QSRH – a case study in successful franchising Mark Lindsay Chief Executive Officer
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QSRH – a case study in successful
franchising
Mark Lindsay
Chief Executive Officer
Presentation Contents
1. Who is QSRH Pty Ltd?
- a brief history
- positioning three distinct brands
2. Adapting to change – to achieve sustained growth
- why restructure was needed
- benefits of restructuring
3. The franchise system
- Franchisor & Franchisee obligations
- The franchise dilemma
- Overcoming the dilemma
4. Summary
Who is QSRH Pty Ltd?
• Australian owned and operated
• Three iconic brands – Red Rooster, Chicken Treat & Oporto
• 620 stores in Australia , NZ, UK, China and USA
• Employment
• 75% franchise operated
• Total brand revenues
• EBITDA Growth
QSRH a brief history
1972 - Red Rooster established Kelmscott, WA
1978 - Chicken Treat established Midland , WA
1986 - Oporto established Bondi Beach, NSW
2002 - Australian Fast Foods (AFF) acquired Red Rooster
2007 - QSRH Group acquired AFF in MBO
2007 - QSRH Group acquired Oporto
2010 - QSRH Group acquired CHOOKS fresh & Tasty
2011 – Archer Capital acquired QSRH from Quadrant PE
QSRH’s Purpose
• To create and control internationally recognised
franchise food systems using our skills and expertise to
deliver maximum ROI to stakeholders through
innovation and leverage.
QSRH’s Management Role
• Set brand performance criteria
• Continually deliver growth in equity
Our Global Locations
613 stores today across Australia, New Zealand, China, the US and the UK:
Red Rooster - operates in every mainland state and New Zealand.
- 374 stores
Oporto - operates on the Australian East Coast, NZ, UK, China and the US.
- 137 stores
Chicken Treat - (including Chooks) operates in WA, QLD and Tasmania.
- 102 stores
Business Overview ... Store growth
Red Rooster:
Future growth
prospects
Oporto:
Domestic &
international growth
Chicken Treat
Impact of merger
East coast growth
QSRH Group Stores (by Brand)
359 356 376 401 427 455 485
106 119130
149168
188209
8 1216
25
55
108
168
65 65
103
111
119
127
135
0
100
200
300
400
500
600
700
800
900
1000
2009A 2010A 2011E 2012F 2013F 2014F 2015F
Red Rooster Oporto (Aus) Oporto (Int'nl) Chicken Treat
Brand Positioning – Red Rooster
Brand Positioning - Oporto
Brand Positioning – Chicken Treat
2. Adapting to change to achieve
sustained growth
Restructuring – why it was needed
• Predominantly corporate model (75%) in 2007
• Impact on decision making
• Impact of geographical spread
• Employee engagement, service, recruitment, training and development
• ROI
Store ownership
(company vs franchisee)
306
146
225467
0
100
200
300
400
500
600
700
Acquisition Today
Franchise
Company
Restructuring - Company to Franchise model
16
42% franchisee
76% franchisee
Restructuring – the challenges
• Culture – shift from corporate to franchise
• Training
• Systems
• Surveys
• Franchise Charters
• Data & measurement
17
IT infrastructure - Key Systems
Macromatix - Retail Operating System
ParTech and STM - Store POS systems (80% of group)
Technology One - Financial Management System
Progenesis - Property Management System
World Manager - Store online training system
Neller - Payroll system
Restructuring - the benefits
• Stabilised Group revenues and earnings
• Improved LFL sales growth
• Consistent approach to investment
• Product and service delivery
• Focus on standards
The Franchise System
The Franchise System
• Is based on a human relationship
• Duty of care
• Obligations – contractual, ethical, business of all parties
• It is a risk sharing system of doing business
• NO GUARANTEES NOR A LICENSE TO MAKE MONEY
The Franchise System
The Franchisor’s obligations:
• Must maintain, develop and promote the business
• Owns the business system and Intellectual Property (IP) in
perpetuity
• Invests capital and resources for continued development and growth
The Franchise System
The Franchisee’s obligations:
• Must operate in accordance with the system protocols and
procedures
• Must invest personal energy and financial capital
• Has a “limited time” right to utilise the business systems “IP” in
exchange for a fee.
The Franchise System - The Dilemma
Franchisees focus on:
• Making as much money as possible during the period of the franchise
• Costs rather than driving top line
• Self interest often without regard for creation of business value at exit
Franchisor’s focus on:
• Driving top line
• Consistent and sustained profit growth
• Group focus (Brand equity)
The Franchise System - Overcoming the Dilemma
Franchisor focus must be on:
• Support & Service
• Communication (transparency)
• Training & development
• Investment in infrastructure (IT)
• System consistency
The Franchise System – Overcoming the Dilemma
Franchisee Focus
Must work both “ on” and “in” the business continually.
“On” the business
a) business plan (5 yrs, milestones, growth, future capital, exit
strategy)
b) marketing/sales development (local, community involvement,
sporting clubs)
c) daily, weekly, monthly KPI’s
Business decisions must be made on facts, not assumption or
emotions.
The Franchise System Overcoming the Dilemma
“In” the business
Connect to your customer base
a) run shifts
b) create rosters
c) stock ordering & regular stock takes
Build and develop your people.
Summary
Driving Franchise Profits
Must work “on & in” the business
Must continually:
- measure outputs, KPI’s, benchmark, share
- work on the relationship – communication
- train and develop your people
- seek feedback – surveys, business and compliance reviews
Franchisee’s
• Must have a business plan that includes “your retirement”
Franchisor’s
• Invest in your Franchisees, employees, systems and IP.
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