Today we are talking with Dunkin’ Brands global chief executive Nigel Travis, a franchise veteran who formerly ran pizza chain Papa John’s and was an executive at Blockbuster. He explains how Dunkin’ is hoping to turn Baskin Robbins around, how the company managed to grow by 800 stores last year across the globe and why technology matters in franchising.
Am I right in saying the purpose of this trip to Australia is to catch up with the Baskin Robbins Franchise network and find out how they’re travelling?
We’ve got a number of people travelling with us and basically our goal is to boost the confidence of our franchisees after some of the problems they had with the previous franchisor, which were pretty well documented. We want to listen to their concerns and stimulate more interest in more franchises – we think we can grow very quickly, as we see this as a great ice cream market, the biggest ice cream market in the world.
The franchisees have had a pretty rough trot. Are they happy to see someone who’s keen to keep the business moving forward?
I think they are very philosophical. They feel that they are now being supported and we’ve made it very clear that the organisation being run in Australia is Baskin-Robbins Corporate, it’s not going to be someone else, we’re not going to sell it off again. We just want to build this business and make it a great business, which we’re sure we can. So they seem to be in great spirits – we’ve had two days of franchise meetings and they’ve asked some great questions. They’ve asked what I’ve considered to be positive technical questions, so we feel good about it.
But this is a very different model for Dunkin Brands, isn’t it? Your usual model is to have a local franchise partner, as you did with Allied Brands. Will this arrangement require some changes to the way you guys go things?
That’s a great question and the answer is yes. That’s why we put Ian Martin, who’s a very experienced fast food operator, in charge of Australia. I mean, Ian to be honest is probably a much bigger individual than we currently need, but he’s got the capability of managing the growth that we foresee. We’ve also obviously put other people on the ground. This situation is not totally unique – we’ve got similar situations in some other countries – but it is relatively unique as you point out and that’s why we feel we’ve got support from day one. We want to crank up the intensity of support for the franchisees, make sure we’ve got a great marketing plan, make sure we’ve got our supply chain all in place and my observations over the last three days is that we’ve managed to do that very successfully.
What’s your sense of how the brand has held up during this period?
I think the brand held up very well, but you can’t have issues without it having some impact on morale. Our goal now is to take the standard of our stores to a much higher level, to make sure we’ve got the right marketing program, to make sure all the disciplines that may have been lacking are in place. We’re not about mediocrity, we’re about excellence and I think what the Australian consumer will see is an even better Baskin Robbins in the future.
There are currently about 87 Baskin Robbins stores in Australia. Have you got a number you’d like to reach?
I haven’t got a goal, but what I would say is I’ll be disappointed if we aren’t several hundred in the next sort of three years. Recognising that franchisees have got the support of an organisation that has got over $1 billion of revenue outside of the US and very successful countries, I can see no reason why we can’t achieve that.
As you’ve been moving around have you seen any opportunities for other Dunkin’ Brands brands?
Your direct question is, will Dunkin’ Donuts be coming here? Put it this way – Australia hasn’t been on our list of priorities but I’ve been impressed with some of the coffee operators here and it’s clearly a good coffee culture. So I’m going to reflect based on what I’ve seen, but clearly there’s some very good operators here which makes it more competitive but it does also mean that people understand what they like in coffee and Dunkin Donuts America’s favourite so it’s something we need to consider for the future. But my focus at the moment is 100% on Baskin Robbins in Australia.
Fair enough. The big challenge for franchisors at the moment seems to be recruitment. Is it a similar story around the world?
Well it’s not easy, but we’re encouraged by the fact that last year we opened 800 new stores which beat everyone except for Subway. So we feel good about that. We’ve managed to get franchisees all over the world. I think the Baskin Robbins organisation is such that it can be attractive for people who are leaving full-time corporate employment, people who want to become owners and entrepreneurs. I think it’s got the kind of investment level that’s not over onerous, I mean the kind of investment that we’re talking about is say up to $300,000 for a store, but we also like to see people who are interested in several stores. What’s been really encouraging on this trip is the number of existing franchisees that said, ‘I’ve got one store now and I want another two’ or I had some the other night on a very pleasant boat trip we had in Brisbane saying, ‘I’ve got three, is there any reason why can’t have another five or six’?
That’s a trend that’s only really getting off the ground here, but in other countries the idea of almost a professional franchisee that has multi units and even multi brands is quite commonplace.
Yes. If you take Dunkin’ Donuts and the average number of stores per franchisee is 5.6 and our biggest franchisee’s got 227 stores. But one brand’s got a franchise with over 2,000. So it is a trend, but one of the great things with franchising is you can build your own significant business but still have the support of the corporation, the marketing support, the operational support, the supply chain support. But you still have the freedom to act as an entrepreneur and I think that suits a lot of people. I think our concept is very flexible, ice cream is not a business under technological threat. I used to work for Blockbuster so I’m very aware how that can be an impact.
You mentioned Subway before. Are you seeing a trend towards the smaller format franchises with a lower investment?
I wouldn’t say that’s an overall trend. I mean, I talk about Dunkin’ in Asia, we’ve got lots of small formats. Baskin is pretty standard and is relatively small globally, but with Dunkin’ some of our more successful stores are the biggest stores, particularly with drive-through. I think a big trend I would point out is drive-throughs. In Brisbane we actually have a Baskin drive-through and in the States about 70% of the Dunkin’ stores have drive-through.
We’ve seen a few US franchisors come to Australia in the last 12 months and we’ve been surmising that is because growth at home is more difficult. What are conditions like in the US at the minute?
The US is actually in my view improving. We’ve just come off a great year and we’ve positive comparable store growth, we grew more than any quick-service-restaurant business in the US. There’s no doubt that the money for good concepts is a lot easier to find that it was even a year ago. I think there’s more optimism, obviously the unemployment rate is down below 9%, which I think is a critical psychological level. I think most people are feeling much better than they did several months or a year ago.
We always like to think we’re ahead of trends in Australian franchising but are there any things that we should be watching out for?
I think it’s something we’re only starting to get involved in here in Australia. I guess that’s where you guys will be able to help the Australian Baskin Robbins franchisees.
We’re focused on the basic store level, getting the marketing and the supply chain sorted out and then we’ve got some great plans to move their business forward. We don’t intent to stand still. This is going to be a fast evolving business. I think the franchisees are feeling better now, they’ll feel even better I hope in a year’s time.
Good on you, I hope your whirlwind trip comes to an end soon. It sounds like a fair bit of hard work.
Well I’m on vacation next week so that will be good!