Lenard’s has sold poultry through its iconic franchise for years, but managing director Bruce Myers had encountered several problems during that time.
Over time, he saw that franchisees are sent the same amount of chicken each day, which they are required to cut and sort, but the amount of chicken sent didn’t accurately reflect the sales trends of each individual store. It resulted in a lot of waste.
Following a franchise owner satisfaction survey, the company discovered its franchisees were too stressed. Employees were receiving packages of chicken, then cutting and packaging each cut individually.
So it decided to outsource the entire operation by deboning the deboning.
“But now, what we’ve done is taken the deboning part out of everything, and then put that in a poultry service. Inghams can do that in their own factory where they can automate it, and it makes the process more efficient for them and at a realistic price for our stores.”
The entire “easy cuts” system is automated. The chicken is cut in factories into individual pieces, which allows it to be packed and then shipped to each franchisee according to those locations’ sales trends.
“Our franchise owners knew they could eliminate some labour at the store level, because if you bring in a whole bird, it has the same proportions – two thighs, two breasts, and so on.”
“But if I only need half of that, I have a balance issue. Now, we can track the balance over the entire system. My store only needs X amount of fillets, and so on. So you don’t get the whole bird, and that’s worked out quite well.”
The benefits of the system reverberate across the entire chain: the system gets labour out of the store, which reduces costs, and also means each location is less cluttered.
“They’re boning the birds mechanically and manually, and then cutting the portions that we require and sending them to the individual store.”
“We’ve essentially just outsourced the manufacturing process while still maintaining the fresh chicken each day.”
And as Myers points out, this means the company can search out smaller retail locations, reducing costs over the franchise as a whole.
Currently 52% of franchise stores have converted to the new system, with the hope that 80% will convert by June 2013.
By moving chicken production to another firm, Myers says the company is able to drive the franchise program even further which will, hopefully, “drive more customers to the counter”.
Foodco is a giant in the Australian franchising world with over 350 franchise business retail outlets trading through the Muffin Break bakery café franchise, Jamaica Blue café franchise and Dreamy Donuts donut and coffee franchise.
This scale means Foodco’s latest innovation, a state of the art training academy at the Foodco head office, was a significant undertaking.
The idea was generated through the Foodco’s HR and training team who conducted franchisee surveys.
Their main feedback consisted of making improvements to ensure that staff members were better trained on day-to-day operational issues.
Drew Edie, national marketing manager for Foodco, told SmartCompany the training centre was designed to introduce new franchisees to a real life in-store environment and is built like one of Foodco’s cafes, complete with a $250,000 commercial kitchen.
Franchisees go through two weeks of intensive training before going into stores and every new staff member (including head office staff such as Edie) go through the training centre so they are qualified to work in the stores.
“The franchisees are fully prepared to go and run their own business once they have done it,” Edie says.
Edie says the challenge with encouraging innovation in a franchise is rolling something out nationally across an established network.
“We have systems in place that are tried and tested, so sometimes it is hard to change,” Edie says.
“We definitely share best practice and if things are working in certain areas we look to replicate that across the country.”
Dominic Lopresti had a problem.
He, along with his brother Marco, both joint executives of gelato chain Gelatissimo, wanted to start exporting their product overseas. But given gelato doesn’t have as many preservatives as ice cream, the transportation and logistics were costly, complicated, and driving them nuts.
“We wanted to create a point of difference,” Dominic tells SmartCompany.
“We tried to think about how we could be different to what competitors are doing. If you look at the major ice cream companies, they use a system of making in factories then distributing through cold logistics.”
That’s okay for ice cream, which relies on preservatives to keep the product tasty. But just as baked bread is best fresh from the oven, gelato is best when fresh – so the company found a way to make it easier for stores to make the product on site.
The pair came up with a type of kit production system, which contains premium quality raw ingredients and gelato-making machines, complete with instructions on how to make the product.
Not only does the system cut down on waste, but it ensures franchisees are able to convince customers they’re buying something fresher than the rest of the market can allow.
“It’s this whole idea of wanting to be different,” he says. Both he and his brother wanted to recreate the concept of making gelato, just as they did in their own father’s shop in the early 1990s.
“I wanted to get back to our roots. And we just thought; how could we recreate that atmosphere?”
But there’s a secondary business proposition to the creation of a production kit – it allows the company to send product overseas and to expand international franchise opportunities.
Now, the company exports to Asia, with the kit allowing franchisees to start production much earlier than they otherwise would have.
“When the product gets there, it’s in perfect condition, and the customer gets to experience the product that’s freshly made in store.”
“They can try gelato that’s just come out of the machine – and that’s a unique selling point for us. We encourage people to have a sample first. And for our competitors, unless they’re making product in store, they just can’t compete.”
Cara Waters is a former SmartCompany editor. Previously, Cara was a senior reporter for the Financial Times’ website and worked for The Sunday Times in London.
