Sarah
So welcome Grant, it’s fantastic to be able to speak with you today. We’re going to talk about Concept8 and your role in the business and your perspective on business. let’s start by talking about Concept8. It’s a well established but relatively unknown multi-brand food franchisor in Australia. Can you tell us about the brands and what the overarching vision is for Concept8?

Grant
Yeah, sure. Thanks for having me today. You’re right. Concept 8 is relatively unknown. We’re probably best known by our brands, which is Noodle Box, Huxter Burger and Patty Smith’s. We changed the name actually from Asian Restaurant Concepts when we launched our burger division. So it didn’t seem to make sense. The name wasn’t fit for purpose. So we now have three divisions.

In our Asian division we have Noodle Box, Supreme Leader, Double Dragon Dumplings, which are our virtual brands and we’re going to touch on that later. In our burger division we’ve got Patty Smith’s Huxter Burger and the virtual brands are Dante’s Hot Chicken and Alabama Chicken. And the recent acquisition is Acai Brothers, which brings us into the breakfast market. In total, most people are surprised to know that we have 160 sites in all cities of Australia and most of the regional markets and we also have three project sites in the USA in Austin, Newston and Atlanta. Now in terms of our vision we’d like to be the leading multi-brand franchisor in Australia. Now that’s the statement of course there are a bunch of metrics that around the number of sites, the brands, the sales but we’re a pretty private company and so those metrics we like to keep to ourselves.

Sarah
What can you tell us about who owns the business?

Grant
Yes, so we all love entrepreneurs, we all have entrepreneurial stories and this is, it’s just a classic entrepreneurs story and the information on the websites pretty much is true. Josh and Dave, so Dave Milne and Josh James set off in their 20s, early 20s and travelled through Asia and literally just fell in love with the food markets, the wok cooking and the excitement of the markets and had a light bulb moment and said, well, I’ve never seen anything like that in Australia. Let’s go back and start up a restaurant. So they opened their first restaurant in Chapel Street in Melbourne, an iconic street. And as they say, the rest is history. 29 years later, concept eight is growing strongly.

And in terms of the entrepreneurial story, they just learnt as they grew. So they’d never been in the restaurant business before when they opened and just decided to have a crack. So it’s a wonderful family story of two mates who’ve built a marvellous business.

Sarah
And what’s their involvement now? mean, you’re CEO, so you’re driving the business, but what is their involvement in terms of strategy and brands, et cetera?

Grant
Yeah, well again, you know, if you’ve studied entrepreneurs, it tends to go two ways. Either the entrepreneurs stay in the business or the business gets to a size where they want to bring in outside help. And that’s what Josh and David did. so David is now our chairman and Josh is one of the directors along with two other family members. it’s, you know, we have board meetings every month, as you’d expect. And they give myself and the team the absolute freedom that we require to grow the business so that Terrell will be supportive. And yeah, it’s a great working relationship.

Sarah
Now we touched, you mentioned when you were introducing the business and the brands about the Saï brothers and the acquisition and obviously the business has kind of grown through acquisitions. Can you just tell us a little bit about that move and the strategy behind the whole thing?

Grant
Yeah, sure. So we wanted to strengthen our breakfast and lunch day part. The majority of our business, the meals are served at lunch and dinner. So we were looking out for a brand and a category that we were comfortable getting into. I actually travelled with Josh and David to LA, the birthplace of many great ideas.

And, you know, so we saw a few sites, a few brands doing acai and we sort of fell in love with the, with that category and then went back and did some homework and realized that the acai market is growing globally from 6 billion to 13 billion by 2030 is the forecast. And so that gave us the confidence to,

look closely at the market. some of the things we liked about Asai Brothers was, you know, at the moment it’s a highly fragmented market. I think there’s one national chain and we certainly would like to be one of the other national chain. The other reason is, know, the franchise partners are quite different. So all of the franchise partners at Asai Brothers are women.

And so we like, we’d like to broaden our network growth. So it sort of ticked a lot of boxes for us. And so yeah, we bought a Cyberbrothers about three months ago.

Sarah
And what’s your strategy there in terms of kind of growth? Do you see that you will be opening that out to new franchises or will you be bringing it across? Do you have franchises in your other brands who would be looking at taking those on?

Grant
Yeah. Yeah, there’s certainly a few, but I imagine that as we grow the business, most of the growth will be new franchise partners to the ConceptAid family.

