HITTING THE SWEET SPOT

While it may all look attractive at first sight, a franchise needs to offer a solid foundation for its practitioners. And when it comes to the crunch, The Cheesecake Shop is a franchise that really knows the importance of a decent crust.

What The Cheesecake Shop has initiated to boost franchisee performance

There is something about baking that appeals to the home-body in all of us, and creating a delicious treat for a special occasion can be a true joy. The good news is that you do not need to be a culinary genius to turn your hand to a baking business that can lighten up lives.

Many of us have grown up with The Cheesecake Shop. About six years ago, the brand took on a slick, more modern look, and in 2014 it launched a revamp to keep the product range relevant. Yet at heart it is still the same family-oriented business.

“Not everyone knows that franchisees bake their own cakes in store,” says

CEO Ken Rosebery. “It’s not a central bakery – we ship out raw ingredients and they do the rest. So we need to know of any enhancements or changes so that everything is in place to be replicated across 220 stores.”

The franchise profile reflects the diversity of modern Australia, he says. “We have a lot of migrants because it provides a safe way to enter a business. We’re helping them with all the regulatory details.

“What sums it up? Families. It’s an ideal family franchise because husband and wife, older children, sisters and brothers can all do something. There’s baking, customer service, admin tasks, so everyone can make a meaningful contribution.

“We set quite rigorous product, service and administration standards. We don’t leave it up to the franchisee what cakes will look like, what service will look like. We do mystery shopping to check on customer service, and we train on customer expectation.”

There is further compliance too as

stores need to be maintained. The fitout needs to look modern and up to date. Help is available if standards slip.

“We undertake regular audits from food safety and store cleaning to other elements. These are scored, and poor scores will highlight the need for extra training. We see it as our job to provide that structure and support. Even with admin we centralise it to make it easy and trouble free for franchisees who are, by and large, not administrators. We provide systems and structure and technology to make everything easier for franchisees.”

ANSWER IN THE CLOUD

While franchisees may have a passion for baking and customer service that makes them an ideal fit for the brand, they are not likely to have an equal passion for their financial and admin tasks.

“Like many franchises there was once little visibility of financials. Mostly franchisees sent in incorrect information because they didn’t know how to do it, and things were not on time. As a franchisor, one of our responsibilities is to ensure our franchisees are making a fair return on their investment,” says Rosebery.

“We saw this as an opportunity to improve the way we monitored the financial performance.” The answer was to turn to cloud-based technology to give franchisees the right tools to deliver accurate financial reports, which then allows the franchisor to offer support where needed.

“We are now at the point where 95 per cent of our franchisees deliver an accurate, reconciled up-to-date financial report within 10 days of the end of the month. This is then benchmarked against other stores in the network. Stores are grouped by size for comparisons, and franchisees can see how they rank for cost of goods and their employment costs and profitability.

“We can see that, they can see that – it’s completely transparent.

“This ended up being a benefit with the changes to the Fair Work Act. The final piece of the puzzle was to ensure timesheets automatically flow through to software so we have a high degree of confidence the wages being paid are compliant with the Fair Work Act.

“Franchisees did not come into this business because they were accountants or middle managers. They manage what they see, they manage with their hands. We want that.

“We had to understand this is not the world franchisees live in. We have to translate into language they understand.”

GREEN OR RED…

The result is an online dashboard visible when they log in on that gives them sales and customer statistics. “They don’t want to labour through data, they just want to see it: green is good, red is bad. The digital age helps us provide incredible levels of support for our franchisees.”

It hasn’t as yet had a massive impact on other aspects of the business because while customers can order online, they still prefer to pick up the cake rather than have it delivered.

This means locations need to be car-friendly. Customers drive in, pick up, go home.

“We’re not in big centres but our business is mature, so we have rises and falls within the economy,” says Rosebery. But he says that however bad times may be, people rarely put off a birthday celebration.

“Our business is incredibly stable. We go up a little bit and we’re horrified if things go down 2 per cent.”

What is having an impact on the business is changing demographics: families are shrinking, urban density is increasing so entertainment habits are changing as well. That might mean adopting a different approach to reach a more urbanised population.

“We need to be relevant to the changing demographics. It’s not easy to find a 100sqm bakery site in Sydney’s inner west and make it work economically. There may be satellite kiosks for neighbouring stores that let them reach areas they couldn’t otherwise.”

The Cheesecake Shop is taking its brand of sweet treats overseas ‒ in New Zealand there are 22 stores and a growing market, while the UK has seven outlets and is viewed as a rapid growth opportunity. Add in the Middle East and South Asia for development, and there’s plenty going on at this business.

KEEPING RELEVANT

Moreover, the diverse base of franchisees in the network is proving useful for other markets. “Our ethnic base will be an asset in our overseas expansion,” says Rosebery. “We have a strong system and are proven and profitable. And the franchisees also appreciate the energy the management team is putting toward growing and keeping the brand relevant.

“There’s a certain element of fashion within food, and with family sizes smaller, entertaining habits change over time. As a mature brand we’re always looking for that extra share of wallet, or purse. We have to make sure we have products that just don’t meet the needs for birthdays but for a variety of occasions.

“We have a young and energetic team, pushing on product and marketing.”

With satisfaction-level surveys, he knows the franchisees are happy with the brand. “Overwhelmingly they value the strong, stable brand and there is increased high brand awareness. It is well regarded by customers. To some degree it’s easy: we make cakes for happy, loving occasions so in some ways those emotions are related to the brand.

“We have franchisees who have been with us more than 20 years. We’ve done surveys and their tenure is generally longer than other franchise systems. That speaks something for the sustainability and profitably of The Cheesecake Shop model.

“For a husband, wife, kids and grandma, it really works very well.”

Listen to the podcast interview at soundcloud/insidefranchisebusiness.