Good Bad Business

Gloria Jean’s: Coffee Franchise… or Cashflow Trap?

• apickle • Season 1 • Episode 7

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0:00 | 31:43

Gloria Jean’s looks like a safe franchise business.

Recognisable brand.
 National footprint.
 Built-in customer awareness.

But behind the logo is a very different reality.

In this episode of Good Bad Business, Peter and Fabs break down Gloria Jean’s using the MOAT framework, Margin, Operation, Advantage, and TAM, to understand whether this legacy coffee brand still works in modern Australia.

We unpack:

  •  Why franchise brands can still fail at store level 
  •  The hidden pressure of rent, labour, royalties, and refits 
  •  What customer reviews reveal about operational consistency 
  •  And whether a Gloria Jean’s store can realistically generate $1M in year one

This isn’t really about coffee.

It’s about franchise economics.

Because brand recognition doesn’t guarantee profitability.

And one average site can quietly bleed cash.

We break down the numbers so you don’t get into a pickle.

If you’re thinking about buying a business,
 listen first.

If there’s a business you want us to break down,
 send it in.

And if you got value from this, share it with someone before they sign something they shouldn’t.

Because we don’t want you to get into a pickle.

SPEAKER_03

All right, welcome to Good Bad Business Podcast. And this is brought to you from Apickle, the team that removes caveats from directors' homes. Today we're gonna deep dive into Gloria Jeans, the uh the once former US uh coffee franchise that became a global brand through the reverse acquisition of its Australian franchise. So let's get right into it.

SPEAKER_00

Good business. I picked up good bad business.

SPEAKER_03

All right, so over to you, Pete. Fabs, we're back. We are back, my friend.

SPEAKER_04

We're back for another episode. Indeed. Oh, looking forward to this one. Yep. It's that moment where the Aussies prevail.

SPEAKER_03

Yes, indeed.

SPEAKER_04

You've got a lot of good um stories.

SPEAKER_03

Yes, when the Aussies win. Exactly, because we're we're too much about following behind other the big brothers. So in this case, we actually did a reverse takeover, which I'm very proud of.

SPEAKER_04

It's interesting you say that because when um when you've got a lot of companies that go over to the US and bring franchises back to Australia, um this happened in the same sort of scenario. But they purchased the rights to the American franchise and brought it back in. So that's pretty cool. Yeah. I think Domino's did a similar thing, but that's yeah, I don't I can't remember. But we'll get into that maybe in another episode. We'll have to jot that one down. So let's get into it. Uh the interesting thing about this business is it about the logo or is it about the local store? And so that's what we've got to do a bit of a deep dive on today because I know with a lot of the businesses that that we deal with, they always sort of come across to us and go, you know, hey, it's a it's about the franchise, or is it about the logo, or is it about the local business? And there's always a combination of a whole different sort of scenarios. But today, the question is is Gloria Jean still a good business in Australia? Or is it a legacy franchise brand? Because there's a lot of traps. There's traps in operations, thin margins, weak traffic, um, and also expensive refits. And that's one thing that always concerns me with a lot of our customers that we speak to. They've been around for a long time, they've had these franchises, and now they've got to do all these massive refits. I think I think Nando's went through something similar where a lot of franchises sort of ran for the hills because you know the refits cost a couple of million bucks to be able to do it.

SPEAKER_02

Yeah, that's right.

SPEAKER_04

So it it is a logo that's national, everyone knows it, but the execution just doesn't seem right. And I'm I'm hoping we can touch on that. Or is it? You know, we don't know. Let's find out as we go along. It's local, and here's what really actually matters the pairing company, which is retail food food group, has been under immense pressure in the last um couple of years.

SPEAKER_03

Falling market cap, so the market capitalization, the eBIT pressures, and for those that don't know that what EBO was Iranian for earnings before uh uh Iran war, Donald Trump tariffs, and something else.

