UK MD Max Burton and Operations Director, James MacIsaac, describe where it all went right
UK MD Max Burton and Operations Director, James MacIsaac, describe where it all went right
Founded in Pennsylvania in 1988 by Anne F. Beiler and her husband Jonas, pretzel shop chain, Auntie Anne's, has come a long way from its origins in the Downingtown Farmer's Market. Now it has more than 1500 outlets, including 40+ in the UK and Ireland.
While the company describes its products as being made with 'simple, wholesome ingredients'; 'using the same base dough allowing for a flexible attitude in catering to different consumer trends' Max Burton, Managing Director in the UK, is quick to point out the signature pretzel mix is what makes it Auntie Anne’s and this secret recipe is the same as when it was first mixed and twisted into pretzels all those years ago.
Reflecting changing consumer tastes, however, Max notes:" Our pretzel mix contains no eggs or dairy content and as such is suitable for a wide range of dietary requirements. "
"I think it’s fair to say customers are definitely more aware of what they're eating today and generally there is a trend towards healthier eating, albeit this isn’t always the primary concern when enjoying a periodical ‘treat’, " he adds.
Max's history with Auntie Anne's goes back to 2008 when, along with is father, they went into business together to grow the Auntie Anne's brand in the UK.
"My father had been in franchising for 20 years as the owner of the Thrifty Car Rental business in the UK. Having worked in and having understood various areas of a franchise business (although not food!) the idea of working together and growing a business, via a sub-franchise model, was an exciting prospect," he says.
"The relative of a family friend of ours was married to Anne Beiler’s niece and had worked with Auntie Anne’s in the US to bring the business to the UK in around 2004. They had strong experience in managing an Auntie Anne’s store but little experience in property, supply chain and sub franchising, so were looking for an experienced UK based operator to take on the challenge, " he adds.
After sampling the product in one of the 4 stores that were trading at the time it was literally love at first bite for Max and a deal was eventually struck to acquire the Master Franchise rights for the UK and Ireland.
Today, the domestic market is a crowded one and for Max, with competitors including the likes of Greggs "who have also done a fantastic job with their menu development in recent years" as well other traditional snack food operators such as Krispy Kreme, Millies Cookies, and newer entrants like My Cookie Dough, the company needs to be ever vigilant.
"As an artisan bakery that hand makes all our products from scratch in each store however you could consider our competition some of the more classic independent bakeries. When competing for breakfast and lunch spend as we are increasingly able to do now, you could consider our competition much broader as we try and lure customers away from seasoned fast food operators like Subway and McDonalds," says Max.
Go under the bonnet of an Auntie Anne's franchise and you will find an established supply chain, customer loyalty app and intelligent integrated operating systems.
As Max puts it: "As you would expect from a brand with 30+ years experience internationally we of course have a proven set of systems and processes which allow our franchisees to easily replicate the successful Auntie Anne’s business model.
"Over the years the systems in the UK have developed to meet the needs of both our franchisees and our consumers; to ensure our operators can measure and manage each aspect of their business and allow our valued consumers to interact with our brand in a way that's convenient and valuable to them," he notes.
Operators benefit from a fully integrated suite of systems; examples of which include an enterprise front of house EPOS to back of house stock management and ordering, to labour scheduling, accounting integration and, more recently, footfall monitoring.
Meanwhile, the Pretzel Perks loyalty app rewards customers a 15% cashback every time they make a visit. In addition there are offers and promotions throughout the year. "Soon our customers will even be able to “click & collect” through their Pretzel Perks app, which they can already do from our website," Max adds.
Unsurprisingly, for would-be franchisees, Auntie Anne's promises a 'a completely project managed journey'.
"Once they register their initial interest, they are sent the Franchise Brochure providing detailed information on the opportunity. After this they'll speak with our Franchise Recruitment Manager to have a more in-depth chat about the business, and also to learn about them as a person. After the initial conversation, a NDA and full application form will be sent and then financial information can be shared," says Max.
"Following this, a first meeting would be arranged (video call currently). At this meeting it is our chance to really get to know a prospect, their goals and expectations. Locations would also be discussed and a brief put together for our property agent to begin the search," he adds.
After this meeting a prospect will either be qualified for the next phase, or not. Once qualified they enter the ‘Due Diligence’ phase. They can talk to or meet with existing franchisees, have a trial day and also go through a background check.
"We would also introduce them to the finance brokers we use - if they require external funding - for an exploration chat. These are the final checks and measures to ensure this brand is right for them, especially if they plan to be the day-to-day operator. Running a store is not as easy as it may seem on the face of it!"
After this process the next step is selecting the location, placing a deposit and then kicking-off the funding process.
"Lots of elements start to come together now and the prospect will be introduced to other members of the Head Office team. We will instruct our architect to start the plans for the design of the store, create a project timeframe and start to prepare the legal documents," says Max.
If funding is required, it's at this stage the business plan will be created. The prospect will be dealing mostly with the Operations Team at this stage on store design, shopfit elements and training. Up until this stage the franchisee can be hands on or off. "Some just like us to get on with it whilst others like to be closely involved with elements, such as the design process for example," Max adds.
Lawyers will then review the lease and prepare to sign it with the landlord.
With the store being constructed the franchisee will then be trained and helped, not only in recruiting their first team of employees, but also devising a plan for the Grand Opening event.
