Under new ownership, the South African fast food franchise DoRego’s has achieved a significant turnaround. Gerald Brown talks to Gay Sutton about revamping the brand and introducing operational management improvements.
It’s been five years since brothers Gerald and Cedric Brown took over the South African fast food chain Captain DoRego’s. In that time they have transformed the business, revamping its tired image, creating a well-oiled management process to support the franchisees, and increasing store numbers from 29 to 67, with five more due to open before the end of the year.
The Brown brothers acquired the business in 2005, and came into it from a position of strength, having run their own Captain DoRego’s franchise since 1996. Knowing the business inside out, they approached brand ownership with a clear vision. “Our initial aim was to upgrade the existing stores and increase their turnover, because when we took over they were just hanging in there,” explains joint owner Gerald Brown. “Then, the plan was to grow the brand and make it stronger throughout the country.”
The beauty of the brand is the unique feature that makes it so successful. Unlike many of its competitors in the fast food marketplace, who specialise in one particular product—chicken, fish or burgers, etc—DoRego’s offers a wide variety of options. “Therefore, people can walk into the store and there is something for everyone in the family. It can be a nightmare to manage,” Brown admits, “but it’s a big strength in our business.
“However, when we first came to the business, it was just hanging in there,” he continues. “So our initial task was to get the existing stores up and running better.” The initial improvements tackled three key operational areas, and laid a solid foundation upon which the company could grow. “We began by looking at the store design and making a basic upgrade—things that were simple for our franchisees to achieve; that were not hugely costly. We also looked at procurement and found we could source many of the products a lot more cheaply, which gave the guys a better bottom line,” he says. “We then started enforcing the general rules of the franchise to raise the standards across the stores and ensure the food being prepared for customers complied with our brand regulations.”
Tackling procurement meant examining and completely changing the purchasing ethos of the business. Although procurement was managed centrally, contracts generally went to those who could supply most cheaply. “We began by negotiating with the suppliers who we felt were the best in the business rather than the cheapest, believing that the more you buy from a specific supplier, the better price you will get. We now have well established long-term relationships with those key suppliers. By establishing six to 12 month contracts we have ensured a consistent supply of stock, even when products are scarce, and we get it at the right price,” Brown says. “I believe it’s one of the better things that we’ve done.”
The next area of focus has been developing and rolling out an array of business tools that will help franchisees to run their businesses successfully at store level—a campaign that has been particularly important and valued through the recession. The franchises are overseen and supervised through a national network of five field staff, each responsible for the welfare of the stores in their region. Tasked with visiting each store at least once a month, the field staff have been introducing a range of new analytical processes.
Working together with the franchisee, they begin by analysing the business performance year-on-year. This enables the business owners to identify areas where performance has perhaps fallen and could be improved. Following on from this, further tools enable them to assess whether the problems are with pricing, products or marketing and so on, and this progresses to mapping out a plan to win that business back. The field staff continue to work with the franchisees, monitoring their progress and supporting them in their efforts.
Finally, the stores have just been taken through a second and much more significant makeover under the direction of a marketing and branding company from Johannesburg. The aim was to bring the brand identity right up to date, to enhance the prospect for expansion, and to create the opportunity for some brand stretch. Among many changes, the brand name has been shortened to the very stylish DoRego’s, while the stores have been completely revamped to create a fresh, modern, energising and clean environment for eating out. And the brand stretch is now going ahead successfully, with stores opened in the more affluent areas of Bloemfontein and Kimberley.
Today, DoRego’s has more than doubled in size, now encompassing 67 stores and employing over 800 staff across the business. However, in spite of the size of the organisation, the Browns continue to maintain a very close working relationship with the store owners, who number around 40. “All our franchisees understand that if they have a problem they can just pick up a phone and call either myself, my brother or one of the field guys. So we all know each other pretty well.” And this understanding and close contact with the grass roots of business is one of the keys to its success.
The Browns’ vision for the business is ultimately to expand strongly in all regions of the country, and to develop the range of franchise offerings. As part of this, the first DoRego’s Express has been opened at a petrol station in Bloemfontein. A cut-down version of the normal store, it’s suitable for incorporating into an existing supermarket as a takeaway or small eating facility, and the plan is to roll them out quickly during 2011.
The second new franchise, the DoRego’s Direct, is akin to a small supermarket and evolved from the older practice of selling fresh fish at the DoRego’s counter. The idea is to open the DoRego’s Direct alongside a DoRego’s takeaway, giving customers the opportunity to buy either a takeaway or all the fresh ingredients required to make a DoRego’s meal in their own homes. The offering includes a wide range of products such as oil, flour, cold drinks, fresh fish and meat and so on. The first Direct was opened in Bloemfontein two months ago and is doing very well.
Moving forward, the strategy is clear. In the short term, the focus is on expanding in areas where DoRego’s is already well established, such as the Free State, Northern Cape, Eastern Cape, the North West and the southern regions of Natal. “Then we will be in a position to attack those areas where the brand is not so strong,” Brown concludes. www.doregos.co.za
