Chooks emerges as top WA franchise

SEVENTEEN years as an 'emerging' franchise has paid dividends for Chooks Fresh & Tasty founder Steve Hansen, with his business named the 2008 WA Emerging Franchise System of the Year by the Franchise Council of Australia.

With 29 franchisees operating 37 stores throughout the state - and three more stores under construction - Mr Hansen said his food chain was probably ready to move out of the 'emerging' category, but was nevertheless pleased with the award.

"Somehow, you're not considered to be a big franchise system until you get 50 stores," he told WA Business News. "I guess I'm still considered small, I guess I'm still emerging."

The growth of the Chooks brand as a major player in the competitive fast-food sector has been a colourful one.

After initially working for Chicken World in the early 1980s, Mr Hansen branched out on his own to create River Rooster in 1991, which operated throughout Margaret River and Busselton.

Just more than 10 years later, the franchise rebranded to Chooks Fresh & Tasty, Mr Hansen said, because of customers' perception that River Rooster was the country cousin of Red Rooster.

The extensive rebranding strategy cost each store about $50,000 and included changing the franchises' logos, colours, shop fronts and signage.

Chooks then repositioned itself in the market through product differentiation, offering customers both barbecued and fried chicken, while retaining the friendly country service.

"Our franchise system has gone through massive changes, such as the rebranding we undertook when we changed from River Rooster to Chooks Fresh & Tasty; even my title changed from managing director to chief chook," Mr Hansen said.

"Further evidence of our franchise system improving has been the continual increase in our yearly turnover, regular changing of our menu boards, our including of Wise Technology Management in our system and the continuing profitability of our franchisees.

"Plus, we continually work on improving our team member and franchisees' development - we offer an ongoing mentoring program to each of our franchisees so they can receive help and guidance on any aspect of their business and we have also incorporated traineeships for team members in stores via a recruitment company called Nationwide Training."

But legislative changes to employee conditions over the years and increasing wage costs have slowed the process of the franchise achieving profitability.

"Wage increases have been far higher than they've ever been," Mr Hansen told WA Business News.

"The people of Perth have been spoilt for too many years I think [with high wages], and what that does for a small franchise is it reduces profitability.

"And the reason you're in business is to make a buck."

To overcome the issue, Mr Hansen has employed a prudential business model to keep costs to a minimum.

At the forefront of the strategy is Mr Hansen's decision to lower costs through his selection of locations for each store.

With the exception of several stores, Chooks is only located throughout neighbourhoods and suburbs so that franchisees do not incur the massive rental costs associated with tenancy in major business centres or shopping complexes.

Mr Hansen said to remain profitable, each Chooks store would only pay between $35,000 and $45,000 on rent each year.

"Rent has gone up 10 to 15 per cent in the last 18 months, too," he said.

"So like everyone else, we have to then bring the prices up and at the end of the day it is about making a dollar."

Mr Hansen said his low-cost franchise model was developed so that franchisees were treated more like employees and were a part of the chain's decision-making process.

"I just follow the principals of franchising," he said.