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Freshstop: Joe Boyle

Franchisors in the fuel and garage convenience store sectors such as Caltex and Freshstop have discovered that there are significant benefits to working together.

Nadine Todd

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Joe-Boyle

Today the Freshstop brand is synonymous with Caltex fuel stations, found almost exclusively at Caltexes around the country. It’s also backed by the Fruit & Veg City brand, which means that franchisees of Caltex and Freshstop are supported by not one, but two power-house franchisors.

“Two franchisors working together needs to benefit both brands as well as the franchisees,” says Joe Boyle, director of Freshstop. “We spent a long time developing the alliance agreement and ensuring we were all on the same page. It’s a very open relationship. Each brand has an alliance manager, and we work closely together, meeting regularly, addressing any problems that might have arisen, and tracking issues so that they can quickly be resolved.”

Before the system could officially launch with four pilot stores in 2009, the franchisors needed to intimately understand each others’ brands.

As Caltex is the core brand, the fuel franchisor drives overall strategy, although this is developed working in conjunction with Fruit & Veg City, whose expertise lies on the retail side. Together, the brands bring a wide array of expertise to the table, and franchisees are well supported on both the fuel and convenience store sides. Viewed as equally important, Caltex recognises the role the Freshstop brand plays in bringing customers to the garages, and so overall marketing strategies in particular are created together.

A ‘Fresh’ New Brand

Freshstop was not born as a garage convenience store brand. In fact, it began life in 2006 as an in-store department within Fruit & Veg City in a drive to minimise waste. “The nature of fresh produce retail means that at the end of each day you end up with bruised or damaged produce. You can’t sell it, and so a huge amount of waste is generated,” explains Boyle.

Meanwhile, the owners of Fruit & Veg City, Brian and Mike Coppin were paying attention to global trends, and smoothies were starting to take the fresh food world by storm. They were healthy and delicious, and an ideal solution to the fruit wastage problems that Fruit & Veg City store owners faced. And so the first Freshstops were developed as fresh fruit smoothie departments within stores.

The concept was so popular that soon free-standing Freshstops were opening in shopping centres from the Western Cape to Bloemfontein. Within a year there were 13 free-standing Freshstops, over and above the in-store departments. Freshly-made sandwiches and wraps were added to the healthy menu, and the smaller franchise offered franchisees a more affordable way of joining the Fruit & Veg family.

And then in 2008 Caltex approached the Fruit & Veg City franchisors with the possibility of an alliance.

Making an Alliance

“BP had partnered with Pick n Pay, Shell had its Shell Select brand, Total had Bon Jour and Engen had partnered with Woolworths,” says Boyle. “The convenience store market was changing, and becoming highly competitive. Caltex was looking for a way to revitalise its Starmart brand. It needed something new – and different.”

The fuel franchisor originally approached Brian and Mike about the Fruit & Veg City brand, but the retail franchisors had a different idea – the Freshstop concept would be ideal as a garage convenience store.

By this stage Boyle had already joined the Fruit & Veg City head office. The Freshstop brand was growing and needed its own dedicated manager. Boyle therefore became integral in the discussions with Caltex.

“Partnering with Caltex meant we needed to adjust our strategy for the Freshstop brand,” he explains. “First, we wanted Freshstop to become synonymous with Caltex, which meant it needed to be rebranded within Fruit & Veg City stores. These were renamed Fruitstop, and today every Foodlover’s Market has an in-store Fruitstop department. Existing Freshstop franchise licenses were not renewed, and there are only four non-Caltex affiliated Freshstops still in existence.”

Step two involved the development, a concept that would suit the convenience market. “The Freshstop brand was very popular, but you can’t only serve fresh, healthy food at a convenience store,” says Boyle. “No-one is 100% healthy, 100% of the time. We needed to extend our offering to include cigarettes, soft drinks, crisps and chocolates, as well as grocery essentials like tinned goods, milk, even washing powder – and we needed to do this without losing the ‘fresh’ appeal of Freshstop.”

The repositioning of the brand was a success – the convenience stores offer everything consumers expect from garage shops, with the added bonus of fresh produce, wraps and sandwiches – and consumers have responded very favourably. “When we first piloted the stores a consumer actually walked up to me and said, ‘This is great, even this Coke in my hand feels fresher’,” laughs Boyle. “There was a great take-up of the concept.”

