FROM FARM TO PLATE

Yarra Valley Farms is ramping up its recruitment.

This delivery franchise is set to hit the big time in the food sector as

an acquisition brings it closer to top-end retail clients.

Yarra Valley Farms, the first independent national fruit and vegetable supplier and retailer in Australia, serves more than 400 commercial and hospitality clients, as well as some of Victoria’s leading restaurants.

Now the franchise distribution business will be ramping up its franchisee recruitment following a major acquisition. The business has been acquired by In2Food, a food supplier to South Africa-based multinational retail company Woolworths Holdings, which owns the David Jones department-store chain.

Law firm Norton Rose Fulbright acted for In2food in the acquisition. Lead partner Ben Smits said the deal was a “game changer” for the Australian food market.

“This sector of the market is very fragmented, and it will be interesting to see such an established and sophisticated player like In2Food work with such enhanced scale and with such a strong management team and strategy,” he says.

In2Food has plans to expand its reach over the high-end produce market in Australia. The acquisition includes Inspired Food Solutions, which is a JV with In2Food and Yarra Valley Farms, formed to support the department store’s strategy to develop its food profile.

The In2Food amalgam also includes a competitor to Yarra Valley Farms in Sydney, TMF, which provides core and prepared produce; and a similar, as yet unnamed, acquisition in Queensland.

“This makes us the largest player in food service for core produce, prepared produce and prepared food,” says Yarra Valley Farms MD Bill Kollatos, who will become CEO of In2food Australia. “Our key focus is to be robust in food service, and we intend to expand our retail food offer.”

SIGNIFICANT VALUE

Franchising is an integral part of this expansion, says Kollatos.

“In the acquisition, In2Food and the bank partners see significant value in the franchise model. This galvanises our strategy and puts more pressure on us to ramp up our franchise recruitment,” he says. “We’ve tweaked our franchise model and are very confident in it and how it works for franchisees.

“Our logistics needs to expand considerably, and In2Food understands that the best way to get produce to a customer is through the franchise model.”

To ease the financial challenge for incoming franchisees, Yarra Valley Farms plans to finance the $75,000 franchise fee over the term of a franchise agreement

(five years, with one option to renew for a further five years).

“We recognise that finance is always a challenge, so we’re backing this up,” says Kollatos.

Of course, there will be costs on top of this: successful prospective franchisees will need to find the finance to lease the truck that is essential for daily deliveries, and the necessary working capital to ensure trading through the difficult early days.

For existing and incoming franchisees, the newly combined business provides specific benefits.

The concept of dark kitchens (sites that create meals for online deliveries, housed separately from restaurants) is a new and growing reality, and rather than impinge on fresh-food deliveries will serve to boost the business, Kollatos says.

“With health and safety issues when setting up dark kitchens, it is most cost effective to buy prepared produce.

“The acquisition means we have greater competency in prepared produce and ready-made meals – and that space is growing,” he says. “We are very, very hospitality-dominated, and our customers are looking at reducing costs in the kitchen.”

It will be interesting to see such an established and sophisticated player like In2Food work with

such enhanced scale and with such a strong management team and

strategy.