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How to be a Winning Multi-Store Franchisee

Peter and John Baladakis are no strangers to success. They own several successful Pick n Pay franchise outlets. monique verduyn chats to john about his 16 years of experience in business.

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Peter and John Baladakis

John Baladakis says he is high on life. He has every right to be. In partnership with his brother, Peter and father, Alex, the self-proclaimed headstrong 40-year-old has achieved what many entrepreneurs can only dream of – ownership of seven highly successful Pick n Pay supermarket franchise stores, Pick n Pay liquor stores and Pick n Pay clothing stores, all within the retail giant’s thriving franchise system.

Born into a family of entrepreneurs, even as a teenager Baladakis knew that he would run his own business and never work for anyone else – being employed was just not an option.

He began his relationship with Pick n Pay in 1994, acquiring his first franchise when he was just 24. The supermarket in the Kempton Gate Shopping Centre located in Edleen, Kempton Park, flourished from day one. That was the beginning of a relationship with the retail group that has endured for 16 years and is still going strong. Baladakis recalls: “I had a BCom degree and a lot of retail experience which I’d gained through working at my father’s Spar supermarkets. Pick n Pay had just started franchising and my father, my brother and I were very keen to buy into a business with such a strong brand.”

Innovating within the box

How does an entrepreneurial spirit succeed within the franchise system? It is a well known fact that entrepreneurs have an almost uncontrollable urge to reinvent the wheel based on their confidence in their ability to figure out how things should be done. “I believe the key to being a successful franchisee and, at the same time giving free rein to your entrepreneurial drive, is to recognise that you can have the best of both worlds,” says Baladakis.

“A successful franchisor offers proven operational, marketing, HR and financial systems, as well as a trusted and highly valued brand. Combine that corporate systems thinking with your entrepreneurial flair, and you have a winning formula that enables you to avoid making mistakes and to become successful more quickly.”

Baladakis believes that while innovation may sometimes be curtailed by a franchising system, this has not been his experience with Pick n Pay. “We actually have a fair amount of freedom when it comes to issues like new marketing ideas within our stores. As one example, we have developed a hot food section that is quite unique in its offering. I believe in working within the box rather than trying to break it. What’s the point of expending your energies on things you can’t change? Rather find ways to work innovatively within the parameters.”

Traditionally the franchisee-franchisor relationship can be fraught with problems.

But Baladakis’s attitude has paved the way for a profitable partnership built carefully over time. Franchisors have to understand how important it is to nurture their franchisees and the franchisees need to trust the franchisor. Baladakis has this to say about his franchisor: “We have never had issues with head office.

The people I deal with are people I have built a long and healthy relationship with – they trust me as I trust them. In my view, every new franchisee has a duty to become trustworthy.”

Choosing the franchise

Baladakis stresses that two-way communication between the franchisee and franchisor is a key element to the success of the relationship.

He also notes that he was fortunate in choosing to partner with a franchisor that ‘got it right’ when it comes to franchise management. “It’s a system,” he says, “that creates wealth for people.”

Although the Pick n Pay franchise system was new at the time that Baladakis bought into it, there were several compelling reasons driving his decision. The strength of the brand and its power were amongst those, as was the company’s history and profitability. He believed in the brand. But his own passion for retail played a role too. “You have to love the business you choose to go into,” he stresses. “It becomes an integral part of your life. Understand that as a franchisee you have to sacrifice any of the comforts that a regular job gives you – there are no coffee breaks, corporate lunches or long weekends.”

Baladakis has some words of advice for people who are thinking about buying a franchise: “Speak to existing franchisees; look at the history of the franchise as well as the number and location of stores; get a detailed model of the business operation; and find out how profitable the franchise is. In addition, make sure you know what the set-up costs are and what that includes, such as design, building costs, equipment and so on. Determine upfront what the ongoing fees are, like joining fees, royalties and advertising costs.”

Building a successful outlet

In the retail industry, a customer-friendly environment is critical. Baladakis has succeeded in getting it right time and again. “You have to believe in the franchisor’s customer service philosophy, otherwise you will not be able to transfer it to your employees.”

