Corner Bakeries for Engen Quick Shops

Reputedly the largest forecourt bakery network in South Africa, approximately 254 of the 530 shops have unbranded bakeries / pie shops (currently managed as a product category within the Quick Shop outlets) and the balance are branded as Corner Bakery / Snack Zone outlets.

Wayne Duncan, chairperson and director of Retsol, comments, "Engen has one of the biggest retail networks in South Africa and is reportedly the biggest in the forecourt convenience market. For us, this is an ideal situation, not only from a brand growth perspective, but also because there is no need to source suitable dealers or sites. This is because the fuel dealers are the franchisees and the company owns or controls these sites, most of which are in prime locations. During the franchise conversion process, we will be signing individual franchise agreements with the dealers.”

Product offerings

Duncan says that, depending on the space available for an outlet, the company will either install a fully-fledged Corner Bakery offering fast food, a bakery, coffee, chicken and sandwiches, or a smaller derivative, offering only a bakery, sandwiches and coffee.

The format is very flexible, which is essential for the brand to fit into the Engen system, as it is comes with a high degree of complexity due to the company's multi-branded strategy. This strategy sees strong brands co-habiting with the Engen brand, with potential for overlap of products, so a certain product will fall away from the Corner Bakery menu in a particular site, if it is already on offer by an existing partner.

“Equatorial Coffee has in excess of 90 sites already and we plan to double this within the next six to 12 months. As one of the fair trade coffee brands in South Africa, Equatorial Coffee provides a unique point of difference to Corner Bakery."

Two-year strategy pays off

Pierr Roodt, Engen's national retail marketing manager, says that the franchise forms a core component of its strategy. "We are constantly looking for exclusive consumer differentials. The brand is exclusive to company and the better the outlets do the more of a destination they become.

"The company had previously entered into partnerships or collaborative deals that were not successful, so we decided that new partners would need to be put through a rigorous, 24-month proof-of-concept period before we aligned with them or signed any new agreements. They would also need to be willing to put their necks on the line in what is a very challenging retail category and provide us with evidence of the value they would add, in terms of hard numbers and results, during the agreed proof of concept period,” continues Roodt.

"There are a number of key factors which made the franchise team the perfect partner in terms of our strategy. Firstly, they successfully managed the bakeries for two years, with a 50% increase in sales over this period, providing us with proof of concept and the confidence that they will be able to establish a bakery brand in all of our stores, representing 15% of the total Quick Shop sales. In addition, it is one of the few companies in South Africa with bakery experience - having owned Bread Ahead - plus extensive experience in franchising. Lastly, there is a good fit in terms of culture and values. The challenge for both of us is that we are starting from 'ground zero', unlike going into a relationship with well-established brands such as Woolworths, Wimpy, Nando's or Steers."

Franchise model

Retsol has created a unique franchising model for the brand, as turnover increases, the franchise fees decrease. Duncan explains, "Because the company is a ‘pure' franchising company - we don't make and sell products - we align ourselves 100% with the franchisee. Our business model revolves around aligning our primary business objective with the franchisee's business objective, which is to increase turnover. We both stand to benefit from this model. For the franchisee, the benefit of our sliding fee scale is of course decreased fees, while for the company, increased turnover means that the franchise is being run properly and profitably."

Retsol was established in 2002 with the vision of becoming SA's leading, privately held franchise company. Following a restructuring in February 2010, Retsol has retained the Corner Bakery brand while the 'shopping centre brands', Ola Milky Lane, Juicy Lucy and Chicken King, have moved to Java Brands.

"The company's management vision is to grow our current brands in South Africa and Africa and we are very excited about the growth opportunities for bakery and coffee brands. In addition, the key strategic objective is to be a franchise and investment holding company, so we are constantly evaluating new opportunities for brand acquisition in retailing and franchising," concludes Duncan.