Mates, we’re not saying that it’s absolutely time to start stockpiling Rippa Rolls and Bondi Burgers just yet. But the panic meter is definitely hovering over “shit thy dacks and cry” at the moment, which is – we don’t need to tell you – bad news for all concerned.
Scores of Red Rooster, Oporto, and Chicken Treat franchises around the country are reportedly on the verge of full collapse, thanks to what franchisees have labelled poor and unfair business practices by parent company Craveable Brands.
A submission to the Senate inquiry into the operation and effectiveness of the overseeing Franchising Code of Conduct has sensationally revealed Oporto and Red Rooster locations around the country are in severe financial stress – teetering on the brink of bankruptcy – thanks to prohibitive conditions placed upon them by the franchiser.
The stores financial difficulties break down thusly:
Craveable Brands controls the branding on some 570 restaurants across all three chicken outlets. The franchisees submitting to this Senatorial inquiry allege the company is acting in bad faith by forcing stores to shell out absurd amounts for goods and supplies; items outlets are forced to buy at rates far above the standard open market price.
The submission details examples of this, like a case of Mount Franklin water, which can be bought for $11 off-the-shelf at any supermarket like IGA or whatnot. But Craveable Brands supplies the same case of water to Red Rooster and Oporto outlets for the inflated price of $18 per unit.
Similarly, franchisees claim they have been forced to purchase restaurant stock and essentials like bulk plastic spoons, knives, and forks at over $70 per package, which is outrageously above the open market price of $40 for the same amount of the same items.
Franchisees allege these inflated prices are due to “rebates” on the behalf of Craveable Brands; rebates which are neither disclosed nor shared with franchisees who suffer because of them.
Additionally, problems have arisen with initiatives like home delivery and customer loyalty, both of which have been enforced upon Red Rooster and Oporto franchises without warning and without compensation for any revenue impacted as a result; the submission estimates that your average store loses about $25,000 per year thanks to loyalty programs which reward customers with $1 for ever $15 spent.
Stores that refused to implement home delivery – which has been heavily criticised after being touted as the saving grace of the businesses – were made to miss out on advertising and marketing as a result. In addition, franchisees have been critical of Craveable’s overall marketing and advertising strategy, which they all contribute to; the submission details how despite contributing money to the company’s budget, higher ups have refused to purchase advertising on free-to-air TV.
Finally, the submission cites massive problems with product innovation due to the inherent conflict of interest of the company owning both Red Rooster and Oporto simultaneously. The company’s are in an odd Mexican stand off-esque stalemate when it comes to product innovation; Craveable will not allow one to introduce new offerings like special sauces, etc, because it could potentially harm the other.
The submission also details instances of alleged bullying from upper management, and paints a very bleak picture of the future of the companies in general.
Craveable, for their part, have yet to publicly issue comment.
The TL;DR version of all this is that yr favourite chook emporiums are claiming to be up shit creek due to bad business practices.
Soak up all that chilli and mayo you can while it lasts, mates. It’s a dark, dark day for chook lovers.
