around Australia, serving Antonio’s flame-grilled Portuguese chicken. IRW: When you started at Oporto as CEO two years ago, you set about transforming the brand. How is that tracking at the moment? CT:  “I joined QSRH four years ago. I came into the business with our current group CEO Rob Combe and we developed a plan two years ago when I went into the CEO role for Oporto.  The transformation program was about refiring the brand. We found the brand had lost its way and people had lost an understanding of who we were and what we stood for. The first thing we did was refire the brand. The second thing we did was modernise the experience. I worked in a restaurant as a young kid – I was very proud of that – and I wanted our team members to be proud to work for us, so we changed the uniform to make it fun and funky. The test for us was, ‘Would our team member be happy to wear our uniform on the train?’ and the answer now is ‘yes’ and before, it would have been ‘no’. That was our litmus test. We introduced music to our restaurants, we did a lot of refurbs and we improved the offering that we have, not just for our people, but for the customer. Finally the last bit for us is to position the brand as a premium quick service brand. Our price positioning was wrong – we don’t want to play in the $2, $3, $4 range. I call that fake food, it’s not real. We serve fresh products and that requires a high quality product. We really care what our customers eat and we want them to have high quality food. We’re also opening up our kitchens – we’ve got nothing to hide, some of our competitors do. We wanted people to see what we do, so we developed new stores last year that enable people to see inside our kitchens. We see ourselves as a restaurant experience but we serve it in a fast food environment, so we’ve changed that in terms of our positioning and it’s resonating with customers. Our feedback tells us that and our complains are the lowest they’ve ever been.” IRW: Why did you decide to bring back Antonio, the original founder, into the business? CT: “When I came on board as CEO, I spent a lot of my career working with family-based business, particularly in consumer products. One thing I was passionate about was making sure the business and culture reflected what Antonio’s vision was, because it was so exceptional. By bringing him back in, it’s meant that he’s mentored and coached my team and I on exactly what Oporto means for him. We all look up to Antonio – he’s generous with his time, he loves people and Oporto. Antonio stared Oporto in 1986. He was a Portuguese immigrant who didn’t speak English when he arrived in Australia but he worked incredibly hard for 25 years with a beautiful family. Antonio sold the business to Quadrant, a private equity firm and then it was sold to Archer Price Equity, who owns it now. Our whole group is currently going through a sale process and will end up either being acquired by another person or ASX-listed. The best way I can explain Antonio is when he invited Rob Coombe and I to his home for lunch with his family and they’re beautiful. He was grilling Portuguese splayed bird chicken on the coals and using the original chilli sauce. That is what Oporto is about. It’s real, authentic and the food is absolutely delicious. We love getting him into the business – he’s part of our success and he’s welcome to be part of us going forward as well.” IRW: Tell us about your plans for Oporto to expand overseas. CT: “We are looking at international expansion, particularly in Asia and the Middle East. We’ll hopefully have a master franchise agreement signed in the next couple of weeks. We’ve had an employee up in Singapore looking at markets for over 12 months, so it’s a great place for us to expand and we think our product is in a great position to do that. We think there’s a huge opportunity for Oporto, throughout the Middle East and the UAE. We think Asia’s got a very good palate for our product, like India and China in the longer-term. We’re looking at Sri Lanka, Malaysia, Singapore and Middle East. We think we’ll have our first store on the ground probably around September this year. It’s likely to be in either Sri Lanka or Malaysia. It’s great for local brands to expand and some of our peers are doing that now. It’s fantastic not just for us, but for the industry. Some of the best food operators come from Australia, it’s a highly competitive market and it’d be great to export those expertise overseas. I spent a lot of my career travelling and working in different countries and the reality is 50 per cent of GDP growth will come out of Asia. It’s an exciting time for everyone. Australia has been doing business with Asia for a long time – in the 80s, it was Japan and now it’s China. The younger millennials prefer to travel in Asia but for us, it’s also a fantastic opportunity as it allows our employees grow. It’s inspiring for them to know they could have a career that could go offshore.” How are your small format stores tracking and will you roll out more this year? “The fourth pillar on our strategy is to show me la fortuna, (‘show me the money’ in Portuguese) and we’re very focused on driving profitability for franchisees and return on investments. One of the challenges in metro areas is rents and property prices are high, so how do you continue to open stores in a clever way? We developed small formats to enables us to stay in cities and talk to customers. It’s