Standards are important too, he adds. Consistency is vital – from cleanliness, to merchandising, to the way a till packer packs a bag – these all need to comply with a high standard. “The customer has to be able to rely on a certain level of service that is associated with the brand, so you cannot deviate from the standards that have been set because you will sacrifice customer loyalty, and that is what impacts the bottom line,” he says.

Site selection is another vital aspect. “A good franchisor will assist franchisees with the identification of a great site. They have the resources and experience to do so. It’s also in their interest to ensure the site is viable, as failure is bad for the brand.”

Another consideration when it comes to site location is the position of the store itself within a centre. “You need to determine how accessible the store is and whether it’s located close to the parking lot so that people can easily unpack their trolleys. When it comes to location, it’s also important to understand the local community. Who is your target market? Are they low income earners or affluent consumers? This has a major impact on the items you stock,” he explains

But the Baladakis team also did something different that has helped to cement the success of the stores they operate. “Although I love being on the shop floor, I have moved into focusing on growing our property portfolio, while Peter runs the actual stores,” says Baladakis.

“As a result, we now own five of the seven centres in which our stores are situated. This gives us an enormous advantage as we are able to pick and choose tenants. By turning the centres into better places for people to shop, we are able to drive traffic to our stores. It’s a level of control that not every franchisee has.”

Developing the team

Baladakis has been fortunate to have two partners who are family, and who bring their own retail and financial experience to the business. They now employ more than 500 people in their stores. “We make our own employment decisions,” says Baladakis. “Every store has a manager and a second-in-charge individual. When we appoint people, we look at the individual, rather than his or her experience. Systems and skills can be taught, but drive and commitment are rare qualities. It’s also important to know at what stage in its lifecycle a business is in when you are making hiring decisions. An older, established business that has been around for a while needs a stabiliser, while a new business requires the energy of a go-getter. A store that has high shrinkage rates needs someone who pays attention to detail and cares about security.”

When it comes to staff motivation, every single employee is inducted into the business and learns about the brand ethos from the outset. Having access to the franchisors’ training policies and procedures obviously has a positive impact on establishing and maintaining one’s staff complement, but giving staff inspiration is also of vital importance.

Contact Pick n Pay Franchising on: +27 11 856 7000

Pick n Pay franchising fast facts*

  • There are currently 291 franchised Pick n Pay stores in South Africa, Botswana, Namibia, Lesotho and Swaziland
  • The minimum investment required is R9,152 million, including stock, for a family supermarket
  • Ongoing operating costs vary from store to store
  • Franchisees must have previous retail management experience
  • Pick n Pay won the FASA Franchisor of the Year award in 2009. The award celebrates the success of a franchisor which has made a significant impact in the marketplace and has, through effective business management and marketing, achieved outstanding financial results and significant growth in a sector. The group converted 49 Score Supermarkets over 2008 and 2009 to Pick n Pay Franchise stores

* Information supplied by Anton Smith, GM, Franchise, Pick n Pay

The habits of effective franchisees

John Baladakis shared his ‘habits of effective franchisees’ at a recent franchisee networking breakfast hosted by Standard Bank and the Franchise Association of South Africa. They were:

  • Engage the customer

The closer you are to the customer, the higher your success rate. Excellent service should be seen as an investment because bad customer service loses you business and therefore profit.

  • Set the standards

Every day should be opening day. Your business needs to be consistent and maintain the same standard you set on your opening day.

  • Lead the team

Leadership is more than just being the boss. You need to pick a direction and stick to it. Don’t lose focus on the target, adjust the course when necessary to get there, but never take your aim off the goal.

  • Improve one thing daily. Innovate

Find ways to cut costs, to improve the customer experience, and to basically run your business more efficiently.

  • Make excellence happen

Find ways to push the goals further. You should strive to make your success today bigger than yesterday’s excellence.

These habits combined, Baladakis says, will ensure that franchisees run successful businesses, giving them the opportunity to make a positive contribution to the economy.

