Mexico, France, Turkiye and Lebanon and we are seeing an influx of many of these cuisines in the franchise sector.
Cost of entry The cost of entering into a new food franchise can range from low end $50,000 up to $700,000 so franchisees need to consider before committing to the following: a. Be clear about your budget – what can you afford? b. Identify if the site on offer is an A grade or C grade location.
need to ensure they “canFranchisors negotiate competitive supply arrangements for their franchisees so that franchises can remain attractive in a very competitive market.
Robert Toth is Special Counsel Sanicki Lawyers, with over 35 years’ experience in Franchise, Licensing and Distribution law acting for both local and International franchisors, franchisees and master franchisees and with expertise in dispute resolution. Robert is an Accredited Commercial Law and Franchise Specialist, a member of the Franchise Council of Australia (FCA) and the International Franchise Lawyers Association (IFLA) and regularly writes for franchise and corporate journals online. Contact Robert@sanickilawyers.com.au or even call him on mobile 0412 67 37 57
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c. Ensure you have adequate working capital to cover your first 6 to 12 months of operation (particularly where it is a new greenfield site).
An observation I asked Mark Said of MKS Group Accountants and Advisors Melbourne who acts for a number of franchisors and franchisees in the sector, as to his view on the market and he stated: “The franchise market (especially in hospitality) has undergone a period of transformation since the Pandemic. As the world gradually recovers, this industry sector is showing signs of resilience and innovation. We have seen many hospitality franchisors and franchisees adjusting their business models to incorporate not only additional health and safety measures but also major investment in technology such as mobile ordering and updated CRM technology all aimed at improving their customer experience. Going forward, we believe there will be an increased focus on sustainability and environmental responsibility as consumers are becoming more eco-conscious of their carbon footprint. Franchisors need to adapt and deliver on these consumer eco-friendly expectations. These changes will also align with the evolving preferences of today’s travellers and diners.
There is a myriad of new players in the market and they have the benefit of starting from a blank canvass with their own unique offer. Older established franchise systems have issues with their older fit outs needing capital investment and upgrade by their franchisees to their fit outs when times are already tough and having to replace aging plant and equipment. Any new franchisee needs to weigh up the option of taking up a new franchise system or buying into a long established brand. There may be some comfort for a franchisee buying into a long established, well-known brand but that may mean greater up front cost and additional cost for updating the equipment and refit of the premises and brand.
With a new franchisor you acquire new fit out, new equipment and start afresh but then you need to ensure you have enough working capital to cover the first months of operation while the business takes off. Of course, new opportunity may mean greater risk for a new franchisee.
New players in the market There are some new brands that you may not have heard of worth a look, in the food sector such as Sankalp Indian (12 outlets), Dosa Hutt (16 outlets) Monkey King Thai, Thailander (8 outlets), Dragon Hot Pot, The Lok Lok Dumpling Bar, misschu (aka Miss Chu) to name a few. We have had trends over the years with a surge in Pizza franchises then ice creameries, coffee and chocolate franchises.
In summary, we see the food franchise sector adapting to new realities, a focus on safety and technology, with a growing commitment to sustainability to remain relevant and competitive.”
New or existing franchise ? New players in the market challenge existing brands and an example of this is inMexican cuisine for example, Nando’s is a well known brand under some pressure from systems like Guzman and Gomez, Zambrero, Mex Tex. and Salsa’s. BUSINESS FRANCHISE MAGAZINE 39
FRANCHISING FEATURE
EXPERT ADVICE: Robert Toth | Special Counsel | Sanicki Lawyers
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The well known brands have taken decades to grow and evolve and generally have the financial capital and backing to overcome challenges. They can also afford to make mistakes and recover from them, which is not the case with new franchisors.
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Franchisees should try to find systems that have long term appeal not just a passing fad as once you have acquired a franchise there are only limited options to exit the system.
