Souvlakihut new owner, Daryl McCormack moves quickly to shore up the brand and reassure franchisees

It was just last week that Souvlakihut was placed into administration, catching the industry and many franchisees by surprise. Like in the form of a white knight Daryl McCormack, ex CEO of Video Ezy has come to the rescue.

QSR Media has been contacted by disgruntled franchisees who felt they had been kept in the dark about developments. Comments such as "we were told they were looking a while ago but were never told anything further and every time we asked we were cut short" and "Franchisee's furious and left in the dark" is feedback we have received.

Their concerns ranged from poor retail sales "our sales are at all time lows each week" one franchisee informed us to unpopular menu changes, "Yes we think this is due to menu changes, and change of the lamb seasoning" another stated. Lack of communication with Head Office was also a big problem amongst franchisees.

So where to now for the fast greek casual chain and who are the new owners and what are their plans?.

Below is an exclusive interview QSR Media Daryl McCormack where we raised all of these questions.

1/. Sales are at all all time low, how do you plan to change this?

The combination of the franchise experience, extensive food industry experience as well as experience from within the Souvlakihut network itself, places the group in good stead for a sensible review and analysis of the network to position it for growth.

While we are still in the due diligence phase of the acquisition, there is clearly scope for the review of the brand presentation and positioning, the menu offer and other aspects of the business. The new management is however experienced enough to know that these decisions cannot be taken lightly and market research and other work needs to be undertaken in the early stages of the ownership of the business to ensure that franchisees are not disadvantaged by decisions which might be made without sufficient background work first.

The focus initially will be on endeavours to increase sales and provide business guidance to franchisees while the review of the system and the brand takes place over coming months.

2/. Many franchisees felt they have been "kept in the dark" during this process, how do you plant to engage with franchisees moving forward?

It is our intention to take over the network on the 22nd of December, provided of course all things stack up as expected. We are in the process of taking time to meet with every franchisee to make sure we understand all the views in the network which is a great place to start a review and rebuild strategy.

3/. Tell us a bit about yourself your group and your plans for Souvlakihut?

As previously announced, the franchisor of the Souvlakihut franchise system was placed in voluntary administration last week. It has been confirmed that the Administrator, Laurie Fitzgerald from BDO, entered into a sale agreement for the business of the franchisor last week.

The purchaser of the business is a consortium of private buyers, all with extensive experience in the franchise industry.

The consortium includes Daryl McCormack, Costa Astrinakis, Adoni Astrinakis and Danny Keep.

The consortium has moved quickly to put steps in place to minimise network disruption and maximise its stability, including organising meetings with franchisees and the appointment of an experienced CEO who is well-known in the franchise industry, Sophie Valkan.

Settlement of the sale is currently scheduled to take place on Wednesday 22nd December.

4/. What happens to the franchisees under this new ownership?

All of us know that without viable and profitable franchisees, any franchise system will struggle and ultimately fail. It is our aim to have this as one of the fundamental criteria against which we will assess all decisions that are made for the business. The brand is a strong brand in the QSR market and the franchise system has been awarded by various reputable players in the franchise and media industry in the past so there is clearly great stuff to work with here

5/. There was talk of pending litigation against the group, what is the litigation about and is this still occurring under the new owners?

At this stage we are not aware of these allegations, as outlined above we are in the process of taking time to meet with every franchisee to make sure we understand all the views in the network.

6/. What is going to happen to the management of Souvlakihut are there plans for structural changes?

As above - we have appointed a CEO Sophie Valkan. Full bio below.

7/. Are John and Bill Fotiadis going to have any involvement moving forward?

They will be involved on a consulting basis.

BIOS

Daryl McCormack has a proven track record in building franchise brands and understanding the needs and motivations of franchisees. Having commenced his working career as a Chartered Accountant with KPMG Peat Marwick (7 years) he then spent four years with the Gandel Group of Companies, before piloting the growth of Blockbuster Video throughout Asia in a dual role as Managing Director for Australia and New Zealand and CFO for Asia Pacific. Over a four year period he was personally responsible for overseeing the growth of the Blockbuster brand through the opening of more than 250 retail outlets in this region. In October 1996 he joined Video Ezy as CEO and spent the next seven years guiding the group through a challenging period of a change in ownership whilst growing the number of shopfronts from 400 to 550. In November of 2003 he decided to take a break from the rigors and travel demands of running a national franchise group to own and operate his own business. With a partner, he acquired 15 stores to become Video Ezy’s largest franchisee. As a franchisee, Mr McCormack has held various senior positions on Video Ezy’s elected franchisee committee representing the views of his fellow franchisees. This varied background gives Mr McCormack a unique and valuable insight into the franchise dynamic from both the franchisor and franchisee perspectives to ensure a balanced approach.


Sophie Valkan has over 12 years experience in the franchise industry in retail and service franchised businesses. She is active in the franchise industry, with extensive experience in acquisition and management of franchise networks, including operational review and integration / consolidation post-acquisition. Her franchising experience includes brands such as Clark Rubber, Yates Garden Care, Midas, Luxafoam and Para (NZ). She comes with a strong understanding of the need to balance the interests of franchisor and franchisee and the need for both to work in a consultative manner towards the common network goals. Prior to entering the franchise industry in 1998, she has had general counsel and general management positions in companies including Pacific Diamond, the Coles Myer group and GE Capital. She has board and advisory board expertise in Australian and New Zealand companies in industries as diverse as retail, franchising, automotive, transport, mining, wholesale and IT. Her qualifications and memberships include a Bachelor of Law and a Bachelor of Commerce (Acc Major) from the University of Melbourne, a Graduate Diploma in Company Secretarial Practice and she is a member of the Australian Institute of Company Directors and the Australian Society of Accountants.