SPEAKER_04

We'll have to find the audience of beauty. So, is it about store refreshers? Is it cost-cutting? So, in this episode, it's not just about coffee, it's about franchising. It's about whether a known brand still creates a strong store economics. And the real question every operator should ask can this store actually make money after the rents, the wages, the royalties, and the mistakes? So, Fabs, let's pull it apart. So, before I hand it back over to you, I want to talk about the origin story. And I know this one sort of really grabbed your attention because as per usual, there's an Iranian involved, right?

SPEAKER_01

We don't get enough of it, right?

SPEAKER_04

That's all we've been hearing about on the years.

SPEAKER_01

I'm an Aussie, guys, I'm an Aussie. He escaped. He escaped. Yeah, were you Bonnie? Uh no, no, I'm born every yeah. I was born in Iran, yeah. Yeah, yeah.

SPEAKER_04

So let's have a look. The origin stories. In 1979, a woman by the name of Gloria Jean Kvetko.

SPEAKER_02

Kvetko.

SPEAKER_04

Kvetko, one of my relationship KO at the end. Yes. Um, alongside her husband Ed's in Long Grove, a small town just outside Chicago, Illinois. Oh, Illinois. Yeah. It began as a single small coffee shop, then a gift shop before expanding into franchise networks across the United States. And while it sort of remained in America, the brand became a major household name because of its massive success. And then its success in Australia. In 1995, the Australian businessman Nabi Saleh, is that how you is that franchise? Yeah, is that the war coming in? And Peter Irvine, well, that was a little bit simpler to say this name there. They they acquired the franchise uh rights in Australia. They opened up their first store in Australia in Sydney at Westfield's Miranda in 1996. And then the Australian operations grew so rapidly. By 2004, the Australian entity purchased the international branding and roasting rights for all territories outside the US by 2009. They actually bought the US rights as well, gaining the full worldwide control of the brand. Did you want to touch on what um what some of the things that Nabi Saleh and Peter Irvine did during the Yeah, yeah, indeed.

SPEAKER_03

So let's get into it. So we did a bit of a deep dive into their background story, and not simply because uh the guy happens to be a fellow Iranian Australian. It actually is quite interesting, um, you know, where they really kind of land, where they emerged the success story and the way it unwinds. So effectively, yep. So uh Nabisala and Peter Irvine traveled to the US in 1995. They acquired the master franchise rights for Australia from coffee people who had acquired it from the Kvetko, the uh the you know, the Slavs. And effectively, and I say Slavs because uh Pete over here is not only Greek, he's also uh part Ukrainian. So there you go. I'm a mongrel, yeah, indeed, indeed, mate. Um, and then yeah, so they basically uh expand uh and yeah, the stores open, as you said, in Westfield Miranda in 1996, and then um effectively uh by 2003, Gloria Jeans has expanded across the country in every state and territory, and then you have over 200 stores in Australia by 2004, and that's where Sala and Irvine buy the international branding and roasting rights for all countries outside the US and Puerto Rico from a D-Drink Coffee. And then let's fast forward that's huge growth. I mean these guys went naturally.

SPEAKER_04

I didn't know they went that big.

SPEAKER_03

Yeah, that's right. And then the interesting part about a bit of their background story, both of them were members of the Hillsong Church and were actually church elders with Nabi Salah holding the more senior position. So you've got a crazy Iranian in a church group.

SPEAKER_01

It's a recipe for disaster, though. Guys, and as I say, assimilation doesn't always work. It's not the one size fits all.

SPEAKER_03

Believe me, he could be the head of a church, one of the biggest churches, a mega church. And um, look, you you'll see for yourselves. I'll let you guys judge. But effectively, um uh yeah, it lands into a little bit of um hot water when it gets embroiled. There's a good both of them. What?

SPEAKER_04

The coffee ends up in hot water. Oh, hot water.

SPEAKER_03

There you go. Yeah, well, extra hot for some of our little specialist friends over there. Um, so Dura International in 2010, which was owned by Salah and Irvine, becomes embroiled in a major legal dispute with the coffee exporter Western Export Services over a breach joint venture. So and it's all yep, and effectively, what was the what was the um venture agreement about? It was over bean commissions. So you know, you've got the the cocaine trade and the bean coffee bean trade. It's the legal cocaine, it's coffee beans. Well, mate, um the level of addiction I have to it, I wouldn't be surprised, right? We're all addicted to it. Yeah, um, and yeah, and effectively, so just long story short, the court awards millions in damages, and Jira is described in the court as being in um financial dire straits. The high court dismisses Jira's appeal in the coffee supply lawsuit in 2011. So there you go.

