Delaware North - A super franchisee's perspective of the QSR industry

Delaware North operates many QSR brands including Hungry Jacks, Oprorto, Noodle Box, Healthy Habits & Dominos. What trends are they noticing? Find out in this interview with David Mayo, their Ntl Brand Mgr, Travel Hospitality Services.

QSR Media: Tell us about Delaware North’s interest in QSR chains.
David: Delaware North operates in various silos in airports, train stations and venues like the SCG or Ethiad Stadium. We also have some resorts in Australia. Delaware is a worldwide company.

Within that the QSR brands are probably about 40 percent of our airport business. Our interest has probably changed from ten years ago in the airports space, when it would have been generic offerings that we would go into. When the airports got privatised and redeveloped ten years ago they required brands to be involved. And so for us to stay relevant, we had to become brand operators. So we’re simply franchisees of the brands. At the moment we have ten brand partners.

QSR Media: Why have you chosen these QSR chains in particular?
David: The airports are prescriptive about what they like. They might say we want a burger offer for example. Some burger chains will go themselves in there, and others would prefer someone like us to be operating the outlets for them as it’s an unusual environment. Airports have particular issues with security and logistics that are different to other sort of environments and they also have different trading patterns.

So part of it is the prescriptive nature of the landlords and then the other part is there’s different day segments and different needs within their foodcourt offerings, and we try to provide solutions to that. We’re working closely with them about when there’s new outlets to be opened and what sort of brand that should be, what sort of food that should be, and what’s going to work best in that space or in that airport. So it’s partly designed or prescirbed by the landlord and partly by the market itself.

QSR Media: How are they performing?
David: Airports in general are doing very well at the moment. Retail spend is down but travel spend is up in Australia with the high dollar, so you have international airports doing very, very well. Melbourne and Perth have very high growth on the back of the high dollar. Domestic transport is still up as people are still are travelling on cheap airfares. So the growth is still running 4 or 5 percent nationally which it has been for the last decade or so, which is why you see such massive investments in those infrastructures.

The relativity in terms of where the burgers come and the chickens come and the coffee comes is the same as what you’d see elsewhere, except the trading patterns are different at the airports. The biggest difference is 50 percent of the customers are coming through before 12 o’ clock. So the breakfast offer is much stronger; the need for breakfast is much stronger than it would be in a foodcourt or in high street.

QSR Media: Where do you see the growth in the opportunities in the industry?
David: I think the growth will come, again, if the passenger numbers keep growing and there is more investment and re-development of airports. For the actual brands, the airports will be looking for newer brands and different sorts of food. As we get more passengers through, we can support a bigger variety of food than there is now.

QSR Media: There would be greater investment in more and different chains in the future?
David: Our job is to go out there and find the brands -- what’s emerging, what’s doing well, what would be suitable in that airport market. Because we’ve got most of the majors in the airports already, and there is more retail space available, there needs to be something else.

Part of my role is to be meeting with new brands, keeping up with the trends, for new partners and new opportunities to bring to the market. The brands bring to us an operating system that we can use. They’ll bring a brand itself so that already brings extra trade. And the brand will almost always perform a generic -- except maybe in the coffee segment.

So there will be lots of growth in the airport portfolio. We will have more relationships with the brands. There will be more opportunities to replace some of the generic outlets with more branded offerings. And then there will be the move to newer food styles.

The Mexican brands for example would be one of ones that we’re looking at now. Mexican food is going quite well in high street, the issue is can we get it to do breakfast? So it’s a very good high street lunch-dinner trade but it needs to be able to come up with breakfast. Chicken has a similar issue, how do you drive breakfast to a chicken trade? So it’s about adapting the newer food styles to what the airport market is and how it trades. It’s definitely something we’ll be growing. We’re always looking for new partners. We’re talking to new brands and emerging brands all the time. Some want to franchise, some don’t. Some want to go to the airport; some don’t, because it’s a very expensive environment to play.

That’s what we’re trying to do to bring solutions to the QSR space in airports.