Sarah
So how important is that acquisition? I do you see that this, so you’re moving into this breakfast area. Do you see that that’s a particular area that you will look to develop with other brands? Or do you have a sense that the portfolio of brands is at a good place now?

Grant
Yeah, we’re quite comfortable with acquiring companies. So we’ve acquired three businesses over the last 10 years. Wokinabox was one of them, Huxter Burger, and now Assai Brothers. But we also have created a new brand in Patty Smith’s, which has got around 30 odd sites already. And that all happened in the last five years.

And we also established the six virtual brands, of course. whilst acquisitions are an important part of our growth strategy, the main part is still organic growth with our existing brands. we want to grow Noodle Box, we want to grow Petswitz, Huxter Burger, and now Asai Brothers. And I think that will keep us pretty busy for the next year or two. But of course,

If an appropriate acquisition came across our path, we’d look closely at it. I think the other thing we look for in an acquisition, apart from a day part or a business with great growth prospects, it’s got to be a business where we can apply the skills that we have as a business to that brand.

give us confidence that it’s going to grow.

Sarah
And what would you sum up those skills as?

Grant
Yeah, well, we have the typical team that you’d see in any QSR. So, you we’ve got a network development team, we’ve got a great marketing team, we’ve got training, project team that build out our restaurants, know, sort of finance and operations. So we’re encouraged if we see a

business that may not have strength in any or all of those areas. And we know from the previous acquisitions that when we apply the skills of the team to any of those businesses, we pretty much see instant growth. So we just, we do what you know, what the large QSRs do. We can do it on a smaller scale.

and we think we bring a nimbleness as well. speed is something that we value highly at concept 8, speed of execution.

Sarah
Concept8 has led the way in embracing virtual brands, think, and you’ve touched on this a little bit earlier. Can you explain what a virtual restaurant brand is and how it works for restaurant owners?

Grant
Yeah, there’s a lot of people, you we talk about virtual brands, dark kitchens, cloud kitchens, and the, people get a bit confused about all of the terminology, but quite simply, know, virtual brands really came to life with home delivery. And so, you know, the advent of Uber Eats and Menu Log and DoorDash, et cetera, know, starting up. So that allowed a virtual brand to come in into existence.

And I think it got accelerated during COVID when you couldn’t actually go to a restaurant. So a lot of people spun up virtual brands, but it’s interesting to note that I’d say most of those virtual brands that were spun up over COVID are now gone. I don’t know the numbers, but talking to our friends in the aggregator friends, I know they had a…

strategy to get rid of a lot because they just weren’t selling anything. So but back to your question, restaurants create a virtual brand, which is some meals that are sold out of the existing kitchen that aren’t the same brand as the what’s on the front door. So in the case of Noodle Box, we have

Supreme Leader Chicken and we have Double Dragon Dumplings and they’re created and sold out of our existing Noodle Box kitchen. So, you know, it’s a great way as the accountants like to say to sweat the asset, you know, the rent’s already being paid, the kitchen’s there, the staff are there. So if you can find an intelligent way to add a couple more brands, the only thing that happens is sales go up.

However, most fail when they launch a virtual brand because they don’t understand operations. They don’t really work out a way to make sure the margin is still maintained. They perhaps don’t have the marketing expertise to make it successful. So we believe and have proven that we can do that.

So that’s why we’re very confident in adding virtual brands to our existing brands.

Sarah
So how do you approach this if you’re introducing it to a network of franchisees? And is there opposition or is it welcomed with open arms as a new revenue stream? Do you get resistance?

Grant
Yeah, well, not now because we’ve got the sales to prove it. Certainly in the early days, there’s some scepticism, but in a network of our size, there’s always some people that are up for the challenge and entrepreneurial in spirit. I’m just thinking back to when we first launched them and Supreme Leader was our first.

Sarah
You proved it.

Grant
We just started sharing the success of the Supreme Leader Sales to our Noodle Box Network. And when we did, they just basically lined up and said, yeah, I want to be part of this now. So it’s by invitation, we invite our franchise partners to participate. Clearly, they need to be operationally strong with their main brand first. Because if they’re not, we’ve learned from

the past that it just creates more problems than it solves. And I would say the main challenge really, as I mentioned before, is operations and marketing. So when we really got into virtual brands, I sent all of the operations team to do Lean Six Sigma courses. And out of this, they worked out how to strip back the operations and get efficiency. And we also invested heavily

in our marketing team, because if you’ve got a virtual brand, there’s no street frontage. No one can see the brand. So you have to find a way to ensure consumers A, can see the brand and B, want to buy it. So we invested heavily in operations, pulled the business apart completely and rebuilt it. Because if you think about it, you’ve got a kitchen that’s used to turning out one brand and now you’re asking that same kitchen to turn out three brands. So it creates a whole lot of problems that have to be solved. But we’re pretty confident that we’ve solved those problems. And we also think, you know, our marketing team is, you know, quite frankly, you know, one of the best in the business. And I’d invite you to jump on your social media and follow our brands and make up your own mind.

