Soul Origin charts expansion on growth wave

In the coming months the Senate will cast a critical eye over Australia’s scandal ridden franchise sector, examining the veracity of the franchising code of conduct and franchise agreement conventions more broadly.

But not everyone in franchising is hung up on the fine print.

For Soul Origin chief executive Chris Mavris invoking a franchise agreement is an admission that the model isn’t working.

“Franchise agreements are to be signed put in a draw and left alone until renewals come around,” he tells Inside Retail.

“The moment either of us have to rely on an agreement to mandate our relationship it has failed.”

Strong trading undoubtedly greases the gears. The café chain’s coffee sales have increased by more than 10 per cent in the last twelve months as the young brand continues its national expansion.

There are now more than 90 stores in its network, just five years after it opened its second store in 2013 and seven years after founders, Hao and Tien Quach, established the business.

If all goes to plan there will be at least another 30 outlets nationwide by the end of the next financial year as centre managers increasingly turn to food and beverage chains to fill holes left by ailing fashion trade.

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Mavris, formerly Michel’s Patisserie’s retail operations manager in NSW, says Soul Origin’s expansion has been aided by its status as a fresh idea in the market but that the business has managed to hit a sweet spot with customers looking for something different.

“All the senior executives of the company have all worked behind coffee machines for most of their lives,” he explains. “We’ve come to the market and given customers a product they want.”

Soul Origin has avoided lumping itself in with the healthy eating trend and instead bills itself with labels like nutrition, fresh food and a commitment to sustainability – making it popular with millennials.

Cafe culture surges

It has been aided by a resurgence in coffee culture in recent years. Despite the so-called Nespresso trend driving in-home caffeine consumption the premium end of the take-away coffee market has been booming, growing by 5.1 per cent annually over the last five years, according to IBISWorld.

“More people are drinking at home but they also love going out and feeling the vibe of any café,” Marvis says. “It’s an experience – some people are ordering online and grabbing and going but others want to listen to the steamer or watch baristas tamp.”

But growth hasn’t been experienced market wide, franchise giant Retail Food Group saw sales in its coffee division, which includes Gloria Jeans and Cafe2U, decline by 1.6 per cent on a same-store basis in the 11 months to November 2017.

RFG’s bakery division, including Donut King, Brumby’s and Michel’s Patisserie, booked same-store growth of 1.1 per cent during the same period.

Mavris believes market growth and taking share from competitors have aided Soul Origin’s progress as the likes of Gloria Jeans look overseas for growth opportunities, although the growing business isn’t resting on its laurels.

It has recently invested in a new range of La Marzocco coffee machines and Mythos One Grinders, which Mavris says, alongside staff training, is delivering consistency to the notoriously hit-and-miss category.

“We’ve really embraced systems,” he says. “We’ve incorporated recipes that detail x number of grams of coffee … as well as a puqpress, which tamps [compressing coffee grains in a filter basket] the same pressure over and over.”

“We’re systemising coffee to reduce the human factor.”

Article published by Inside Retail / Matthew Elmas /  April 24, 2018