SPEAKER_04

There are some people that say that they're not addicted to coffee or I don't drink coffee. Like, I just don't understand these weird people. My wife happens to be one of them. I've got to hope she doesn't listen to this podcast. She actually does, but anyway. Um, and I say to her all the time, well, maybe you should. Maybe it might calm things down.

SPEAKER_03

It works for me, it works for you.

SPEAKER_04

It works for me. So the interesting thing about this story, other than the origin story, is that the Australian Rights, even though they opened up in Westfield in '96, but it wasn't just another cafe. It actually became one of Australia's first scaled coffee franchise systems. And then in 2014, Retail Food Group buys Gloria Jeans for 163 million bucks. And suddenly the business becomes part of a franchise portfolio machines. Now, RFG, uh, named to most, which is Retail Food Group, they own Donut King, uh great cinnamon donuts, uh, Brumbies and also Crust. But now here's the shift: the current chapter isn't growth, it's a reset. Store refreshes, cost rationalization, there's operational inefficiency or efficiency. And that actually tells you something because it's no longer one of those hot growth brands. It's now a turnaround strategy. Fabs over to you.

SPEAKER_03

So let's um let's do a business snapshot. So what you're really buying. So let's strip this back. So Gloria Jeans sells obviously coffee, cold drinks, hot chocolate, pastry, snack food, simple. But operationally, this is not simply a coffee business. It's a labor-sensitive convenience business. The model is primarily franchise. The franchise or earns franchise fees, ongoing royalties, marketing fees. The franchisee carries rent, wages, local execution, debt risk. And um, and and also just on the note on the subject of risk, I'll just quickly also mention that in 2014, Salo and Irvine sold the global franchising and roasting business to the Queensland-based retail food group for $163.5 million. And Salah stayed on temporarily with the senior management, and our FG now owns the brand worldwide. So um there was actually quite a bit of a um change of changing of the guard, um, which obviously has continued to this day. And so the Iranian got roasted. Yep, he got roasted, he got he got regime changed, you know. So um that distinction matters because the franchise or can survive while the store operator struggles. Yeah. So over to you.

SPEAKER_04

So what's the variance? I mean, what's what's the problem? The the reviews really tell an interesting story. We've had the opportunity to go through a lot of the reviews, and I think it's something that we need to be doing sort of more of like throughout this podcast, rather than you know, the the audience here us gibber on. Like what what are what's the audience telling us? Meaning when you look at the reviews, what is their audience telling us, not our specific audience, I should say. Yeah, but so some of them they just love it, you know, great hot chocolate, friendly stuff, smooth, rich coffee, which is um some of the reviews that we've seen. Great cold coffee. But what happens when the stores miss and then the complaints start to stack up? Some of the complaints that have happened down that we've noticed is fix your app. Um, one customer said foul coffee, uh, trying to save money. Clients don't like muffins. That was interesting. I don't know what what's whatever muffins got to do with. But you know, your muffins, coffee, it's all, it's all part of the it's all part of the integration. But let's zoom out. This is not one brand problem, it's a variance problem. And some stores perform and others don't. And at the end of the day, it's franchising. So the the variance is the silent killer. And and we chat about this all the time. Like, are you a drive-thru business? Are you a retail footprint? Like, what type of business are you? Correct. There's so many different businesses where they've been able to identify who they are and what they do. They are they are they're able to understand the location and what actually drives traffic. It just seems that this business itself, from what we can see via our research, it seems to be very scattered. I know the the drive-thru that I live nearby, like this thing pumps. Like there is not a moment of the day, and it's actually next door Maccas. And and the the Glory Jeans gets more traffic, drive-thru traffic than what the what the actual Maccas does. Yeah. I don't actually know what the big attraction is. Yeah. Because I drive past and go stuff that I'll just go to the 7-Eleven and get a coffee. I'm not queuing up an hour within a drive-thru, but it seems to work. But I think with all business and this one in particular, what type of business are you? Is it franchise? Is it a retail footprint? Are you a shopping center business? Where does it work? So yep. Fabs, over to you.

