One franchise system is exploring new methods of distribution and franchise formats to boost business.
The capacity to make a profit out of poultry that comes in one door and exits another boned, cut and transformed into customer-friendly chicken meals for retail is at the heart of the Lenard's empire. When the business introduced the simplified production process Easy Cuts, it enabled franchisees to shrink their store footprint from 75 sq m to 35 sq m – and with it the rental costs.
Lenard's has most recently advanced to a hub and spoke format for its retail network, and company stores that have joined the hub have seen increased turnover, CEO Bruce Myers reports.
This new hub and spoke system has boosted manufacturing by a multiple of five and opened up a series of different opportunities for franchisees. Ideally, suggests Myers, the new options will attract franchisees who want to operate across urbanised areas.
“Now we can go to the system and look for those people who are interested in developing this,” he says.
The system works by taking production out of all but one retail site. The production capacity is sited in a hub store turning out the product for other stores commonly referred to as 'spokes' (which brings the footprint back to 20 sq m).
Lenard's kiosk model
It has resulted in a new franchise agreement offer that enables franchisees to buy and operate a production hub and up to four spoke outlets under the one franchise license.
The model also supports growth opportunities for existing franchisees, allowing them to add spokes to their existing business.
The size of a Hub & Spoke operation will depend on the specific location says Myers: Northern Queensland towns like Cairns, Mackay and Townsville could easily occupy up to five stores.
But the opportunities extend beyond the simple shopping centre outlet profile. As there is no production required on site, a modular kiosk option has also been introduced that can operate on limited trading hours, allowing staff to focus on sales and customer service. In addition to smaller rent it reduces the wage bill for a franchisee.
And the introduction of 50 Lenard's Express outlets at IGA supermarkets has been based on and facilitated by the Hub & Spoke supply methodology, Myers highlights.
A company owned Brisbane central product make up facility is an example of a larger hub operation the company is using to deliver Lenard's products to more consumers under the Lenard's Express brand.
"We put the Lenard's Express business into action, and we are starting to expose our franchisees to the model to help them build it up," says Myers.
Franchisees can use their own trucks or cold couriers to deliver the goods, he says.
Who would the wholesale distribution be aimed at? Butchers can take on a branded Lenard’s section, or the chicken can be merchandised in chilled cabinets in other food retailers.
The difficulty of maintaining control in a set up where distribution is outside the franchised network is unavoidable, Myers says.
“The retail scene has changed, possibly for ever. We have to get turnover from different locations for franchisees to make a living.”
There is also talk of a home delivery service – this opens up a lot of avenues, says Myers [pictured left].
“What it’s about is getting Lenard's to more and more people. That’s the key.”