The master franchise business behind one of New Zealand's leading coffee shop chains has been placed on the market for sale.
The Gloria Jean's brand is among New Zealand's most recognised coffee retail chains with 17 franchised outlets encompassing 10 in Auckland, three in Christchurch, two in Hamilton, and oneeach in Wellington and Lower Hutt.
The Gloria Jean's master franchise business is being marketed for sale by Bayleys business broker Tony van Camp through expressions of interest.
Gloria Jean's was founded in Sydney, Australia in 1996. Since then the company has grown considerably with more than 900 coffee houses across 39 countries - including 400 in Australia.
Last year, parent company Gloria Jean's International was purchased by Retail Food Group for A$163.5million (NZ$176.2 million).
Gloria Jean's' New Zealand master franchise was established in 2003 through a joint partnership between by coffee-loving businessman Paul Ewing who had been operating a franchise in Brisbane for three years, and the company's founders.
The first New Zealand Gloria Jean's opened in the Northlands shopping centre in Christchurch. Soon after, the second New Zealand Gloria Jean's site opened at the Palms Shopping Centre, also in Christchurch. Two years later Ewing bought out the parent company shareholding to run the New Zealand division solo.
The brand's New Zealand turnover has been steadily increasing in recent years. In the 2012/2014 financial year, the 17 New Zealand sites purchased 11.7 tonnes of roasted coffee beans. That figure increased to 14.5 tonnes in the 20154/2015 financial year, and is forecast to exceed 17 tonnes in the 2015/2016 financial year.
New franchises cost $55,000 to operate under the Gloria Jean's brand and are allocated on 10 year terms with extendable rights of renewal. New franchisees are also required to pay a $10,000 training fee.
Franchisees then contribute two per cent of gross sales to a consolidated brand advertising budget, with a further six per cent of gross sales paid to the head franchisor.
Interior view of a Gloria Jean's cafe.
Van Camp said that with a strong 'cornerstone' presence the Gloria Jean's brand was now poised to move into a new growth wave.
"The brand has traditionally been very much focused in the bigger centres so there is a big growth opportunity to establish outlets in provincial centres as the competition has done," Van Camp says.
"This could well see Gloria Jean's locations in the likes of Whangarei, Tauranga, Rotorua, New Plymouth, Napier, Hastings, Gisborne, Nelson, Blenheim, Dunedin and Invercargill, which all have the population bases to sustain the necessary turnover required to underpin the brand.
Van Camp said the Gloria Jean's New Zealand master franchise business currently employs three staff:
A managing director working on negotiating leases with new franchisees, overseeing new stores and existing store refurbishments, analysing sales data, and reviewing the company's financial reports. An operations manager working on day-to-day running of the business, including pre-opening inspections, store performance audits, commissioning new equipment, and staff training at both counter and back office levels. An administrator working on data entry, GST returns, invoicing and accounts payable, collection of franchise fees, and supply coordination. "The master franchise company is essentially the administrative engine behind the Gloria Jean's brand. As such, the company runs a lean back-office focused business model," Van Camp says.
"The master franchise has also identified food as an important growth opportunity for the brand, with initial feasibility studies and reports undertaken on the potential for establishing a centralised production kitchen supplying outlets with bakery items.
"The rationale is to compete with food based retail outlets which have moved into the coffee retailing scene as a secondary product. Recent food offering trials at Gloria Jean's Featherston Street store in Wellington increased average spend by 20 per cent. Boxed salads were particularly popular with female customers and the cost was not indicated as a barrier."
Van Camp says the master franchise has budgeted for a 30 per cent increase in outlet sales through the introduction of greater food menu offerings. Leading the transition into the food are the company's Lorne Street outlet and a new Botany branch which is soon to be opened. Both are being equipped with commercial kitchens.