SPEAKER_03

M for margin. M for margin. So now the numbers. So best case source store sales, they're around $894,000 per annum. Cost of goods 33 to 38%. Labor 28 to 35%, and occupancy 10 to 16%. Royalties and marketing about 8%. And here's the reality. So the best case Ibita, um, i.e., you know, earnings before um all the other stuff that we mentioned is 13%. Um, base case 4.5%, worst case negative, i.e. a loss. Um, and that means one week lever hurts, two week levers break the model.

SPEAKER_04

But and I suppose that's where operators get caught. It's the weekend wages. That's where the spreadsheet starts to get pretty real. If labor starts to drift or sales actually soften, the margins disappear. So this is going to be an interesting one, Fabs. Yeah. Um, when it comes for marginal, like we've already identified that the when it comes to labor intensive, and we've spoken about this on other podcasts, like when you're adding in royalties and marketing, things like that, it really starts to chew up a lot of the margins. And then whatever debts you've incurred really starts to compound into your overall cash flow. So I'm gonna give this one a one out of 10 because the although the margins are high with coffee, but I just want to just sort of add a quite um, I suppose an amendment, which is what I'm looking for, is when you're adding additional products, you might have high margins within your coffee. But then all of the other verticals that you've integrated, that sort of takes away the margin. So you've really, again, you've got to focus on the one thing. If it's coffee, just focus on the coffee.

SPEAKER_03

Yep, yep. And and and that that goes to the point of why food truck businesses um work so well, especially those coffee, those, you know, those um food truck uh cafes, because they focus on one thing. They're obviously their rental overheads are much lower. And also they get to specialize without having to um account for the uh customers attending. So yeah, I think on that note, especially in contrast to the newer business models, I'd probably give it a one out of ten as well. Um, because yeah, the costs are just um too far, and as well as um the fact that it seems like it's a bit scattered, right? It's um it's a jack of all trades, master of um none scenario.

SPEAKER_04

Yeah, and that's really what it comes down to.

SPEAKER_03

Yep.

SPEAKER_04

I'm going to I want to touch on another topic, which is which is actually related. But there's a business in the US it's called Raising Canes. Have you heard of it? No, raising canes. So why back in 30 odd years ago, it was named after his dog cane. Right. Um, but in the US, raising canes like is like another expression of raising raising hell. Yeah. All they do is chicken fingers. They've got coleslaw, they've got Texas Toast, they've just got they've just got three, three to four or five different items in the actual menu. That's it. Yep. It's a six billion dollar a year in sales. There's four hundred thousand dollars that goes through their store at any given time. And that's across all of their all of their stores. And so it just goes to show that when you focus on the one thing and you add certain verticals that complement the one thing, you can scale very rapidly because you just do the one thing. And I think this is where this particular business starts to sort of move away from the margin levers because there's too many different verticals within the business. I mean, I I know one of the glory genes is selling manush.

SPEAKER_01

Yep. Yep.

SPEAKER_04

What the hell's manush got to do with coffee? Exactly. Wait, it it and and so, and then now they're doing asahi because you know that's the latest trend. The the interesting thing with that is I I don't mind that too much with a business like Glory Jeans. Like if you're gonna add a sahi and you're gonna add manush and all the rest of it, that's fine because the the core fundamentals of Gloria Jeans is coffee. But then Asahi businesses, when that fad disappears, well, you've got no other vertical to sell. Correct. And so that's where they're gonna start to sort of fall behind. And that's when those types of businesses are gonna struggle because fads are fads. Yep. Okay, at least with Gloria Jeans, they'll go back to their fun, the core fundamental, which is coffee.