Good New Week! With all of the challenges confronting business there remains positive opportunities which can be seen in the resurgence of restaurants and the fast food sector in shopping centres, shopping strips and CBD areas.
The landlord will deal with the Franchisor who holds the lease.
their franchisor is on an expansion path or looking to reduce their franchise footprint.
For the franchisor the benefit of holding the head lease is that they control the site and their brand in case the franchisee abandons the business or they are terminated as the franchisor can retain their presence in the location.
If the franchisor has reduced their presence and converted to company owned outlets this may be a sign that the franchisor is not looking to actively grow its system.
On the other hand, the franchisor is then primarily liable to the landlord under the lease For franchisees that do hold the lease, they are primarily liable under the lease.
t *G MPPLJOH UP UBLF PO B GSBODIJTF EP ZPVS due diligence on the franchisor just as much as they do their due diligence on you.
The food and hospitality sector is dynamic, somewhat fickle and highly competitive with so many options for consumer tastes.
Either way the franchisee generally has to provide a bank guarantee or security deposit which is at risk if things do not go to plan
Every franchisor even McDonalds has over the years had to reinvent their brand, offer and presence in the market.
Shopping Centres also demand store upgrades which can place a financial burden on the franchisee and this has led to negotiations with the franchisor over how those costs will be paid and funded.
The well known brands have taken decades to grow and evolve and generally have the financial capital and backing to overcome challenges. They can also afford to make mistakes and recover from them, which is not the case with new franchisors.
Lease or Occupancy License In many systems the Franchisor holds the head lease for the premises and grants the franchisee an occupancy license for the term of the franchise. There are some pros and cons to this for franchisees as under a license they have no ability to deal directly nor negotiate with the Landlord or shopping centre management. 40 BUSINESS FRANCHISE MAGAZINE
Tough times? Some brands have significant capital backing which allows them the luxury to expand even during tough times. As my brother Ted of Ted’s Camera Stores fame always said – “when times are tough market harder!” This concept rings true and we see it in many sectors where many businesses retract, reduce their marketing and die a slow death while those that are innovative, invest in technology and market harder, pick up market share in their sector. Franchisees should do their research on their prospective franchisors and identify if
Before you jump in!
t $POTJEFS JG ZPV BSF UBLJOH PO B HSFFOëFME site this may be a higher risk than an existing site. t "SF ZPV CFJOH PêFSFE BO " # PS $ HSBEF site? t *T UIF 'SBODIJTPS CJH PO UFDIOPMPHZ BOE innovation? If not, how will they compete in the market sector they are in. t *T UIF TUPSF ëU PVU EVF GPS BO VQHSBEF BOE refurbishment? t *T UIF QMBOU BOE FRVJQNFOU OFX PS XJMM JU need replacement? t 8JMM ZPV IPME UIF MFBTF PS IPME VOEFS BO occupancy licence. Above all if you are considering entering into a franchise, make sure you seek advice from a Specialist Franchise Lawyer who is a Member of the Franchise Council of Australia (FCA) and seek independent financial advice before you commit so you can make an informed decision. Y
BUSINESS FRANCHISE MAGAZINE 41
FRANCHISING FEATURE
SNAPSHOT: Graze Craze
GRAZE CRAZE LAUNCHES ITS FIRST AUSTRALIAN LOCATION IN ST IVES, SYDNEY Graze Craze®, the innovator in graze-style dining and catering, has opened its first Australian location in St Ives, Sydney. Less than two years after launching its franchise program through United Franchise Group™ (UFG), Graze Craze has experienced explosive success in the US, selling over $4.6 million (AUD) in charcuterie since opening its first franchise location in February 2022. It now boasts 42 locations open in the US, with an additional 56 franchise agreements signed within the first two quarters of 2023, adding to its already robust development pipeline which currently totals 175 locations to be developed in the next several years. Now entering the Australian market with its first location in Sydney, the charcuterie and grazing board franchise has rapid expansion goals in the NSW market initially, before then focusing on recruiting franchisees across Australia. In-store Grazologists™ curate handcrafted, impeccably designed, sweet and savoury charcuterie boards and picnic boxes made with the highest quality ingredients and arranged with perfection. Offering various sizes of charcuterie boards and boxes that can be customised, sizing options cater for just one person all the way through to ten people. The menu offers classic cured meats, premium cheeses, artisanal breads as well as options for those with special dietary requirements. “It’s an incredibly exciting time for Graze Craze®. Our first location in St Ives Sydney has been strategically selected with a great mix of business, residential hubs and community groups. It will provide catering for corporate and community events, private parties and celebrations as well as for those just wanting to pick something up for a special occasion.” Timothy Smith, Managing Director of Starpoint Brands™ Australia. “The market is ripe for a franchise in this industry and with our already established brands of Signarama® and Fully Promoted® here in Australia there will be plenty of opportunities for cross collaboration between our franchisee network.” “2023 has already been an incredible year for our brand in the US, and 42 BUSINESS FRANCHISE MAGAZINE