A Franchisee’s Perspective is published by superbean.net. For more information visit www.superbean.net

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Sector Focus

3 Tech Trends Your Franchise Should To Keep Up With During The 2018 Restaurant Revolution

For the first time in history, the majority of consumers are – arguably – more interested in how they buy instead of what they buy, according to research. Catch up quickly by responding to this in three ways.

Diana Albertyn

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How many ways can you customers choose an item, order it and pay for it in your restaurant? Mike’s Kitchen, Spur, The Baron, and other sit-down restaurant franchises across South Africa have widely started accepting mobile payments using the Zapper app. If you have too, you’re on the right track, because convenience reigns in the restaurant industry, especially where trends are concerned, for your current and future customers.

“In the last two years, there’s been a 50% increase in restaurants using technology. Almost 80% of guests say restaurant tech improves their guest experience, especially when it makes service faster,” according to a recent study focusing on diners and technology.

Here are three of the top trends influenced by consumers’ mounting affinity for experience over your menu items, décor or prices:

1. Self-service via touchscreen kiosks

Who wouldn’t appreciate skipping the queue and enjoying a consistent enhanced ordering experience? Add rich imagery and food customisation capabilities and you can see why self-service is poised to make a huge impact on the QSR industry in 2018.

Related: How Your Fast Food Franchise Can Attract Quality-Conscious Consumers

While kiosk aren’t a new form of technology, combined with loyalty programmes, touchscreens for mobile order pick-up and – in the near future – facial recognition to identify and service customers accordingly, they’re about to become a mainstream addition.

What’s in it for you though? Well, besides happy repeat customers, your order accuracy will improve and staff will be free to attend to more strategic activities within the business.

2. App-enabled ordering and pick-up

Research by QSR Web found that digital restaurant ordering is growing 300% faster than dine-in traffic.

Because “restaurant consumers are aggressively gravitating toward concepts that offer the greatest level of convenience and control across ordering, payment and distribution,” according to analysts from Wells Fargo, mobile ordering technology requires your franchise to go a level higher than its current system.

Consider implementing features such as dedicated drive-thru lanes to for app orders. Or what about outdoor locker systems activated by a mobile phone, enabling a customers to receive their order without interacting with restaurant staff?

3. Analytics aiding personalisation

Even better than mobile ordering though, is using AI to leverage apps including Facebook Messenger or simple SMS to take customers’ orders, for a personal touch. Not only does the chatbot record orders, but based on individual customer data, it’s able to predict what they may choose to eat based on various factors including age, gender and even mood.

Related: The Only How-To You’ll Need To Start A Restaurant

If you’re wondering how the mood is detected, fried chicken giant and search engine firm Baidu have established the answer: Facial recognition technology piloted in Beijing that predicts customer orders based on their face displayed in the kiosk screen.

“Restaurant technologies that capture data, such as customer orders and preference will businesses better understand their target audience. Hence, they will be used extensively in 2018,” according to Indiez, the company that developed Domino’s pizza’s app.

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Sector Focus

How To Start A Funeral Business

Running a funeral business can be lucrative, but you must determine whether it’s the right venture for you.

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how-to-start-a-funeral-business

In South Africa, burial remains the most popular end-of-life choice.

“Just how many burials take place is difficult to measure because there is a formal and an informal funeral industry in South Africa,” says Rey von Ronge, secretary of the National Funeral Directors’ Association, an industry watchdog organisation specialising in resolving disputes between undertakers and the public.

This following guide explains how you can open your own funeral home in South Africa and covers these topics:

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Sector Focus

The Pros & Cons Of Owning A Restaurant Franchise

Do you have what it takes to be a successful restaurateur? Our franchise expert offers some words of wisdom.

Jeff Elgin

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There are many different types of business format franchises, but when most people think of a franchise business, their first thought is of food. The success and growth of the many big brand-name fast-food franchises makes this a logical first stop in the thinking process.

When evaluating restaurant franchises, you must focus on the characteristics of the business from a franchisee’s perspective to determine whether this industry is the right one for you.

There are some wonderful advantages to having a food business, but there are also some challenges you need to be aware of before proceeding in this industry.

