Noodle Box started with one store in Melbourne and now stir-fries more than one million kilograms of noodles a year. Managing Director David Milne explains how the franchising model turned their business into a raging success.
Sometimes all it takes is a good idea. When David Milne founded Noodle Box alongside business partner Josh James in 1998, he wanted to serve Asian food, fast, in the cute little noodle boxes he’d seen in the Tivoli Gardens in Copenhagen. “We started heading down the franchise path without actually realising it. It wasn’t part of our business plan when we started the network,” Milne says. But with eight stores and strong branding, it became clear it could be a great franchise business. “We realised this model was more suited to owner-operator rather than us trying to spread ourselves too thin across the network.”
So the entrepreneurial duo set about the enormous task of converting their business to a franchise model. Where once they just had to do things as they saw the need, now everything had to have a procedure behind it. “We used as many people around us who had done it before as we could. We had a franchise company called Franchise Developments help us put together manuals, franchise agreements, disclosure documents and food safety processes etc.” Milne says it was much, much more work than they’d anticipated. But the move has paid off. Noodle Box now has more than 80 stores across Australia and is looking at expanding into overseas markets (first stop, Mauritius).
Franchising was the right move, at the right time, Milne says. “We had an opportunity to grow in a sector where franchising was becoming quite popular, and even though we’ve got a lot of direct competition, the noodle and Asian concepts hadn’t been branded and delivered into the market.”
What’s in it for you?
Relinquishing control of your business to a franchisee might seem like letting go of your baby, but with the right plan in place, it could be the best decision you ever make. In the food business, Milne says he believes hands-on ownership is critical. “The other thing is that it allows you to grow using individual people’s capital. You’re not having to go out and raise millions of dollars to be able to grow the business.”
The benefit of a marketing fund is priceless, Milne said. “As you’re growing stores and people are contributing to that fund, it really enables you to advertise.” Most importantly, you have a team of people just as invested in your business as you are. “Once you do have the office and the infrastructure set up, you’ve got a bunch of people to work with and you’ve got a lot of people to help out.”
In fact, Milne credits the people he and James had around for a lot of their success. “We’ve both run this business trying to absorb as much knowledge as we can from around us. We’ve been fortunate that over time a few experienced people have taken some interest in what we’re doing.”
Learn from those who’ve gone before
Now a seasoned franchisor in his own right, Milne has some sound advice for a business looking to grow aggressively using the franchise model. “Make sure you have great agreements from the very beginning.” If you don’t really nut things out with your franchisee it will come back to bite you when you have to make changes.
The number one challenge of franchising is learning to manage a mix of personalities. “Often when people are quite good at running their own business there can be a number of strong personalities.” Finding the right franchisee that fits the brand, the model and the industry can also be difficult. “When you start getting that right, it’s a good feeling and can create a lot of good in the company.”
Go steady at the start, Milne advises. “Strengths and weaknesses in the model come out more the more stores you have on the ground. What is easy to run with five stores may not translate to a good model down the track.” Therefore, don’t run away with your success. Go steady until you’re getting to the 30 or 40 mark. “If you have to make big changes once you’ve got a number of stores on the ground the cost can be excessive. Even with a very simple model like ours, with any tweaks or changes you have to get everyone on board, train everyone and make the physical changes.” So slow down, and learn as much as you can through the first 20 or 30 stores.
Lastly, don’t skimp on your infrastructure. “Investing heavily in the infrastructure to support the network is what will make you successful. Systems that run skinny on that generally have a lot of problems.” Look for long-term rather than short-term solutions and your system will be much healthier.
While Noodle Box has an impressive number of stores on the ground, numbers aren’t what breeds success. Noodle Box’s primary growth strategy is to foster internal growth among its existing network. By rewarding franchisees for good performance, Noodle Box is helping good businesspeople get into their second or third store. “We’re really trying to back franchisees to help them grow their business inside our business.”
The availability of greenfield opportunities for franchisors has slowed down, Milne says, so the management team has employed an external recruitment agency so the executive team can concentrate on growing as a group. “We’re not looking just to grow the brand on store on store numbers, we’re looking to grow the brand on store on store turnovers.” Despite the tight market, Noodle Box has actually toughened the selection criteria for potential franchisors. “We don’t think there’s any point in recruiting a franchisee just because they’re there. We’ve learnt over 15 years that if you do have somebody who isn’t strong come into the business, the workload is tenfold to try and help them keep up.”
Milne and James have also turned their emphasis towards training, business support and marketing. “When things have got a bit quieter in terms of growing the business store on store, we’ve actually decided to consolidate, put a stronger structure in and really concentrate on our existing stores.” The business has grown from one person looking after 20 stores to 27 people in head office looking after 80 stores.
Poaching top-level executives from other strong franchises has helped grow the franchise support team. New brand manager Rachel Bitzilis (formerly of Boost Juice) executed a national marketing campaign recently to support the local area marketing done by franchisees. “The Noodle Crew cards loyalty program was a fairly aggressive marketing campaign along with a fairly aggressive offer.” In just eight weeks, the program attracted 35,000 members.
As the brand grows, it is essential to keep a consistent offering. “The consistency comes through how you build your infrastructure.” Invest in people as well as geography and do everything to the same plan, Milne says. “Make sure the support is there and the message is being heard through the whole network.” It needs to be followed up by consistent training. “There’s no point in setting up in a region and then only being there every four or six months. That’s when you start to lose consistency as a brand.”
Finally, don’t forget branding is only half the battle when it comes to consistency. “It’s not just about the visual. It’s about how everyone presents and the service and the food. That consistency has to be pushed through the group all the time.”