Once the store is built there will be further training 3-4 days in store with staff and then the Grand Opening will take place. "A member of our team will be with them for a few days after and then fully hand over to the franchisee," notes Max," adding: "Our Head Office team are there to support on any issues, the new franchisee will also be in close contact with the training manager/operations team for any operational issues."
After they've been running for a while they will fall into the usual pattern of store audits quarterly, annual business review meetings and instant help via the HQ helpline if necessary.
Total investment per franchise is, on average, around £145,000 with £50,000 of available capital usually required, and as Max notes: "Being a retail business in busy locations and generally with property deals that provide for an amount of “rent free” at the start of the lease, the business should become cash positive very quickly."
But he cautions: "However it is always worth ensuring there is a sum of money put aside for that “rainy day” that may occur at any time. We have therefore in the past suggested that circa £10,000 is kept aside in that way."
Underpinned by the seven core values in its business: Teamwork, Respect, Honesty, Excellence, Diligence, Continuous Improvement and finally, Celebration (where achievements are recognised and rewarded) Auntie Anne's mission statement for franchisees/store managers is:" to provide our franchisees and corporate store managers with comprehensive sales, marketing and operational support to enable them to run successful, profitable Auntie Anne’s stores.”
Its consumer mission statement meanwhile is: “to serve our customers freshly baked, golden brown, soft pretzels, and other delicious food and beverage products, in a friendly and courteous manner from a sparkling clean store.”
More than a decade on, working with the same company, viewpoints - based on experience- inevitably evolve. Max is no exception and while the benefits and challenges of a franchise structure remain the same today as before, landlords view franchise businesses with a little more respect nowadays and understand more that a franchised operation in their mall is likely to be managed with a greater attention to detail and greater passion, and therefore more likely to be a success.
"In the early years I definitely had to sell “franchising” to the landlords; this is not needed today," Max is quick to point out.
Meanwhile, with chinks of light at the end of the COVID pandemic tunnel - even if daily caseloads continue to surge - Auntie Anne's, like other operators in its sector will be hoping lockdowns are a thing of the past, especially given most of its 40+ stores are in enclosed mall environments.
"We opened last July (post lockdown 1) and traded through to November when all shopping centre sites generally closed. At this time our High Street/accessible stores stayed open (around 8-10 of our locations), albeit trading at a reduced level.
"The same occurred during lockdown 3. All stores (other than Luton Airport which should be opening by 1st August) re-opened on 12th April 2021 and sales have been incredibly buoyant since then. In terms of costs, other than a sum back in June 2020 to make the stores 'COVID secure' there have not been any increases of note. We are seeing some Brexit related supply chain challenges but overall things are pretty stable," says Max.
Indeed, sales returned to pre-pandemic levels almost immediately and in nearly every location. "We are now well placed to, and have been, picking discussions back up with our various agent and landlord partners. Generally I would say there are now more and slightly cheaper opportunities for tenants, however prime locations are still generally popular," he adds
While the company was chasing one or two areas before COVID hit, such as central London railway stations and the City of London, its searches in these areas is being delayed until things have stabilised further - the focus now being on busy high streets and retail parks in towns "because there is definitely a move to more 'local shopping' which we can capitalise on."
Tasked with improving the performance of the business overall - COVID or no COVID - Operations Director, James MacIsaac, is quick to acknowledge the ‘retail is detail’ mantra. Indeed, a successful Auntie Anne’s franchisee will require a fairly broad skill set; "one that we help them to develop over their time with us and provide a range of tools and resources to assist with."
Similarly they'll be customer focussed with a dedication to exceptional product and service, will have a keen eye for detail, be an excellent people manager, have a good understanding of their financial position and be able to manage their costs closely, as well as being sales-driven and a proactive marketeer to drive interest in their local area, according to James.
"The COVID-19 pandemic was of course a challenge all businesses have had to face head on, we used the time that our retail estate was closed to work on improving our business so that we could emerge from the pandemic stronger and ready to meet the challenges of the post-pandemic world.
"This has included investing in our systems and processes, developing new ways of working and reaching our customers, developing new and improved operating models and store concepts, improving our franchisee communication strategy, along with a raft of other business improvement activities. It has certainly been a very busy year and the time is now to capitalise on the opportunity that we feel there is in the UK market."
In the immediate term the company is working on taking the business out of its core comfort zone of snack food sales in busy shopping centre environments to ensure it's better able to cater for a larger range of snacking and meal occasions, from a broader portfolio of store setups that meet the changing demands of the consumer.
"Longer term we need to continue develop our operating model, to drive new and innovative ways of taking our product to wherever our customers are and increase the frequency with which they visit our stores/digital storefronts," says James, adding: "We all make mistakes and we have certainly been no exception over the years, it is how you learn from these mistakes and build back stronger that defines you however.
"One particular focus for the team at the moment is ‘dispensing with the paper’ and migrating from older ways of working that make it challenging for the food retail staff of today to easily access, understand and engage with our resources and ultimately ensure our businesses and brand is managed effectively.
In other words, printing more guides and adding more folders to the manager’s already crowded shelf in the back office won’t achieve this, so in effect the company is working hard to improve that area of its business at the moment.
Over the next five years the aim is to have 100+ stores, up from the present 40+. "After what has been a very challenging business period over the past 18 months, we now feel there is significant opportunity in the UK Market and are excited to steer our business through this next phase of growth," says James.