Three Beans Coffee, Vanilla, Mung


three beans


Organic, Ethical, Pure


A café franchise based in Sydney, Three Beans has been providing fast, healthy, and ethical food and coffee products to their customers for almost a decade. Established in 2006 by James Howe, Three Beans’ first location was a small shop in Chatswood Chase. 2 years later, James and his brother Matthew began working together expanding business from 1 store to 4, owning and operating the locations themselves. “We found that to be an incredibly challenging approach to business in terms of the time needed and staffing issues,” says Matthew, “So we reached this crossroads of whether to continue or we stop doing it.” It was at this point that the brothers decided to develop the company into a franchise. Matthew’s prior experience as senior vice president of McDonald’s in the United Kingdom proved a valuable asset for the evolution of Three Beans’ business model, and the first four locations were successfully franchised over the span of 6 weeks. The major ethos surrounding Three Beans is their approach to natural, authentic food, with no additives, preservatives, or artificial colours and flavours, with a focus on organics and animal welfare. In order to properly operate under the high standards they had set for themselves, Matthew and James established their own commercial kitchen before the company became franchised, properly equipping them to supply the business as it expanded over the next five years. Today, Three Beans operates 19 cafés, with 2 new locations currently under construction; one in the Kareela shopping centre in Sutherland, and the other in Westfield shopping centre in Miranda. Their most recent store, located in Hunters Hill, was opened at the end of August.

Three Beans has developed a pleasantly simple business model for their franchisees, enabling them to bring in unskilled labor and train them to deliver a consistent product. “We are not a business that wants chefs,” says Matthew. “We want our brand to be consistent in every outlet we operate. We spend a lot of time developing a business that can be run very simply.” Menus are carefully created by skilled professionals from within the company’s commercial kitchen and facility, which supplies the cafés with every ingredient apart from milk, pre-packaged drinks, bread, fruit, and vegetables. “Everything else comes from the kitchen, and is very simple to assemble and very simple to deliver to our customers. That’s the biggest thing that we give to our franchisees.” In addition to the delivery of individual store marketing for all of their locations, the utmost priority has been placed on the provision of training for customer service and, most importantly, barista’s. “That’s the most important thing for us,” Howe explains, “as the quality of the coffee is key driver of success in our stores. We’ll put field service people in the stores to help if there are any issues or if the staff needs to be retrained; we are always helping them.”

Taking a “quality over quantity” approach to their franchise structure, Three Beans puts great time and effort into determining the most beneficial sites upon which to open new business locations. “The reason we don’t open many sites in a year is that we are always striving to initially find locations that we know can be profitable to the franchisees,” says Matthew. An important element of their site selection process is an affordable occupancy cost, which provides a direct advantage for both them and their franchisees. “Three Beans doesn’t make any margin on real estate,” explains Matthew, “literally what we pay is what the franchisee pays. We’re really clear on providing a fair and a credible split on returns, so we also don’t take any percentage of turn-over either. There is a fixed weekly franchise fee, and we are clear with our franchisees that when we make money they make money, the more products they sell the more successful they are, the more money they make then the more money we make through supplying them.” Three Beans’ food cost as a business is noticeably higher than any other café or fast food outlet, on account of their ethical approach to food sourcing. While the price of RSPCA-approved free-range eggs, chicken, ham, or bacon, may be higher than any intensively-reared agriculture product, Three Beans’ ethics policies are their greatest point of difference in the marketplace. “We genuinely care about where the food comes from,” says Matthew. “Our coffee is all Rainforest Alliance and organic as well. Our cost of business is higher, but from that we say to our franchisees, ‘if you’re successful, we’re successful,’ and it’s always in our interest to ensure the success of the franchisee.”

The quality and ethical nature of their coffee and food products serves as the base for Three Beans’ strong reputation. For the past 6 years, the company has been working personally with Gabriel Coffee’s Director, Sam, cupping all the origins of their coffee and developing their blends. “The starting point for us is outstanding beans and roasted consistently by Sam,” says Matthew. In addition to their ingredients, Three Beans’ quality focus extends staff training as well. ”Any barista can make a great coffee taste bad, or an average coffee taste good, so for us it’s all about training our baristas.” The company has numerous measures in place to ensure consistency between all 19 stores, including 3 field service employees, who monitor the product and training quality within every location, and an inter-store coffee coffee competition every 6 months, based on the World Barista Championships score sheet.

Three Beans has met with continuous success at the Golden Bean Coffee Awards, consistently bringing home gold, silver and bronze medals from the event. As well, the RSPCA has repeatedly recognised the company with a Gold Egg, a Gold Pig, and a Gold Chicken for their efforts in supplying their businesses with only free-range products.

While Three Beans’ franchisees work within their respective communities to support local efforts, such as fundraisers, sports teams, and schools. “We’ve given free coffee cards for charitable events, we’ve done gift hampers, we’ll look at anything and everything and try to do it,” says Howe. “The reality is that you’ve got to be, particularly as a café, a part of the local community. You want customers to feel like this is their café. We don’t want to be seen as some big unwieldy brand, we want to be seen as the choice of the local community, so we encourage our franchisees to do anything and everything they can within the community.”

While still a young business, Three Beans has achieved and maintained consistent supplier relationships for many years. Three Beans’ milk supplier, Reilly & Sons, has worked with James since his first café, and their coffee supplier, Gabriel Coffee, has grown side-by-side with the business. “We’re constantly contacted by people wanting to supply us,” Matthew says, “but for us, the most important thing in terms of supplies is consistency; it’s not about the cheapest price, and it never can be. It’s about the whole provision of the service.” In addition to their food suppliers, the Three Beans has worked with the same legal providers since the company’s establishment eight years ago. “They are vital in terms of providing support and making sure that we’re doing the right things.” Close ties with associations such as the franchising council are critical as well, as they act as a source of up to date news regarding issues within the industry, regulatory changes, and best practices.

The search for driven, capable staff has always stood as the greatest challenge for Matthew. “We are a people business,” he says. “We can make sure that we have the best quality products coming into the stores, but at the end of the day it’s our outstanding staff running those stores, that’s the big challenge and it always is. So finding enthusiastic, hungry employees that love the brand, and want to work hard, succeed and deliver outstanding service to customers is always the biggest challenge.”

Matthew Howe left Australia as a 25-year-old New South Wales University commerce graduate. After months of backpacking, he decided to settle down in the UK with his wife-to-be, and began working at McDonald’s UK head office, drawn by the enthusiasm, passion, and dynamic nature of the staff. Progressing from the finance department to a number of new positions, Matthew worked for 18 years with the corporation before making the decision to move back to Australia with his family to work with his brother at Three Beans; a decision he feels was the best he has ever made. “While there are pressures running your own business, significantly more pressures in terms of responsibilities that you don’t have within a corporation, the rewards are great, you’re not answering to another corporate head office 5,000 miles away in the US,  you can make well thought out decisions rapidly and respond to the market quickly.”

About author