to now be able to provide this opportunity to Australian entrepreneurs is really exciting,” says Kim Caruana, Brand Manager of Graze Craze®. “It’s a completely unique franchise in the food industry which can be notorious for high wastage and high staffing requirements. The Graze Craze® business model has been specifically designed and refined to maximise operational profits, with an owner operator requiring minimal staff. Our extensive training and onboarding program also means that any passionate entrepreneur regardless of their experience can learn the business and start growing it from day one.” Graze Craze® offers customers the ability to visit in-store or order online, as well as offering options for pickup and delivery. Graze Craze® is a member of the Starpoint Brands family of trusted companies, a division of United Franchise Group (UFG), including Signarama®, Fully Promoted®, Transworld Business Advisors®, Venture X®, Office Evolution®, Network Lead Exchange™, The Great Greek Mediterranean Grill® and Graze Craze®. Y
Info@franchiseready.com.au www.franchiseready.com.au
Franchise Franchise Ready Ready are are proud proud recruitment recruitment partners partners of of more more than than 30 30 Brands Brands
BUSINESS FRANCHISE MAGAZINE 43
FRANCHISING FEATURE
EXPERT ADVICE: Doug Downer | Franchise Ready
PEOPLE ALWAYS NEED TO EAT,
SO A FOOD FRANCHISE HAS TO BE GOOD, RIGHT? People think food businesses look easy. After all, we all eat, and lots of us cook food, so it shouldn’t be that hard. They look like businesses that practically anyone can operate and make massive amounts of money in. After all, everybody eats and drinks, right? How hard can it be to operate one of these businesses? Food Businesses represent around 8% of all businesses in Australia and within the franchise sector food franchises represent around 20% of all franchise opportunities. There are many benefits to working in a franchised food business. People look at food businesses and think they must be good — you don’t have to wait for the cash to hit your account like some other business opportunities, as they are cash businesses, and the cash flow is strong as it flows in daily and if you’re part of a franchise system, the franchisor would have negotiated good trading terms with suppliers, so you don’t have to have huge cash tied up in stock. It’s been estimated that over 10% of the population (both globally and in Australia) has worked in food services at some point in their career and at any point in time the food sector represents about 5% of the total working population. If you have worked in food service, it’s a sector worth investigating if you’re looking to buy a franchise. That’s because you kind of know what you’re in for: it’s hard work, you’re on your feet for long periods of time and your transaction dollar amount is often low, so you must get and serve lots of customers. Some people fall in love with idea of owning a food business and having their friends come around. I can assure you it’s nothing like that, I have owned five different food franchised businesses and one independent food business. When you’re establishing your food business, you work harder than you’ve
44 BUSINESS FRANCHISE MAGAZINE
Doug Downer an experienced Business Developer and Coach with an impressive 30+ year senior management history in developing and leading businesses within the Franchising sector. He has been recognised in the Top 30 Franchise Executives in Australia in 2019, 2020, 2021 and 2022 and in the Top 100 Global Influencers in Franchising in 2022. Doug owns five franchises as a franchisee and has been responsible for the establishment of three start-up franchise systems including all aspects from strategy through to market entry. Doug has operated at CEO and Director level in eight franchise systems. He also started, owns, and operates five successful SME Businesses of his own, so he is well versed in all aspects of franchising. Contact Doug at: doug@franchiseready.com.au | Website: www.franchiseready.com.au
ever worked in your life before. Because it’s yours, you must and, it may take a while to get customers to change their current preferences to your products. A food franchise would suit a large range of people but may be more desirable to people that are customer oriented rather than sales oriented and could suit both introverts and extroverts. Once the location is up and running, the owner often waits for customers to come to them. It’s true that you should be marketing over and above what the franchisor does, but this may not be everyone’s expertise, so it tends to be a reactive franchise opportunity.
