Pioneering Innovative Business Solutions for Franchise Partners
Established in 2007 by Nicola Mills, Pacific Retail Management is a Sydney-based umbrella company for a number of successful businesses, including Kick! Juice Bars and Go Sushi, the number-1 sushi franchise in Australia. Prior to the company’s founding, Mills was directly in charge of Kick! Juice Bars, now one of the country’s two remaining juice franchises. With a background in media, she had a choice whether to return to her original area of focus or progress further on her journey in the food and beverage industry. “I decided to stay in food and beverage, mainly because sushi was just starting to come onto people’s radar,” she says. “People were starting to talk about it, my friends were saying ‘lets go out for sushi for lunch.’” In late 2007, Nicola approached Go Sushi, which had 18 locations at the time, and purchased the company the next year. In 2011, Pacific Retail Management carried out further research into customer demand in order to improve the Go Sushi business model, launching the Wasabi Warriorss brand from the results. Since its creation, the brand has experienced significant growth, currently boasting 42 stores across Australia, with agreements signed this year to open stores in Hong Kong, the Philippines, and the GCC countries (UAE, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman).
The Go Sushi brand is Pacific Retail Management’s quick, convenient, grab-and-go business. “It goes in smaller locations,” says Mills. “It’s our most nimble brand, you can put it anywhere.” Wasabi Warriors, their premium brand, offers organic vegetables, free-range meat and eggs, and recyclable packaging. “Even though it is still in our convenient grab and go environment, you can sit down and eat. We have more hot food available, and some sites have a liquor license, so you might want a Saki with your food.” Sushi Tribe is Pacific Retail’s commercial brand, supplying fresh sushi to hospitals, cafes, and schools throughout Australia. Finally, 8 Kick! Juice Bars continue to operate in the country. “We locate those next to a Go Sushi,” Nicola explains, “so we might have one lease, put Go Sushi on one side and Kick on the other, complimenting each other as healthy offerings, and the 2 separate brands share one site and share the costs.”
Pacific Retail Management offers franchising opportunities for Wasabi Warriors locations, Sushi Tribe commercial kitchens, or split Go Sushi and Kick! Juice Bars. A major point of difference between Pacific Retail and other franchise operators is their Manage To Own program. In recent years, the group had found that franchisees were meeting with difficulties when trying to acquire financing. “You had to be a certain age, or have enough capital behind you, or have equity in a house before banks would lend you any money to buy a business, and that was slowing down growth and opportunities, and people just couldn’t get financed.” With Pacific Retail’s program, the company builds the stores and the franchisees operate them, paying the company back through the profits. “The program has been really good for us, and for the franchisee,” says Mills. “In fact, some of our store managers have taken this up. Because they know sushi, they like doing sushi, but they don’t have the capital to build their own store, this gives them the opportunity to move up from store manager to owner. Banks want property equity, or you can get some equipment finance but it is costly. It’s just too restrictive. There is a lot that you need backing you before banks will help in business.” The Manage To Own program has met with great success, and to date the program has brought on 10 new franchisees, with many more store managers signed up, eager to take part. Mills’ next step is to work towards receiving the support of a bank for the program.
As the most successful sushi franchise company in Australia, Pacific Retail Management has the highest number of franchisees in the sector. “We are very focused on the training of franchise business owners,” says Nicola. “All of our competitors are company store-owned models.” Many competitors, even those with more stores, only have a small percentage of franchised locations. “We are a true franchise group, therefore we tend to be more marketing and brand-oriented, and we have more support and training programs in place, because we are supporting so many more people.’
The company is working very hard on the promotion and use of products that are gluten free, and free from artificial preservatives & additives, organic, and free range. “We are doing constant work to make our product healthier, fresher, and more socially aware,” Mills explains. “We also do a lot of work keeping aware of what is happening globally, internationally and locally in sushi trends, and where sushi is going.” As well, Pacific Retail is continually introducing new products into their stores, a significant amount of which is requested by franchisees. “They expect a lot from us, they push us to do a lot for them. It keeps us at the cutting edge of the business.”
Pacific Retail Management’s success has been recognised in the form of a variety of awards, including BRW Fast Franchise in 2010 and 2012, and the DcStrategy award in 2009, for being in the top 100 of the 1100 Australian franchise owners.
In keeping with their green philosophy, Pacific Retail Management makes a significant effort to provide support for wildlife and the environment. “Our message is around ocean, earth and animals,” says Mills. “Anything that helps the oceans, such as when we look at fish and where we source our fish from, we make sure that it’s sustainable or wild. If we look at chicken, is it free range, and are the eggs and vegetables organic?” Then that goes back to the environment where we can use recyclable timber in the building of our stores.” In the public eye, the company’s priorities take the form of the characters of their Wasabi Warriorss Brand. “Our Wasabi Warriorss are a group of five; Ocean Warrior looks after the ocean, Veggie Warrior looks after the earth, and Beefy, Porky, and Chicken Warrior look after the animals.”
