Downturn Doesn't Spoil the Froth
There's opportunity in the global credit crunch if you know where to look, writes Keeli Cambourne.
JOHN AYOUB isn't worried about the forecast of a recession. In fact, he hasn't had time to think about it, with his business continuing to grow and his time now being taken up training his new franchisees on how to get the most out of their investment.
In just over two years Ayoub has taken his Coffee Emporium concept from a single cafe in Bankstown to more than 10 outlets across Sydney, including a new one in Miranda and another in Bondi Junction.
"The coffee industry is a little different than others because people will still spend money on a cup of coffee, it's something they can afford," Ayoub says.
However, it's not just the affordable luxury that has helped Ayoub improve his business in a time when many national corporate franchise giants are finding it tough.
He says he has concentrated on the suburbs, rather than trying to increase his franchises too quickly and too soon.
By focusing on delivering a service and product to retail centres in Sydney's west, an area that has often been neglected by the bigger coffee chains, Ayoub has built a loyal following and dedicated clientele.
"We're not afraid to go to Penrith or Campbelltown or even further west and customers are always telling us how much they appreciate the fact we are there," Ayoub says.
"One of the things we insist on even in this sort of climate is that we don't jeopardise our service and that the quality of our product is consistent."
Franchise Works director Tim Dixon says although food and beverage franchises are often one of the safest in times of financial crisis, they too can get into difficulties if they start to marginalise their business.
"Now is the time for taking oppor- tunities in marketing and service," Dixon says.
And food seems to be a diversification drawcard for many bigger companies, he says.
Australia's second-largest bookseller, Dymocks, recently bought an 80 per cent stake in the Australian-owned and operated Healthy Habits sandwich bar franchise as it seeks to diversify its business.
But Dixon says smaller franchises do not need to diversify, so much as consolidate. "Don't cut back on your serviceability and grab opportunities to increase brand awareness."
That is exactly what the founder of the Cookie Man franchise, Peter Elligett, is doing. As with Ayoub, his business is growing and he predicts it will continue to do so over the next 12 months at least.
"I have been through three recessions already … and each time my business has grown," Elligett says.
"But I also take a more aggressive attitude in this sort of climate and improve on things like point-of-sale material and ensure that we enhance our service. Sure, you can look at ways to cut costs but definitely the one thing you don't want to cut is marketing or staff.
"The last two recessions have given us better positions and opportunities - better positions in shopping centres, as landlords are more open to negotiations about rents and you can get into stronger position.
"You have to look at the positives. If you listen to the horror stories, all that doom and gloom can become a self-fulfilling prophecy."
Source: The Sydney Morning Herald