Certainly the sales results would show that customers like our virtual brands and they’re buying them.

Sarah
So in terms of technology and systems, what developments can we expect to see over the next few years? And are you embracing AI?

Grant
Yeah, I was listening to a podcast on The Economist all about AI just before this interview. So I’ll address AI first and then I’ll talk about our tech stack and our technology. I think the analogy I use with AI is the smartphone. So, know, iPhone, my first iPhone, I think I purchased about 18 years ago. I remember about 2007. So it’s a long time ago. And if you think about that first iPhone, it had some basic functionality. I think it had iTunes, a camera, and a few other bits and pieces that weren’t overly useful. But then now if you look at the latest iPhone, it’s got an artificial intelligence button and it can do amazing things to improve our life. And I think AI is similar.

You know, at the moment, it’s a bit clunky. You know, if you want to draw a, if you want to have a photo of a zebra skiing down a slope, you know, you can do that. But I’m struggling to see how it can really improve my business today. But I’ve got no doubt in, you know, like the iPhone in 18 years, AI will have amazing benefits that we can’t even think of yet. So that’s my little bit on AI. It’s going to be amazing, but not today. And so we’re not looking too closely at how it’s going to improve our business. But in terms of technology improving our business, there’s a raft of things that we’re doing in terms of embracing various software. you know, our point of sales supplier, Redcat, are an amazing partner. They, you know, they look after our Lordy program. They look after our app. They look after our kiosks. And, you know, I think we’re the only one in Australia where you can jump on an app, order Noodle Box, order Supreme Leader Chicken, order Double Dragon Dumplings, three different brands
and have it delivered in one order by Uber or Dordache. Someone else might be doing it, but I’m not aware of it.

We also have ZenPut and Zendesk, one to look to scrape all social media to see what our customers are saying about our brands and address the issue if it needs to be addressed. The other, Zenput, is our operational software. So like, as I mentioned, you know, we’ve got some sites over in the States and, know, it just blows my mind that the operations team can log in here and do the operation function from Melbourne over in Atlanta or Austin or Houston. So, you know, a lot of the tech that we use is global by nature. So again, you know, we…

We’re using DoorDash and UberEats over in the States, but we run the campaigns out of Australia. We do all the marketing on social media. Of course, all the social media companies are US based. So we buy the campaigns on Instagram or Facebook or TikTok or YouTube. We buy all of that out of Australia, even though they’re running over in the States. Power BI, course, is everyone’s move to data management is critical to our business. So we use Power BI for that. And so it goes. But probably the main area of tech that I’m super excited about, and I encourage anyone listening to this podcast to have a close look at, kiosks and automated woks.

So kiosks have been around for a long time, but we’re rolling out kiosks in all of our restaurants. And the stated ambition for us is to not serve customers one-on-one, but to use kiosks. Now we have to do that, not because the customer experience is critical, but it helps with order errors, but it also helps reduce the cost of labour in our restaurants, which is always a problem for us. I won’t get into any controversy about the labour costs of labour in this country. But the fact of the matter is, we’ve got to find a way to reduce labour costs. And kiosks is one way of doing that.

The second thing is the automated woks. For years, we had wok chefs who are cooking all of our meals, but we’re slowly transitioning to automated cooking and having huge success. We’ve got one franchise partner over in multi-unit franchise or over in Perth. He’s got four restaurants and he now uses automatic woks in all of his restaurants. He’s one of, his restaurants are some of the highest sales restaurants in our network and the quality of of the food now coming out is superior because it takes out human error. So that’s some of the ways we’re using technology. And I’m super excited about the possibility of automating other forms of the cooking process.

Sarah
So I guess those kind of developments and that move towards automation is one way that food businesses can manage their profitability. And it gives the brand a competitive edge. So when you’re looking at the success of the business, what do you consider as the key measures for success?

