Making it casual
Full-service restaurant chains dominate the casual dining scene, with franchises from the US featuring prominently in Australia.
Destination eateries are popular with consumers while casual-dining precincts are favourable for franchisors, writes Noha Shaheed.
A new Euromonitor International report, Full-Service Restaurants in Australia, says North American full-service restaurant chains account for 42 per cent of value sales and 29 per cent of outlets in Australia.
“These restaurants tend to serve mostly families and larger groups, as their offering usually includes good deals for children’s menus, and food portions tend to be larger,” says report author Julia Illera, senior research analyst at Euromonitor International.
A casual-dining destination could be defined as a food outlet where customers dine in groups and spend at least half an hour eating.
One example is the Singapore franchise The Rotisserie, which offers a comfort-food menu covering breakfast, lunch and dinner – from coffee during the day to alcohol at night. Meals come in large portions at affordable prices, with each food product prepared fresh daily.
“Our target customers are working professionals in their early 20s to late 50s, families and events organisers who are frequent party planners,” says MD Jason Pope. “Our food has a broad customer appeal – a dine-in meal with colleagues, a packed sandwich on the go or an intimate family celebration.”
CEO Ross Worth of home-grown casual-dining chain Hog’s Australia says its audience is extremely diverse. “We cater for everyone between 18 and 54 years specifically, and included within this demographic are families, corporates, parties and events, date nights and just general catch-ups.”
“Our primary target customers are 20 to 50 year olds, with a slight male skew, and secondary are young families,” says Twelve Boar franchisor Rick Palesh. The brand offers American-style barbecue tailored to the Australian market.
“Our customers are unpretentious, relaxed and casual ‘foodies’,” he says.
Millennials are a key target group for local fast-casual franchise Rozzi’s Italian Canteen. Director Dean Salomone says the group had a specialist consultancy group conduct extensive market research to clearly identify the ideal customer. The findings were 58 per cent female, 42 per cent male and 49 per cent between 18 and 34 years old, “which is a strong reflection on our ability to engage with millennials”.
Costa Anastasiadis, who heads up local Hellenic dining chain Zeus Street Greek, says this brand also targets millennials and growing families. As does Australia/New Zealand franchise La Porchetta, CEO Sara Pantaleo saying its primary customers are families, with secondary markets of young people and baby boomers.
DELIVERY AND TECH
Delivery technology has been a big disruptor in the restaurant space,
Zeus Street Greek
particularly with mobile apps being used for booking tables or ordering homedelivery food.
In the Euromonitor restaurant report, Illera says competitors in other channels, including 100 per cent home-delivery/ takeaway, cafes/bars and fast food, will continue to pose a potential threat to growth in the full-service restaurant space.
“In fact, these channels are expected to outpace full-service as busier lifestyles encourage Australians to opt for more convenient food options that can be ordered and picked up or delivered faster than waiting for a meal at a full-service restaurant.”
So how are franchised casual-dining chains meeting these challenges?
Pope says The Rotisserie has two store models, express and restaurant.
“An express unit is suited to food courts or shopping centres while a restaurant is larger and suited to dining precincts and shopping centres.
“Our concept is based on casual dining and takeaway formats. With the fast-casual trend sweeping Australia, more consumers are looking for speedy meals with good food quality. That is what The Rotisserie is built around, ‘Fresh Food Fast’. We put out good-quality food with the flexibility of having it on the go,” says Pope.
Blackboard specials are added to the menu regularly, with higher-performing meals eventually being included on the permanent menu.
In terms of food trends and the rise of varied dietary needs, Pope says the group is working on specific dietary options.
For deliveries, the company is working with third-party companies to manage the logistics. As the company rolls out new technology, franchisees will incur fixed costs, with support and training from head office.
“As a new, young company, we are receptive to trends in technology and will be allocating funds and time for training, which in turn generates value for the business,” says Pope.
Master franchisees invest in a 10-year term starting from $130,000 (licence fee only, does not include store fitout cost). For a five-year term, franchisees buy in for $350,000-plus (includes store fitout/ set-up and licence fee).
