My interest for food did not begin from the sexy culinary
shows we now see on DSTV’s food and lifestyle channel. Neither did it begin with my brother’s
gradual interest in studying from the vineyards of Western Cape to the small
quaint village towns in South of France.
Rather it began in my grandmother’s kitchen, meekly nestled in an urban
home located in Hatfield, Harare. The
journey was subtle. It started with the
regular ritual of baking that my grandmother partook in weekly. She would prepare the family favourite,
banana loaf bread and small banana cookies.
She also enjoyed baking her favourite fruit cake and, then as kids we
did not enjoy the idea of dried fruit in a cake until our palates matured and
began to savour the fullness of the fruit cake.
I don’t recall how it
happened but I found myself at 15, taking Cookery class for O’ Levels at
Chisipite Senior School. My Cookery
teacher at the time was Mrs. Soltau. I remembered how she taught us how to
prepare béchamel sauce. She was
relentless in making sure we were meticulous in how we prepared it. This is because the white sauce is
significant and versatile in many dishes in the kitchen around the world. We also learnt how to make short crust pastry
and flaky pastry from scratch. In fact,
choosing to do cookery class back then was not even a novelty. All I know is that I chose it as an O’Level
subject from a limited choice of Art and Fashion & Fabrics classes.
20 years later, I found
myself, running a franchise restaurant, a family business, in the northern
suburb of Johannesburg. As I stood in
the middle of the restaurant, there were pockets of patrons in the store. No promising signs yet, of a full lunch-hour
in the horizon. The restaurant had old tall wooden sliding doors, some of which
were about to come off their hinges; some of which you could tell had been
repaired just enough to survive till the next “repair” job which was anywhere
between a week to a month from now. The space where the patrons dined humbly was
dark and a feeling of desolation filled the room. Part of the reason was the lighting in the
store was dim and antiquated; the other, was the sharp contrast, past the
boundaries of our restaurant, were bright well-lit surroundings; and the sound
of vibrant and chatty customers in the adjacent restaurants quietly revealed
the warmth and welcoming environment that our new restaurant reluctantly lacked. The store was located inside a mall, so no
natural light ever saw the curves and edges of the restaurant. Only the white cold ceramic tiled floor of
the mall provided some semblance of light into the reception area of the
restaurant; beyond that, a black and white checked floor greeted the foot of
the entrance of the door and a sea of wooden dark chairs covered in a red
substandard faux leather fabric littered the dining area. The walls were white and awaited a recoating. Half way down the wall a black and white tiny
ceramic mosaic tiled border emerged, to contrast the accent longitudinal wall
of wood from the border to the floor.
The wall represented the history and the age of the store whilst a few
of the framed pictures on the wall did not share the same liberty. It is why a few months later when the
Franchisor wanted us to spend money in the 1st year of operating the
store on redecorating the wall; my mother kept the original design of the wall
without the large human portrait wall papers accompanied by a few of the framed
pictures.
A lot of work needed to be done to restore the
franchise restaurant to its supposed former glory but we also had to be
realistic. We had just bought the store and adding refurbishments to the first
financial year of the business was quite ambitious.
During the first three
months of running the restaurant we decided that we needed to understand a lot
more about the functions of each and every staff member and what they did on a
daily basis. Where the management’s job
started and ended? What kind of service the
waitrons were providing to the patrons and whether they were incentivized to
offer good customer service? What would
motivate the kitchen staff in the kitchen and why they liked talking so much in
the kitchen as if they are vendors at a market place? We started piloting our
way through the kitchen. We embarked on
a journey of discovery that would reveal that we bought an old restaurant with legacy
issues such as immature operational systems, low staff morale, no pride for the
brand, and poor working culture. The
changes and improvements we tried to foster in the coming months to turnaround
the restaurant were met with distrust and hostility.
I don’t remember how it
quite happened but eventually I had grasped the basic Pilot System quite well
prior to taking the intermediate and advanced course at the Pilot HQ in
Woodmead, Sandton. I had been taught by
a manager at the store and Franchisor Operations manager on how to capture invoices
on the system, how to count stock items, and how to print the income statement
to ascertain our food cost weekly. We
were advised by the Franchisor that food cost had to be around 37% at least
monthly; but unfortunately, during the first three months our food cost
reported 40% and above. Many questions
came to mind.