Grant
There’s a few in, I’m not sure this is in order, but just as it comes to me, certainly having supportive shareholders who are focused on growth, but they’re also focused on the team, making sure that we can attract and keep the best team possible. And yeah, so supportive shareholders is really important and we have that. Probably, know, culture, you know, this is, you know, the intangible, but, you know, we’ve spent a long time building the culture. We have a set of beliefs that we talk about all the time. We hire against the beliefs. So if we don’t believe that someone believes in our beliefs, there’s a mouthful, they wouldn’t join our team. To have a purpose that’s clearly identified by all the team and known by the team is critical. Our ability to embrace technology, but probably about as important as all of those in our world is a growth mindset. So we want to grow, we want to grow as quickly as we can and we love people who embrace change and who want to grow with us.

Sarah
I want to change now and talk a little bit about you. We’ve talked a lot about the brands and you did touch earlier on the importance of marketing, particularly for the virtual brands and having a good marketing team. That’s your background, marketing. What attracted you to that world in the first place? The marketing world.

Grant
Well, I’ve always been fascinated by why people buy products and services. As a kid, I used to watch advertising and just noticed how I reacted to some ads and they made me want to buy that product or I think what idiot would want to buy that product? So I don’t know how that happened, but it just did.

So originally I went into advertising. Advertising was great, but then I worked out that it wasn’t actually the main game. Marketing was more important than advertising. Creating a great product, pricing it, looking at distribution, et cetera. I also love growing sales and companies, love creativity and working with creative people.

And I kind of worked out that marketing was the best discipline to do all of those things. Numerical skills weren’t my strong suit either. So, so, career in finance, wasn’t on offer. but yeah, so that, that’s what, what attracted me to marketing combination of all of those factors.

Sarah
Ha ha.

I can relate to that.

And so what perspective do you see, if you sum that up, what’s your sort of the particular perspective that you bring then to the hospitality business?

Grant
Yeah, the, in some ways the hospitality sector, the QSR market is ridiculously simple and it’s ridiculously complicated. So if we, we’ll just talk about the simple cause it’s easier and we haven’t got much time, but, you know, we are a hundred percent focused at concept I, myself and the team in creating food that people love. And if you go to our office or if you see a photo of our office, you’ll see that we’ve got a massive kitchen and the office is built around the kitchen and we have two chefs on staff, which some might say that’s an indulgence. Perhaps it is, but it gives us the ability to have two people continually creating food that people love. If you don’t get that bit right, what have you got really? So that’s kind of, if you want to think of about a target or a bullseye, that’s in the middle for us. Next, you’ll hear everyone say this, but it’s true. Build and keep a great team. So the first thing is to attract them. Next thing is build them and then keep them.
So I think that’s really important. Obviously, we’re a franchisor, so looking after our franchise partners is everything to us. And probably last thing, this is what I love about our shareholders and our owners, is provide them with a good return, probably so I can keep the job, but they’re very supportive and they understand that the other things I talked about become more important. If you look after your franchise partners and make sure they’re profitable, then everything else looks after itself. And probably the last thing that pops into mind is always focus on getting sales today as well as investing in your brand for tomorrow. I think if you just focus on the here and now solely, year, six months, a year, two years later, you can end up finding that you’re not where you really want to be. So, you know, I spent a lot of my time worrying and thinking about what the business is going to look like in five years, 10 years.

Sarah
And what’s been, what would you say has informed your style of leadership?

Grant
Well, I remember, I think at uni, whilst it didn’t at that stage really resonate with me, but I read a book by Peter Drucker, who said, culture each strategy for breakfast. And I kind of thought, yeah, that’s cute. But above all else, I believe this to be true now, some 30 years later, that if you can create a great culture, by employing the best people you can, who are trying to achieve a common goal around a set of shared beliefs and a solid company purpose that everything else will look after itself. So I spent a lot of my time just ensuring that the team have the following our beliefs and have got the freedom to succeed. Time and time again, I read about failed companies and it’s not for me to talk about them, but culture can’t be purchased anywhere and it takes years to cultivate, but it can be undone in days in the wrong hands. How many times have you heard of new management acquisition and the company goes out of business within a couple of years. And I’d put it you that it’s really around the culture.

Sarah
Mm-hmm.

All right, well, Grant, we’ve run out of time, but it’s been really fantastic having a chat with you today. So appreciate your time. Thank you so much.

Grant Lee
Thanks, Sarah.