The advantages

restaurant-layout

In assessing a food business, the main advantages are typically considered to be:

Built-in Demand

Consumers have been trained to look for franchise food outlets, which can represent a big advantage for a start-up. You need to make sure the product offering of the food franchise has “staying power” in the marketplace rather than being a fad or fringe product.

Related: The Only How-To You’ll Need To Start A Restaurant

Ease in Financing

Traditional lending sources are very familiar with the real estate and equipment needs of a prepared food operation, which may ease the challenge of obtaining start-up financing. These sources also like the relatively high revenue production of a typical food franchise.

Track Record of Success

Many food franchises have multiple units and have been operating for a while, making it fairly simple to determine and verify their track record of success. That can help you make an informed decision about the business prior to getting involved.

Prestige

Whether valid or not, many people associate a high degree of glamour with a person who owns a food franchise business. The fairly high degree of status associated with this occupation is important to many prospective franchisees.

The disadvantages

restaurant-plating

In assessing a food business, the main disadvantages typically include:

High Initial Investment

Most food franchises require a significant investment to get started. Food preparation stations, sinks, stoves and ovens, grease disposal systems, venting requirements, customer seating and bathroom areas – the list goes on.

Zoning and Code Compliance

The government tries to ensure that any food business meets numerous codes and guidelines so the food product is safe for the public to consume. Complying with these regulations can initially can be time consuming.

Virtually any food franchisor will provide extensive assistance to a new franchisee in terms of dealing with zoning, permits, code compliance and all other site-related issues, because the new franchisee probably doesn’t have a clue how to do this whereas the franchisor has lots of experience on these matters.

If a food franchisor doesn’t offer extensive support on these matters (you can determine this during your conversations with existing franchisees), pick a different one.

Related: 10 Business Ideas Ready To Launch!

Labour Challenges

Most food businesses require the services of a significant number of low paid employees to conduct their business. Turnover of these employee positions is normally very high, and recruiting and retaining a sufficient number of acceptable quality employees is typically listed as the number-one challenge in any food franchise.

Relatively Low Margins

In food operations, the franchisee has both the cost of goods sold and Labour costs to contend with in an environment that is very price sensitive, especially in fast-food outlets. The net margins of most food businesses are not nearly as high as other (particularly service-related) franchises, and you’re also dealing with spoilage, theft and other issues that you don’t find in many other types of franchise businesses.

Quality of Life

As mentioned above, many people associate a high level of status with owning a food business, at least until they understand the facts of a typical food franchisee’s life. The hours can be very long, as you’re often the first to arrive and the last to go home. The Labour challenges can be very frustrating and are the main reason owners cite for wanting to leave this industry. Then there’s also the issue of what a person smells like after spending long hours each day in a food franchise.

In conclusion

south-african-restaurant

The obvious question, assuming you don’t have previous experience running a food business, is “how do you know whether you have these skills and aptitudes?” The best answer, and one that is actually required by a few of the most successful food franchises, is to go to work in an existing unit and shadow the present owner until you’ve gained enough experience to know for sure.

This isn’t going to be a process involving an hour or two – more likely it’ll take at least a few weeks to know for sure. The time commitment involved may seem high, but it is infinitely better for you to find out early (and without risking your life savings) if this business is not for you.

A final consideration related to food franchises is this: Some food franchises run very simplified operations and can provide a business model that avoids a number of the disadvantages listed above. These are typically businesses that don’t involve cooking a product, at least not on site. They may use a commissary system to deliver ready-to-serve products, or products that only have to be assembled in order to serve, to the franchise outlet. These types of businesses, like a Subway outlet, can avoid many issues but almost always still have to deal with the employee issues discussed above.

Give some serious thought to the franchisee role in terms of the tasks required in a typical day or week, the hours worked, the investment and the possible returns. Make sure you know what it takes to succeed and that you possess those qualities. Then you’ll know whether being a restaurateur is right for you.

Evaluation Tip

The secret to success in evaluating any food franchise (or any franchise for that matter) is to clearly identify the skills necessary to succeed, then make sure you either have them or go do something else. The food business can be very rewarding to a person who has the special blend of skills and aptitude to make the business work, and these operators are among the most respected in all of franchising because of their success.

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