Bread BARONS

Inside Franchise Business - - Leadership -

As Bak­ers De­light heads into the fu­ture, the new gen­er­a­tion at the helm still sees plenty of op­por­tu­nity in the mar­ket.

Bak­ers De­light founders Roger and Les­ley Gille­spie have handed over the reins of their busi­ness to daugh­ter Elise and her hus­band David Christie. The young cou­ple took over early this year and have set­tled into their roles of joint CEOs.

Eight years of man­ag­ing the Bak­ers De­light busi­ness in Canada has honed their skills and they are ready to steer the Aus­tralian chain of 600-plus out­lets to a new phase of growth.

“The main thing we want to do now is be in­no­va­tive and nim­ble, take some youth and en­thu­si­asm to move things a bit faster, to think more about growth, rather than de­fend­ing our ter­ri­tory,” says Elise.

While there will be change, it will pre­dom­i­nantly be cul­tural change, she says.

“We’re not just chang­ing for the sake of it. It’s about growth, sales and prof­its for the fran­chisee, and there’s an ap­petite for change in the net­work.”

CUS­TOMER FO­CUS

There is a sense of re­lief that Bak­ers De­light is con­tin­u­ing as a fam­ily busi­ness with a longer-term per­spec­tive, rather than be­ing driven by share­holder value.

Elise ad­mits, how­ever, that the change may not be easy. “Peo­ple say they love change, but it can be quite con­fronting.”

There will also be ini­tia­tives de­signed to im­prove the cus­tomer ex­pe­ri­ence, from a click-and-col­lect op­tion to up­dat­ing some store lay­outs. Some fran­chisees will need to rein­vest into the bak­eries so they are up to date, she says.

With ar­ti­san-bak­ing bou­tiques at one end of the com­pet­i­tive spec­trum and the su­percheap breads from su­per­mar­kets at the other end, there re­mains a mas­sive op­por­tu­nity in the mid­dle mar­ket, Elise says.

David says the changes are born of cus­tomer de­mand - whether that be seen through prod­uct sales, cus­tomer re­ac­tions to mar­ket­ing cam­paigns or through de­tailed mar­ket re­search. “We’ll be shift­ing our fo­cus to a group of cus­tomers who don’t shop with us as much as we’d like them to.”

That means there will be ini­tia­tives to en­cour­age time-poor, health-con­scious young fam­i­lies to shop more of­ten in Bak­ers De­light.

One ad­van­tage in the mar­ket is the niche fo­cus. Un­like su­per­mar­kets, the busi­ness can con­tinue to con­cen­trate and im­prove on one area. That, says David, is a huge ad­van­tage with the in­com­ing threat of re­tail­ers like Ama­zon.

“If you look at what Ama­zon has done, it has fo­cussed on the cus­tomer, given them some­thing that we can’t do. So what can we do that oth­ers can’t, that we can do re­ally well?”

The an­swer, he says, is the fran­chise com­po­nent.

“We have lo­cals in nearly ev­ery bak­ery, em­ploy­ing lo­cal peo­ple, be­ing part of the com­mu­nity through footy clubs and schools. We make our prod­ucts from scratch, it’s what we have fo­cussed on. Su­per­mar­kets have 100 dif­fer­ent ar­eas to fo­cus on.”

Bak­ers De­light has more than 600 stores across Aus­tralia. The long-term tar­get is 800, so there i]s plenty of growth to come if the cou­ple can pull off their ex­pan­sion plan. It starts next year with 15 new stores the goal.

“We need to set our tar­gets high. Our mar­ket pen­e­tra­tion is strong in Vic­to­ria, and I see no rea­son why it can’t be the same in Queens­land and New South Wales.”

BRAND POWER

Elise ex­plains the strength of the brand: “It’s very transparent - our por­tal and ex­tranet has full avail­abil­ity of op­er­at­ing profit line. Any­one at head of­fice or an­other fran­chisee can look, and the re­ports are all named.

“If I’m a fran­chisee in Cam­ber­well and see a bak­ery is do­ing sim­i­lar sales to me but achiev­ing greater prof­itabil­ity, I can ask what they are do­ing bet­ter - is it in­gre­di­ents, is it wages? I can give them a call and find out.”

The head­quar­ters team en­cour­ages this, and the trans­parency helps de­velop an open, col­lab­o­ra­tive cul­ture. In fact, while many fran­chise brands are way off achiev­ing this level of trans­parency, for Bak­ers De­light it is old news.

“We’ve had this so long,” says Elise. “Once we moved from fax­ing weekly tak­ings, and it was all done elec­tron­i­cally, hav­ing all the in­for­ma­tion at our fin­ger­tips has been great.”

That does not mean there aren’t still

chal­lenges. It is a longer jour­ney to make sure the in­for­ma­tion is cor­rect. Sales fig­ures are re­li­able be­cause they are taken off the reg­is­ters, but monthly fi­nan­cial state­ments still need to be en­tered cor­rectly.

“It’s about ed­u­ca­tion and com­mu­ni­ca­tion, ex­plain­ing the im­por­tance of ac­cu­racy, that it helps us bet­ter sup­port fran­chisees, to man­age the levers that drive the prof­itabil­ity of the busi­ness.”