In addition to the provision of bulk pricing on supplies, marketing, or sponsorships, the close relationships that Pacific Retail Management have forged within the industry have proven invaluable in situations of crisis. On a number of occasions, storms or floods in the vicinity of crops that supply the company’s franchises with produce, such as bananas or rice, have caused industry shortages. “Sunrice came and helped us,” Mills says, “and kept our pricing the same for many, many months.” While prices rose everywhere else, the supplier maintained the pricing for the group, keeping the prices down for its franchisees, and therefore its customers. “Those are the times where it is most critical to have strong relationships, and be are working well with your suppliers. When you have a crisis, it’s nice that they come to the fore.” Other suppliers, like Coca-Cola, have provided support for Pacific Retail Management in the form of market insights, helping them set targets and goals around current and future industry trends. “Coca-Cola can tell us, for every customer that goes into a food outlet, how many people walk out with a drink. Market insight into customer activity has been really important for us and has really made a difference in our profitability and in how we make key decisions.”
Ties with associations such as the Franchise Council of Australia and the National Retail Association are also highly valuable to Pacific Retail Management, as they play a key role in the resolution of political and market issues. “Often as a small community business owner, you get caught up in your own deadlines,” says Mills, “and knowing those guys are always out there banging the drums is fantastic.” Associations also host numerous workshops and networking events in order to keep their members informed of recent developments and industry innovations.
Nicola points to three major issues that will present the greatest challenges for the industry in the future; rent, wages, and finance. “Nationally, our rents are too high, landlord power is very strong. At the end of the day, the market is determined by supply and demand. We can complain about rents being too high, but if everyone is out there paying it and there’s enough demand, the landlords are business people too and they will set the rents to what the market will bear.” According to Mills, a key problem is that many independents go into leases with very little knowledge of the amount that they should be paying. “They don’t get financial backers to help them, and they often pay the overinflated rent. But what is happening is, the exit costs on a lease are so restrictive, or so devastatingly high for tenants to exit, that they hang on to the end of the lease.” As many cannot afford to exit, they choose to stay on the site, losing money, and borrowing funds to make it to the end of their lease. This creates a false sense of demand, as people are staying in high rents for too long (demand slows, and rents stay high). “I strongly believe that work needs to be done on exit clauses for leases. If a site is not working for a tenant, they should be able to exit out of a lease without this massive legal or financial bill put on them. That’s a huge issue for me.”
The issue of determining wages has long been a debated topic in Australia. “Every time we have a change of government, there’s a fight over wages,” Mills says. “That’s always a concern for us if because wages go up, it puts a lot of downward pressure on small businesses, they can’t deal with it and they go under. You get this vicious cycle when everybody says ‘put the wages up,’ and they put the wages up, and then you have fewer businesses and fewer jobs. You may get a higher wage in a job, but you still have to get a job!”
The lack of finance and funding for small businesses is reducing job opportunities both within the industry and for many other businesses as well. “The flip side of course is the banks then say a lot of small businesses go out of business, so it is high risk to finance them,” Nicola says. In the midst of Australia’s economic turmoil, many reports noted the fact that small business and entrepreneurships played a major role in the survival of the economy. “If that slows down, delivery slows down. 65% to 70% of employers in Australia are small business owners.” In the face such a challenge, many companies, including Pacific Retail Management, have found a variety of creative solutions, the most notable being Nicola’s new crowdfunding venture, Ready-Fund-Go. In 2013, equipment financing was very costly and bank loans were highly restrictive. “We had a number of franchisees looking for financing. The Manage To Own program was still in place but there is only so much that our company can finance,” says Mills. While looking into other financing options, Nicola learned about crowdfunding, which had become a huge phenomenon in North America and Europe, collectively earning 5.1 billion dollars last year, doubling year on year for the last four years. “We had a sushi franchisee opening at the time so I thought I’d do a crowdfunding campaign to raise money to help get the stores open,” she says, “but found that, as a business, I couldn’t raise Australian dollars this way, only for a personal cause.” Mills then gathered a small, like-minded group together, and began development on a new crowdfunding platform focused on business projects and ideas. “This will mean that if one wants to get a business idea off the ground, money can be raised to facilitate it through crowdfunding.” The project, called Ready-Fund-Go, is slated to launch in October of this year, and has already attracted a number of interested parties. “The opportunity for people to launch themselves and get their businesses going is fantastic. In the US last year, under item no.10 on their Jobs Act, the Senate approved crowd funding and loosened the laws and rules around it because it was stimulating the economy and creating jobs. Now Australia is going to do the same.”
Nicola Mills’ journey in the industry is made up of a long list of personal achievements and milestones, from her acquisition of Go Sushi and establishment of Wasabi Warriorss, to growing the brands within Australia and seeing them expand into overseas markets. Mills is currently working to acquire a number of Pacific Retail Management’s competitors, with one such process in its final stages. “For me, going forward it’s about growth,” she says. “Starting Ready-Fund-Go to help fund small business and our franchisees, as well as supporting collaboratively building regional area sushi businesses, are very important objectives to me.”