Many people fall in love with the idea of owning café and it’s no wonder, as 75% of the Australian population are reported to have coffee once or twice a day, most popular with people aged between 25-34 and with over 25,000 cafes and many other food businesses offering coffee, there’s lots of coffee options to choose from. The other popular food sectors are restaurant operations totalling over 30,000 outlets. Whilst food is relatively easy to get into and we know people have to eat on average three times a day and the market has moved to grazing through the day which has increased the incidence of eating, and on the beverage
The market is changing from “technology advancements to shifting consumer preferences, several emerging trends are shaping the future of franchising in hospitality.
”
The Trends in Food franchising Technology is playing a pivotal role in enhancing guest experiences. Environmental consciousness is no longer a niche concern; it's a mainstream trend. The pandemic accelerated the focus on health. Innovation with culinary experiences and higher consumer expectations, exacerbated by the proliferation of celebrity chef programs. Additionally, dietary preferences like veganism and gluten-free options are now standard offerings although stand-alone outlets focussed on this narrow niche have not proven to gain total market acceptance as evidenced by the high failure rate of these niche businesses.
you have worked in food “ Ifservice, it’s a sector worth
percentages. Most food businesses need to be under 30% COGs to be profitable.
investigating if you’re looking to buy a franchise. That’s because you kind of know what you’re in for: it’s hard work.
”
t 'PPE SFUBJMJOH JT CMPPEZ IBSE XPSL Standing on your feet for excessive periods of time, and today, food service is seven days a week from early to late, so it has the potential to impact your quality of life.
side, it is recommended that as human beings we need to hydrate eight times a day, all of this augers well for food and beverage businesses and the beauty of franchising is that someone has developed the business model for you giving you a greater chance of success.
t ɨF TVDDFTT PG B GPPE CVTJOFTT JT heavily reliant on real estate: location is everything, and that comes at a price. Ideally, a food business would like to run at 4–10% for full-service restaurants and 8-14% for takeaway, known as quickservice restaurants (QSRs).
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t $POTVNFS CFIBWJPVS DBO DIBOHF BOE unless you have a strong loyalty program, ongoing marketing and a great product that is always evolving, customers are prone to try other products.
t " SFMJBODF PO UFBN NFNCFST UIBU BSF PGUFO unskilled and potentially unreliable as they see their role as a stepping stone to their ‘real job’. t 8BHF DPTUT BSF XJMEMZ WBSJBCMF BOE BU UIF whim of sales, it’s a fine balancing act. Not too many staff or labour costs will be too high (ideally 25–30%) and not too low to impact the customer experience. But get this wrong and the results can be catastrophic. t $PTU PG (PPET $0(T BSF WBSJBCMF BOE require excellent controls and recipe management to maintain optimum
t *G ZPV SF TJUVBUFE JO B TIPQQJOH DFOUSF BOE to a lesser degree on a high street, there’s a strong chance of competition and copying of your best products which you have no control over. The market is changing from technology advancements to shifting consumer preferences, several emerging trends are shaping the future of franchising in hospitality. If you’re looking at a food franchise, you need to be aware of these trends and what the franchisor is doing to address these emerging trends.
