Mobile food franchise Tasty Trucks plans to invest $2 million into the business this year and increase its fleet of vans, following the acquisition of Newcastle-based business Lunch Express.
Victorian-based Tasty Trucks operates a fleet of more than 85 food delivery vans. In January, it acquired Lunch Express, which has 17 lunch vans.
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Now the business has announced its intention to invest $2 million in order to increase its fleet. It plans to add 20 new vehicles across Victoria and NSW over the next 12 months.
The additional vans will service a greater proportion of Melbourne’s industrial areas, including areas such as Frankston, the Mornington Peninsula and Geelong.
The new vans were developed over a two-year process by Tasty Trucks founder Colin Lear, at a cost of more than $500,000.
The business is now looking for new franchisees, all of whom pay rental costs for their van. Van sales managers also have the opportunity to franchise at an entry level of $10,000 to $30,000.
While there’s no shortage of lunch express vans in the marketplace, Lear says he continues to reinvest in the Tasty Trucks brand, thus achieving sustained growth and reach.
Rather than expanding through new and untested geographic areas, Tasty Trucks grows out of its existing clients.
“We’re unusual in that our territory is bounded by companies. We don’t go into greenfield areas – we respond to demand and grow organically,” Lear says.
At the time of the Lunch Express acquisition, Lear said the vans would be rebranded, but there was no hurry.
“There is no point in immediate rebranding of the vans to Tasty Trucks,” he said.
“Because of the reinvestment we make into the business, we have a certain standard. We don’t want to devalue what we’ve built in Victoria.”
“We need to get the total system up to Tasty Trucks’ standards. It’s about the whole package, so we will probably rebrand on a van by van basis.”
“In addition, we will continue to look at acquisitions in other states of Australia in a bid to realise our goal of becoming a national brand.”
According to franchising expert Jason Gehrke, Australia has more franchise brands per head of population than any other country, so further acquisitions are highly likely.
“In the last couple of years [the number of franchise systems] has receded from its peak of 1100 systems due to market forces,” Gehrke told StartupSmart.
“It is likely that as smaller systems struggle to recruit franchisees and achieve critical numbers, there will be more sales and merger activity, with larger and more established franchises.”
“This may result in a further reduction in the number of brands in the market.”