Foodco responds to tougher market pressures by turning to convenience hubs, transit areas

Managing director Serge Infanti also cited overregulation as a potential challenge facing the franchising sector.

Adaptability seems to be a key philosophy for Foodco, the franchisor that owns Muffin Break and Jamaica Blue.

The operator's heritage brands, despite having more name recognition than a majority of its peers and a constant fixture in shopping centres, is not hesitant to explore trendy convenience areas, transit stations and the growing drive-thru segment to enhance their domestic portfolio.

They also couple their ongoing digital transformation with their much-publicised initatives on sustainability.

Behind it all si Foodco managing director Serge Infanti, who talked to QSR Media about their strengths as a privately-owned company, the biggest trends and problems in franchising today, and what's next for its brands.

QSR Media: Foodco has grown to have over 500 locations in 7 countries. What do you think is the greatest factor that contributed to where Foodco is today?

Infanti: I think for us, over the (past) 30 years, the biggest contributor to our current performance has really been the stability of the management and the ownership of the group. We've had essentially the same ownership for 30 years and the management team has been with me now for almost 15 years - most of the senior management team.

That has enabled us to have a look at more longer-term strategies and short-term strategies. Sharing our vision with our franchisees and our partners is really important, whether they are franchisees in the local domestic market or whether they are our license partners overseas. It is really important to build that connection but also that consistent view of how you want to execute your strategies in those regions.

What do you think are the biggest trends in the franchising business today? How is Foodco adapting to those trends?

Clearly, technology is one of them and your ability to use technology to connect to your consumer and to better understand you consumer; I think that's absolutely critical for any retailer and certainly critical for a franchisor like us.

But technology must always be an aid to customer service; it can never be the replacement for that personal service so we try to blend the technology and the quality of the service together to better understand our consumer.

The other trend that's been very noticeable is sustainability and we're doing so much work in recycling and ensuring that we're using local produce that comes from Australia in across both our brands. [Another] trend I think everyone needs to be part of is...understanding how your product connects to the consumer and the different choices the consumer has today with regards to either a lactose-free coffee or a soy coffee or a protein meal or a gluten-free meal and making sure that we're in tune with the consumer.

Vegan, for example, is a trend we're embracing in both our brands. We've had a lot of success just recently in Muffin Break with our new vegan range and Jamaica Blue will be bringing out a new vegan range very shortly as well.

What are the pressing challenges facing franchisors? What is your strategy to address these?
Over the last few years in franchising and across small business in general, we have seen a margin squeeze, which has put a lot of pressure on retailers to ensure that they get the correct return on their investment. Franchis(ing) is also no different. We have to look at our model regularly.

Particularly over the last few years - when you have had an explosion in labor components, you have had an explosion in food costs and of course, occupancy costs running at all-time highs - you are in a situation where you really have to make sure that your systems and procedures and processes are in tune with returning the correct return on that investment for our franchise partners.

The other challenge I think that exists in franchising is overregulation. We've seen the franchising inquiry make some recommendations and I think you have got to be careful that you don't overregulate this industry into extinction. You need to make sure that there's a balance between the regulation requirements and the need for people to be entrepreneurial and be able to grow in this current market.

What does the future look like for Foodco?
The future is very exciting for us. We are in seven countries around the world. We've got a very strong domestic portfolio which everyone is aware of - we've got some great opportunities in the UK.

We've also moved our concepts into the convenience area so we are taking our concept outside of shopping malls into more transit stations and we have different types of models that we deliver our products and our coffees through.

We're also looking at the drive-thru with partnerships with other QSR operators so we're quite excited about the future. Not only will we continue to grow within the shopping centre portfolio but we have so many opportunities in international markets but also in other convenience areas in Australia.

Watch our interview with Infanti below: