Everybody loves a good barista, but the business model behind supplying one is where the beans meet the grinder.
For Trung Bui, 30, starting Espresso Warriors was his answer to creating a sustainable franchise model that benefits him as a franchisor, franchisees and customers.
“When you go into business, you want to make money, that’s why everyone goes into business,” Trung says.
The café chain has grown to 12 stores in one year alone and he says he couldn’t be better placed with timing and the environment.
“In Australia, we are the market leaders in the café industry, worldwide,” he says.
“In a very competitive market, we are the front runners and industry innovators.”
His business is at the forefront of this innovation with a goal of turning over $35 million by 2019.
It first began when he entered his first business partnership as a franchisee as a “naïve” 22-year-old.
He took out three personal loans worth $130,000 with interest rates at 13 per cent, but “the day we opened, I still didn’t know what a cappuccino, a flat white or anything was”.
“I kind of put all my eggs in one basket for the first time in my life,” he said.
“When you’re back’s against the wall, you have to perform because if you don’t, your livelihood is on the line so there was no way I was going to fail.”
Eight years later and having sold two franchise businesses, including one he created, Trung has tailored a business model.
He says it was prompted when he noticed red flags with his position in the food chain, and he saw many franchised cafes going up for sale.
“With all franchise models, it all works off royalties and that is the main revenue or income, which eats off the net profit of the franchisee,” he says.
Coupled with rising rent and franchise fees, he says, “by the time you get to your fifth or sixth year, you’re left with nothing."
Feeling that it was just the tip of theiceberg, he started Espresso Warriors to ensure the franchisor makes money and mitigates damage and loss of income to franchisees.
“So we bought a truck, a refrigerated truck and got our own cool rooms and became suppliers to the franchisees.”
This enabled them to deliver better and consistent produce for customers, and reduce prices for franchisees.
The business structure also helps his partners ride the highs and lows in the ever-changing coffee industry.
“Five years ago you could have a coffee and cake,” he said.
“Two years later they wanted food, and now they want natural organic stuff, so if you don’t adapt, you won’t survive the market."
"We look at the trends and stay ahead of them.”
This includes adapting new menus to meet local tastes.
He plans for 25 stores to be in Sydney in two years, but is looking at growth opportunities offshore with careful planning.
“We got to always be learning, always be humble and always adapting.”
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