How tashas Built A Recession Proof Business

How tashas Built A Recession Proof Business

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When tashas was started in 2005, it had all the makings of a trendy yet unremarkable lifestyle business. Founder Natasha Sideris had no grand ambitions – she simply wanted to create a cosy lunchtime café that would cater to a neglected market. Short on cash, she even had to borrow from loansharks, because her lack of experience ruled out other funding options. So how did she turn a simple café into a brand that not only attracted the interest of a listed company, but is now also going global and is often referred to in Famous Brands circles as recession-proof?
Natasha-Sideris

Vital Stats

  • Player: Natasha Sideris
  • Brand: tashas
  • Established: 2005
  • Visit: tashascafe.com

Natasha Sideris is not a chef. Nor does she have any desire to be one. She is an entrepreneur. More particularly, she is a restauranteur. Sadly, in the age of the celebrity chef, the crucial (and challenging) role of the restauranteur is often overlooked. Running a restaurant is incredibly hard. At its core, a restaurant is a business — one in which exceptional customer service and constant innovation is crucial — which is why so many new restaurants fail.

Sideris has overcome the challenges associated with starting a restaurant to create a brand that is utterly unique. Like many successful franchises, tashas grew from a small sole operation into a large organisation, but unlike many other brands, it has retained its soul. tashas Is not your typical franchise. In many ways, a tashas restaurant has as much in common with an independent operation as it does with a franchise.

How did Sideris manage it — how did she create a franchise that feels unique and offers a surprisingly intimate experience, but has also proven itself to be scalable and globally appealing? The journey hasn’t been easy, but it has been rewarding.

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Challenge one: Finding a niche

tashas-restaurant-layout

The restaurant industry is an incredibly crowded one, which means it can be difficult to establish a new operation. There are foodies out there who enjoy testing new restaurants, but the average customer isn’t terribly adventurous. Very often, customers stick to what they know. This, at least, is a popular opinion within the industry, and one that causes many new restauranteurs to resort to a franchise business, as opposed to an independent operation.

The franchise option makes sense. It offers a proven business model that brings with it a built-in customer base, which is why franchises in general tend to fail with less frequency than independent operations.

But Sideris doesn’t agree that franchising is necessarily the only option. Sure, franchising makes sense, but there is space for independent operations as well.

“More than ever, I think there is a desire for restaurants that offer unique experiences,” says Sideris. “People in general are more knowledgeable about food and hospitality trends today than they were in the past, and they are now always on the lookout for a place that offers something new and innovative. Franchises will always be popular, but I do think the modern dining landscape leaves a lot of space for independent operations.”

Despite owning a franchise restaurant at the time (a Nino’s), Sideris started tashas in 2005 because she identified a gap in the market that no franchise operation — or independent operation, for that matter — was filling.

“I saw that there was a demand for a lunchtime restaurant that offered exquisite food, a trendy environment and great service,” says Sideris. “No one was really catering to that market at the time, and I knew there was a promising business there.”

Challenge two: A lack of funding

tashas-restaurant

Identifying a business opportunity is one thing, getting hold of the funding necessary to pursue that opportunity is quite another. Most lending institutions will only consider a start-up loan if the entrepreneur has considerable assets that could be offered up as collateral. Franchises, meanwhile, typically demand that franchisees provide 50% of the required start-up capital in the form of unencumbered funds. The reason is simple: Access to funds matters. Under-capitalisation is one of the main reasons many businesses fail.

So where does that leave entrepreneurs who don’t have adequate funds? Sideris — desperate to realise her dream but without the money needed — was forced to resort to extreme measures. She approached what might be charitably referred to as ‘unofficial lending institutions’, but could more accurately be described as loan sharks.

With no bank willing to look at her, it was a strategy that she was forced to resort to no less than three times: First when she opened her original Nino’s restaurant in Bedfordview, then when she opened her first tashas in Athol in 2005, and finally when she converted her Nino’s into the second tashas in 2007.

It is a ‘solution’ with obvious risks, and not one that she would recommend. “The first tashas was under-financed by about R1,8 million. By the time it opened, I was in a very deep hole. Clawing myself out of it required incredibly hard work. Fourteen-hour days were the norm,” she says.

However, she doesn’t believe that a lack of funding should deter entrepreneurs from pursuing their dreams.

“Money helps, but you can get very far with hard work, tenacity and ingenuity. Don’t let money put you off. Too many entrepreneurs feel that they can’t pursue their dreams because they don’t have money. That’s just not true. If you’re willing to work extremely hard, you can make it happen.”

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Challenge three: Delivering a premium experience

tashas-founder

Right from the outset, Sideris knew that tashas should offer a premium dining experience — yet another reason she needed a lot of capital to get the restaurant going. As mentioned, she wanted the food, setting and service to all be of the highest quality. Accomplishing this required a fanatical attention to detail.

“Even today, I test and greenlight every single dish before it finds its way onto a tashas menu,” she says. “I also demand that only the best ingredients be used, and that absolutely everything be freshly prepared once ordered. Nothing is pre-made.”

This is an approach that one would hardly imagine lends itself to franchising, but the strategy went unchanged even when tashas was partially purchased by Famous Brands in 2008.

Sideris has maintained the same level of quality by selecting franchisees very carefully, and by offering far more training than you’ll find in the average franchise operation.

“With most franchises, head office will typically spend about a week in a store once it opens. We spend no less than six weeks in the business. When a tashas was opened in Dubai in 2014, I spent three months there. If you want people to really adopt your way of doing things, you need to expose them to it consistently. Once you’ve trained someone to do something in a particular way for six weeks, they’ll keep doing it once you’re gone.”

