HITTING THE SWEET SPOT
Here’s what dessert franchises are serving up.
Consumers love niche desserts, “chasing the food truck” and being part of dessert culture at night markets, according to trend report Rise of the Sweet Stuff: Lessons from the Dessert Experts by Goodman Fielder Food Service.
In a world where the thrill of one-dessert outlets such as Middle Eastern Knafeh, Japanese Hokkaido Baked Cheese Tart and even doughnut vans reign supreme, how do franchise businesses add value in the face of popular independent brands like these?
Franchising is all about culture, but do dessert franchises with a sit-down option offer that edge for the snap-happy Instadessert consumer?
SAN CHURRO
Known for its chocolate and churros, Spanish chocolateria San Churro is headed up by co-founder Giro Maurici who says the concept of desserts and drinks in a Spanish-inspired fit-out appeals to a wide audience.
“However, our core target market is 18to 35-year-old females who are social instigators - these are the women who
Ice cream, gelato, chocolate … Aussies love their desserts, and the rise of Instagram is proving a hub for dessert trends and culture, writes Noha Shaheed.
organise the catch-ups and are aware of places to go and form the social glue in their circles. They desire to feel connected and indulged, and are keen for a variety of experiences that are not the standard coffee catch-up.”
While experience is a key aspect of the model, San Churro is mindful of trends, aiming to ensure it competes by staying true to its core offering while being flexible enough to adapt to flavour trends.
“At our heart, we are an accessible brand so we don't alienate consumers the way some of the more ‘on trend’ concepts do. While our churros and chocolate are classic Spanish desserts, we do offer innovative desserts to appeal to a range of customers. Our menu is quite broad and always changing around our core products.
“We do jump onboard some dessert trends, but we are more about putting our own slant on them. The beauty of what we do is that we don’t rely on trends to make our business work. They work as a bonus for our sales,” says Maurici.
And tech is definitely a key.
“We place great emphasis on the use of technology for the smooth and efficient running of our stores. Our integrated POS system ensures our franchise partners benefit from the most up-todate technology on the market, tailored to our specific requirements,” he says. “It also incorporates integrations across other platforms such as our accounting, rostering and payroll systems.
“With the increased emphasis on customer loyalty through our app, we are able to target marketing campaigns to our already extensive customer base, and to continue to grow this via direct communication and personalised offers.”
For franchisees, San Churro’s initial investment includes the franchise fee, store design and build, training, set-up and support. Depending on the location, the average startup cost can range from about $600,000 to $850,000. Franchisees also benefit from ongoing support and an open-door culture.
Help with financing the business is available through San Churro’s accreditation status with three major banks, ANZ, CBA and Westpac.
Buying power is also a plus. “As a national franchisor with more than 50 stores across seven Australian states and territories, we have gradually, over our 11 years, developed excellent relationships with key suppliers,” says Maurici. “We have maintained and developed these relationships in order to deliver a high standard of quality products and services to our franchisees.
“Within our supply chain, there can be external factors we face from time to time, and our team is committed to aligning with the best suppliers who are not only cost effective but are reliable and have similar core values to ours.”
However, Maurici says the most challenging aspect of any franchise business is sourcing, training and retaining quality staff. “At San Churro our training team helps our franchisees with the selection and training of new staff members, and is always on hand to help with ongoing development. Creating a culture that respects and nurtures your team is definitely key to succeeding in this area.”
DESSERT HOUSE
Dessert House offers ice cream, gelato, frozen yogurt and sorbet as well as truffles and chocolates, cakes, waffles and other sweet treats. MD Sean Corbin says the brand aims to be the go-to destination where consumers can create what they crave and indulge in what they love. The target consumers are women looking to socialise or indulge in “me-time.”
“Being a premium dessert offering, Dessert House is positioned at a different end of the market to street-food vendors and cheap grab-and-go options,” says Corbin.
The Dessert House concept brand itself is an innovative twist on classic offerings.
