In Australian franchising, Retail Zoo managing director Janine Allis looms like a giant over the landscape thanks to her well-publicised success with Boost Juice. But now there is a new kid on the block – Mexican outlet Salsas.
“We acquired Salsas a couple of years ago [in 2007] when it had four stores, we’ve now grown it to 22 stores,” Allis said.
“It’s going great. We’ve got some of our Boost franchise partners who have bought some and some of our Salsas partners have bought their second one and looking for their third.
“The business model is great and it has been accepted well into the market place. People often think of Mexican food as beans and fried and stodgy food. Salsas is how Mexican food actually is in the Baja Coast – it’s all freshly cut tomatoes and coriander and lime and other fresh ingredients mixed together with some herbs and spices to come up with a fantastic taste sensation.”
Allis said her experience with Boost had been extremely useful in growing the Salsa brand.
“You learn the journey and how it all works,” she said.
“Looking at the marketplace and our competitors – not necessarily competitors in Mexican food but chains such as Nandos – we really think the Australian market could hold a couple of hundred Salsas in targeted areas. The growth profile is quite fast, but not uncontrollably fast.”
And who is interested in these franchises?
“We are getting people that love food. I’m a firm believer that if you are going to do any business, whether it is a franchise or other, you have to be passionate about it. So we have people who are passionate about food and passionate about great customer service. There are people who want to get into a business with good growth potential and those who want to look at maybe opening a second store if they are successful with their first,” Allis said.
“The restaurants have two models – fast
casual, which is where you can go in to a restaurant-type setting, or food
courts in shopping centres. It is a dual model, which has some flexibility. A
fast-casual outlet is around 150 sq m and it is a more expensive build than a
food-court outlet, which might only be
50 sq m. It is all about what model works for the franchisee – a food- court model would need to be open seven days a week compared to a fast-casual, which might only be open for six. There are a lot of different things that come into it when people are considering franchises.
“We do the same screening [of potential franchisees] that we did for Boost. We look at whether they have the desire and they are doing a franchise for the right reasons. Some people want to do it just as an investment, but they will fail. People who are actually interested in owning and running their own business and making it profitable are desired. Also people need to be able to afford it, it’s all very well to want one, but if you can’t afford it, it makes it difficult. We try to work with them to make sure they can, because I don’t think it is healthy for people to be too debt ridden.
“The cost does vary, but the average cost, including franchise fees, is about $430,000. If you are looking at a street site then it can get up to the $500,000 mark.”
A sheer lack of competitors is proving to be a competitive advantage for Salsas operators. And Allis said the management experience was also helping to avoid costly mistakes.
“Having a system that is proven and a franchise network that is profitable is important,” she explained.
“One of the risks of getting into franchising is that the master company or franchisor isn’t viable. We have been going around for 10 years now, so we know what our system is like. Really, you are coming into a proven franchise company.
“One of the hardest things in retail is leasing. We have a long list of sites that we want to put in, but even if you look at a top shopping centre like Chadstone in Melbourne, they have dodgy sites in there as well.
“It costs the same amount of money to put an outlet in a bad location as it does for a good one, so I would rather wait six months.
“We have our list of centres and where we want to be, but it is a matter of making sure we are not only in the right centre but also the right street and the right position within that street. It’s worth waiting for.”