22/01/2018 - 15:51

Bullish franchises plan to expand

22/01/2018 - 15:51

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SPECIAL REPORT: Whether it’s burritos, car repairs or mortgage advice, a number of big franchises are targeting growth in 2018.

Bullish franchises plan to expand
Bucking Bull master franchisee Troy Pickard at the franchise’s new store in Watertown. Photos: Attila Csaszar

Patrons dining-in with a cold beer will be a key part of the expansion strategy for Bucking Bull in Western Australia, as the traditionally food court-focused business moves into higher value markets, according to Franchise Fusion managing director Troy Pickard.

Bucking Bull is owned by Queensland-based Aktivbrands, with former Joondalup mayor Mr Pickard’s Franchise Fusion the WA master franchisee since August 2016.

Fusion runs two outlets, including a new up-market outlet at Watertown shopping centre in West Perth, while 12 are operated by sub-franchisees.

“There’s a significant shift that’s occurring in shopping centres,” Mr Pickard told Business News.

Bucking Bull has been an established brand for nearly 20 years, but there has been a shift (in the market) away from the food court model towards a more casual dining experience.”

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Mr Pickard said the Watertown restaurant aimed to put a modern twist on the offering, encouraging an increase in the average spend per person of about 50 per cent, to $18 a head, compared with the traditional food court.

The availability of alcohol with a meal also changed the dynamic, he said.

“We’ve created an in-store atmosphere that’s contemporary, that’s Australiana, that we feel consumers are seeking,” Mr Pickard said.

Bucking Bull has further growth plans in the casual dining space.

“We’re in negotiations to roll-out dine-in stores  at Rayne Square, Garden City and Karrinyup,” Mr Pickard said.

“It won’t be long before you see Bucking Bull on main strip locations in Mt Hawthorn, in Leederville, in Vincent, we’ll sit alongside the destination brands.”

He said one reason for his confidence in the sector was the improved sales during the past six to nine months as the economy recovered.

Franchisors for Mexican quick-service restaurant Zambrero, Bakers Delight, mechanic Auto Masters and finance business Smartline Personal Mortgage Advisers also expressed optimism in the WA market when they spoke to Business News.

Zambrero, which entered the state in 2013, already has 32 stores in WA, with about eight more in the pipeline for this year.

Zambrero general manager WA Steve Waddingham said the local market had been one of the strongest for the company nationally, with plans to lift its presence to around 40 stores in the next 12 months.

“We’re having demand from people wanting to give us properties and all that sort of stuff, the business is chasing us at the moment, which is a nice place to be,” he said.

Mr Waddingham said the brand’s strengths were its philanthropic emphasis, with a plate of food donated to developing countries for every plate sold, and strong focus on healthy eating.

“You’re not going to get asked if you want fries with that, and we’re not going to sell you a beer with it either, we unashamedly are wanting to be a healthy option,” Mr Waddingham said.

One potential opportunity would be in regional areas, notably for home delivery, he said.

While administrators were appointed to stores in Mt Lawley, Subiaco and Leederville in late 2017, Mr Waddingham said they would be reopened within a month.

Melbourne-based Bakers Delight joint-chief executive, David Christie, said his company had opened six new shops in Perth’s southern region during the past 18 months.

Mr Christie said product innovation was a major part of the strategy for the bakery to grow in what was already an established market, with examples being its introduction of an apple and cinnamon hot cross bun in 2017 and new breads targeted at health-conscious customers.

He said the company had a long-time relationship with its WA franchises, with the business’s first franchisee still running a bakery, although some of those originals were reaching the age where they wanted to exit.

Embracing technology for internal systems and keeping costs down were also focuses in the domestic market.

Mr Christie, who took over as joint chief executive a year ago from founders (and in-laws) Roger and Lesley Gillespie, said one positive economic trend was that tenancy markets had shifted towards lessees, with landlords willing to be more accommodating, particularly in big new developments.

Coffee roaster and cafe franchise Jamaica Blue, which is owned by Foodco Group, continues to expand its presence in WA as part of a national strategy, according to general manager Drew Eide, with three new cafes opening in the west last year.

