Commentary

The Fair Work Commission review of penalty rates in the fast food and general retail sectors – it rejected any change - has thrown into relief a number of issues that have failed to be addressed. We provide our views on some of them here. Issue 1 - International Competitiveness The unions argued that the overall economic situation of the retail industry remains very strong and there is no evidence of structural change impacting upon these considerations. Our Commentary Competition in the retail sector has been steadily increasing, and the consumer is demanding greater flexibility in opening hours. 2011-12 was a particularly bad period for sales with major retailers cutting staff to remain profitable. As well, there has been a shift in retail spend to online sales and big barns with fewer staff, for example, Ikea, Bunnings, Aldi, and so on. The Productivity Commission (PC) pointed out in a 2011 report that growth in retail sales has experienced a long-term slowdown due to changes in consumer buying habits. Consumers are choosing to spend less on retail goods, are saving more and spending a greater share on services. For many Australian retailers, wages are growing at a faster rate than the price of goods, the ratio of labour costs to sales is high compared to the United States and United Kingdom, and these higher labour costs are being passed onto consumers. According to the PC report: “Part of the explanation for the lower total labour costs to sales ratio overseas appears to be higher labour productivity, which in turn is influenced by capital investments and the adoption of workplace flexibility initiatives, amongst other factors.” So we have a situation where the consumer is paying for higher labour costs at a time when overall retail spending is in decline, and the internet is making consumers increasingly price sensitive. Issue 2 - Our Changing Society The unions argued for no changes to penalty rates. They asserted that penalty rates are a reward for working unsociable hours, and help to compensate employees who are lowly paid. Our Commentary Employers argued penalty rates are a throwback to a previous era, where retail opening hours were closely regulated, where competition for the consumer dollar was low, and a cultural stigma attached to working on a Sunday. They said this was no longer the case. Most people are too busy to shop between 9 to 5 on weekdays, and after hours and weekend shopping has become the new ‘normal’. They also said employees are looking for greater flexibility in working arrangements, including the opportunity to work evenings and weekends. In our view, the nature of our society has changed significantly since the 1970’s, but our award system still seems rooted in that era. We need an openess to change to reflect our changing society. Issue 3 - Legalistic Approach The FWC are requiring employers to produce direct evidence of the link between penalty rates and employer behaviour and practice. For example, they want evidence that lower penalty rates will translate into more jobs and provide greater flexibility to employees. Our Commentary The current quasi-judicial approach taken in the review of awards should be replaced by one of genuine inquiry. The FWC needs to get out to the workplace and find out what is happening by talking to workers and employers, instead of being fed very selective information by unions, lawyers, advocates and paid consultants. One thing it will find is a dual economy - those employers who play by the rules and pay legal rates, but also many who cannot afford to, do not know how to, or the many who choose not to. The employer case was woefully under-funded compared to that run by the unions, and was actively supported by relatively few employers, despite its importance for their businesses. A lot of evidence put forward was either ruled out or ruled irrelevant. It is ironic that the unions ran a concentrated, well-planned campaign presented by legal counsel, while the employers generally muddled through with a diverse range of employer association representatives who weren't well supported by their employer members. So much for business supposedly having all the economic power!  

While “green shoots” are starting to emerge in the Australian retail and QSR industry, the reality is a staggering 1,024 Australian retail companies went into administration during 2011-12.

Leave the grill and give up serving customers for a few minutes. I’m sure your busy but there’s another review of the Franchising Code of Conduct happening.

All successful businesses need to develop a public profile and a recognisable brand, particularly in the case of franchises because a key asset of a franchise is the power of its brand.