“Our Construction Zone puts customers in charge of their own experiences in store, so we’ve essentially taken a traditional model and loaded it with all the trimmings. In a sense then, we are continually conducting customer research simply through having customers concoct the dessert combinations they want,” Corbin says.
“Dessert House is driven by quality and offers an indulgent experience, so we don’t jump on every trending bandwagon – but if something fits our philosophy, then we are open to adapting our range.”
As part of the Franchise Retail Brands (FRB) network, which is the parent company of a variety of food concepts, Dessert House offers franchisees the
opportunity to leverage enterprise arrangements and investments in technology. FRB has established supply chains with trusted partners, 24-hour distribution and quality-control measures to ensure standards are maintained across the group.
Corbin says that changing trends and the cyclical nature of the food and beverage industry are challenges prospective business owners need to be aware of. He advises having a solid plan to boost performance in the lower trading periods and amplify the opportunities during peak periods.
Turnkey investment starts from $320,000, and FRB is in the process of becoming accredited. “Until we do receive full accreditation, we will help with arranging finance from external vendors,” says Corbin.
Franchisees receive help with site selection and lease negotiations, store fit-out and workflow planning, training, recruitment and staff management, occupational health and safety, financials, point of sale and marketing.
THEOBROMA
“Theobroma is a total food-and-beverage concept offering consumers a wide variety of couverture chocolate and chocolate beverages with the added enhancement of a food menu,” says franchise and operations manager Ben Fernandes.
“From our chocolate cabinet showcasing our extensive range of artisan handcrafted jewels using real Belgian couverture chocolate, through to our signature mug and warmer, hot chocolate and cold beverages, desserts and chocolate retail products, there is something for everyone and every occasion.”
Some stores are even licensed to sell liquor.
Fernandes says the key is finding the right balance of staying true to classic favourites while creating interest with new products and innovations. “The challenge is how to incorporate the trend in a franchised environment in a timely fashion.”
While tech can be an asset to any business, he says that because of the setup and nature of the store locations, online ordering and sales have not been a strong performer, “but we are carefully monitoring this space”.
“Our new stores incorporate digital menu boards and screens, allowing a more interactive engagement with the brand. Our fully integrated loyalty systems also do away with the old stamp card system, moving to a consumer-engaged online program.”
Investment levels start from $150,000 for a chocolate pavilion and from $350,000 for a chocolate lounge.
“Unlike most food franchises, we do not believe in a one-size-fits-all mentality and focus on the individual business at hand where the franchisee has a lot more influence - right down to choosing the menu,” says Fernandes.
Franchisees benefit from unified leasing negotiations and supply agreements with key suppliers, which allows access to competitive prices for products.
However, there are challenges. “One of the greatest challenges is managing expectations at all levels,” Fernandes says, “from managing customer expectations on service and product, through to franchisee expectations on return on investment and support, and franchisor expectations on compliance and growth.”
CHOCOLATREE
Chocolatree is a chocolate cafe franchise headed up by Ron Kohli, who says the brand thrives on its fresh and tasty desserts made from quality ingredients and Belgian chocolate.
“We have an extensive menu including hot and iced drinks, juices and smoothies, waffles, crepes and fondues.”
Chocolatree’s target market
is
women between 15 and 40 years of age. “Customers are looking to spend their money in place with a difference,” says Kohli, who describes the franchise as a traditional yet innovative dessert bar that offers desserts with a difference like deconstructed passionfruit tart, Tellamisu (a Nutella and tiramisu fusion) and dessert shakes as well as traditional favourites like brownies, and sticky date and breadand-butter puddings.
The initial investment is from $250,000, and franchisees benefit from full training and ongoing support.
“Chocolatree is a growing system and will have the better buying power as the brand grows.
We will be supplying the key products to all franchisees at very competitive prices,” says Kohli.
.
ST LOUIS HOUSE OF
FINE ICE CREAM AND DESSERT
St Louis House of Fine Ice Cream and Dessert specialises in French-style ice cream.