Convenience is expected by consumers either through access to outlets, drive thru and speed of service. Customisation of products to suit customer’s taste preferences. Online and mobile ordering to assist with both convenience and customisation. Robotics and automation have become increasingly popular in the fast-food industry. Robots have allowed fast-food restaurants to reduce labour costs and increase efficiency while still providing customers with consistent quality and service. Premium quality offerings at a premium price point. A value option on the menu for the cost conscious particularly in this period of high inflation, high interest rates and lower consumer confidence. Consumers are looking for Value over Price, so you can have a premium offer, but what’s most important is quality. In summary, food franchising is a great way to get into a business by leveraging the systems that have been developed by a franchisor, it’s been proven there is over a 50% increase in business success over independent food businesses and that because the franchisor has usually addressed many of the emerging trends that affect a food operation, there’s a lot to operating a successful food business, in franchising the franchisor builds the systems so that the team can operate the systems to assist the running of the business, in independent businesses much of the operations are the owner’s responsibility, Franchising makes running a food busy easier. Y BUSINESS FRANCHISE MAGAZINE 45
FRANCHISING FEATURE
SNAPSHOT: Durk’s Cafe + Eatery
DURK’S CAFE + EATERY
JOINS FORCES WITH AMPOL TO FEED HUNGRY TRAVELERS Durk’s Cafe + Eatery, an Australian cafe brand known for its commitment to nutritious food, has expanded into the travel centre sector, marking a significant strategic move for the emerging brand. Despite its relative youth, Durk’s has demonstrated remarkable versatility by establishing a total of five locations in 12 months, encompassing two inline stores, a kiosk, and, most notably, two new dining hall travel centre sites within Ampol’s state-of-the-art travel centres along the Southbound and Northbound stretches of the Hume Highway, Pheasants Nest - just south of Sydney. Gary Blyton, General Manager and Co-Franchisor of Durk’s Cafe + Eatery, comments: “The two new locations are a welcome addition and were not part of our overall plan but we are now glad that they are. We were approached by Ampol because they were looking for something a little different. Many travellers, including truck drivers, these days are looking for something a bit healthier and in some cases with a home made element to it rather than just ‘fast food’. Our team was tasked with developing a version of our menu that would cater to this modern day traveller whilst also able to be operationally effective in this type of location. Over 40,000 vehicles per day use the Hume Highway so for us it was a great opportunity. Now that these sites are operating above expectations we will make them available to potential franchisees. We have several other new locations planned for NSW so it’s certainly exciting times ahead.” With a rich history deeply rooted in hospitality and franchising, across several successful food ventures, Durk’s Cafe + Eatery are thrilled to channel this wealth of experience into the dynamic cafe sector. Nathan Wood, Marketing Manager of Durk’s Cafe + Eatery comments: “Navigating the highway can be a tiring experience, and 46 BUSINESS FRANCHISE MAGAZINE
finding nutritious food options can be a real challenge. That’s where Durk’s Cafe + Eatery steps in. We are thrilled to bring our unique cafe concept to the Hume Highway Ampol Travel Centres in Pheasants Nest, making it easier for commuters to enjoy delicious meals that are both satisfying and good for you. We’re not just a cafe; we’re a destination for those seeking a better way to dine on the go.”. Durk’s Cafe + Eatery is a 100% Australian owned and operated cafe franchise dedicated to providing high-quality, nutritious meals. With a focus on offering a healthier alternative, Durk’s Cafe + Eatery is operated by highly experienced hospitality franchisors who’ve been in the Australian market for more than 20 years. 'PS NPSF JOGPSNBUJPO QMFBTF WJTJU XXX EVSLTDBGF DPN BV
