20 September 2016

Seven essential tips to grow your business

Serving fresh, healthy food to busy office workers, Soul Origin has grown to almost 50 stores in three years with a multi-million dollar turnover. We talk to GM Chris Mavris on the seven must-dos to grow your business.

Chris loves his food and coffee, which is understandable. Beholden to his Greek heritage and like many growing up in a European family, “food was central to everything”.

He said his now-elderly mum still cooks “enough food for 50 people” when he and his family visit and insists they “not leave anything on their plate”.

You could say food retail has always been in his blood. Following his late father into the family café business, he has racked up more than three decades including 10 years with Michel’s Patisserie as a franchisee [two as a state operations manager].

That love of food and those years behind the counter is at the heart of all he brings to Soul Origin.

“Our concept puts food front and centre … fresh, healthy, simple, natural,” he said. “Our food is for all time-poor Australians to eat mindfully every day.”

Chris was part of the team which came up with the Soul Origin “fresh and fast” concept. It now has 48 stores across NSW, ACT and Queensland, Victoria and SA, which he said will grow to 70 by Christmas.

More than 30 of those stores use Tyro terminals, mostly the Yomani 3G model, which delivers fast Tap & Go transactions for quicker-moving queues and its integration allows for easy reconciliation.

Chris said each store averages about $24,000 turnover a week ($1.2 million-plus per year) which rates favourably in what is a highly competitive market.

Australia’s love affair with franchises

Soul Origin’s rapid expansion is testament to our enthusiasm for franchises particularly food outlets. According to the Franchise Council of Australia, we have more franchise systems per capita than any other country, with 1,160 franchise brands and more than 79,000 franchise units.

And it’s big business. The fast food sector alone is worth $19 billion. And market trends would suggest Soul Origin has come at the right time.

According to IBIS World, Australians are now taking more care of what they eat.

“Industry demand has been affected by increased consumer awareness about the nutritional content of fast food and a conscious effort by consumers to choose healthier options,” it stated. “Operators have responded by introducing a range of healthier, premium choices.”

These are Chris’s keys to a successful franchise (or any business):

1. Customer obsession

“Customers are king. Everyone is putting their efforts into social media [for engagement]. The customers are right in front of you,” he said. “Engage with them. Talk to them. Learn about their families. Be able to talk about little Johnny’s soccer game or Meagan’s netball.

“Franchising is simple in many ways … it’s all about relationships. Relationships between the support centre and franchisees. Relationships between franchisees and their teams. And relationships between teams and their customers.

He said one of the points of difference with Soul Origin to other QSR outlets is that customers do not order at the point of sale (POS) but in front of the food on display… be it salads or sandwiches.

“There’s also person in front of you. The interaction is with a person, not a machine. We are bringing some of that human interaction back to retail. Here, the POS is the last contact, not the first.”

He said in QSR and even in some restaurants, service can be too automated. “It’s a symptom of Australia’s (high) labour costs.”

Chris insisted customers enjoy that personal interaction. “People spend their days on their mobile phone. There’s a quote, ‘we’ve never been more engaged. But we’ve never been more alone’. That’s very true.

“Remember, be customer obsessed. Not competitor obsessed.”

2. Quality and presentation of product (food)

Chris goes by an old rule from his 30 years in retail of displaying food as “plentiful, overflowing, and fresh”.

“Stake ‘em high, watch them fly. Keep them low and they won’t go. It’s basic retail. If the display is half full, you won’t buy,” he said.

“Our model is ‘made today, sold today’. It’s all about fresh food for us. Fresh ingredients. Pure ingredients. We special everything off at the end of the day. We make sure there’s no food kept for the next day. It’s part of who we are as a brand.”

How they prepare food is also unique for the business. The cooked ingredients such as meat are prepared in a centralised kitchen in the inner west suburb of Marrickville, NSW and delivered to the stores daily. The fresh food such as vegetables are prepared instore.

He said in order to continue to scale, they have invested “a couple of million dollars” into new larger cooking facilities in nearby Smithfield.

“What’s important is the integrity of the food, so we are looking at different techniques to do that without using preservatives or changing flavour profiles.

“We’ve taken the cooking out of the stores. Consistency is the main reason. We can also go into sites where food couldn’t before because we don’t need ventilation. It also makes us more attractive to landlords because the investment s not as big (with the extra fitout) and makes the move-in quicker.”

3. Nailing the one-percenters

Chris said getting the small things right was essential.

“The way the salads are presented … how the drinks are facing label out in the fridge,” he said. “These are the things that customers don’t necessarily see, but they subconsciously take note of. It all builds an impression of the business.”

4. Scalability and growth

Probably the most essential tip for a successful franchise would be the model’s ability to scale. Chris said they tested for six months before deciding on quick service over table service.

“If you’re not growing and your people are now growing around you, your business can’t grow,” he said.

So what’s the driver of this growth?

“We are retailers, so we get things done. We have the experience, infrastructure, knowledge, and the support of our landlords because we generate higher level of sales and customers for shopping centres,” he said.

He claims Soul Origin does double the turnover of the average sandwich shop which gives landlords more peace of mind because of longer leases.

5. Proven financial model

“One in three small businesses fail in their first two years. But in franchising, 80 percent will still be working in that time,” he explained. “Because they are working off a proven financial model before they go to market. The mistakes you can make have already been made.

He said this is vital because “Australia is the most difficult country in the world to set up a food-related business”.

“We live in a nanny state. You start with the hardest government regulations as far as food safety is concerned. Then our occupancy costs are some of the highest in the world for retail. We also have some of the highest labour costs in the world.

“Put those three things together and Australian food retailers could take on the world because our financial models have had to work in one of the toughest markets.”

He said as an indicator of the robust nature of the model is that many of the franchisees have multiple stores (11 own more than one store). He also points to the bank’s willingness to lend working capital.

“Banks won’t loan against one-off shops, but they will to franchises.”

6. Ease of entry

Making it simple for the franchisee to move in is paramount.

“We do all the fitout and they get a turnkey,” he said. “We say we have a shop at particular location for this amount, and you roll up with the cheque for that amount, your bank guarantee, first month’s rent, working capital, and off you go.”

7. Ongoing support

Chris referred to the area managers between head office and the franchisees. Called “Soul Managers”, he said all have owned franchises so they have the “empathy and experience to relate to our franchisees” because they know the pitfalls and pressure of running a business.

He added the support continued beyond the four weeks’ training and 10 days with the store opening team, to ongoing training in finance, marketing and customer service.

“The franchisees are in business for themselves, but not by themselves.”

The facts:

Area: Fresh fast food.
Established: 2011. Second store opened in April 2013.
Business model: Fresh healthy breakfast and lunch options through franchised stores in shopping centres. All ingredients for cooked products are prepared at Soul Origin’s centralised kitchen and made fresh daily instore.
Stores: 48 across NSW, Victoria, SA, ACT, and Queensland.
Turnover: Average $24,000 a week turnover per store ($1.25 million a year).
Store members: 650-700 nationally.
Customer mix: 60 percent female and 40 percent male. Most in the 18 to 45-year-old group.
Plans: Grow to 70 stores by end of 2016, 200 stores by end of 2019.
Awards: QSR Best New Concept 2015.

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