Growing a Footprint

Proving the concept worked was only the beginning though. Next came the mammoth task of starting to convert Starmarts to Freshstops. “No Caltex franchisee is forced to convert to a Freshstop,” explains Boyle.

“This means we need to really sell the concept to them. It’s a much bigger investment, but it also converts a c-store into a premier league offering.” The aim is to eventually convert all Starmarts into Freshstops, but it’s a slow process. “You can’t convert 180 stores overnight,” says Boyle. Fruit & Veg City is therefore the franchisor for both Starmart and Freshstop, managing both brands, taking care of the supply chain and assisting franchisees.

Caltex franchise owners who have converted their stores have experienced a 60% growth in profits on the retail side, and an 8% to 12% growth in fuel volume, so there is a strong argument for converting to a Freshstop.  However, it’s also an investment for franchisees who choose to do so.

The Freshstop Franchise Experience

Freshstop stores range from 30m2 to 150m2, depending on the type of store an owner wants to open, the investment they are willing to make and the available space. There are three models to choose from: A self-service bar (the smallest option, where fresh food is delivered daily); semi-kitchen (where some product is made on-site); and full kitchen (where all food is manufactured on-site, including burgers, wraps and sandwiches.)

“New stores are opened according to what the franchisee wants, but in the case of converting existing stores into Freshstops, we try to eliminate as many costs as possible by using what the franchisees already have,” says Boyle. “Quality is essential, and of course the look and feel of the store has to follow the Freshstop model, but if the kitchen equipment is in good working order, for example, why replace it?”

In an effort to keep costs down, there are also no joining fees, no programme management costs and no rebates from builders or equipment suppliers. The fact that Freshstop belongs to Fruit & Veg City means the brand is supported by a well-established supply chain that specialises in transporting fresh produce, and has a national warehousing system – both  of which mean that Freshstops in even far-flung areas receive fresh deliveries, every day.

It also means that Freshstop gets to enjoy the good pricing points of a major retailer, which means that even though it’s a convenience store model, which is traditionally more expensive than normal retail outlets, Freshstop prices are incredibly competitive, changing the perception that garage stores equal high prices.

The franchisor will assist franchisees in choosing a model, converting the store, designing a menu and understanding the Freshstop brand. All franchisees go through a two-week training course, after which the franchisor follows a ‘hand holding’ process for a further five to six weeks. Thereafter, there are ongoing training sessions, as well as quarterly meetings and an annual conference.

A Franchisee Forum gives franchisees an opportunity to provide both Caltex and Freshstop feedback, which in turn allows the franchisors to assist the franchisees where necessary and troubleshoot any problems.

Chevron (the owners of Caltex), Fruit & Veg City and Boyle are all represented on the forum, as well as the franchisees through chosen representatives. “The franchisees we choose to represent the group are those who are not only interested in their own site, but developing the brand as a whole,” explains Boyle. “The more Freshstops we open, the more traction the brand gets, the better for everyone.”

Localised menus

Having a national footprint that caters to a range of geographical and LSM markets means that each Freshstop’s menu needs to be designed specifically for that area’s consumer. “We don’t have a one-size-fits-all approach,” says Joe Boyle, franchise manager, Freshstop. “We carefully evaluate who our consumers are at each store, and then choose the right range of sandwiches, wraps and other foods for that target market. Our selling points are that we are fresh, convenient and affordable, but we need to be offering the right food as well, which in turn leads to more feet through the door.”

By the Numbers

2006

Freshstop brand is launched

2009

The first four Freshstops are piloted at Caltex garages

73

Total Freshstop stores currently open at Caltex garages

48

Number of stores scheduled to be opened in 2012

60%

In-store growth in year one of Starmart to Freshstop conversion

33%

In-store growth in year two

25%

In-store growth in year three

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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Entrepreneur Profiles

6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Twenty years after first wanting to own a business, Appanna Ganapathy launched ART Technologies, a business he aims to grow throughout Africa, starting with Kenya thanks to a recently signed deal with Seacom. As a high-growth entrepreneur with big plans, Appanna spent two decades laying the foundations of success — and now he’s starting to collect.

