Foodco’s Serge Infanti talks acquisition strategies, overseas growth markets and what impact the carbon tax will have on the business

In this exclusive interview we find out how 2011 has been for the group and what their plans are for 2012.

QSR Media: Tell us about Foodco?
Serge: Foodco is the group behind our three brands, Muffin Break, Jamaica Blue and Dreamy Donuts. Foodco owns the international rights to all our brands. We started back in 1989 when we rolled out our first Muffin Break in Coolangatta and that store still exists today.

I believe that a key element of our success is that our shareholders and most of our senior management have been with the business since the very early days. This has provided a stable foundation for long term growth. We are an Australian company and we’re very proud of its brands and our excellent reputation and their contribution to the retail and franchise community both here and also internationally. Today, we have over 350 stores throughout 5 countries.

QSR Media: How was 2011 for the group?
Serge: Despite the economic uncertainty and the difficulty that confronts traditional retail, we have continued to perform better than both the retail market in general and our own niche. Our total revenue growth is exceptional but even more pleasing is our strong customer and same store sales growth. At the end of the day same store sales and customer count growth are the only true measure of a brands success.

There are many factors which I believe contribute to this. We place great emphasis on organic growth and return on investment for our franchise partners, and this can only be achieved by maintaining the brands relevance, accentuating points of difference and ensuring we deliver the best products and service on a day to day basis. The concept of retail success hasn’t changed in the 21 years I’ve been involved but the execution has and is much more challenging today. Social media, declining shopping malls numbers, online shopping and the rapid change in customer expectations make the task of remaining relevant and successful far more difficult than in the past. Thankfully, I have a dedicated team of Foodco professionals and excellent franchisees who make my job a lot easier. It’s about having a clear vision for each of the brands and maintaining the longer term strategies to achieve this, despite the short term pressures that may exist.

QSR Media: What impact will the Carbon Tax have on Foodco?
Serge: A tax of any nature will always go back to the consumer. We know that direct power costs will increase, and other charges for example, freight costs will also increase, so there will be a lot of associated costs that will increase in small business as a result. Unfortunately this comes at a time when retailers are struggling and simple price increases to absorb taxes are not an option. We don’t know the full implications of this tax as yet, but what we do know is that we have to be diligent in ensuring that we deliver other cost savings through efficiency and product costs that will assist our franchisees maintain their profit and absorb the tax impact.

In addition to the carbon tax and the increasing cost associated with that, we must remember that small business has already increased pressure from the high cost of borrowing and ridiculous bank charges and fees that have never been reasonable when compared with the general market or big business lending. Furthermore, high rental expectations continue to be a challenge with the lessor and all these factors make for a challenging environment.

I am very confident that we are meeting that challenge and will continue to do so.

QSR Media: Where do you see opportunities?
Serge: The group continues to drive growth in the domestic market strongly in our traditional areas of A grade shopping malls but we are also having a great deal of success in the smaller centres and high street locations. Our reputation, based on a history of success, and our strong relationship with landlords and excellent demand from potential franchisees will ensure that we can continue to grow in both the Australian and New Zealand markets.

Our international expansion has been exciting for us. We have been able to grow to over 40 stores in the UK with the Muffin Break chain, we’re now one of the top café chains in China with Jamaica Blue , and we will look to accelerate that growth over the next few years. We’ve just finalised licencing of Jamaica Blue in the Singapore region and we plan to finalise the Muffin Break licence in Singapore over the next few months.

We continue to look at other opportunities in the region as well. Southeast Asia is clearly on the doorstep, where there’s a growing appreciation of Western food and coffee in that market, so that’s of interest to us. We’ll continue to develop the UK business aggressively as well, and will be in a position to roll out our Jamaica Blue cafes in the next year.

We haven’t turned our back on the US market either. That’s still out there for us but it is a matter of focus and when we commit to a expansion in a territory we do so with a view of success not just for ego sake. When will we eventually go to the US is still a question for us, but probably in the next five years we’ll look into going into that market as well.

QSR Media: Are you looking to buy any more brands to put under the Foodco banner?
Serge: We have a strong infrastructure here and we have a very strong support team of people who understand retail and franchising. Our DNA is about intellectual property and developing that intellectual property to ensure retail success.

I look at expansion opportunities in the things that we know, so taking over smaller coffee chains and food operations is certainly on the cards. We have a very strong balance sheet and are always on the lookout for opportunities. 

QSR Media: Who are your customers for each of your brands?
Serge: Muffin Break, by providing such a great value for money offer, means that it cuts across a number of demographics, from children, to mums, to the elderly, which represents a very strong part of our customer base. In the case of Jamaica Blue, our offer is tailored more to a higher demographic group, predominantly women who are very discerning and eager for points of difference.

Dreamy Donuts is a more sophisticated donut offering than the basic donut offer. We use only natural filling with no preservatives or additives and our donuts are baked and prepared at each store which ensures they are fresh. It has a very wide appeal from the seniors to the very young.

QSR Media: How do you train and coach your franchise owners to ensure your brand standards are maintained?
Serge: Training has been an integral part of our business for many years. It has developed a lot over the last few years. I think the biggest change in franchising I have seen has been the change in franchise business owners. In the early days a large number of franchisees were very entrepreneurial, and many came from other small business or corporate management jobs. Today, there are many more franchisees from diverse backgrounds and of varying skill level and education.

This places greater emphasis on the need to train and to ensure remedial training is available. Certainly the need to train is extremely important and more so today than ever before. It’s a difficult, competitive environment out there, and the need to maintain the customer’s standards and the brand reputation and integrity is critical to success. We’ve developed a comprehensive online training system over the last few years to complement our already extensive training program. All franchisees attend a comprehensive training program for 2 weeks at our Foodco Training facility. This program includs classroom-type education, business skills, employee management, accounting, marketing, amongst other things and also covers the basic retail skills, cooking and baking, and understanding and making a great cup of coffee.

In addition we also ensure our franchisees do in store training with our more experienced bakers and customer service people and experience face to face customer service.

We believe our franchisers are very well-prepared when they go into their own business. But we also have ongoing training sessions for the franchisee and their staff to assist them in maintaining standards and up to date practices.