Of course, providing a premium product or service is expensive, which brings with it its own set of challenges. Rising costs and the weakening of the rand in particular is currently placing a lot of pressure on local restaurants.

“Not that long ago, an avocado cost R6. Today, a top-quality one costs about R22. If a restaurant charges a customer R60 for it, it might seem as if that offers a good chunk of profit. However, once you subtract labour costs, rent, furnishings, electricity and water, you’re not left with very much. The fact of the matter is, many restaurants are struggling to make ends meet,” says Sideris.

What are the options? The first is to up prices, and the second is to compromise on quality. Compromising the tashas experience is not something that Sideris is willing to do, which means that she has been forced to increase prices.

“We’ve upped prices recently,” says Sideris. “But you can’t pass all price increases on to the consumer. Over the last few months, our suppliers have increased prices twice, while we’ve only done it once. Like most businesses, we’ve been forced to absorb a significant amount of the costs.”

If you’re going to increase prices, you also need to be cognisant of the fact that customers will become increasingly demanding.

“If you’re going to increase prices, you need to provide an even better service and experience than before. You can’t ask more and then let the product take a dip in quality. Customers rightfully won’t stand for that.”

Challenge four: Franchising the business

tashas-franchise-business

When Sideris started tashas, she had no intention of ever franchising the business. In truth, franchising never even seemed like a possibility. An upmarket lunchtime café had little in common with the restaurants and fast-food operations that were typically franchised.

But fate intervened in the form of Kevin Hedderwick, CEO of Famous Brands. “I had known Kevin since about 2001,” says Sideris. “He was a regular customer at my Nino’s in Bedfordview, which I later converted into a tashas. When my second restaurant had been up and running for about a year, he approached me and asked me what my plans for the future were. I wasn’t sure what to say, and in any case, I didn’t think that a listed company would ever be interested in a small operation like mine.”

But Hedderwick was serious. Famous Brands was very interested in partnering tashas. Sideris, however, was reluctant.

“I didn’t want to franchise. I couldn’t imagine giving up control of the food and design of the restaurants,” says Sideris.

She struggled with the decision for no less than eight months. “Famous Brands was very patient with me,” Sideris laughs. “I was so afraid to make a decision.”

In the end, though, Sideris did agree to sell a majority stake in tashas to Famous Brands. The company acquired a 51% share in the brand, but she retained her two stores as a franchisee. Immediately, Sideris was in the unique position of being both franchisor and franchisee. It was clear that this would not be your typical franchise operation.

“Having my own stores has been very useful,” says Sideris. “It helps me to understand the challenges that franchisees deal with.”

Read more on Famous Brands: Kevin Hedderwick here.

Why did she finally agree to sell?

“It all came down to my belief in Kevin. He had a vision, and I knew that I could trust him. I knew he would allow me to retain the kind of control I was looking for,” she says.

Challenge five: Growing the brand

tashas-logo-nicolway

The approach that Sideris has taken to growing the tashas brand is very different from that typically used with franchise restaurants and fast-food outlets.

While she demands consistency in the quality of the food and the level of service, each of the locations is unique, while at the same time retaining the DNA of the tashas brand. This is mostly shown through the tashas design elements that inform both the interior design and the ‘Inspired By’ menu.

“If every tashas was exactly like the next one, I think people would get bored. Customers want unique experiences. I always compare the tashas restaurants to a group of close friends — they’re similar but still unique,” she says.

With this in mind, tashas makes use of a 30/70 rule, whereby 30% of the food and design of each store has to be the same as the other restaurants, but 70% can be different.

“I came up with the idea of giving each restaurant its own unique look and feel that would appeal to the local clientele. So, tashas Melrose, which is situated in the very upmarket Melrose Arch, is inspired by salmon, champagne and oysters. tashas Brooklyn in Pretoria has a Dutch Huguenot vibe, while tashas Hyde Park has a Parisian feel.”

While most franchise operations tend to operate under the belief that more is better, Sideris and Famous Brands have made the surprising decision to limit the number of local locations to the relatively small number of 15.

“I don’t think the local market can really support more tashas restaurants. There is a limit to the number of suitable locations,” says Sideris. “tashas isn’t like other franchise operations where success lies in scaling as quickly as possible. tashas has fewer locations, but higher turnover.”

Where does that leave the future of the brand? The answer lies in heading overseas. “We made the decision a few years ago to expand the brand internationally. We looked at two markets in particular: Australia and Dubai,” says Sideris. “At first glance, Australia seemed like a great idea, since it is very similar to South Africa.”

What gave Sideris pause, however, was the long distances and time differences involved. “I was worried about the logistics of setting up a restaurant so far from home. The time difference would make it hard to communicate, and, should there be a sudden emergency, getting there wouldn’t be easy,” she says. “Because of this, Dubai made more sense. There’s no great time difference and it’s only eight hours away.”

Also, Dubai proved to be surprisingly similar to South Africa in many ways. It had the same mall and restaurant culture that South Africa is famous for.

tashas Dubai opened in 2014 and was an instant success. “We were blown away by how well tashas was received in Dubai,” says Sideris. “It showed us that we have a brand that has international appeal.”

What’s next for the brand? More restaurants are already in the works for Dubai. After that, opening tashas in Australia and the UK seems like an inevitability.

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Jun 13, 2016
GG van Rooyen is the deputy editor for Entrepreneur Magazine South Africa. Follow him on Twitter.