SPEAKER_03

Yeah, that's right. And and look, I know a lot of people, I don't know about um you, but you know, what when I was uh say in my 20s and I was just, you know, always hanging around, I remember Gloria Jeans was the place where people would go in big groups, but they literally sip on a coffee for like five hours. And then it's like they might order one or two things, but it's like relative to the time, you know, a lot of times people had an emotional connection to Glory Jeans. It was just a place to hang out. So yeah, the margin wouldn't stack up to the amount of people that are coming.

SPEAKER_04

You know, we we say it all the time at a pickle with all of the clients that we deal with when we're looking at sort of restructuring and turnaround strategies. When a business fails, it starts to add products. Yes, yes. When a business succeeds, it removes everything that isn't the core fundamental of the business. That's right. And it's like when you go into a restaurant when you've got this menu that's the size of a freaking encyclopedia, yeah. It's like all you're doing is that you the business owner is throwing shit at the wall and seeing what sticks. Exactly. What is it that you actually do? Yeah, so agreed. Moving on, operations. So this is a peak hour business. Speed matters in these types of businesses. The milk, the textures matter, the coffee consistency matters, the cleansiness matters, the cues matter, and this is why it goes back to what we just said a moment ago. Focus on the core fundamentals, which is coffee, because then your speed, you can pick that up. Your milk texture, that can be exceptional because you're just focusing on the one thing: cleansingness that matters, the cues. And if you miss the morning trade, you don't recover in the afternoon because you've missed the busiest period. It's when everyone gets up and wants their coffee. Yep.

SPEAKER_03

So for me, um, I mean, look, the systems exist, there's recipes, supply chains, training, menu systems, but customer reviews suggest execution still varies store to store. That and that is 100% right, um, especially location dependent. Manager run, possible, but much safer as owner operated. And a lot of that does stem down to, I mean, look, operationally, um, once again, what I said, um, there is peak periods. And a lot of times, look, rarely do people just go in, you know, for the morning coffee run and go to Gloria Jeans. Gloria Jeans seems more of a commitment to a coffee session where you're having desserts. Most of the time, people would rather go somewhere where it's a bit easier to access and get their quick morning coffee, and also someone that specializes in it. So I would say, look, operationally, I mean, it's gonna be, you know, the score that I'd probably give it is probably a three out of ten myself because there is some capacity there, but it does seem to be based on peaks and flows.

SPEAKER_04

So yeah, so I'm uh I'm gonna agree with you.

SPEAKER_03

Yeah.

SPEAKER_04

Definitely in the agreement there. I just think that it comes back down what I said a moment ago. When if the milk texture matters and your mindset is shifted upon different products, that's where it starts to sort of fall behind.

SPEAKER_03

So we're in agreement, advantage. Yep, aid for advantage. So what's defensible? Uh, brand awareness, supply chain scale, convenience locations, legacy familiarity, um, what's copyable? Coffee, cold drinks, pastries, and more kiosks.

SPEAKER_04

And that's the thing. I mean, like what is their advantage? Um, if the brand is starting to get uh stale, well, then it's relatively easy for the local cafe to copy what Gloria Jean's is doing. And then because they're localized and they're able to get the ingredients locally, and most people want to support local. So again, you know, what is your advantage? But and and that's really the rent, the real issue is the brand memory. It's not the same. There's brand momentum, and I think that's where a lot of businesses get mixed up. Yeah, it's not like just because like you and I are nostalgic to you know, because we grew up with it, but that doesn't mean that we're gonna be loyal to it. Yes, we want brands that have momentum, and that's where a lot of businesses they they need to be able to reinvigorate, especially a lot of the franchises. I mean, look at Red Rooster, for example. I mean, that's another one that's stale. Yes. So, you know, we all we all had that as kids. But are you gonna go back there now? Maybe only because of the nostalgia component, but has it kept up the brand momentum? So again, if if our audience take anything out of today, brand memory is not the same as brand momentum. Every brand needs to have momentum, which is one of the reasons why, you know, us at a pickle, we're always trying to sort of keep up with the latest and greatest because we want momentum.

SPEAKER_03

Don't be stale. Yep, yep. You don't want that emotional dependence on your client base, you know?

