HOSPITALITY

BREWED FOR SUCCESS

Passion for coffee is ensuring that coffee franchises thrive despite current challenges, writes SAMANTHA BARNES

Entrepreneurs are adaptable by nature and can weather economic storms. Among these are some coffee franchise owners who have posted improved fi nancial results since the lockdown. Amid the maelstrom, vida e caffè was voted Favourite Franchise in the Coffee Magazine Reader’s Choice Awards 2020 – beating out a host of other brands.

“We are proud of our recent Favourite Franchise award as voted by the public,” said vida e caffè CEO Darren Levy. “Passion means coming to work to make our customers’ and staff’s day better.”

On the subject of passion, vida e caffè franchise owner Justin Fenn says: “The most obvious passion that needs to be created is staff interaction with customers. Staff must be properly trained, incentivised to do well, and have a good working environment.”

Fenn owns three vida e caffè stores in the Western Cape. “Last year (2020) was a year of extreme lows and highs,” he says. “Customers were not sitting in-store; they were walking with their coffee, children, dogs and bicycles.” When customers could return in-store, Fenn noticed a massive upswing in business. “When we reached sit-down service again, we started to show growth over 2019, and then further growth.”

Fenn is looking at his fourth store. “I bought in as I loved the brand and saw coffee was becoming a massive business. I am very happy with my decision.”

Fenn noticed a massive upswing in business. “When we reached sit-down service again, we started to show growth over 2019, and

FUELLING UP

Hitesh Patel, vida e caffè strategic executive, says: “There are countless opportunities across Southern Africa for prospective franchisees. vida is represented through the Shell network in most small towns. One of our partners, Lee Parker, wanted to move coffee from his convenience store and build a vida

vida e caffè

container on his forecourt. He has since doubled the space due to demand.” Parker now owns fi ve vida e caffè stores beyond the forecourt and his Caltex store is consistently in the top 10 stores nationwide. “This illustrates the ability for franchisees to grow,”

Hitesh Patel says Patel. “Working together in new, innovative spaces and locations can result in success.”

Metropolises in KwaZulu-Natal, Gauteng, Tshwane and Port Elizabeth remain underpenetrated,” adds Patel. “There are over 300 stores nationally with room to grow.” The fee for a new franchisee is R100 000 plus VAT and the cost for a new store of 60–100m2 is R1.2-million plus VAT. ›

Darren Levy

“I BOUGHT IN AS I LOVED THE BRAND AND SAW COFFEE WAS BECOMING A

MASSIVE BUSINESS.” – JUSTIN FENN, FRANCHISE OWNER, VIDA E CAFFÈ

LEGGING IT

Bootlegger Coffee Company shares some of the vida approach. Managing director Pieter Bloem says: “We have great coffee, great company culture and a solid team behind us. There is a focus on the environment and sustainability including 100 per cent Rainforest Alliance-certified coffee, biodegradable packaging and a zero-waste drive.”

Bloem says store locations are mostly aimed at creating community. “We aim to deliver a good product and are constantly tweaking operations, design and functionality.”

Most Bootlegger stores reopened when the country entered level 3 lockdown. “Takeaway trade helps with cash flow, but cannot account for all overheads and bringing our employees back. We need the sit-down trade. TERS was a major role player and we have not had to enter into formal retrenchment programmes. Key lessons are adaptability and constant, clear and concise communication.”

GETTING ON THE MAP

Bootlegger Coffee Company has 23 stores in the Western Cape and three in Gauteng, with a fourth waiting in the wings. The focus in 2021 will be on Gauteng, while there are still opportunities in the Western Cape. The pipeline for the next three years includes most provinces.

Opportunity abounds for the entrepreneur, says Bloem, who shares the example of an exceptional franchisee: “We have a largescale franchisee in the Western Cape whom we term a ‘cluster franchisee’. They own and run seven successful Bootlegger stores – all opened in the past 14 months. They have employed their own internal operations and sourced their own sites.”

Bootlegger Coffee Company builds stores for around R2-million–R3-million excluding VAT, size-dependent and accredited with major banks.

Bootlegger Coffee Company

DID YOU KNOW?

Successful leaders in food franchising don’t necessarily start in the food industry.

McDonald’s South Africa CEO Greg Solomon was originally a civil engineer. The franchise has achieved 10 years of revenue market share and profit growth. Solomon emphasises the importance of sharing the brand aspirations.

Source: Franchise Association of South Africa

FAST FACT

South Africa’s franchising economic output as a percentage of gross domestic product (GDP) ranks in the top five countries worldwide. With its contribution to GDP at 15.3 per cent (2017), the country’s franchise sector sits up with France, Australia, New Zealand and the Netherlands.

