Zarraffa's aint happy with RFG

Zarraffa’s Coffee chain is happy to share its cup of rich brew with its franchisees
Greg Stolz, The Courier-Mail
January 11, 2018 10:36pm
Subscriber only

KENTON Campbell is as fired-up as one of his espresso machines at coffee peak hour, the f-bombs flying faster than the froth off a cappuccino in a cyclone.
The founder of booming coffee chain Zarraffa’s is fuming at the damage being done to the franchising industry by the Retail Food Group, a fellow Gold Coast-based company whose fortunes have tumbled spectacularly on the back of reported mistreatment of franchisees.
“There’s a lot of franchisors out there that are doing the right thing and there’s people like RFG,” Campbell, a straight-talking former US Navy diver, tells The Courier-Mail over coffee at his Helensvale head office.
“We’re not RFG and the industry isn’t RFG. Franchising is ever-evolving and we’ve evolved and I don’t want to be put in the same f------ basket as those motherf------. “I’m upset because I take it personally. I don’t want to be painted with the same brush because we’ve worked too damned hard.”
The spray is ironic, as it was RFG that first brought Campbell to Australia in 1995 to work in its coffee business, after two executives from the now-besieged listed company chanced upon a coffee cart he had set up in Seattle and liked what they saw and tasted.
Campbell’s entrepreneurial spirit can be traced back to his childhood when, aged five, he started up a bottle collection agency in his hometown of Eugene, Oregon.
After moving to Australia, he established Zarraffa’s, originally a coffee roasting house in the backstreets of Southport, in 1996 with a $9000 loan and opened his first café in the suburb’s Australia Fair Shopping Centre the following year.
Two decades on, Zarraffa’s is a $120 million company with almost 80 franchised and corporate stores across Australia, from Cairns to Kalgoorlie. It recently opened its first NSW outlet, at Belmont near Newcastle.
Referencing RFG’s shopping centre-based franchising model, Campbell says Zarraffa’s saw “the writing on the wall’’ more than a decade ago and began to get out of high-rent centres and into stand-alone drive-thru outlets to make the business more viable for franchisees.
He says soaring rents and shopping centre landlords “putting f------ Tom, Dick and Harry coffee shops in’’ have made major centres unsustainable, possibly even for his flagship corporate store at Harbour Town on the northern Gold Coast.
“We’ve been getting out of the centres for 12 years now and they’ve (other food franchises) been still jumping in,” he says.
Campbell says the company has bought out some franchisees who were struggling in shopping centres and will close the stores down in line with a philosophy that “we’re in this together’’.
It’s a philosophy, he says citing another example, that led to the company not charging royalties for the Surfers Paradise Zarraffa’s during light-rail construction that decimated trade.
Zarraffa’s head office has 50 staff, “about twice the industry standard’’ Campbell says, to train and service its franchisees, and operates with complete transparency.
“I can hold my hand on my heart and say that everything we do … there’s no smoke and mirrors,” he says.
“Our franchisees are our partners and we’re all in this together. Our current franchisees are also more important than the ones we might have one day. Happy franchisee happy franchisor, just like happy wife, happy life. It absolutely is true.”
A Zarraffa’s drive-thru outlet costs about $750,000 and Campbell says franchisees are recouping their investments in as little as two years, with stores turning over an average of $1.65 million annually. He says the proof is in the pudding, or at least the coffee cup. Of 18 new Zarraffa’s outlets in the immediate pipeline, only one will be owned by a new franchisee.
“You know why?” Campbell says. “Because all the rest are taken by the current franchisees, because they believe in it.”
Some franchisees own as many as four outlets, while former managers have also become store owners.
He says while the RFG scandal has given franchising a black eye, the industry has helped thousands get into their own business and created countless jobs.
“Business isn’t easy, just because you’re a franchise … franchising isn’t some magic, perfect situation,” he says.
“My job is to give franchisees the most opportunity, but they’ve still got to get up and open the doors.’’