“The cafe industry is in a fragmented state at the moment,” Mr Eide said.

“There’s been an explosion of strong new independent cafes, for example.

“We’ve also seen changes to the way people shop with the introduction of urban entertainment quarters instead of traditional retail zones.

“Established and well-respected brands like Jamaica Blue need to persistently evolve and innovate to stay relevant, and I believe we’re doing that exceptionally well."

Mr Eide said the franchise had had a softer sales period during the state's recent downturn, particularly in regional areas.

He was still confident the brand was a market leader, however, with a new cafe concept design recently rolled out starting in Joondalup in 2014.

Mr Eide also disagreed with some other industry members about the leasing environment.

"In this challenging retail environment, retailers are at the mercy of lessors and watertight leases," he said.

"Strong legislation is needed to provide a more even playing field between the tenant and the landlord."

Multinational fast food chains are also getting in on the action, with McDonald’s planning to spend about $150 million in the four years to 2020 on new stores and refurbishments, while KFC added new stores in Byford and Kwinana last year.

ASX-listed Collins Foods, which controls the lion’s share of KFC franchises in Australia, bought five stores from another franchisee for $18 million.

More than meals

It isn’t just food outlets planning expansion.

In finance, Smartline Personal Mortgage Advisers grew considerably towards the end of the boom, rocketing up the BNiQ Search Engine list of franchises to sixth place, with 70 franchises in WA.

WA state manager Michael Theseira said the past three years had been slower, although the business had maintained market share.

He said the company would aim to add another five to 10 franchises in the year ahead, compared with just a couple in 2017.

“We’re reasonably happy with settlements, and we’re expecting 2018 to be a better year, a busier year,” Mr Theseira said.

“We’re seeing some signs of life in the market.

“In terms of our priorities for the coming year, it is growth but it’s not growth for growth’s sake; it’s sustainable growth.

“We want to bring on quality people.

“(We’ll) be a little more aggressive in our recruitment strategy, not at the expense of quality.”

A new player in the finance franchise field is ABN Group subsidiary Resolve Finance, which will embrace franchising after 20 years in the mortgage broking, financial planning and conveyancing market.

Resolve managing director Don Crellin said he felt the franchising structure was the best model to support the business’s growth because it allowed controlled expansion and would harness the entrepreneurship of franchisees.

Mr Crellin said the pipeline of potential franchisees was strong and had exceeded expectations, while he wasn’t yet ready to commit to a specific number of franchises.

He said he was seeing good reason to be optimistic about where the state’s economy was heading, although he wanted to take a long-term view beyond cycles.

It would be more important to get the right people as franchisees who work for the model, Mr Crellin said.

In the motor vehicle market, Auto Masters business development and marketing manager Carl Meyers said the car service and repair business was still growing.

“We’re going to expand, probably another four branches this year in WA,” Mr Meyers told Business News.

“There are still a lot of areas that we’re not (yet) in, with the urban sprawl … convenience is a big factor.”

He said it was important to ensure the business had a presence in residential areas and more industrial spaces, where people worked, to make it as easy as possible for customers.

Auto Masters hit a niche in the market between smaller workshops and big dealership-controlled mechanics, Mr Meyers said.

“We’re seeing standalone workshops can’t afford to buy all the technical and diagnostic equipment required now to service newer cars,” he said.

On the other hand, Mr Meyers said many people were unhappy with dealership service, which he believed contributed to growing market share for Auto Masters.

Rankings

Business News has found Jim’s Group to be the largest franchise in WA, when ranked by number of franchises, although the company did not respond to multiple enquiries.

Two cleaning businesses, Jani-King and CleanTastic, rank second and third.

The highest levels of the list are dominated by cleaning and housework related businesses, with another being WA-based Housework Heroes, which ranked seventh.

About half the businesses on the list are food focused, with multinational sandwich maker Subway well ahead of the pack on 156 stores.

Bakers Delight, McDonald’s, Dome and Red Rooster are also in the top 10.

Other industries are represented, too.

Jetts 24-Hour Fitness, which ranks 18th, is representative of a longer-term trend towards franchised gym ownership.

That business is only 10 years old.

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