Growth sweetens Dome’s market appeal

Change has been brewing at Dome Coffees Australia ever since Nigel Oakey was appointed CEO a year ago. And, as he told Julie-anne Sprague, it’s about much more than just branding.

DOME Coffees Australia is back on the track to growth, two years after the group put a stock market float on hold.

Just 12 months into the job, chief executive Nigel Oakey believes the turbulent times are over and the company can look outward again.

Mr Oakey, who gained broad retail management and strategy experience at Shell Australia before becoming a director of a boutique Sydney coffee franchises, Il Gianfornaio, revealed to WA Business News his major plans for Dome’s future.

He said the coffee company wanted to double its existing 60-store portfolio in the next five years by entering two new international markets, increasing the number of stores in Perth and the eastern seaboard, and growing its wholesale business through a state-of-the-art roaster in Sydney.

It will do this after completely revamping the way it deals with its 350 staff and dozens of suppliers.

Before Mr Oakey’s appointment, Grant Samuel Private Equity bought a 50 per cent stake in the company, enabling founders Patria Jafferies and Phil May to expand the company.

They began to buy-back franchisee stores, planned a stock market float and made a dedicated push into the eastern seaboard.

However, these plans began to go sour and, after a management review by Grant Samuel, Ms Jafferies and Mr May left their executive positions to play a more advisory role and make room for the appointment of a chief executive officer.

“The company had put a number of outlets on the eastern seaboard and were happy with the buy-back program in Perth,” Mr Oakey said.

“However, it was becoming apparent that the expansion plans in the east needed a rethink.

“The company had key milestones for expansion over the next five years. My job was to come in and look at the company, and for the past 12 months I’ve built a platform to realise those plans.”

Mr Oakey said that, in order to realise the shareholders’ expansion dreams, which still include floating on the stock market, he had been concentrating on making Dome a better place for employees to work and getting his people to a point of “change readiness”.

He said that, because the company had bought back a number of franchisees in early 2000, it was necessary to build a strong culture among the staff to allow a smooth transition for a number of his intended changes.

“I wanted to build a sense of urgency … it puts a focus on the front line,” Mr Oakey said.

“This company had just bought back stores and was now responsible for 350 employees.

“It’s a huge shift in thinking, which demanded a focus on the front line.

“It’s no longer a head office business; it’s a field business.

“The value of this company is not in the head office but it’s in our store managers and our staff. We’re building what is the most dynamic and vibrant retail operation in the country.

“The first 12 months has been the refocus and what’s been wonderful is we’ve reinvigorated our relationships with our employees. Now that we’re putting the changes into place we have people who are change ready and positive.”

For the past six months Mr Oakey has analysed the suppliers of Dome’s ancillary products, from cakes to ingredient suppliers, significantly reducing supplier numbers along the way.

Mr Oakey would not name the suppliers, however, who will know if they have secured partnership deals this week.

“We’re now moving into an exciting phase of building operational discipline across our entire menu,” he said.

“There will always be degrees of freedom for individual stores to tailor to the local market but as a customer you want strong levels of consistency.

“It has required us to be quite innovative with partnering with suppliers. We’ve created true strategic alliances and partnered with people who are experts in their field of endeavour … we are partnering for a win-win situation and working to exploit further commercial opportunities.

“We cast the net very widely and conducted a very detailed due diligence process. The feedback is that this is something that is quite new and very refreshing in terms of supply chain management in WA.”

The company has also switched packaging – at a cost five times that of its earlier methods – but Mr Oakey said this served to increase the quality of the Dome product.

“Enemies of coffee are light, air and moisture,” he said.

“Our coffee is now packed 20 minutes after roasting. All of the residual oxygen is taken out and the light foil bag has a one-way valve. It lets carbon dioxide out but doesn’t let oxygen in. No one is using the roasting technology that we are using.”

Mr Oakey said boosting quality via the investment in a new roaster in Sydney and the new packaging would not only help the cafe sales, but also aid the penetration of the wholesale market.

“We think there is an emerging opportunity to give grocery consumers a coffee product with a level of freshness and quality that greatly surpasses what’s on the shelf at the moment,” he said.

“Vacuum-packed ‘bricks’ of coffee grounds are yesterday’s innovation and, by the way, the coffee in those things is essentially stale.”

Dome also owns the Cino to Go outlets and Mr Oakey said the company had similar expansion plans for that brand.

“Cino is an exciting young brand. I can see it going east and into Asia,” he said.

But the Dome brand is the current focus of expansion plans, with three new stores to open in WA this year.

Although unwilling to give full details, Mr Oakey said one store would open in Busselton in September, while another would be located at Perth International Airport from August.

Perth International Airport is managed by Spotless Catering and the airport store would be the second hospitality-aligned Dome store in the city after that at the Burswood Resort Casino.

Mr Oakey said it was a strategy that he hoped to expand.

“The Burswood store has been such a resounding success that we are actively looking at ways to further the partnership. The deal with Spotless is very much in the same vein,” he said.

“These are operators who bring to the equation unique high traffic locations for Dome stores, which are outside the mainstream property real estate market. We, in turn,value-add by bringing a trusted brand to environments where they have the right to operate, thus enabling them to better leverage their assets.”

The company is also talking with an East Asian property and hospitality management group, with plans to expand significantly in an East Asian country over the next five years.

While the company hit a snag with its eastern states operations, Mr Oakey is confident expansion will happen.

“We’re not ruling it out as we move through this five-year pro-gram, but right now we have this fantastic agenda and a tremendous amount of change at the base business with development opportunities in WA and continued growth through Asia,” Mr Oakey said.

The concentration of quality, from customer care to production processes, will ensure the stake-holders’ expansion dreams are realised, but also in the ever-competitive coffee market, will ensure its share of the bean.

“Starbucks will help position us. They will cement our position with the consumer,” Mr Oakey said.

“There is plenty of room for more players. We own the premium end of the market.

“My delight for the market space is genuine and very sincere. We are a very different proposition, we don’t force people to drink out of paper cups.”

He said Dome could differentiate itself in the marketplace by providing premium coffee and quality service.

“In this business anyone can pay the green fees,” Mr Oakey said.

“It’s then down to how you play the game.

“Things you can win on include how your people and your brand value add the product.”

He said the company was well and truly back on deck, every store was profitable, and the public could expect big things from Dome Coffees over the next five years.

“We are now sitting on a platform where we have a prosperous business, a focused team, a culture that’s heading in the right direction and is thoroughly supported by all the stakeholders,” Mr Oakey said.