Downturn of the Big Ones ???

[wa_dave]

Here in Western Australia we have the usual big chains, Pizza Hut and Domino’s, plus a couple of Aussie groups, Eagle Boy’s and Pizza Haven.

Pizza Haven all but disappeared but are now advertising for franchises. The state manager recently even left a card under our door asking if we were interested in selling or re-assigning our lease. They have been the lower end brand for some years and have just about disappeared off the market. Poor product, branding and marketing.

Eagle Boy’s have beeen around for some time and do $4.95 large (12")advertisied specials and have similar price points to Domino’s. There have been a number advertisied for sale for some months without being sold. One just south of our area was advertisied for $115,000 then went down to $95,000 and then after 6 months advertised for sale went down to $85,000. Apparently it was doing about $6k - $7k per week. It is now going to close at the end of their lease and they have contacted me through their leasing agent to see if I want to buy their ovens.

Eagle Boy’s had a store site (an old KFC style chicken store) for drive through pick up concept about 200 metres up the road from us advertsised 2 years ago and were asking $365,000 for the franchise entry (equipment etc) but have not been able to get any takers. They stopped advertising this site about 6 months ago. They are having trouble getting franchisees for other new sites as well.

Pizza Hut started advertising their stores for franchising about 6 weeks ago for their sites. This follows major declines in Australia of sales and profits for Pizza Hut. They have sold off their New Zealand division and have sold most of their Victoria stores in Australia and are now doing the same over here. They only run delco’s here after closing down their dine-in’s years ago.

Domino’s are the only one of them that seems to be holding their own, but like all in the hospitality industry are suffering from lack of staff. They seem to be getting more aggressive and this may be to try to lift sales back, take it from their ailing co-big ones or just Domino’s being Domino’s.

Anyway you look at it the majors / franchises are declining at the expense of the indies. From what I hear from suppliers most indies are holding their own, some doing well and some are experiencing strong growth. I know we are just going from strength to strength going from $8k per week 6 months ago to now constantly hitting high $9k and even hitting $11.1k three weeks ago and then following up with $10.8k and $10.2k the following two weeks.

With the extra disposable income from the high wages fuelled by the mining boom and record low unemployment (3%) maybe people are spending on quality rather than quantity and us indies are reaping the reward. Once they try ours we know we have got them so maybe the extra income has been our catalyst for them to try ours. We are also seeing customers purchase more frequently as they are becoming money rich / time poor.

I feel for the guys who have invested in franchises with these declining chains as they go out the door backwards. It goes to show that it doesn’t matter how much you pay for a store and how much the franchiser puts into advertising and promotion, if you haven’t got a good product you won’t be selling enough pizzas to pay your way.

Go the indies

Dave

 

[j_r0kk]

Good post Dave. Could you imagine how much you would do if just one of those places closes down? I mean, you never want to see that happen but it sounds like that’s more of a possibility than them being able to sell, re-sign the lease, etc.

Hang tough down there brotha. Sounds like you’ve got everything working exactly the way you’ve dreamed. Must’ve been those boxtoppers (j/k). Speaking of boxtoppers, how’s your staffing? 'Cause if you’re really building momentum you should probably increase you advertising frequency. Here’s my view on doing $10k/week:

$10k/week is pretty awesome but if you drop $1 you’re no longer in double digits. I HATE to look at sales weeks and see that big eyesore right in the middle of the page where one week is substantially off vs. the others. So why not try to bring it up another couple grand? Believe me when I say the difference isn’t really that great from $10k-$12k. Each night just feels a little more solid than usual. Oh yeah… you make a little more profit as well.

With that being said, in no way am I demeaning what you’ve done in a few short months. That kind of sales growth should be commended because you’re obviously doing something right. Some operators in this forum would kill to do half those sales. And at $10k, you’re no longer just earning a paycheck… you should be taking in some profits, so that’s way better.

The reason I suggested $12k/week is because I want to push you a little bit. Personally, I’m never satisfied with where I am. I always want to push the limit to see how far I can grow. I think you should take on the same attitude and challenge yourself. Once you get into the bigger numbers, strangely it’s no longer about how much money you make. It then becomes a “game” to see how high you can go.

-J_r0kk

P.S. Oh yeah, one more thing:


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[wa_dave]

Thanks J-r0kk

We have our target firmly set on $12k and the way we are going I could see it happenning within 3 months. We hit $9k in November, $10K in May and $11K in July so October should be on target for $12k.

The only thing holding us back from going full steam is the lack of oven capacity. Until we get a lease sorted out we cannot afford to invest in another oven. Just wait to see sales soar when we do

Because of the oven scenario we haven’t done any advertising as we are at capacity on Friday and Saturday nights. We have built the quieter nights from 30 - 50% extra and this is where we can do so more as we are managing it without too much stress.

On the staffing issue it’s still a problem but we have added another weekend driver which takes a load off Saturday nights. We are still without a driver for Wednesday nights which is costing us about $200 in sales. The driver doing this left without notice - just didn’t turn up any more (drugs and police problems), so we are without a driver Wednesday, down one on Friday and short of makeline cook (he did this also) on Sunday. Otherwise all is fine

Dave