2014 April Edison Report
Building a global coffee franchise
A putative global brand
CGF’s business plan is to significantly grow Esquires from its current 78 stores into a major international brand via a franchise model. The branded coffee chain sector is growing at around 10%+ a year in many countries, providing numerous opportunities for CGF to expand, even in mature markets such as the UK and US. China, India and the Middle East also present current and future growth opportunities at even faster rates. Store growth is expected to average 41% a year between FY14 and FY20. CGF will earn revenue from royalties paid by franchisees, sales of master franchises, and sales of coffee and other products to franchisees. Its costs will be largely focused on branding, business development, in-market franchisee support and administration.
Execution the key
Management’s ability to develop CGF as an international business is critical to the company’s success. The Deeks brothers are the driving force behind the company and have more than a decade of experience with the Esquires brand both locally and internationally. CGF will be operating across currencies with its NZ dollar share of revenue falling away as it grows; earnings will increasingly rely on the movement of a basket of currencies increasingly dominated by the Chinese yuan and US dollar, making currency/treasury management increasingly important.