SPEAKER_04

No, god no. Yep. So TAM, total addressable market. I mean, look, we know this is a huge market. Coffee's a big business. Um, the Australian coffee shop market is about 7.1 billion with a B. And there's more than 14,000 businesses. So that's a huge, that's a huge tam. But Gloria Jeans isn't competing for coffee, it's competing for convenience coffee. And that's at shopping centers and hospitals and transit and drive-thru. You know, that's a very overcrowded marketplace. And so it goes back to what we said before. What type of business are you? Are you a convenience coffee? Are you a shopping center coffee business? Are you a hospital coffee business? Are you a transit coffee business, or are you a drive-thru coffee business? Now, with the way that society is at the moment, you know, we want everything in a hurry. We want everything instantly. You know, we live in a Netflix world where you can just constantly watch and keep watching and keep watching. You can get it everything on demand. So that's why, you know, your app needs to be up to date. And as far as I'm concerned, most coffee businesses really need to spend the extra money and be drive-thru.

SPEAKER_03

Yes. Because of convenience. Yep, look at Starbucks.

SPEAKER_04

Yeah, Starbucks, yeah, absolutely. So, Fabs, over to you, what's the what's the moat scorecard? What are we what are we talking about?

SPEAKER_01

Yeah, okay. Well, we're let's go back.

SPEAKER_04

Yeah, we'll go back. Let's flip that back. Do we score? We didn't score the tension.

SPEAKER_03

No, we went to the yeah, and actually, let's go back to the you know what? We'll keep this in because we want to show people as well. We get people out of pickles and we get out of pickles.

SPEAKER_04

So it's not we've forgotten the advantage. A for advantage, what are we gonna score at? Is it defensible? Where's the brand awareness and is it supply chain scale? I don't think it is.

SPEAKER_03

There's no real advantage. Honestly, I love the part that you said brand memory is not the same as brand momentum. It really ties into that because exactly it's literally relying on sentiment, sentimental value, and that's not gonna kick it for long-term sustainability. So I'd say advantages. I'll give it a one. I'm gonna be able to say one.

SPEAKER_04

Yeah, there's no, there's absolutely no advantage. Absolutely no.

SPEAKER_03

Yeah, Tam, what are we scoring? All right, I'm gonna take a little extra step. And based on what you said, not only do we live in a new kind of era where everyone gets everything now, Gen Z especially is working in a very remote world. It's no longer about having a handshake and meeting in person. So, you know, glory jeans does come off as a big commitment. So I think generationally, even it is gonna lose out unless it changes business model because you know you can order things on an app, you can just, you know, QR code it, whatever it is. So I'm gonna be a bit harsh and probably say, look, the coffee market's good. I'll I'll probably give it a five out of ten because there is a coffee market as it stands.

SPEAKER_04

Yeah, it's not gonna be a thing. It's a big TAM. So I agree. Like it's it's a huge TAM. Yeah, huge TAM. $7.1 billion. Yeah. Um, so the toll address will market is there. It's trying to find your footing in a crowded marketplace.

SPEAKER_02

Exactly. Yeah, yeah.

SPEAKER_04

So that's why I'll also give it. I'm gonna give it a four. Yeah, yeah. I just I'm not, I'm not comfortable with it. Yeah, yeah. I don't know why. You want to give it a feeling I want to give it a five. Like, I'm just there's not there is no real advantage there. So now let's tally it up.

SPEAKER_03

Yep. So so basically we've got um across the board. So for Pete, we've got nine out of 40, and for Fabs, we've got 10 out of 40, which gives us a total aggregate of 23.75 percent. So that's a fail.

SPEAKER_04

Yeah, there you go. Yeah, yeah. We thought that.

SPEAKER_03

Yep, yep.

SPEAKER_04

Fabs, over to you. Let's um let's run the numbers for the first million dollars. Are you going to make a million dollars out of this business within the first year, or are you gonna get yourself into a pickle? Let's run the math.

SPEAKER_03

Let's do it. Let's run the math. So the average ticket is ten dollars and fifty-four cents to hit one million. You need around nine million.

SPEAKER_04

And that's where you've got all the additional products to be able to boost it up.

