Diego Pitzalis has owned and run a Fego’s coffee shop in Rosebank for the past eight years. He shares his experience of franchising
Why did you decide to get a franchise?
I didn’t really decide. It’s the help you get — the back up, the know-how with setting up the shops. It was an industry I hardly knew.
Has your experience of franchising been a good one?
Sometimes. Some things they get sticky with, like the menus. Some things are too expensive. Each shop is individual and they want uniformity in the shops. Like if there’s something on the menu that you can’t sell, you have to keep it there.
How did you choose Fego’s?
Well, it’s my cousin. I come from a big family of coffee shops. The Capellos, they’re family, likewise the Mugg & Bean and the JB RiversÂ. This was the cousin I was close to, so I went with Fego’s.
What do you think are the advantages of having a franchise, compared to an independent business?
It taught me in the beginning. But once you know your trade, there’s not much you can do. I think that’s why they tie you in for five to 10 years. You’ll see a lot of people taking their signs down [once the contract is up and running the business under their own name]. I think a lot of people do that. You don’t want to donate profits to the franchise fees, the name might change and the look of the menu, but everything else is the same — same owner, same staff, same food, same customers. I’ve done it now for eight years. Our contracts are for five years. I took a second contract, but I don’t think I’ll do it again.
Then there’s the buying power, that if you’ve got 30 stores you can get a better price and it brings the cost down. That would be good if they handed the rebate over to the store owner. Sometimes they have central kitchens. Like Steers, if you have a Steers franchise you have to buy everything from Steers. We’re allowed to buy where we want to, and we don’t really see the rebates.
Were you able to access finance easily?
I didn’t finance the store. I was lucky. They become difficult to finance — if you don’t get busy straight away, it can really affect your cash flow.
Do you get enough training and support?
Sometimes. Every now and then you get a rough ride. At the moment there’s no support.
What’s the hardest part about having a franchise?
The worst part is paying. The hardest part is that you can’t really diversify, you can’t respond to customers who want curry and rice, for example. Our group has been a bit flexible on that, but it depends.
Do you have advice for anyone thinking of getting a franchise?
- Look for centres. Look for areas that have inside and outside. It’s important to have a smoking area. People want to sit outside and smoke, they don’t want to sit inside in a smoking area.
- Don’t get locked into a 10-year contract. Five years would be best.
- Do a bit of research into the area, even if they say they’ve researched it. It’s difficult. Look at the menu, see if it’s right for the area. You can’t sell a prego roll for R39 in Rosettenville. We also battle with prices here. Make sure the area warrants it.
- Make sure you’re getting decent equipment. Cheap stuff is always breaking. Maintenance is the most expensive item and sometimes it gets hectic, when your fridges and your toaster all break at the same time. And the mark-up on foods is not too big.
- Coffee shops are different. Our portions are bigger than in a restaurant, but the restaurant will charge double what we charge. It’s the way they [customers] think. They don’t want to pay R60 for a pasta in a coffee shop. We’re not looked on as restaurants, but we’re the same thing.
- Get a good lease. Look at the price per square metre and decide, if business is quiet, can I still pay my rent? It’s got to make sense.
Is there anything else you want to add?
Being part of a franchise, if there’s a support system, can be a good thing. Like if you’re one person short in the kitchen, they can send you someone. On your own, you’re not going to get that.