Nadine Todd

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Vital Stats

Like many entrepreneurs before him, Appanna Ganapathy hadn’t even finished school and he was already thinking about his first business venture. A friend could secure the licensing rights to open Nando’s franchises in Mozambique, and they were very keen on the idea — which Appanna’s mom quickly dampened. “You can do whatever you want,” she said. “As long as you finish your degree first.”

Unlike many other entrepreneurs however, Appanna not only finished his degree, but realised that he had a lot of skills he needed to develop and lessons to learn before he’d be ready to launch the business he wanted.

“We launched ART Technologies just over two years ago. If I had started any earlier, I don’t think I would have been as successful as I am now,” he says.

Here are six key lessons that Appanna has learnt along his journey, which have allowed him to launch a high-growth start-up that is positioned to make an impact across Africa.

1. You don’t just need a product – you need clients as well

Business success is the ability to design and execute a great product and solution, and then be able to sell it. Without sales, there is no business. This is a lesson Appanna learnt while he was still at university.

“I was drawn to computers. I loved figuring out how they worked, playing computer games — everything about them,” he says. “My parents lived in Mozambique, and during my holidays I’d visit them and a friend who had a computer business. I helped him assemble them and thought I could do this too while I was studying. I convinced my dad to buy me a car so that I could set up my business — and never sold or assembled a single computer. I delivered pizzas instead.”

So, what went wrong? The simple truth was that at the time Appanna had the technical skills to build computers, but he lacked the ability to sell his product.

“If someone had said, ‘I’ve got an order for 30 computers’, I would have filled it — but to go out and get that order — I didn’t really even know where to start.”

2. Price and solution go hand-in-hand

As much as you need the ability to sell your solution, you also need a market that wants and needs what you’re offering, at a price point that works for everyone.

In 2007, Appanna was approached by a former supplier whom he had worked with while he was based in Mozambique. The supplier had an IT firm and he wanted to expand into South Africa. He was looking for a local partner who would purchase equity shares in the company and run the South African business.

“I loved the opportunity. This was something I could build from the ground up, in an area I understood well,” says Appanna. The firm set up and managed IT infrastructure for SMEs. The value proposition was simple: “We could offer SMEs a service that they could use for a relatively low cost, but that gave them everything an enterprise would have.”

The problem was that although Appanna and his team knew they had a great product, they were competing on price with inferior products. “If we couldn’t adequately unpack the value of our solution, an SME would choose the cheaper option. It was a big lesson for me to learn. It doesn’t matter how good the solution is that you’re offering — if it’s not at a price point that your target market accepts, they won’t choose you.”

It was this understanding that helped Appanna and his team develop the Desktop-as-a-Service solution that ART Technologies now offers the SME market.

“While I was developing the idea and the solution, I needed to take three key things into account: What do SMEs need from an IT infrastructure perspective, what is the most cost-effective way to offer them that solution, and what will the market pay (and is it enough to cover our costs and give us a small profit margin)?”

Appanna’s experience in the market had already taught him how cost-conscious SMEs are, and so he started developing a solution that could deliver value at a price point SMEs could accept. His solution? A unique Desktop-as-a-Service product that combines all the processing power and Microsoft products a business needs, without any capex outlay for servers or software.

“It’s a Cloud workstation that turns any device into a full Windows computer,” Appanna explains. “We hold the licences, and our clients just access our service. A set-up that would cost between R180 000 and R200 000 for 15 users is now available for R479 per user per month.”

It took Appanna and his partners time to build the solution, but they started with the price point in mind, which meant a solution could be designed that met their needs as well as the needs of the market.

“Too many businesses set everything up, invest in the solution, and then discover they can’t sell their product at the price point they need. My time in the market selling IT and infrastructure solutions gave me invaluable insights into what we needed to deliver on, and what we could realistically charge for our service.”

3. Get as much on-the-ground experience as you can

appanna-ganapathy-art-technologies

The time that Appanna spent building the IT firm he was a part-owner of was invaluable. “I started as a technical director before being promoted to GM and running the company for three and a half years. Those years were very, very important for me. They’re where I learnt everything about running a business.

