From the source: Chris Mavris, Soul Origin

Soul Origin AdamBIO: Mavris was the first employee to join Soul Origin when it launched in 2011 and is now CEO of the company. Mavris’ entire career has been spent in the food retail industry  – he has owned several cafes in the past and was previously NSW retail operations manager at Michel’s Patisserie.

COMPANY PROFILE: Soul Origin is an Australian-owned franchisor and fast-growing quick service restaurant, offering wholesome and nutritious breakfast and lunch options. Since Soul Origin opened its first store in 2011, it has grown to a network of 76 stores across the country.

Inside Retail Weekly: How has Soul Origin been tracking in the past year?

Chris Mavris: Last year, we’ve seen the company change significantly. We’ve gone from a medium-sized business running like a small business, to a medium business running as a medium to large business. We’ve had a full restructure of the support centre with all the key pillars, property division, kitchen division, retail division, marketing division, training and new store openings, with HR, finance and IT.

We used to have a lot of cross-pollination across the business – that’s just how we grew as a brand, everyone wanted to help each other and get the job done. We’ve stopped those inefficiencies in the business now and we’re getting people clear and precise resources and tasks to complete and creating efficiencies an organisation our size should have.

Over the last eight months, we’ve also been working with Eagle Boys Pizza founder Tom Potter, who came in as a senior strategist to build the business plan and structure. We took our staff offsite on a Friday to a retreat and each department head spoke about their plans and budgets, and we opened the floor to questions so people can understand it.

IRW: Soul Origin has had a lot of growth in a short period of time. What’s that been like for the business?

CM: When I joined the company as the first employee four years ago, we had three stores and tomorrow, we’ll open the 77th store. It’s been quite a journey with a lot of laughter, tears and hard work along the way, but there’s been a lot of joy and pleasure we’ve derived from creating something as good as we have at Soul Origin. It’s been a rollercoaster, but something I’ve enjoyed more than anything I have in my life.

IRW: How has that growth been funded and how do you see that growth being maintained in the future?

CM: Whatever the company has made, we’ve rolled it back into the business. Because our model has our own supply chain and we’re a vertically integrated company, it has given us more funds to work with to grow the business.

Because we run a production kitchen, we cook the ingredients for the stores, like the chicken, rice and pasta and the salads are assembled with fresh ingredients, like cucumbers and tomatoes from the stores’ local providores. All those fresh ingredients are chopped daily and mixed with the products we cook for them.

Where most franchise businesses have a nine per cent stream of turnover, we also have a production facility which gives the business extra funds to grow. In saying that, is our kitchen a profit centre? Yes, it is, but it has been designed and it came into being only because we wanted to give our franchisees and exclusive product. 

We’ve seen other brands that have been held captive by third party suppliers and seen products they’ve developed in the market that have made their way into supermarkets and other retailers in the same space. So we wanted to have an exclusive product for us and we wanted to source the best quality ingredients at the best price, to give customers restaurant-quality food in a QSR environment.

The company’s purposely over-invested in the team at the moment to ensure it can keep up with the pace and if you look at the resources and skillsets the company has invested in bringing people in, that’s to make sure the rapid expansion the company can cope with it, while ensuring we have well-serviced and profitable franchisees in our network. The pace is going to be as much, if not quicker than it has in previous years.

Early on in the business, we invested significantly in systems and software. We did have a vision three or four year ago that we’d grow rapidly and make sure we built the foundations that give people the tools to manage that growth, whether it’s a franchise manager or rolling out MYOB to all out our stores as we speak. We built the infrastructure to help us manage that growth when we hit the button and started running.

IRW: What plans do you have for the year ahead for Soul Origin?

CM: The structure’s in place and the team’s in place We would like to think by the end of the financial year, we can get to 110 stores across Australia. We will get to Western Australia by the end of the year and our first store in Darwin will be in March next year at this point in time.

IRW: Is Soul Origin the kind of concept that you see one day working overseas?

CM: Yes. In Australia, there’s a lot of low hanging fruit. We’ve had great success going into regional areas like Lakehaven and Salamander Bay – the numbers those stores have generated have surprised us and we’ve been warmly welcomed by those communities.

We’re in Adelaide, Victoria, ACT, NSW South Coast and North Coast, Sydney and southeastern Queensland at the moment. We understand that if we play the international game, there’ll be at least 18 months’ planning and we’ll start having serious conversations towards the end of this financial year about when and where that international growth will come.

There’s been small talk about New Zealand, but with our central kitchen model, we’re going to have to plan kitchens and there is a bit work that goes on behind the scenes for us to be able to execute it.

IRW: What’s it like growing a business at such a fast pace while also trying to maintain the culture and values of a business, especially for Soul Origin, which is about family and grassroots community?

CM: We’re always asking ourselves, ‘is this on brand?’ That’s what we need to stop and ask ourselves all the time – is this what the founders, the Kwok family would want? Is this where the vision needs to go? And does it fit within our brand culture – family, friends, growing together and growing one another?

We’ve also been very fortunate that a lot of us have had experience in the food industry over a long time. Twenty-two years ago, I was introduced to franchising as a franchisee, then worked as a franchisor. All of us have worked in food retail all our lives, so we’ve had a great network of people that we’ve been able to draw on.

