Food & Beverage feature
This article appears in the September/October 2013 issue of Business Franchise Australia & New Zealand
Did you know that Australians spend over 135 billion dollars on food and beverages every year?
Or that Australians drink over one billion cups of coffee in cafes, restaurants and take away outlets?
Then what are you waiting for? Join the world of food franchising!
Until the early 1970’s, franchising was virtually an unknown concept in Australia. That quickly changed with the arrival of the ‘golden arches’ along with two all-beef patties, forever changing the suburban landscape. KFC and Pizza Hut joined McDonald’s, and so began the story of franchising in Australia.
Since these early days, franchising has grown in leaps and bounds to include almost every industry and covers almost every product and service imaginable. The food sector of franchising continues to thrive and grow, with food franchises representing a large proportion of the franchising industry.
The majority of franchise units are in retail trade (26 per cent) with accommodation and food services (17 per cent), which include food retailing, fast food and coffee shops.
Research shows that people are increasingly spending more and more on food and beverages. The value of food and liquor retailing in Australia grew by 4.2 per cent in 2011-12, to reach over 135.8 billion. In 2011, global research company Euromonitor estimated that Australia was expected to spend more than $37 billion on takeaway food alone, making us the 11th biggest-spending fast food nation on earth.
According to the most recent Australian Food Statistics Report (2011) household expenditure on food and beverages in Australia increased to an estimated $255 a week in 2009-10, up from $216 in 2003-04 and $212 in 1998-99.
Meals out and takeaway food increased as a proportion of the total household expenditure on food and beverages over the same three year survey periods.
Australian Bureau of Statistics research supports these findings, with the trend for spending on meals out and fast foods increasing by 50 per cent from 2003-04 to 2009-10.**
Australia’s growing waistline
Put simply, we love our food, and in terms of franchising the options have never been more prolific. From the early days of burgers and pizzas, we are now being served up more options than ever, and with growing concerns over our increasing waistlines, healthy options have become popular in recent times.
In addition, more and more people are raising concerns of gluten intolerance, lactose intolerance, nut allergies, high cholesterol, diabetes… the list goes on! As food retailers, being able to cater for all kinds of food intolerances and preferences is becoming increasingly important. Responding to consumer desires is vital for sustainability in the food industry. This also creates opportunity.
SumoSalad notably struck while the iron was hot. The brainchild of Luke Baylis and James Miller, SumoSalad was conceived with the view that ‘fast food’ could be good, healthy food too. It was a unique lunchtime concept: a fast food outlet that sold made to order salads which were nutritious, delicious and convenient. Having served over 30 million salads since its first store opening ten years ago, SumoSalad is Australia’s largest and most awarded healthy fast food franchise. With 91 stores across Australia, as well as nine internationally in New Zealand, United Kingdom, Dubai and Singapore, SumoSalad is also scheduled to open its first store in North America this year. It is anticipated that an additional 300 stores will be opened throughout the next ten years in various markets.
Furthermore, Retail Zoo, parent company of Boost Juice Bars, Salsa’s, Boost International, Fresh Mex Grill and CIBO Espresso, reportedly achieved a doubledigit EBITDA growth for the 2012-13 financial year. The group’s EBITDA stood at $17.6 million with bottom line growth of 24 per cent, during the past twelve months.
Coffee culture has swept Australia in a big way. For most people, a trip to the shops cannot pass without stopping for a coffee, a long day at work wouldn’t be the same without the familiar take away coffee cup on our desk, and a long drive simply
wouldn’t be possible without a mandatory coffee break! The coffee market has grown considerably in Australia in the last few years, and has proved to be a booming market for many franchisors.
The ever expanding list of franchise opportunities for those interested in a coffee franchise provides a wide variety of options for potential franchisees.
Cafe2U is one of Australia’s most successful coffee franchises, with over 120 Australians successfully running their own mobile Cafe2U coffee van business. The concept has also recently launched in the USA.
In addition, Queensland based franchise Zarraffa’s Coffee has taken the mobile coffee market one step further. By implementing operational innovations, they are embracing further expansion through the drive thru store model. Having recently opened their 63rd outlet, the franchise has significant growth plans for the next 12 - 24 months.
Alternatively, there are a wide range of coffee shop franchise opportunities where coffee is served in stylish, relaxed and friendly surroundings, most also providing a takeaway option for customers. If you’ve always wanted to run your own café, then
perhaps these options could be suited to you.
Of course, if we go back to where franchising first began in Australia, the fast food sector of franchising remains strong. With fast food outlets providing tasty, quick, and cheap food in all locations, from highways to malls and on the high street, the appeal for consumers remains high, and with many now providing healthy alternatives these businesses remain highly competitive in the industry. This is only further highlighted by McDonald’s celebrating its 40th anniversary in Australia in 2011, and now has over 900 restaurants.
Rules and Regulations
As with any industry it’s important to understand the rules and regulations associated with the business, and this is extremely important when working in food retail. Janine Allis, Founder of Boost Juice and Managing Director of Retail Zoo, gave this advice for people thinking of getting into the food industry:
“First of all you need to fully understand what it means to be in food, particularly healthy food. You need to be aware of the FSC (Food Standards Code), TGA (Therapeutic Goods Association) and the Health Authority. Then you need to consider what the ACCC rules are and of course if you get into franchising there is also the FCC (Franchise Code of Conduct). These are just a few of the governmental and industry bodies that have specific requirements when it comes to the food industry.
“This can all be very daunting and confusing, particularly when many of these bodies do not give you a clear answer on a question regarding the rules. But business always has its challenges. You need to just keep going, becoming a sponge and soaking up all the information you can possibly absorb. Information is key, because making a mistake in regards to any of the above Codes and Associations can not only cause massive fines, but can be terrible for the public relations of your business.”
Business Franchise magazine – Janine Allis-Food Glorious Food!
Get to know your franchisor
Once you have conducted your extensive research into the many food franchise models and systems available to you, remember that the franchisor holds the key.
The management system, the operational procedures, the leasing agreements, the contracts, and the fees have been generated by the franchisor. Check the franchisor’s background – is it solid? Meet with them. Do they have integrity? Do they answer all of your questions openly and honestly? Do they invite you to do your own investigations into the company? Are they eager for you to talk to existing franchisees? If at any point you feel pushed, rushed, bullied or even ignored by the franchisor – it’s time to consider walking away. Hopefully though, the franchisor will be professional, honest and open.
The next step is to meet with several existing franchisees. While it’s fine to have all the manuals in place and have the franchisor tell you how great and successful the business may be, it’s the franchisees that have the real story. Visit them in their place of business, ask questions, and ask their employees if they enjoy working there. One of the great things about researching food franchises is that you can simply drop in and eat. Be a random customer. Visit several locations. Is the food good? Is the service good? Is it consistent from one location to another? Do the employees seem happy? Do the customers seem happy?
By doing as much research as you can you can gain the knowledge to know if you are making the right choice at the right time.
So if you are passionate about food industry and the ever changing eating habits of our nation, a food franchise just might be for you. All the very best of luck as you venture on a fantastic path to success!
*Franchising Australia 2010 Report
**2009-2010 Household Expenditure Survey (HES)