Freshstop: Strength In Unity

Franchisors in the fuel and garage convenience store sectors such as Caltex and Freshstop have discovered that there are significant benefits to working together.


Freshstop: Strength In Unity

Today the Freshstop brand is synonymous with Caltex fuel stations, found almost exclusively at Caltexes around the country. It’s also backed by the Fruit & Veg City brand, which means that franchisees of Caltex and Freshstop are supported by not one, but two power-house franchisors.

During a franchise interview with Joe Boyle, he said, “Two franchisors working together needs to benefit both brands as well as the franchisees.” “We spent a long time developing the alliance agreement and ensuring we were all on the same page. It’s a very open relationship. Each brand has an alliance manager, and we work closely together, meeting regularly, addressing any problems that might have arisen, and tracking issues so that they can quickly be resolved.”

Before the system could officially launch with four pilot stores in 2009, the franchisors needed to intimately understand each others’ brands.

As Caltex is the core brand, the fuel franchisor drives overall strategy, although this is developed working in conjunction with Fruit & Veg City, whose expertise lies on the retail side. Together, the brands bring a wide array of expertise to the table, and franchisees are well supported on both the fuel and convenience store sides.

Viewed as equally important, Caltex recognises the role the Freshstop brand plays in bringing customers to the garages, and so overall marketing strategies in particular are created together.

A ‘Fresh’ New Brand

Freshstop was not born as a garage convenience store brand. In fact, it began life in 2006 as an in-store department within Fruit & Veg City in a drive to minimise waste. “The nature of fresh produce retail means that at the end of each day you end up with bruised or damaged produce. You can’t sell it, and so a huge amount of waste is generated,” explains Boyle.

Meanwhile, the owners of Fruit & Veg City, Brian and Mike Coppin were paying attention to global trends, and smoothies were starting to take the fresh food world by storm. They were healthy and delicious, and an ideal solution to the fruit wastage problems that Fruit & Veg City store owners faced. And so the first Freshstops were developed as fresh fruit smoothie departments within stores.

The concept was so popular that soon free-standing Freshstops were opening in shopping centres from the Western Cape to Bloemfontein. Within a year there were 13 free-standing Freshstops, over and above the in-store departments. Freshly-made sandwiches and wraps were added to the healthy menu, and the smaller franchise offered franchisees a more affordable way of joining the Fruit & Veg family.

And then in 2008 Caltex approached the Fruit & Veg City franchisors with the possibility of an alliance.

Making an Alliance

“BP had partnered with Pick n Pay, Shell had its Shell Select brand, Total had Bon Jour and Engen had partnered with Woolworths,” says Boyle. “The convenience store market was changing, and becoming highly competitive. Caltex was looking for a way to revitalise its Starmart brand. It needed something new – and different.”

The fuel franchisor originally approached Brian and Mike about the Fruit & Veg City brand, but the retail franchisors had a different idea – the Freshstop concept would be ideal as a garage convenience store.
By this stage Boyle had already joined the Fruit & Veg City head office.

The Freshstop brand was growing and needed its own dedicated manager. Boyle therefore became integral in the discussions with Caltex.

“Partnering with Caltex meant we needed to adjust our strategy for the Freshstop brand,” he explains. “First, we wanted Freshstop to become synonymous with Caltex, which meant it needed to be rebranded within Fruit & Veg City stores.

These were renamed Fruitstop, and today every Foodlover’s Market has an in-store Fruitstop department. Existing Freshstop franchise licenses were not renewed, and there are only four non-Caltex affiliated Freshstops still in existence.”

Step two involved the development, a concept that would suit the convenience market. “The Freshstop brand was very popular, but you can’t only serve fresh, healthy food at a convenience store,” says Boyle. “No-one is 100% healthy, 100% of the time.

We needed to extend our offering to include cigarettes, soft drinks, crisps and chocolates, as well as grocery essentials like tinned goods, milk, even washing powder – and we needed to do this without losing the ‘fresh’ appeal of Freshstop.”