“When I started, I was responsible for sales, but I didn’t have to actually go out and find clients, I just had to meet them, compile quotes and handle the installations. Everything I did was under the guidance of the company’s CEO, who was based in Mozambique. Being the guy who did everything was the best learning ground for me. It set me up for everything I’m doing today. In particular, I learnt how to approach and deal with people. Without people and clients your business is nothing.”

Appanna didn’t just learn by default — he actively worked to expand his understanding of all facets of the business. “At the time I wasn’t planning on leaving to launch my own business,” he says. “I was a shareholder and I wanted to grow that business. That meant understanding as much as possible about how everything worked. If there was something I wasn’t sure of — a process, the numbers, how something worked — I asked. I took personal responsibility for any errors and got involved in every aspect of the business, including areas that weren’t officially ‘my job’. I wanted to really grow and support the business.”

4. Stay focused

Interestingly, while the experience Appanna has accumulated throughout his career has allowed him to build a high-growth start-up, it also taught him the importance of not wearing too many hats as an entrepreneur.

“I’m glad I’ve had the experience of wearing multiple hats, because I’ve learnt so much, but I’ve also learnt that it’s important to pick a lane, not only in what you do as a business, but in the role you play within your business. I also race superbikes in the South African Kawasaki ZX-10 Cup; through this I have learnt how important it is to focus in the moment without distractions and this is a discipline I have brought into the business.”

“If you’re the leader of an organisation, you need to let things go. You can’t be everything to everyone. When I launched ART Technologies, I knew the key to growth would be the fact that although I’m technical, I wasn’t going to run the technical side of the business. I have strong technical partners whom I trust, and there is an escalation framework in place, from tech, to tech manager, to the CTO to me — I speak tech and I’m available, but my focus is on strategy and growth. I believe this is the biggest mistake that many start-ups make. If you’re wearing all the hats, who is looking at where you’re going? When you’re down in the trenches, doing everything, it’s impossible to see the bigger picture.”

Appanna chose his partners carefully with this goal in mind.

“All the partners play a very important role in the business. Ruaan Jacobs’s strength is in the technical expertise he brings to the business and Terry Naidoo’s strength is in the support services he provides to our clients. Terry is our technical manager. He has the most incredible relationship with our customers — everyone wants to work with Terry. But there’s a problem with that too — if we want to scale this business, Terry can’t be the technical point for all of our customers.

“As partners we have decided what our blueprint for service levels will be; this is based on the way Terry deals with clients and he is developing a technical manual that doesn’t only cover the tech side of the business, but how ART Technologies engages with its customers.

“Terry’s putting his essence down on paper — a step-by-step guide to how we do business. That’s how you build a service culture.”

5. Reputation, network and experience count

Many start-ups lack three crucial things when they launch: Their founders haven’t built up a large network, they don’t have a reputation in the market, and they lack experience. All three of these things can (and should) be addressed during start-up phase, but launching with all three can give the business a valuable boost.

Appanna learnt the value of networks at a young age. Born in India, he moved to Zambia with his family as a young child. From there he moved to Tanzania and then Mozambique, attending boarding school in Swaziland and KwaZulu Natal. At each new school, he was greeted by kids who had formed strong bonds.

“I made good friends in those years, but at each new school I recognised how important strong bonds are, particularly as the outsider.”

Appanna’s early career took him back to Mozambique, working with the UN and EY on various projects. When he moved to South Africa, as a non-citizen he connected with his old boss from the UN who offered him a position as information officer for the Regional Director’s team.

His next move would be to the tech company that he would run for just over three years — also the product of previous connections. “Who you know is important, but how you conduct yourself is even more so,” says Appanna. “If your reputation in the market place is good, people will want to do business with you.”

Appanna experienced this first hand when he left to launch his own business. “Some key clients wanted to move with me,” he says. “If I had brought them in it would have settled our business, but I said no to some key customers who hadn’t been mine. I wasn’t ethically comfortable taking them with me.”

One of those multinational clients approached Appanna again six months later, stating they were taking their business out to tender and that they were hoping ART Technologies would pitch for it. “Apart from the Desktop-as-a-Service product, we also provide managed IT services for clients, particularly larger enterprise clients. Due to the client going out on tender and requesting for us to participate, we pitched for the business and won. The relationship with this client has grown, allowing us to offer them some of our services that they are currently testing to implement throughout Africa.”