Over the years, I’ve reached out to people to mentor me, like Noel Carroll, founder of Michel’s Patisserie and we drew in Tom to do work at a high level with us. We’ve had people who have worked in the industry and brought them with us on our journey – they’re culturally-minded people who have the same desire to succeed and aren’t scared of hard work.

IRW: There are a lot of competitors in the healthy food QSR space now, aren’t there?

CM: ‘Healthy’ doesn’t describe us – we offer fresh, nutritious food you can eat every day. We do a chicken schnitzel! I see Thrive and Iku as being healthy. I see us as being a nutritious, fresh offer that you can eat every day.

I see us as a leader in the QSR field. We took away menu boards and let people see what they’re going to eat and brought back the human engagement. The customer engagement isn’t with someone at a POS terminal. It’s in front of the food, where you can say, ‘I want that, that and that in my container’ or ‘Can you please toast that?’ You can see what you’re getting. The last transaction is at the POS. We’ve brought the human side to retail, took away the high counter to really bring on that interaction and really humanise the experience.

I think we’re an ‘eye’ brand. You eat with your eyes. We attract customers to our product through their eyes. You walk into most food shops and you see a photo on a menu board that’s been done by a food stylist with glue and toothpicks – you never get what’s in the photo. With us, you know what you’re getting because you can see what you’re getting.

IRW: What would you say are some of the challenges of running a sustainable business like Soul Origin?

CM: Cost is a challenge, and that’s always going to be a challenge but in saying that, it needs to be part of any business’ DNA. One of the reasons we wanted to run our own production kitchen was to be able to manage the food and to rely on as much Australian made product as possible.

We went to a bamboo container which we were trying to source for a long time, because we we wanted a particular shape and style. And from day one, we’ve used paper cups, biodegradable plastic lids. Even on our bamboo containers, we’ve got biodegradable eco lids.

Sustainability is part of who we are and we want to leave the place in as good a shape as we found it when we go. In our stores, we use recycled timber in a lot of our fitout. We’ve tried to incorporate as much sustainability in what we do and I think our shops reflect that when you walk up to our counters. 

One of the challenges is getting functional products that are sustainable that will give the customers an experience they’re used to. Do they have thermal qualities and strength in packaging? We have to make sure the customer doesn’t have a bad experience because the paper falls apart in their hand because it’s made of non-traditional materials. So the challenge is getting the balance right of what the customers are happy with, without the costs being prohibitive or inhibitive to the customer or to the franchise partner or business model.

IRW: There have been a few franchise businesses lately that have been under the microscope due to underpaying their staff. Do you think there are certain weaknesses in franchise businesses that allow for these kinds of problems to slip through the cracks?

CM: I think there are opportunities to better improve our systems. Our systems are quite robust and ahead of industry standards, but we’re always tearing ourselves apart – “is there a better way and what can we do to better educate our franchisees about franchise issues?”

Our finance partners like MYOB will give us more transparency there to help better guide and educate our franchisees. We rolled MYOB into the business in November last year, so for four to five months, I’ve been talking to franchises about it through meetings and newsletters telling them we’re going to one piece of software. We sent a letter to all of them, asking them to accept an invitation to chartered accounts and we had 53 out of 68 stores accept the invite.

Do we have a network that does the right thing? That tells me yes. Are our systems robust enough? Yes, they are. Is it a good business? Yes it is. Early on in the piece, when I had franchisees who had opened one shop then wanted a second, third and fourth, it gave me the confidence to know that this is a solid business.

Franchises don’t end up with multi-unit franchisees if they don’t make money – they want to exit.

IRW: Leasing has been a hot topic lately in shopping centres. How do you manage to keep a hold on costs for your franchisees and do you see that problem continuing?

CM: I’ve been involved in retail for 30 years. It’s been a perennial battle, it’s not one that’s just reared it’s head in the last 6-12 months. For as long as I’ve been in retail, there’s always been the battle between retailers and landlords. We have confidence in our brand and product that we’re selling, we’ve been fortunate that our stores had been able to generate a higher average sale than many average brands in the same space we play in, which has allowed us to pay some of the asking rents that landlords have been asking for in spaces in centres.

IRW: Retailers have always argued with landlords with rent, but if food is what shopping centres wants, there is much more capacity there for growth. But equally, there’s only so many meals you’ll eat in a food court.

CM: With the sales of fashion dropping in malls because of online shopping, the landlords need  to keep their returns. They need to change their mix within their centres to continue growing their returns for them and shareholders. At the end of the day, the centres are owned by superannuation funds and everyday Australians own parts of these shopping centres.

We’ve been fortunate that we’re a young brand and haven’t had to come up with any renewals yet. we sign a 7 years lease In two or three years’ time – – when we start going through renewals, I might have  different answer to this question. Being a young brand, we’ve been in a fortunate position while this disruption has been going in the centres.

We only ever sign a deal where we believe the business model will work, considering our greenfield growth that we’ve had in the last three to four years. I think the obligation for landlords is to keep attracting more people to those properties if it’s going to work. If they don’t, I see it’ll get to a point where retailers will walk away. Obviously food is the new fashion, it’s about the balance. Landlords need to build their properties to make sure the numbers keep growing to support all the additional food offers out there.

IRW: Would you look at alternatives, changing the model?

CM: We’re looking at different opportunities and models at the moment, however, the focus is on our core bricks-and-mortar shopping centre businesses.

 

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