Disgruntled Hog’s franchisees unite
DISGRUNTLED Hog's Breath franchisees have joined forces following the closure of eight stores over the past six months.
Franchisees, who pay up to $800,000 to set up a restaurant, hope the haemorrhaging of the chain stops after what they claim is a series of blunders including a convoluted name change.
Former franchisee Desmond Francios said he had to declare himself bankrupt with debts of more than a million dollars after closing his WA store at Morley after less than five years in business. His store was one of eight to cease trading over the past six months
The most recent closure was only a couple of weeks ago when the inner-city restaurant at Indooroopilly shut while the Coolangatta eatery served its last meal earlier this year.
Other Hog's Breath restaurants to go out of business were Northbridge in WA, Shellharbour and Epping in NSW and Holden Hill and Glenelg in SA.
In April last year, the long-standing inner-Brisbane Petrie Terrace restaurant closed less than a week after the Brighton Le Sands, New South Wales outlet shut.
The two New Zealand Hog's restaurants have also shut.
One franchisee, who did not want to be named, said the rebranding of the business name from Hog's Breath Café to Hog's Australia's Steakhouse, which was rolled out in 2016, was a poor and confusing decision.
"We have a franchisor that has changed our business model and basically changed the brand…and it's just confusing," they said.
"A franchise association was formed six weeks ago and there has been a paper written that has explained what has happened and how they have harmed the brand."
The iconic Queensland brand, famous for its prime rib steaks and Hog's Tail Fries, started in 1989 in Airlie Beach and quickly expanded across the nation. At its peak, there were more than 80 Hog's Breath restaurants across the nation.
That number has dipped to about 65, of which 24 are based in Queensland. The company employs a total of about 2000 employees.
QUT Business School associate professor Gary Mortimer said the brand made its name when food trends were different and changing eating habits may have impacted on its success.
"At the time Hog's Breath was going through that period of growth, maybe big steaks, chips and beers was a big food trend because they went from one (restaurant) to 80 very quickly," Dr Mortimer said.
"Now the market has shifted. We see Sushi is on every corner and there is a big growth in Thai and Vietnamese foods, so palates have changed…and the market is shrinking."
Mr Francios, an accountant by profession, said things started to go awry after only a few months taking over the business in Morley. He tried valiantly to keep it afloat , even changing locations to attract more customers. He said he owed no franchise fees but there were outstanding debts to the taxman, landlord and a bank.
"Based on the financials we received from the previous franchisee he was apparently making in excess of $200,000 a year," Mr Francios said.
Another franchisee said there had been more than three years of declining sales and the buck had to stop with head office.
"We've had failed marketing, failed menus, failed Hog's card, failed rebranding. When you get more than 36 months of straight decline you really have to stop blaming the franchisees or the economy."
Hog's chief executive Ross Worth said the company provided franchisees with a mountain of support from business coaching to financial cost control and marketing plans.
He said the health and wellbeing of people impacted by closures was his priority and many businesses had suffered in tough and competitive economic times.
"To say that restaurant closures can't be blamed on a downturn in the economy is contrary to every report that I've read over the past 18 months," Mr Worth told The Courier-Mail.
"It's unquestionably the toughest environment we've seen in our thirty year history.
"In addition to a decrease in spending, we've also had to adapt to completely new customer eating habits with the arrival of Uber Eats and other food delivery services."
For mum and dad investors considering buying into any franchise, QUT's Dr Mortimer said they needed to think broadly about their commitment.
He said there was a misconception that owning a franchise was the way to working your own hours, answering only to yourself and freeing up time to pursue leisure activities.
"There is a tendency for mum and dad to buy a franchise thinking there will be lots of free time, they will be their own boss, play golf on a Wednesday and that is not the reality of running any business, whether it's a franchise or not," Dr Mortimer said.
"If you run a cafe or burger franchise… you have to sell a lot of coffee and lot of burgers to make money and you not only have to pay wages, you have to pay the franchise fee every month, pay levies and buy inventory under a contractual agreement."