“With more than 20 years’ experience in the ice-cream field, we have spent a lot of time making and researching what constitutes a premium product,” says MD George Karamalis.
“Our ice cream is locally produced from premium ingredients and delivered to our stores fresh.”
Extended trading hours are also a selling point, with stores open for breakfast and some open until midnight on weekdays. Mood lighting, tabletop candles and even a St Louis playlist add to the business’ romantic feel.
Karamalis says the company annually reviews and updates its dessert menus. “This involves employing a food-andbeverage consultant/chef who reviews our products and offerings, and then spends considerable time researching trends before creating new items to be included in our menus at the beginning of every year. This is an exciting process, which we know attracts new customers as well as those returning.
“We do like to do a fair bit of research into social-media trending, but if somethingis outside our theme of classic, sophisticated and made from quality ingredients, we simply will not follow that particular trend.”
St Louis pushes forward with technology as it becomes available, such as partnering with Deliveroo, Rewardle and UberEats, but Karamalis says customers are not always “tech-aware”.
Franchises range from an initial investment of $350,000 to $550,000, depending on the site. Franchisees receive training before store opening, and ongoing support.
“Because of the increasing number of our store outlets, we now have stronger liaisons with current and new suppliers,” says Karamalis.
Unlike most food franchises, we do not believe in a one-sizefits-all mentality and focus on the individual business at hand where the franchisee has a lot more influence - right down to choosing the
menu.
COLD ROCK ICE CREAMERY
Cold Rock Ice Creamery offers ice creams and sorbet to which customers can add their choice of toppings.
Owned by Franchised Food Company (FFCo), Cold Rock Ice Creamery is “not just about the ice cream – it’s all about the theatrical, customised experience”, says director Stan Gordon.
Customers are offered a range of ice cream and sorbet flavours, then add their choice of mix-ins such as chocolates, lollies, fruits and nuts. This combo is then mixed and smashed together in front of the customer on the “Cold Rock”, a frozen granite bar, and served up in their choice of a cup, cone, shake, take-home pack or cake.
“With more than 3000 flavour combinations available, it’s the theatre ‘while you wait’ that sets us apart,” says Gordon.
The target market is families, young children, teenagers and ice-cream lovers.
“We’re all about innovating our offering
to make it better. We’re constantly adding new mix-ins and flavours that keep up with trends, like the recent Nutella craze.
“We’re also constantly diversifying the Cold Rock brand with new offerings. A good example is the Super Kosher range we’ve just launched in our Malvern [Victoria] store.
“While we are always on the lookout for new ideas, the Cold Rock ‘Choose it, mix it, smash it, love it’ essence and design of service has fundamentally remained the same since inception … only we keep on making it better.”
Though the brand responds to foodindustry trends, it isn’t quick to jump on short-term trends, instead finding a balance aimed at keeping loyal customers happy.
We are not here to run
your business - we can only help you not
make mistakes.
Gordon says that though some franchises engage with the likes of Menulog and U bereats, “technology s uch a s a pps does not play a major role in the business”.
He says the Cold Rock Cake Builder has proved particularly popular. “Customers can create their own custom ice-cream cake in their choice of flavours, mix-ins, decorations and special messages ... We are not aware of anything as sophisticated within our market sector.”
The cost of a Cold Rock franchise is about $250,000, and a Cold Rock Express less than $110,000.
As part of FFCo, which owns and runs other retail food brands such as Healthy Habits, Pretzel World, Trampoline Gelato and Mr Whippy, Cold Rock offers its franchisees access to buying power. “We work with a number of larger, reputable food, beverage, ingredient and packaging suppliers to ensure we offer our franchisees the best prices possible,” says Gordon.
It is important for franchisees to be aware of what they are getting into when they invest in a franchise. “There’s no doubt becoming your own boss is an adjustment – but one any new business owner (franchise or not) is familiar with,” says Gordon. “We are not here to run your business - we can only help you not make mistakes.”
COCOLAT
Cocolat offers handmade delicacies including chocolate and gelato desserts, and is described by director Duncan Powell as “a dessert destination”.
