Burger Edge on 0S Expansion and their 45 store outlook
The gourmet burger market is becoming increasingly competitive, and Burger Edge is one of the growing QSR's in this space. Find out more in this interview with Issam Soubjaki, Franchisor, Burger Edge.
QSR Media: Tell us what you’ve been up to since the last time we met.
Issam: In the last 18 months we’ve had very steady growth, we’ve grown 9 stores in that time. We’ve re-established Queensland. We’ve established and grown Western Australia as a very good market. We’ve also rebuilt our distribution network to accommodate that growth, that national expansion. So that’s being overhauled, and it’s working quite well at this stage and it’s helped our franchisees with reduced costs and far better service levels. And also we’ve put the strategy in place for our 45-store network. So I’m very pleased with that. We’ve been busy.
QSR Media: Urban Burger’s owner, Shane Heal, filed for bankruptcy late last year and there’s apparently a new lineup; what advice would you give them given that you’re in a similar market?
Issam: The advice I’d give them is the same advice I’d give to any incoming franchisee. QSR in Australia, especially QSR franchises, is a tough gig. But I’d basically tell them just to get their priorities right. Make sure the franchisees are the bedrock of their business; their profitability must be paramount. Also, get your house in order. I would be cautious to go out touting for franchisees before I got my own infrastructure and systems in order.
QSR Media: What do you say are some of the issues in the industry?
Issam: The issues still remain the same; it’s all about being lean and being robust for growth. So it’s about the strategy for growth. HR is still probably our number one priority: making sure stores are adequately staffed across the network. We’re finding that as probably the number one issue. There’s a shortage of qualified people. There’s even a shortage of enthusiasm for the industry. It’s not classified as a career, to be frank. It’s not even classified as a job. Most people treat it as an in-between job or a stepping stone. So the industry has to cope with that. It’s pretty tough to make it an attractive position for someone out of university or who has a skill in another area to jump and come and work in QSR.
The other issue is occupancy costs. They are coming down in some sectors, and in some states, in some centers, and they’re going up in others. So we’re finding we’re able to negotiate a lot better now with some of the bigger landlords, but some are still jacking up the costs and the terms and conditions. So that’s going to be tough because it’s quite alluring to go to a tier 2 or to a less established shopping center, which is not good for the growing brand.
The third one is just the pool of franchisees. We’ve developed a strategy such as building our own company-owned stores to feed our own organic growth, so we don’t have to rely on injections of franchisees. So we’re growing our own businesses internally using our own capital.
The other usual suspects, cost of goods obviously has to remain stable. And customers are becoming less tolerant of poor-performing or lax franchises, and they’re quite prepared to punish a less than satisfactory offering or experience…and they punish them with their wallets and with their opinions. They have both and they’re prepared to use them.
You’ve got to remain relevant in the market.
QSR Media: OS Markets, is this something that Burger Edge is looking at?
Issam: We’ve had a lot of interest out of Middle East; we’ve had interest out of India and China. But we have to weigh it up against what resources are required to manage an overseas partner. That’s exactly the way we’re going to approach it. They’re going to be a mutual partner with vested interest in our brand and vice versa. So to make sure that that relationship and that partnership is going to work well and not be a drain on our local resources is a very delicate balance. We’re approaching it all on a case-by-case scenario. India is looking good at the moment, we’ve got some interest out of there, but India has its own issues that we have to make sure we’re ready for them before we get over there. Middle East is looking quite attractive for us as well, but we will tread carefully.
QSR Media: What comments would you make about the future landscape of QSR in Australia.
Issam: I think it’s positive. There is a lot of good businesses emerging that are actually world-class. My peers in the Australian sector are nothing short of world class in this business. We are fortunate because we have a very good and buoyant economy compared to internationally. So we’ve had the opportunity to develop some very innovative offerings, some very unique and entrepreneurial businesses. I hope that continues.