• Full turnkey establishment
• Initial training and startup help
• Vendor selection
• Site selection and construction help
• Marketing support
However, Pope says it can be a challenge for franchisees to maintain quality standards and the brand’s reputation.
“Potential buyers should be legally and financially informed before signing on the dotted line. The lease and franchise agreement should be studied in detail, and prospective franchisees should ask plenty of questions to clarify any doubts.
“Speak to different people and do background checks on the franchise you are entering into.”
Pantaleo says La Porchetta is a homemade Italian kitchen concept which runs a standard kitchen with a full restaurant menu, and a pizza kitchen.
“We’ve been around for more than 30 years and have grown because we understand our customer,” she says.
“The ideal site for us is in a suburban area, because people now want to eat locally. There’s also a growing market for takeaway and home delivery.”
For franchisees, La Porchetta has a flat-fee system and standardised menu. However, franchisees can create a specials board to cater for local tastes.
“We’ve made sure our menu has lighter options, as well as options for vegetarians and people with special dietary needs,” says Pantaleo. “We’ve been customising our meals for our diners since we started.”
As well as the menu being reviewed annually, franchisees need to ensure they “stay across changing food trends and can meet customer demand at a national level, as well as provide menu items that reflect local demographics”.
“As well as the point-of-sale system we use, we’ve introduced online ordering and driver tracking,” says Pantaleo. “We’ve also introduced new marketing platforms. Technology is a very big part of everything we do, including engaging
It’s very important
to listen to your customers. That’s one the most important
elements of a successful business.
with our customers online, because that’s where they now are.”
Online portals and apps have transaction fees, and home delivery is being trialled.
“In a highly competitive market, you need to make sure you deliver at every touch point,” says Pantaleo. “It’s very important to listen to your customers. That’s one the most important elements of a successful business.”
Meals are made from scratch with fresh ingredients at La Porchetta, which can be a challenge. Franchisees must follow franchisor processes and procedures to ensure consistency across the brand.
The initial investment in a franchise starts from $450,000, depending on the size and location of the restaurant. The franchise terms are 10 years, and franchisees benefit from full training, on-site visits, regular contacts from franchise support coaches, and marketing.
Pantaleo says an ideal franchisee is someone who loves food, has entrepreneurial drive and is passionate about greeting customers. “They need to enjoy rolling up their sleeves and being owner/operators. We have amazing husband-and-wife teams and franchisees who are in a business partnership in which they complement each other’s skills, and that works very well.”
Her advice for potential buyers considering the casual-dining space: “Don’t think it’s a passive investment. It is a business in which you will need to work. If you love the food industry, you will love it.
“Make sure you are aligned to the culture of the brand and that you love it, because it’s like a marriage. If you don’t fall in love with it, you can’t succeed.”
Palesh says the Twelve Boar model allows franchisees to produce quality smoked barbecue cuts without needing to be a “pitmaster”, and without compromising on taste.
He says the model entails “low skill and low labour costs” but can still deliver “consistent and excellent quality”.
Palesh says informal dining is the primary business, and a “healthy menu” is not necessarily important. As most products are made in house, the food has minimal fillers and preservatives. “There is always room to introduce salads and the like,” he says.
Each new menu item is given the Twelve Boar touch to make it distinct to the brand.
“This food category does not leave much room for the likes of vegans and vegetarians,” he admits. “On the flip side, most of our food is gluten free.”
Home delivery is not offered because of territory issues, and also because the offering does not necessarily travel well.
“People do not eat out just to eat. In our ever-evolving social culture, people are continually looking for an experience. It’s also a form of social interaction,” says Palesh. “Although there is a place for home deliveries and other conveniences, it’s simply not for everyone – or for all the time.”
Palesh says a challenge for the business is that it is all about a new concept in Australia, so customers are still developing an understanding of what American barbecue is.
The initial investment for a franchisee ranges from $150,000 to $350,000, depending on such factors as location, fitout contribution and store size. Franchise terms are for five years with an option to renew for another five. Franchisees benefit from training and marketing support.
An ideal franchisee is an owner/operator who enjoys providing customer service.
“We feel that less hospitality experience is better for our franchise model, as the franchisee can come in with a fresh perspective and be happy to learn the systems created for them.”
Before you do invest - homework, homework and then some more
ROZZI’S ITALIAN CANTEEN
Rozzi’s Italian Canteen offers Italian-inspired dishes within the breakfast and lunch space,
and dinner where applicable.
Salomone says that with two models, Fresh Kitchen and Italian Canteen, there are three shopping-centre sites suitable for the business: fresh food, fashion or destination sites within centres with a minimum of three feeders for foot traffic.
“We are in the research and development stage of an express version of Rozzi’s with a view to trialling a site,” Salomone says. “Should the trial be successful, we will look at our express version as a potential foodcourt property play, to complement our Fresh Kitchen and Italian Canteen models.”
He says one of the benefits of the Rozzi’s model is a competitive cost of goods with efficient labour percentages. “Once our stores have opened and settled, we allow our franchise partners to review their sales trends and adjust their category mix to suit their local clientele.”
For Rozzi’s, informal dining is critical as it is not a full a-la-carte service and more of a value offer. “We have some great healthy options in our salad and breakfast ranges. We have built our entire menu range with a view there will always healthy options.
“It’s super important for consumers to feel they have options. We currently have gluten-free and vegetarian options in our salad, pizzas and pasta ranges,” says Salomone.
Menus are reviewed annually, but he says this is likely to move to a six-monthly review.
He also says a challenge of the business is site selection in a crowded real-estate market.
The initial investment for franchisees can range from $300,000 (for smaller kioskstyle sites) through to $750,000 for sites of up to 200 sqm. Initial training, marketing support, product innovation and ongoing support is included.
“Before you do invest - homework, homework and then some more homework,” advises Salomone. “Ideally, you also really like the product/cuisine you’re selling and producing every day.”
Australian franchise system Hog’s Breath has more than 80 locations throughout Australia and New Zealand.
“Healthy eating is a huge element of our menu,” says Worth. “We constantly refer to the company Tree of Life Nutrition for external expert advice, and always try to ensure our menus are both current and innovative while remaining excellent value for money. We look to make menu updates every 12 months.
“We want every diner to experience our ‘ hog’spitality’ and cater to all dietary requirements including gluten-free, lactoseintolerant, vegan and vegetarian.”
Worth says delivery is also a priority. “We’ve just partnered with Deliveroo to explore this exciting area, and have five restaurants trialling it,” he says.
“We’re also continuously working on streamlining other avenues such as drivethrough and customer pick-up.”
Technology is also a priority. “We partner with an online booking process (Dimmi) and have successfully trialled the ability to order at the table via IPADS. We’re also looking at launching an official app that will offer a full suite of initiatives.
“We will certainly continue to grow and evolve with technology and, depending on what initiatives are taken up by our business owners, there could be a small capital investment required.”
Taking into account the footprint size and the concept - an express model or a fullservice restaurant - the initial franchise investment can range from $150,000 to $1 million. Franchise terms are 10 years with an option to renew for another 10. Franchisees benefit from the franchisor’s leverage in buying stock and equipment.
“We offer full training, coaching and mentoring along with strategic marketing advice by internal and external parties,” says Worth.
While he agrees that there is huge competition in the casual-dining sector, he says the brand is aware that growth and variety are important.
This is why the brand has developed a
new express model.
“This comes in the form of a food truck that can visit events, or a smaller static footprint for such locations as airports, food courts, cinemas or petrol stations.
“Obviously this is also a great opportunity for potential franchisees that do not have the capital for a full restaurant model.”
ZEUS STREET GREEK
Zeus Street Greek (ZSG) co-founder/GM Anastasiadis says the franchise “is not a cookie-cutter business”, but a tried-andtested model.
While healthy food is not a priority, serving up “honest” food is crucial.
“For us, it’s about transparency in our food offering.”
Anastasiadis says customers, particularly millennials, are interested in where the product has come from, such as sustainable and ethical farming. However, by default the Mediterranean diet is gluten-free and has a large vegetable offering. ZSG has an annual menu change which comes with a 10 per cent shift.
Meanwhile, Anastasiadis disagrees with the Euromonitor prediction that hospitality brands with full delivery will pose a threat to casual dining.