SPEAKER_03

Yep. But they're adding too many tickets. Exactly. And as you said before with the side thing, imagine you buy all that supply, then the next month Asai just loses trend. Then it's all you know, um disposable as um inventory. So you've got around, you need around $19,231 in weekly sales. That's around 261 transactions per day. Possible, yes. Automatic, not so much.

SPEAKER_04

Yeah. It's it's one strong site that you can actually do it. I mean, that's your drive-thru sites, I believe. Um, an average site, it's quietly going to bleed. And I've seen a lot of um Glory Jeans and shopping centers, they've closed down because you know, they haven't got that vertical, and I'll say that word again. But what I mean by that is that you've got the foot traffic plus the drive-thru plus the Uber. Yes. Why would you isolate yourself from one of the verticals where you can achieve additional revenue? Yeah, and I could never understand the issues that a lot of businesses have when it comes to Uber.

SPEAKER_02

Yeah.

SPEAKER_04

Like it's free money. They're coming in, they're pick, they're they're picking up the order and they're disappearing. I mean, you know, when when we were kids growing up, and we it was either you were a pizza shop and you had to have your own delivery drivers and you had to have all of that expense. Now all of that expense has disappeared because all you got to do is add onto the app. Now, yes, there are um restaurant um sort of damages in regards to how the kitchens are actually set up. But if you have to extend your kitchen to be able to take advantage of an additional demand where you've got additional traffic coming in, then go for it.

SPEAKER_02

Yep, yep, 100%, 100%. Um, it it's um definitely the uh the case.

SPEAKER_04

Yeah, yeah. Okay, so the risk and the rewards look, the biggest risk is the parent company pressures. And I think when it comes down to sort of labor cost and storing consistency and brand relevance and more importantly, the franchise economics, that's where things start to take a little bit of a turn. The franchise or earns a fee either way, the operator, and obviously wears the local risk, and that really matters. That plays a really big part. And for me, the final verdict is that Glory Jeans isn't automatically a bad business, but it's not a passive income either. There is um the site, which obviously plays a big part of the overall foot trapping, definitely. The labor control, and that's it is a labor control business, the execution, um, obviously within the systems and the franchises, and there is a bit going on in the background with RFG and a lot of uh disgruntled franchise laws, but we'll we're not gonna get into that at the moment. But the execution that obviously plays a big part. And I feel that if if you're gonna go out there and if you're gonna choose a franchise that's a part of a portfolio of franchises, is the franchise or focusing on the one product? And in that case, are they focusing on the one brand? A lot of these franchise ores they want to scale by owning multiple portfolios. They want to own multiple brands within their portfolio, I should say.

SPEAKER_02

Yeah.

SPEAKER_04

And that's where things start to get skewered. Because they think that, and we've seen this through through our own customers with a lot of the franchise businesses that we deal with, is that if the franchise or has multiple brands within the portfolio, they think that they can um get scale in respect to purchasing um their products at scale because of all the the portfolio brands in which they have. But that's not necessarily the case because donuts are different from coffee, right? So I think that's just one lesson that a lot of um people need to take out of this particular podcast. Yep, is that if you're choosing a franchise that's within a portfolio, is the franchise all's mindset going to be skilled across their brands? Yes, exactly. You know, if they've only got the one brand, that's a good thing.

SPEAKER_03

Yeah, exactly.

SPEAKER_04

It's not a bad thing.

SPEAKER_03

Exactly, exactly. And it shows kind of that that focus and that and that dedication, right?

SPEAKER_04

Focuses everything.

SPEAKER_03

So the pickle lesson the logo can attract customers once, but it's only operations and you know, to add to that consistency that can bring them back.

SPEAKER_04

Yeah, 100%. So let's wrap this up. So if you're thinking about buying a franchise, don't buy the logo, buy the economics. And if there are businesses that you want us to break down, send it in. Because as we've said many times, we do not want you to get into a pickle. And if you like this podcast, send it to a friend because it helps other people find us. Indeed. Well, thank you so much. It was a pleasure. Thank you, mate. On to the next one. Cheers.

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Fabs Aria

Co-host
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Peter Wyszenko

Co-host