The repositioning of the brand was a success – the convenience stores offer everything consumers expect from garage shops, with the added bonus of fresh produce, wraps and sandwiches – and consumers have responded very favourably. “When we first piloted the stores a consumer actually walked up to me and said, ‘This is great, even this Coke in my hand feels fresher’,” laughs Boyle. “There was a great take-up of the concept.”

Growing a Footprint

Proving the concept worked was only the beginning though. Next came the mammoth task of starting to convert Starmarts to Freshstops. “No Caltex franchisee is forced to convert to a Freshstop,” explains Boyle.

“This means we need to really sell the concept to them. It’s a much bigger investment, but it also converts a c-store into a premier league offering.” The aim is to eventually convert all Starmarts into Freshstops, but it’s a slow process. “You can’t convert 180 stores overnight,” says Boyle. Fruit & Veg City is therefore the franchisor for both Starmart and Freshstop, managing both brands, taking care of the supply chain and assisting franchisees.

Caltex franchise owners who have converted their stores have experienced a 60% growth in profits on the retail side, and an 8% to 12% growth in fuel volume, so there is a strong argument for converting to a Freshstop.  However, it’s also an investment for franchisees who choose to do so.

The Freshstop Franchise Experience

Freshstop stores range from 30m2 to 150m2, depending on the type of store an owner wants to open, the investment they are willing to make and the available space. There are three models to choose from: A self-service bar (the smallest option, where fresh food is delivered daily); semi-kitchen (where some product is made on-site); and full kitchen (where all food is manufactured on-site, including burgers, wraps and sandwiches.)

“New stores are opened according to what the franchisee wants, but in the case of converting existing stores into Freshstops, we try to eliminate as many costs as possible by using what the franchisees already have,” says Boyle. “Quality is essential, and of course the look and feel of the store has to follow the Freshstop model, but if the kitchen equipment is in good working order, for example, why replace it?”

In an effort to keep costs down, there are also no joining fees, no programme management costs and no rebates from builders or equipment suppliers. The fact that Freshstop belongs to Fruit & Veg City means the brand is supported by a well-established supply chain that specialises in transporting fresh produce, and has a national warehousing system – both  of which mean that Freshstops in even far-flung areas receive fresh deliveries, every day.

It also means that Freshstop gets to enjoy the good pricing points of a major retailer, which means that even though it’s a convenience store model, which is traditionally more expensive than normal retail outlets, Freshstop prices are incredibly competitive, changing the perception that garage stores equal high prices.

The franchisor will assist franchisees in choosing a model, converting the store, designing a menu and understanding the Freshstop brand. All franchisees go through a two-week training course, after which the franchisor follows a ‘hand holding’ process for a further five to six weeks.

Thereafter, there are ongoing training sessions, as well as quarterly meetings and an annual conference.
A Franchisee Forum gives franchisees an opportunity to provide both Caltex and Freshstop feedback, which in turn allows the franchisors to assist the franchisees where necessary and troubleshoot any problems.

Chevron (the owners of Caltex), Fruit & Veg City and Boyle are all represented on the forum, as well as the franchisees through chosen representatives. “The franchisees we choose to represent the group are those who are not only interested in their own site, but developing the brand as a whole,” explains Boyle. “The more Freshstops we open, the more traction the brand gets, the better for everyone.”

Localised menus

Having a national footprint that caters to a range of geographical and LSM markets means that each Freshstop’s menu needs to be designed specifically for that area’s consumer. “We don’t have a one-size-fits-all approach,” says Joe Boyle, franchise manager, Freshstop.

“We carefully evaluate who our consumers are at each store, and then choose the right range of sandwiches, wraps and other foods for that target market. Our selling points are that we are fresh, convenient and affordable, but we need to be offering the right food as well, which in turn leads to more feet through the door.”

By the Numbers

  • 2006: Freshstop brand is launched
  • 2009: The first four Freshstops are piloted at Caltex garages
  • 73: Total Freshstop stores currently open at Caltex garages
  • 48: Number of stores scheduled to be opened in 2012
  • 60%: In-store growth in year one of Starmart to Freshstop conversion
  • 33%: In-store growth in year two
  • 25%: In-store growth in year three

 

Nadine Todd
About the Author
Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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