“I think there is a general oversupply in the sector,” he says. “Over time, quality offerings will be more available and consumers will be more astute in their choices.
“Not everything travels well or can be delivered.”
He says third-party delivery accounts for 20 per cent of trade, with the exception of food-court sites. A cloudbased POS system used by the network is included in the establishment costs.
Initial investment costs for franchisees are:
• Restaurant - $580,000 to $650,000,
licensed, higher foot traffic
• Express - $300,000 to $350,000, food-court lunch trade, Thursday nights and weekends.
Terms are five years with an option to renew for a further five. Training, innovation and a buddy system among franchisees are included.
Anastasiadis says the first three to six months can often be challenging because for many franchisees it is often a major career shift. Franchisees can expect to be working 60- to 70-hour weeks at the start. After a while franchisees can start taking days off and be less hands on.
“Tell your family to hang on for the ride,” says Anastasiadis. “There are long hours at the start, but it’s worth it at the end.”
STEVE COSTI’S FAMOUS FISH
Famous Fish originates from the Costi’s Seafood brand which has been around since 1958.
In 2014, Steve Costi and former Michel’s Patisserie co-owner Jon Sully with a group of partners evolved the brand, the menu and the business model.
“We’ve not only drawn much of our inspiration from the seaside, which is reflected in the aesthetics of the stores, we’ve also created an overall experience that is both in keeping with what everyday Australians have come to know
“As a new, young company, we are receptive to trends in technology and will be allocating funds and time for training,
which in turn generates value for the
and love about fish and chips,” says GM Sal El-Houli.
He says the model is dynamic enough to apply across several different store formats, from CBD food courts that start at 50 sqm through to strip and/or casual dining/restaurant precincts ranging from 120 to 150 sqm.
“Ideally, the site needs to have a demographic mix of nearby residential and commercial/retail,” he says.
“At the moment there is not a fully integrated seafood franchise operator in Australia. With seafood/fish and chips being the number-one takeaway food throughout Australia by independent food businesses, we believe there is a significant gap in the market for a quality seafood and fish-and-chip offer across the country,” says El-Houli.
He says a healthy menu is very important to the brand. “This has been something we have worked hard on. We have marketed much of our offerings that are grill- and salad-based to highlight the fact we do have an extensive healthy offer in addition to our traditional fishand-chip offer.
“Informal dining is also an important transition for fish and chips in general, and something we are also conscious of and working toward communicating clearly to our customers.”
But while the business is known for its seafood, the menu is broader. “We have a spread of product categories, with burgers, pastas, soft-shell tacos, lamb, beef and chicken products, salads, and much more.”
El-Houli says a challenge is being consistent enough and bold enough with brand communication to customers.
While delivery is on the radar for the
There are no silver bullets in this caper, and it takes time to get the business to
where it needs to be.
short to medium term, technology at store level comes in the form of self-ordering tablets for customers.
“There is an upfront hardware cost for franchisees and ongoing annual software costs, but the key metrics as a result of having these really do stack up,” says El-Houli. “At the moment, a solid chunk of our customers use this channel to order, and on average spend nearly 25 per cent more when using them.
“Online ordering is being worked on, with the ordering app a little further down
the track.” he says.
As for investment levels, some Famous Fish stores have required less than $200,000 (after applying the fitout contribution) for a turnkey operation, but this can stretch to $450,000. The two big variables are the size of the tenancy, and whether or not the franchisor can secure a fitout contribution from the landlord. Franchise terms are five years with an option to renew for another five.
“We issue 100 per cent of fitout incentives from the landlords to our franchisees, as ultimately this would potentially mean franchisees can look to scale up quicker and become multisite franchisees, so it’s a win-win for everyone,” says El-Houli.
He believes investing in a hospitality franchise requires the right attitude. “If your mindset and motives for coming into a business like this aren’t established on a sound platform, it is very likely the industry will churn you out fairly quickly.
“There are no silver bullets in this caper, and it takes time to get the business to where it needs to be. It requires hard work and dedication.”
Rozzi's Italian Canteen
Steve Costi's Famous Fish