Salad chain sprouts legs
Tuesday, 4 March 2008
Last Updated: Tuesday, 4 March 2008
By Jacqui Walker
Sumo Salad is set for a growth spurt, with tendrils spread in several directions. Founder Luke Baylis tells how he is regaining control of the brand and recruiting franchisees in a tough market.
Luke Baylis (right) and James Miller, the founders of franchised salad chain Sumo Salad, plan to double sales to $30 million, triple store numbers to about 90 and make a strong push into Victoria this financial year.
All of this at a time when the franchise industry is experiencing the turmoil of new regulations and most franchisees are struggling to recruit franchisees.
He is happy to answer your questions. Send your comments and questions to feedback@smartcompany.com.au (until 10 March).
Jacqui Walker: Luke, your network revenue has increased 166% a year on average over the past three years to reach $14.2 million in 2006-07, and you are forecasting $30 million revenue in 2007-08. Your growth is accelerating.
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Luke Baylis: Yes; by the end of June we expect to have 60 to 62 new stores. We have already brought on 28 stores this financial year.
What is same-store revenue growth?
Our comparative sales growth is about 16%. It would have been more but it was a really bad summer. The weather has really impacted the business.
If it rains during summer we have a few issues because we don’t have the winter menu available to April. But if it’s cold and rainy people like to eat comfort food. This was the case in New South Wales particularly.
Our stores in Queensland and South Australia and Perth have incurred phenomenal growth. It’s Victoria and New South Wales that haven’t been as aggressive.
What happened in Victoria?
I think the weather has impacted it. In Victoria we are under-represented, we haven’t had enough stores to get brand recognition.
We have just bought the master franchise for Victoria back. The master franchisee wasn’t proactively growing the business. There were issues with consistency with the other states. It cost us several hundred thousand dollars.
But we decided to invest and give it a big push. At the moment we are the number one healthy fast food brand in all markets except Victoria, where we are getting beaten by Healthy Habits – but that is going to change.
This year we will double our presence in Victoria by opening eight stores, including four corporate stores in key strategic locations, and we will invest in marketing and branding. The new locations will be shopping centre-based, including the new development in Doncaster.
Sumo Salad has done some clever marketing in the past to build recognition of your brand, including the McDonald’s inner child spoof viral marketing campaign. What do you have planned for Victoria?
Our plan is to get a lot of brand awareness. We plan to do a lot of print media and radio to get mass market recognition and heavy local store marketing. That will be a major part of it.