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.”
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.”
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 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