“I believe how we conduct ourselves is essential. You need your own personal code of ethics, and you need to live by it. Business — particularly in our environment — is built on trust. Our customers need to trust us with their data. Your reputation is key when it comes to trust.”

Interestingly, although Appanna and his team developed their product based on a specific price point, once that trust is built and a certain standard of service is delivered, customers will pay more.

6. Start smart and start lean

Appanna was able to launch ART Technologies with the savings he and his wife, Kate, had put aside. He reached a point where he had ideas he wanted to take to market, but he couldn’t get his current business partners to agree to them — and so setting up his own business became inevitable.

Although he was fortunate to have savings to bootstrap the business, it was essential for the business to be lean and start generating income as quickly as possible. This was achieved in a number of ways.

First, Appanna and Kate agreed on a start-up figure. They would not go beyond it. “We had a budget, and the business needed to make money before that budget was reached.” The runway Appanna gave himself was only six months — highly ambitious given the 18-month runway most start-ups need. “Other than my salary we broke even in month three, which actually extended our runway a bit,” says Appanna.

Appanna had a server that he used to start with, and purchased a second, bigger server four months later. He also launched another business one month before launching ART Technologies — ART Call Management, a virtual PA services business that needed a PABX system, some call centre technology and two employees.

“I’d been playing around with the idea for a while,” says Appanna. “We were focused on SMEs, and I started noticing other challenges they faced. A lot of entrepreneurs just have their cellphones, but they aren’t answering them as businesses — it’s not professional.

“In essence we sell minutes — for R295 you get 25 incoming calls and 50 minutes of transferred calls. We answer the phone as your receptionist, transfer calls and take messages. How you use your minutes is up to you. For example, if you supply the leads, we can cold call for you. ART Technologies uses the call management business as a reception service and to do all of our cold calling. It’s kept the business lean, but it’s also brought in an income that helped us with our runway.” In 2017 ART Call Management was selected as one of the top ten in the SAGE-702 Small Business Awards.

The only problem with almost simultaneously launching two businesses is focus. “It’s incredibly important to know where you’re putting your focus,” says Appanna. “The call management business has been essential to our overall strategy, but my focus has been pulled in different directions at times, and I need to be conscious of that. The most important thing for any start-up is to know exactly where your focus lies.”


Into Africa

Thanks to a distribution deal signed locally with First Distribution, ART Technologies was introduced to Seacom, which has available infrastructure in a data centre in Kenya.

“It’s a pay-per-client model that allows us to pay Seacom a percentage of every client we sign up,” says Appanna. “First Distribution will be our sales arm. They have a webstore and resellers, and we will be opening ART Kenya with a shareholder who knows the local market.”

From there, Appanna is looking to West Africa and Mauritius. “We have the product and the relationship with Seacom gives us the foothold we need to grow into East Africa.”

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Entrepreneur Profiles

Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

All over the world kids are abandoning the traditional notion of choosing a career to pursue until retirement. Gen Z aren’t looking to become employable job-seekers, but creative innovators as emerging business owners.

Diana Albertyn

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Do kids have an advantage or disadvantage when it comes to starting and building a company? It depends on how you look it. Juggling school, friends, family and other aspects of childhood and adolescence comes with its own requirements, but perhaps this is the best age to start.

“Being an entrepreneur means having to learn, focus, and connect to people and these are all traits that are valuable throughout life. Learning this when you are young is especially crucial, and will set you up for success and to be more open to other opportunities,” says billionaire investor, Shark Tank personality and author Mark Cuban.

Here are some of the most successful kidpreneurs who have cashed in on their hobbies, interests and needs to start and grow million dollar businesses borne from passion and innovation:

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30 Top Influential SA Business Leaders

Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.

Nicole Crampton

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Entrepreneurship is said to be the answer to South Africa’s unemployment challenges and slow growth, but to foster entrepreneurship we ideally need business leaders to impact grass root efforts. Business leadership is vital to improved confidence and growth. These three titans of global industry say:

  • “As we look ahead, leaders will be those who empower others.” – Bill Gates
  • “Leaders are also expected to work harder than those who report to them and always make sure that their needs are taken care of before yours.” – Elon Musk
  • “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.” – Steve Jobs

Here are 30 top influential SA business leaders forging the path towards a prosperous South African future.

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