QSRs Explain the Appeal of Standalone Stores
Striking it out beyond malls can be a great gamble.
Australian QSRs are famously enamored by malls, with some chains setting up stores exclusively on these high-traffic shopping centres, but that love affair has wavered as of late. And you can blame it on mainly on rising rentals, according to Steve Plarre, Chief Executive Officer at Plarre Foods Pty Ltd, which operates the namesake bakery chain.
Plarre said owners are beginning to balk at the high mall rentals, and are instead opting to set up standalone stores. He said his bakery chain now has a couple of standalone type locations, but noted that the decision to put them up required rigorous evaluation.
“They are generally very dependent on a number of factors that are often hard to replicate." said Plarre.
Another reason why QSRs may want to diversify their store mix is to expand their market outside the mall-going crowds, which has been stagnating.
“For the Muffin Break and Jamaica Blue brands, historically in Australia our locations have been heavily mall-based. With increasing rentals and reduced foot traffic in centres, our development teams are seeking opportunities outside of this traditional landscape,” said Serge Infanti, Managing Director at Foodco Group, operators of Jamaica Blue and Muffin Break.
“In recent years we have had success with high street, airport, hospital and university locations. In the future, we do see more stand-alone locations in our portfolio,” he added.
In the same vein, Burger Urge and Roll’d are both considering expanding their store mix to capture different market segments and cater to different regional areas.
But malls will not go extinct anytime soon, reminded Mark Buckland, Managing Director at Healthy Habits, which is why his chain is sticking to a mall-heavy strategy for the time being.
“There has been a trend of late to suggest that the traditional ‘mall’ is in decline and that this will pose significant problems for current centre based businesses. Whilst there is some truth to the view, we believe that it is premature,” said Buckland.
“For as long as people want to congregate for social and other key events then centres have a place and that means food outlets – both in the form of inline food courts and also casual dining precincts have a place,” he added.
Buckland said given these reasons, Healthy Habits has chosen to focus on centres with an open eye for opportunities to build a standalone location or even establish a presence in high streets.
Drive-thrus
Among the standalone models, the standout choice among QSRs is the drive-thru, which offers fast and convenient service for Australians on-the-go.
“Mobile consumers deserve the same quality of product as cafes, but with increased convenience,” said Warren Reynolds, Executive Chairman at Muzz Buzz.
“In 2013 we expanded our restaurant models to include a kiosk-style and drive-thru model. Both are performing exceptionally well,” said Karim Messih, General Manager at Zambrero.
The key to creating a successful drive-thru store is to think about efficiency, said Neil Soares, CEO at Croissant Express.
“Retail sales across Australia are down from their peaks, yet rent and labour costs continue to climb. We are going to completely overhaul the look and feel of our stores, and part of this is rolling out new formats and in non-traditional locations. We plan to move to a central production model which will improve the consistency of our product and service across the network, while drastically lowering the cost base for our franchisees,” said Neil Soares, CEO at Croissant Express of a new store concept it plans to launch in the Perth CBD in mid-2014
“This new business model will allow us to operate in different locations and in much smaller footprints than was previously possible. Drive-thrus are also in the pipeline for suburban Perth. We have employed a full-time architect to design new store concepts and work with our franchisees to create a completely new store environment,” he added.
But the expedient service that drive-thrus offer may not be a match for some QSRs that want to deliver a more robust customer experience.
“Our concepts are about offering the complete cafe experience with great service, product and ambience as paramount. I have looked at drive-thrus and I’m unconvinced that this is right for us,” said Serge Infanti, Managing Director at Foodco Group, operators of Jamaica Blue and Muffin Break.
“Whereas our experience does not lend itself to a drive-thru format we are instigating new design formats in our gelaterias to stimulate customer interest such as; open viewing production, which allows customers to enjoy the gelato making experience, more seating to stimulate the enjoyable ambience and a range of gelateria formats allowing outlets to be positioned in a greater variety of locations,” said Fred Pose, Franchise Development Manager at Gelatissimo.
“The infrastructure of a standalone drive-thru model is considerably more difficult to set up than a cafe or mall based outlet. It’s clear that Australian consumers will continue to drive increased convenience and choice,” said Reynolds of Muzz Buzz.