Sustainability within any business commences with understanding the drivers of revenue streams and profitability. In finance circle this is often referred to as the “jaws” i.e. keeping the revenue line growing upwards on a graph faster than costs and expenses. Understanding the market the business operates, variations in consumer sentiment, known competitive advantages and old fashioned value for money and profit margins are all imperative. With franchise groups there are few that don’t have designs on dominating their given market whether domestically or internationally. A franchise group will have a heavy focus on creating best practice in their operations which are meant to reflect a consistently superior product or service than that of a non-chain competitor. Getting the product or service to market takes a good business mind generally with extensive retail or marketing mindset. Getting a successful product or service to market is only half the battle. Maintaining a sustainable brand and network requires focus and dedication and the ability to understand that without a sustainable franchisee proposition the situation is eventually destined for disaster. Unfortunately sustainability isn’t always given its due focus and failures at both franchisee level as well as franchisor level occur. Whilst I can appreciate the administrative constraints of the Franchising Codes of Conduct it reflects the desired rapport required that any given franchise group can lay its foundations on. Whilst every business is unique and requires a variety in structure and operations the basics of sustainability commence with following rules: 1. Accept that without sustainable franchisees your product or service can’t be delivered to the market and create valuable revenues for the group.

A few months ago Pinterest was the new kid on the block in social media, boasting never-before seen user growth rates and promising a radical new mix of social and marketplace. We were extremely excited and the feedback we got on any blog mentioning Pinterest was incredible.

Regular contributor on employee relations matters ER Strategies has compiled a short list of some of the more important recent changes made to the Fair Work Act, which regulates employment across most of Australia. Unfair dismissal and General Protection dismissal applications Under the Fair Work Act there was a gap in the time limits between lodging an unfair dismissal and a ‘general protections’ dismissal application. This meant an employee could lodge an unfair dismissal application and if unsuccessful there, have a second bite of the cherry by lodging a general protection application, where in practice the rules for employers defending themselves are generally tougher. Effective from 1 January 2013, the time limits have been changed to be the same for both, with some good, some bad aspects for employers: • The time limit for lodging unfair dismissal applications will now increase from 14 to 21 days, giving employees more time to lodge their unfair dismissal application; whilst • The time limit for lodging a general protections dismissal application will be reduced from 60 to 21 days. In addition to the time frame changes, the renamed Fair Work Commission will be given further powers to dismiss unfair dismissal applications and to make cost orders against parties, lawyers and paid agents in unfair dismissal matters. Examples of when the FWC may exercise its discretion to dismiss an application under these provisions may include where the dismissed employee / applicant fails to attend an FWC proceeding relating to the matter without providing prior advice and/or without any reasonable excuse for their failure to attend, or an employee / applicant continues to pursue an unfair dismissal application despite a settlement agreement having been concluded by the parties. Enterprise agreements Small technical changes have been made to the rules around making enterprise agreements to clarify some disputed interpretations that have arisen. Effective from the first of January 2013 the following changes came into effect in relation to making enterprise agreements: • Enterprise agreements cannot be made with a single employee • Employers cannot modify the notice of employee representational rights prescribed by the regulations (this notice must be given to all employees once enterprise bargaining commences). • Terms allowing an employee to opt out of an enterprise agreement are prohibited • A union official cannot act as bargaining representative for an employee unless the union has coverage to represent that employee The ER Strategies website is at www.erstrategies.com.au. They also have a specialist enterprise bargaining website at www.enterprisebargaining.com.au. Related QSR Media article - https://qsrmedia.com.au/in-community/news/fast-food-employers-confused-employment-obligations