How can our food cost be so high?
What are the factors that could cause high food cost?
What is the importance of the variance report because
the current management did not see the use of the daily and weekly reports?
They would print it and
file it but there were no tactical plans around it on how to improve or check the
abnormalities on the sheet. The whole
entire process was overwhelming, but I was determined to demystify the process
of running the kitchen. If anything I
picked at business school is that human beings complicated issues. The drawbacks are the gaps identified between
how the processes should be running, compared to how it’s currently
running. If the gaps are too wide, it’s
a legacy issue and to fix it at store level one would have to address it with
the Franchisor.
My MBA came in handy in
identifying, analyzing and making recommendations to my parents in steering
this store out of the woods. I had not
been part of the original negotiations when my parents decided to buy the store
so I was pretty much unaware of the operating expenses of the store. The first three months my mother would handle
the expenses of the store whilst I handled operational issues including human
resources issues and payroll. I learnt
later that absolving myself from operational expenses of the store left me
exposed to the real cancer of the business, RENTAL EXPENSE. Despite our best efforts of being good
restauranteurs, we had to be better. That means understanding what we should
have understood before signing the dotted lines.
Franchise Disclosure Agreement
The Franchise disclosure
agreement, also referred to as an FDA in franchising is a very pertinent
document that discloses to the prospective buyer/franchisee the costs of owning
and running a franchise restaurant; cash flow projections/potential returns and
main overhead expenses. The costs can include the following:
·
Franchisee
Initial License fee
o
Training
Manuals
o
Operations
Manuals
o
Training
of staff (some Franchisors don’t usually charge for training staff for
Franchisees)
·
Outlet
Development costs, includes but not limited to the following:
o
Assistance
with lease negotiations with the prospective landlord
o
Assistance
with application for financing (some Franchisors may not assist with this
aspect)
o
Planning,
layout and interior design
o
Site
supervision
o
Site
development
o
Store
evaluations, equipment and fitting
·
Other
costs – the cost of improvements to an existing building would depend on the
amount of remodeling needed to change the interior to meet Franchisor’s
specifications
·
Stock
Deposit
·
Royalty
Fees
·
Advertising
and Marketing Fees
·
Insurances
Costs
·
Liquor
License
·
Trade
License
·
Rent
Guarantee/Deposit plus Gross Rental for 1st month – dependent on the
landlord
Main Overhead
expenses – will impact directly on Net Profit of the business are:
·
Food
Costs
·
Labour
Charges
·
Worker
costs
o
Uniforms
o
Staff
food
o
Contribution
to any regulatory authority
·
RENT –
NB: MAXIMUM SHOULD BE 10% - 12% of TURNOVER
·
Electricity
·
Gas
·
Other
Expenses
o
Bank
Charges
o
Interest
o
Insurance
o
Accounting
fees and Administration
o
Telephone,
fax and postage
o
Stationery,
etc
In essence, the FDA should
essentially help you make up your mind.
However, it’s important not to rely on this document alone to make your
decision. Do your own due diligence,
even if it means speaking with the existing Franchisees directly of the brand
you would like to invest in before securing the right of first refusal to an
area. Nonetheless, the documents my
parents received at the time weren’t as explicit in outlining the list of costs
and expenses listed above. That list
formulated above is an excerpt of the FDA I prepared for the Franchisor at the
time on a volunteer basis. Running this particular
franchise restaurant was a very expensive lesson to learn but not as expensive
as the business school education in Denmark!
I still love the
restaurant sector. It’s a calling for me
not a career not a job. A restaurant is
not just about providing glamorously plated food to customers at a
premium. It’s a lifestyle. If we fail to deliver the tastefulness and beauty
of culinary cuisine on a plate; we rob our customers of an experience that transcends
the mediocrity of everyday life.
Extract from the upcoming book Franchising Bull$h*!:
Lessons learned in running a Franchise Restaurant. Copyright @ May 13, 2015. This article was first published online on BlogSpot by Tambu Ndoro, Enterprise
Development Consultant, Author and Blogger.