“We make our own products right is the heart of the Adelaide Hills,” he says. “One of the key differences that sets our brand apart is that each product is handmade using local produce. A lot of our products are not sold elsewhere.”
During week days, the target market is mums with prams, especially in groups who seek coffee and cake. In the evening, Cocolat appeals to individuals seeking desserts after dinner.
“Our desserts, chocolates and gelato are not mass produced. Our signature desserts such as The Wild Thing and our chocolates such as The Guilt Bar are trademarked.
“When it comes to the brand and experience, each Cocolat location delivers the same experience of quality delivered in a plush environment.”
In terms of innovation, Cocolat introduces new products by way of seasonal changes. This is done twice a year, winter and summer, to allow the brand to “innovate via subtle differences in the seasons”.
There are three Cocolat store concepts: • Kiosk: in shopping malls and in the
middle of walkways
• Store: in large shopping centres and
usually between 100 to 130 sqm • Street strip: in areas of high foot traffic
Shop fits vary from $220,000 to $450,000.
“There are several financial institutions we have referred potential franchisees to for finance, and this help is readily available,” says Powell.
“Our franchises are turn-key solutions. All our products are handmade in our central kitchen, delivered fresh into store. Our products have a high shelf live to minimise waste. As we make most of our products from scratch, there is no middle man for distribution. Our ingredients are bought in bulk.”
As for tech, plans are in the works. “Currently, Cocolat is working on a model that allows customers to order their specialty cakes online and opt to have them delivered to their home or pick them up from a local store.”
GELATISSIMO
“We are constantly wanting to deliver innovation through our products by continually listening to what our customers want as well as staying abreast of industry trends,” says CEO Filipe Barbosa of artisan gelato chain Gelatissimo.
“Our product is genuinely artisanal and made fresh in store, using only the finest ingredients without artificial colours or artificial flavours. We do like to appeal to the discerning ‘foodie’, but our range does include familiar flavours for most palates.”
The brand has a three-tier model embracing kiosks, gelaterias and cafes.
Though social media plays a part in the offering, Barbosa says Gelatissimo only launches products that withstand market research versus “overnight” fast-food fads.
A new store can range between $250,000 to $380,000. The brand is accredited with ANZ bank and can review financial aid on a case-by-case basis. There is a flat royalty of $250 a week versus the standard percentage royalty. Barbosa believes this lets the franchisee grow sales and benefit more financially by doing so.
“Through economies of scale and our manufacturing side, franchisees can benefit greatly by not having a thirdparty supplier involved. The reliability of attaining stock on time is also vastly improved through Gelatissimo controlling freight,” says Barbosa.
“The main challenge with any frozen dessert business is the weather. Our business has a natural bell curve that reflects this.”
Through economies of scale and our manufacturing side, franchisees can benefit greatly by not having a third-party supplier
involved.
GELÁRE CAFE
Geláre Cafe offers premium desserts, or as business development manager Ryan Torabi describes it, “an ultimate dessert experience”.
“Quality is in-built into the system, not
only through the quality of the product but also the training we provide. This ranges from our operational training (such as our barista program) to the business and management side (business development program). The key to all of this is the close collaborative and supportive culture within the Geláre group, especially between the franchisor and franchisees.”
Torabi says there are a couple of key demographics - the 15 to 35 years group which seeks an exciting dessert offering with an atmosphere to match, and families with children who want a more traditional dessert offering.
“You can never be static. Learning is a key part of the culture that we create across the network. We value the experiences of each franchise partner in the field and create a body of knowledge that helps us with our innovation strategies,” says Torabi.
“Examples of social-media dessert trends that have influenced our offerings include ‘freakshakes’ and coffee in a cone.”
Although technology can augment brand loyalty, he says Geláre relies more on the customer’s in-store experience, and relationships built with franchisees.
For a traditional brick-and-mortar dessert bar, the initial investment is $350,000-plus. For the new Vintage Food Truck concept, the initial investment is $200,000-plus.