Fresh from a holiday in Africa, Boost Juice founder Janine Allis says Australia is blessed if it can afford to get worked up over a carbon tax, but admits retailers are under pressure.
She says consumers are unsure about the economy and that’s why they’re not spending. High rents, high labour costs and the Government’s poor understanding of business and its cost pressures don’t help small business people either, Allis says.
Still, as Boost enters its 12th year, the entrepreneur is targeting 20% growth and says her business has never been in better shape.
And following the sale of a 70% stake in Boost last year, Allis say she is talking to three businesses in Australia about potential acquisitions and has an open mind on overseas expansion too.
Her other business, Salsa’s Fresh Mex, is now four years old and turned over $17.6 million in the year to May, with plans for a further 10 new stores as Australians develop a taste for better Mexican food.
The last time I spoke to you was about the carbon tax and you were saying that you would need more detail before signing up in support. Now that you’ve seen the detail, what do you think?
To be honest I haven’t gone through it in detail to make a comment so… no comment! When did it come out?
A couple of weeks ago.
Right, I’ve just come back from overseas, two days ago. However the African jungle is very interesting.
Well, that would have given you a very different look at the world.
Actually one of the greatest things there, completely off subject, but a really interesting thing for us is we actually ended up being with a Supreme Court judge in South Africa and her whole youth was about getting Nelson Mandela out and being part of the ANC and spending time in jail herself. She was this very funny, cynical Supreme Court judge.
We think we’ve got problems, bloody hell. All we’ve got is a carbon tax!
One of the things she said was people overseas, people from South Africa for instance, think Australia’s boring and it’s very grey. And I said, as an Australian, ‘What do you mean, boring?’ She said, ‘Boring’s good. You haven’t got extreme anything.’
And I thought, ‘Boring is good in that capacity, our issues compared to what they are facing and other countries are facing our issues are pretty boring.’
I suppose we are in a position where we can make mountains out of mole hills.
And how great’s that? How lucky are we that we can do that?
Well, I know your new business Salsa Fresh Mex is mostly concentrated in food courts so your stores would have a good sense of how foot traffic is going at the moment. What are you hearing? Are people still heading to shopping centres?
Look, it’s really interesting because obviously being in the industry of retail you associate with a lot of other retailers and a lot of people are really struggling from all different walks of life.
But we’re finding with Boost and Salsa’s, our year-on-year in most of our stores is double digit.
It’s a bit like when we were going through the GFC; you don’t know what to expect on a day-to-day basis but so far people are going, ‘We’re still in the malls but we’re not spending, but hey we still have to eat and drink.’
So we’re finding our industry it’s still very, very strong.
But retail’s the sort of thing where you can’t go, ‘Yes, things are going well’ because tomorrow comes and you go, ‘Why have we dropped?’
So it’s more about the amount of money that people are spending rather than actual bums on seats, so to speak?
I read the paper on the weekend and it’s all very doom and gloom. It’s all about America’s about to go under, which obviously is going to affect everyone and that means it’s going to crash, and interest rates are going up and back down depending on which bank you speak to.
There’s a lot of uncertainty and I think when there’s uncertainty, people like to keep their wallets closed.
But when it comes to food, they still go, ‘We’re out, we’ll spend our $10 or $15 on food,’ which is good.
One contentious issue that people have raised in the past few months is the high retail rents in Australia. Do you think there are landlords willing to drop their rents? Is there a case for that?
Again, having an international business and just coming back from travelling, one of the things you do really discover with Australia is that it’s one of the hardest countries in the world to make money and all of our expenses make it very, very difficult.
So if there are any moments like there is at the moment with retail, that’s when you suddenly see the tipping point and you see businesses like Borders and Angus and Robertson and all those other companies that went under recently, it only then needs to move a couple of points and then it’s not viable.
And the reason is what you just said – rents.
Now the rents are extraordinary and so is the labour. The Government does a lot of theoretical calculations on how things work but they don’t actually understand the impact.
We’re a business of a whole lot of small business people – because franchisees are small business operators – and what you find is they go, ‘Okay, we’re going to increase the labour [costs] and every year we’re going to increase them, but now for us to even keep our doors open, we need to look at reducing labour.’
So it’s this spiral which is going to affect us, maybe not today but in months and years to come.
Our unemployment will have to go up. I mean, a report has said Australian cities are more expensive than New York and that’s just insane for our level of population.
With rent, what we are finding is we’re going back and getting some renewals and some of the landlords aren’t reducing.
But all of that is expensive and that’s why any more expenses or any more tax on business just makes it harder. Plus, our margins in Australia are so tiny.
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