a clever way of keeping the brands in those locations and allowing franchisees to spend a little less capital expenditure than before, so we can get them in the system. We’ve got four or five small-format stores so far and we’ll have 10 in the next year or so.” IRW: How are the delivery trials going at the moment? CT: “It’s a bit early to tell. We’re trialling with Deliveroo at the moment in Sydney. We see delivery as being an opportunity for food players in the future. The pizza market dominates the majority of it at the moment, but we don’t see a reason why Portuguese flame-grilled chicken can’t be in it. For us, it’s a latent demand but the question is the best way to do it. Our long-term view would be that we’d do our own delivery potentially or partner with someone.” IRW: What have you learnt about millennials since you’ve come on board at Oporto? CT: “I love them, they’re such an interesting cohort of people. I’m not the oldest CEO in the industry and I love dealing with them. They love change, they expect a lot, they’re digital and tech-savvy and they want to engage with brands in the right way and that’s fantastic for Oporto. We really resonate with that millennial community. The other thing that’s fantastic about millennials is they are prepared to switch brands quickly, so that keeps you on your toes, so if you don’t delight them every time, they’ll move. We’re engaging with them by sampling products, we’re talking to them in their language in digital and social media and we’re getting them involved by helping us with innovation. We’re also we’re mindful of what an aspirational product that they’re prepared to pay for looks like. For us, flame-grilled Portuguese chicken is amazing, so it’s about communicating that to them. We’ve upgraded our digital menu boards, so that photography and foodporn is available to them.” IRW: What was the thinking behind the launch Oporto Sobre Rodas (Oporto on Wheels)? CT: “In Lisbon, these trucks drive around everywhere, so we wanted to show Australians what it’s like in Portugal. The idea was to create a vehicle to delight the customers and let them taste the product and see us cooking it. The truck itself is a traditional vehicle, but we’re able to cook food out of it in a clever way. For us, it’s a great opportunity to use it at a range of events, from festivals all the way to food truck events and it enables us to do a lot more marketing with franchisees. It gives people a feel for who we are and what we stand for, which is authentically Portuguese. We don’t want to be another brand doing a food truck for $2 million that’s same-same.” It’s been a great innovative channel to get our product out to customers who love us or don’t know about us.” IRW: There’s been a lot of talk in the media lately about franchises that have been underpaying staff. Where does Oporto stand on compliance and ensuring their franchisees are on top of it? CT: “Ultimately, as a brand, we have to take responsibility for our franchise system. We’re mindful of the challenges that go with that. Our policy and position is simple – we must do the right thing, so we adhere to all the laws and regulations that apply to franchising and we ensure we exercise our rights when people do the wrong thing as much as we can. We do that in a studious way, so we help franchisees as much as we can, we provide significant technology, we’ve made very large investments in technology to help franchisees and we see it as a partnership exercise. Franchises have a responsibility to adhere to regulations and procedures, so in any system, you may have people that do the wrong thing. Our role is to do an appropriate number of audits to find that out and assist them if there’s a lack of learning – we provide significant training and development. We also have a strong franchise advisory council and we have 100 years’ experience in running franchising businesses. From our perspective, our franchisees show a good level of compliance and we work with them day in, day out.” IRW: What are some of the biggest challenges in food retailing right now? CT: “The biggest challenge at the moment is asset price inflation, like rental costs. That’s the case for anyone in property really, particularly when it relates to some of the food courts. To a lesser extent, there is food price inflation on cost inputs, some of that is domestically driven if we’ve had volatile weather and some of its offshore.” IRW: What lessons have you learnt from the other brands at QSRH? CT: “The best lessons that we’re going to learn are about delivery from Red Rooster. Red Rooster has already rolled out delivery, so it’s easy for us plug in and get in behind that, which is what we’ll potentially do in the future. The other thing is around supply chain. We have a sophisticated supply chain team who are best in class at what they do. They keep costs low and manage supplies on behalf of our franchisees and keep product consistent. The other area is our IT team. They do a fantastic job talking to our customers on digital platforms and around the customer experience and customer feedback, so we get our net promoter scores. They help us understand that level of feedback, like the customer recovery score and how quickly we can get back to customers and delight them after they’ve had any issues with our brand. So there are a lot of learnings that we share among the teams.” Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.