Source: World Franchise Council 2017 Survey on the Economy Impact of Franchising Worldwide

COVID-PROOF DINING

Safe dining in the age of COVID-19 extends beyond improved ventilation and wider spacing between tables – Kloof Street Village is a case in point. Real Foods secured the site in Cape Town a year ago, explains Dean Kowarski, the company’s founder. “Initially, we planned to build a new food hall concept with four separate brands – Nü Health Food Café, Free Bird, Schoon, and Kofi – offering a welcoming, slick and convenient dining experience with a range of options for the local community.”

The pandemic forced Real Foods to radically reimagine the restaurant experience to make customers feel safe. “We considered the details that were becoming important to ensure a safe dining environment: ventilation and air circulation; maintaining physical space between people; outdoor spaces; and technology to facilitate contactless experiences,” says Kowarski. Real Foods reworked smaller details, which needed to be relevant for the next 10 years. “Features include wraparound fold-stack windows for better air circulation, additional ventilation ducts, outdoor ordering hatches and an outside seating area,” says Kowarski. “While inside seating has been limited for now, there are a lot more seats outside.”

LAST CONTACT

The space was designed to allow for contactless takeaway orders and delivery (with a separate entrance for third-party delivery drivers such as UberEats and Mr. D Food to limit the number of people in the store) to drive incremental revenue, explains Kowarski. “We created two ordering hatches outside the store for Kofi and Nü so customers can order without entering the store.

“We also collaborated with technology partners Micros and Datasmith to develop a kiosk and mobile app system for contactless ordering: customers order via the kiosk or the mobile app. Orders can be placed for sit-down or takeaway.”

Kofi, which serves small-batch roasted African coffee among other offerings, has an outdoor ordering hatch.

While none of the stores at Kloof Street Village are franchised (yet), Real Foods Group has franchised stores for Nü, Free Bird and Kauai at other locations.

YOUR SUPPLY CHAIN

From product suppliers to your logistics partners, your supply chain is critical to delivering your products or services. The reality is that all businesses have required some assistance during this period, and many business owners have negotiated terms with their suppliers and partners. We’ve seen landlords working closely with franchisees to reduce their rental fees and suppliers who have granted extended terms to franchisees to assist with cash flow.

It’s important that we all work together in this regard. Asking for terms that are unreasonable and negatively impact your suppliers does not protect your business down the line. Similarly, they want to ensure that your business survives and that you continue doing business into the future.

Transparent discussions around what your business is currently facing, where you need assistance and how you can help each other are essential at this time. Remember, everyone is feeling the impact of this pandemic. The key is that we can get through this if we work together and support each other.

YOUR CUSTOMERS

Customers want to support the brands they know and love, but their needs and expectations are also changing. Are you currently re-evaluating your product offerings and channels of distribution, or hoping that things will just return to the way they were?

One obvious and immediate trend that we have seen is virtual shopping, but we believe that this trend will continue. The public is still anxious about Covid-19 and we have yet to see whether there will be a second or even third wave of the pandemic. How aligned is your business to online trade?

We’ve seen successful businesses forming partnerships to introduce a channel of delivery. The quicker you can align to those partnerships, the better, particularly if you want to negotiate commissions and price points that work for your business and the delivery partner you contract with.

We also believe that value-add offerings will be extremely important going forward. Consumer spend has been negatively impacted, thus offerings should be aligned to this trend. An example of this will be free WiFi and home deliveries. Contactless payment options, virtual shopping, as we’ve seen, and stores and products that address the realities of Covid-19 are all important factors to consider.

YOUR BANKING PARTNER

It’s important that we all come together, which is why we are encouraging franchisees to reach out and connect with their networks. As a banking partner, we are working closely with our clients, not only to deliver banking solutions from payment options to financing, but to support the business holistically.

We have a dedicated team with a wealth of experience that we can tap into and offer various solutions including customer data and insights that are critical for the brands of the future to leverage.

Now more than ever you need to know your customers and how they engage with your brand. Assumptions are not enough. The ability to adapt and innovate is born from tangible insights into your customers’ spending habits.

These are the areas in which we are working closely with our clients. A blend of proven and innovative solutions will be required to address this new world we find ourselves in, and we are working faithfully with our customers to build the foundations for a strong 2021 and beyond.

CUSTOMER INSIGHTS

Know your customer intimately with CustomerViewTM

This pandemic has reaffirmed the importance of knowing and understanding our customers.

CustomerView™ from Standard Bank enables you to use data to understand your Standard Bank customer base. This Merchant Online reporting solution will help you understand your customers’ spending patterns and buying behaviours, and allow you to monitor performance and profiles across different stores. You can also compare and contrast these insights with other Standard Bank merchants within your industry.

CustomerView™ will provide you with deeper insights into your Standard Bank cardholder customer base in terms of spend; taking into account dimensions such as age group, income bands, and location of customer, gender, returning customer, first-time customer and basket analysis.