Many leading fast food companies are using analytics about customers and pricing to help gain a competitive advantage in the marketplace. When armed with the capabilities and technologies to transform huge amounts of transactional data into actionable insights, a company’s leadership can be confident in decision making to help improve not just the efficiency of day-to-day operations but also the effectiveness of strategic planning. The ‘hats’ a CFO wears The CFO can be the catalyst that typically brings together managers, the chief information officer and the Information Technology (IT) organisation, and the functional executives accountable for performance in sales, marketing, and operations to ensure the organisation is using and applying analytical data. Second, as a strategist, the CFO focuses on enhancing shareholder value. The use of innovative analytics is fast becoming one of the critical tools to help achieve this result. The CFO should know: • Do we have the capabilities to deliver analysis-driven improvements? • What data should be captured? • Which analytical tools make sense for our business? • Do we have the required people and organisation in place? • How big is the gap between what we need and what we have? The modern CFO wears many hats in the typical fast food company: • As a steward, finance oversees the accounting, control, and asset preservation tasks which can be necessary for compliance with external financial reporting requirements. • As an operator, finance seeks to balance cost and service levels in doing its job. • As a catalyst, finance can be an agent for change and business alignment, using its central position to help identify, evaluate, and execute strategies and act as a business collaborator with other decision makers (including business unit leaders, the chief information officer, and sales and marketing executives). • As a strategist, finance helps define the future of the company and focuses on enhancing shareholder value through a focus on profitable revenue growth, helping to manage operating margins and monitor business risks. Business analytics Typically, the top two objectives of finance in fast food companies are 1) improving/maintaining margins and 2) growing and preserving revenue. Business analytics can be fundamental to these mandates. The CFO is typically the natural leader in the quest to use analytics to help drive bottom-line growth. With an eye toward profitability and the external market, with a cross-functional view of the business, with sensitivity to risk management, and with an appreciation of the value of fact-based decision making, the CFO can be the most effective choice to help leverage technology and analysts in the pursuit of higher margins and greater revenue. The intense competition for high-value customers can underline the importance of using analytic tools to get close—and stay close—to the high-value customers. Also, advanced analytics can identify the dollars potentially being left on the table because of less-than-favourable pricing or special sales initiatives. In fact, research has shown that a company can gain an average margin uplift of one to three per cent by implementing a pricing improvement initiative—a crucial differentiator and competitive edge during times of saturated markets, unfavourable macro-economic conditions, and shrinking margins. Segmentation as the basis for customer profitability Improved ‘profitability per customer’ should begin with a customer segmentation analysis, which can provide insights into customer preferences and subsequent purchasing behaviour which drive overall sales, product mix, and margin contribution. Customers can be segmented in different clusters to create multi-dimensional views based on categories such as historic and predicted performance, strategic fit, buying behaviours, and cost-to-serve. With an improved understanding of customer categories and the ‘why’ of their buying patterns, the sales and finance functions can work together to manage customer, marketing, pricing and operational strategies more effectively. Implementing analytics should not be a ‘big bang’ initiative; capabilities that can meet the company’s needs should be developed over time. A crawl-walk-run approach can allow the CFO to focus on one step at a time. First, ask questions: before taking any action, CFOs should ask, ‘What capabilities are required to deliver these analytic-driven improvements?’ Data quality plays a crucial role, and the CFO should confirm that the organisation’s technology can provide the ability to pull and integrate data from multiple, disparate systems. In other words, the data sets should have the required integrity. The next question is ‘Are we capturing and analysing the proper data, the proper way?’ The analytical process should be appropriate and defined. One way to determine whether this is the case is by using multiple analytic tools to triangulate to an answer when addressing an issue. Next, determine customers’ needs. By working collaboratively with marketing and sales to determine customers’ needs, the CFO can gain insights about the nature of the business and demands of the marketplace. Then, in defining customer segments, the cross-functional team(s) can align each segment’s features with the company’s strategic goals. The CFO’s subsequent go-to-market recommendations for profitable revenue growth should reflect the segment performance analysis. The CFO should use business analytics to quantify the potential impact on revenue and profitability of each go-to-market initiative, as well as to determine the feasibility of each in terms of ease and pace of implementation. The CFO should prioritise the initiatives by value, focusing on the realisation of tangible benefits early on as the most effective way to get buy-in to the use of business analytics from finance’s business colleagues. Prioritisation can include the design of an implementation roadmap that would specify “owners” and their responsibilities. 

New digital marketing platforms- a flash in the pan, or something to seriously focus on? While traditional marketing channels are still relevant, like all other companies in the global marketplace franchises are moving their marketing to new media. Facebook, Twitter, Pointpal… should you be using them? More to the point, how should you be using them?

A QSR normally fits into one of 4 categories:

A QSR normally fits into one of 4 categories: · Free Standing with Drive Thru (FSDT)

A QSR normally fits into one of 4 categories:

A QSR normally fits into one of 4 categories.

How people choose restaurants today has changed. Traditional marketing used to be enough to drive diners to your restaurant, and then word of mouth would bring their friends. Over the past couple of years though, consumer behavior has shifted significantly.

It’s probably just coincidence, but a number of our clients in recent months have raised their concerns about how their workers’ compensation insurance provider hasn’t handled a particular claim well, and this has cost the employer dearly, either in an employee’s ongoing lost time from work, or by causing an increase in the employer’s workers compensation premiums.

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