Fi­nan­cial clar­ity also helps fran­chisees when they are ready to leave their busi­nesses, pro­vid­ing pos­si­ble buy­ers with clear profit-and-loss state­ments and an easy way to as­sess the value of the busi­ness.

Day to day the fo­cus is on topline sales, mar­ket­ing and per­for­mance, and fran­chisees can be­come ex­cited and driven to a pos­i­tive com­pet­i­tive­ness, says Elise.

There is no ex­cuse for any fran­chisee not to know how their store is per­form­ing at any point dur­ing the day - the dig­i­tal dash­board up­dates sales fig­ures ev­ery 15 min­utes. A fran­chisee can choose 10 bak­eries to reg­u­larly watch, and will re­ceive their fig­ures as well.

“If you have sys­tems it helps en­gage the com­mu­nity and fos­ter mu­tual sup­port,” says Elise. “We re­ally have built the cul­ture that

We’ll be shift­ing our fo­cus to a group of cus­tomers who don’t shop with us as much as we’d like them to.

one of us is not as good as all of us.”

If there is a poor per­former, it re­ally im­pacts the brand and the busi­ness, she says.

There is an­other rea­son why the Bak­ers De­light brand stands tall: stan­dards.

“We make it very clear to our fran­chisees com­ing in that this is not an in­vest­ment - this is you in the bak­ery, you are the face of your busi­ness, some­one who has ex­pec­ta­tions, some­one en­gag­ing who feeds and brings pos­i­tiv­ity,” says Elise.

Fran­chisees are ex­pected to be ac­tively in­volved in their lo­cal com­mu­nity, with fel­low fran­chisees and with area man­agers. At­tend­ing con­fer­ences and road­shows is manda­tory, and en­sur­ing these are valu­able events for fran­chisees is an on­go­ing com­mit­ment, Elise says.

Col­lab­o­ra­tive events al­low for feed­back from fran­chisees, who can voice their con­cerns about the di­rec­tion of the busi­ness or mar­ket­ing ini­tia­tives, and who ex­pect trans­parency in re­turn.

FU­TURE PROOF­ING

Fu­ture proof­ing the busi­ness has in­cluded the in­tranet learn­ing sys­tem called Brea­d­u­ca­tion, an on­line plat­form es­tab­lished at Bak­ers De­light for a few years.

“None of our sys­tems are per­fect, but they com­ple­ment great sales staff,” says Elise.

There are sys­tems that help train fran­chisees and man­agers in core as­pects such as fi­nan­cial lit­er­acy and cost con­trol. A

man­age-to-own pro­gram has brought in about 4 per cent of new fran­chisees. “It par­tic­u­larly suits younger peo­ple who don’t have the cap­i­tal to pur­chase, but who want to buy in a cou­ple of years.”

The steps to fran­chise own­er­ship start with run­ning a cor­po­rate store. When the in­di­vid­ual reaches spe­cific bench­marks, the next step is for them to con­sider tak­ing out a lease, then buy a busi­ness.

Elise says it is a longer road than the four months of train­ing for fran­chise buy­ers who have the funds to pur­chase out­right..

Tes­ta­ment to the busi­ness is the num­ber of ex­ist­ing bak­ers and pro­duc­tion man­agers who in­vest in a fran­chise, and current fran­chisees who ex­pand within the sys­tem. Just 20 per cent of new fran­chisees come from out­side the Bak­ers De­light net­work.

New fran­chise stores were bought last year by:

• Ex­ist­ing fran­chisees - 49 per cent

• In­ter­nal man­age-to-own - 31 per cent

• Ex­ter­nal fran­chisee - 16 per cent

• Ex­ter­nal man­age-to-own - 4 per cent.

Multi-unit own­ers un­der­take a lot of train­ing and devel­op­ment. It is a po­ten­tial exit strat­egy to buy or sell to the team, says Elise.

Look­ing ahead, the key is to in­crease topline sales, to boost prof­itabil­ity.

“Be­yond that, we’re look­ing at equip­ment in­no­va­tion that al­lows bak­ers to start later, and saves on penalty rates and re­sults in bet­ter staff re­ten­tion. Start­ing at 2am or 3am is bet­ter than start­ing at mid­night,” she says. “This is a big fo­cus for us, and it means fresher prod­uct for the cus­tomers.”

New tech­nol­ogy, a new POS sys­tem and an im­proved pro­duc­tion sched­ule mean sav­ings in waste and wages.

At the bak­ery level, fran­chisees are en­cour­aged to look in de­tail at the ros­ter, at pro­duc­tion, bench­mark­ing, to lean on the area man­ager and find out how they can make the most of, and max­imise, sales.

With all this sup­port to hand, does this mean all fran­chisees are highly prof­itable? There is a spec­trum of fi­nan­cial suc­cess, says Elise, with some bak­eries barely turn­ing a profit to those run­ning a $500,000 busi­ness.

“We have lots of sup­port for fran­chisees who want to make more money. If you get it all right, the ba­sics step go a long way. Friendly staff who know the prod­uct range and are help­ful make a big dif­fer­ence.”

Roger and Les­ley Gille­spie

Elise Gille­spie and David Christie

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