Concept Eight, the parent company of Noodle Box and Huxtaburger, is buying Acai Brothers and has bold plans for the brand.
In an exclusive interview with Franchise Executives, Grant Lee, Concept Eight CEO, said “We think the acai business is still in the early stages of market growth in Australia. It’s an area we’ve been looking at for a couple of years. We think we could grow the Acai Brothers business into more than 100 sites in Australia.
“The market is categorised by independent, single site operators. In every category, there are a few brands that are truly national. We want to be one of them,” Lee said.
Serving acai bowls, smoothies, juices and coffee, the brand also opens up a new day part for the Concept Eight business.
“Our trade has been 80 per cent dinner, 20 per cent lunch, and the Acai Brothers purchase will strengthen the breakfast and lunch day times,” Lee said.
Concept Eight operates three divisions
With the Acai Brothers acquisition, Concept Eight will have a portfolio of 160 restaurants across three divisions. The Asian division comprises 114 restaurants, there are 36 restaurants in the burger division, and Acai Brothers brings 10 sites to the new breakfast and lunch division.
Lee is confident in the company’s capacity to manage Acai Brothers’ future.
“We’re pretty adept at handling multiple brands, working with our virtual brands business and we’re comfortable operating the three divisions,” he said.
Just two of Concept Eight’s restaurants are company-owned, the rest are owned and operated by 130 franchisees.
“We still have some work to do in multi-site strategy; we expect some franchisees will want an Acai Brothers franchise,” Lee said.
Acai is a fresh market for Concept Eight. However, the launch of seven virtual brands took the business into the unknown fried chicken, vegan and dumpling markets. The initiative has boosted franchisee business, he points out.
“These have been great for our franchise partners in terms of sales and profitability. That’s why we’re comfortable with bringing on Acai Brothers.
“As a company we understand target markets and how to reach them and we have operational capabilities to make that happen,” Lee said.
Scaling the business
Acai Brothers is a lifestyle brand appealing to health and fitness-focused young adults, and teenagers seeking a treat.
“The restaurant sites will be different to our burger or noodle brand locations,” Lee said. “The footprint is a lot smaller and as a lifestyle brand we need to be where the target market congregates.”
Two friends, Sam Carson and Ben Day, launched Acai Brothers in 2014 – Day has since left the business. After the Concept Eight acquisition, Carson will become the brand’s general manager.
“They did a fabulous job getting it off the ground,” Lee said. “But it’s very hard to run a franchise business in Australia with less than 50 sites. It’s hard to make a profit.”
Concept Eight has a strong support team across training, marketing, project management, supply chain and business development.
“We have all the services a franchisee requires to be successful; for small QSR franchisors it is difficult to offer unless you have serious scale,” Lee said. “Concept Eight will be putting a lot of effort into Acai Brothers in the short term. The brand is number three at the moment and we don’t want to be there in the future,” he said.
Lee also believes the brand can travel well. “We’re excited about the brand, we can take it everywhere,” he said.
Noodle Box pumps up US expansion
The acquisition comes hot on the heels of the 100th restaurant opening for Noodle Box, a brand that has already dipped its toes into the US market.
“We’ve been in the US for over 12 months testing the market in Atlanta, Houston and Austin, and we’re very happy with how our meals are accepted in the US market.
“There’s only one company we are aware of that has really grown an Asian brand outside the US, Panda Express,” Lee said. Panda Express has 2,300 restaurants, mostly in the US, and overseas in airports and military bases.
“We think the market is open for Asian QSR brands where single independent operators still dominate. Pizza is overcrowded, the chicken and burger markets are crowded,” he said.
Noodle Box’s cooked-to-order meals offer an alternative to the standard precooked dishes available from competitors, he says.
“We have to get the model right; the US palate is different, customers like bigger portions and heavily-sugared sauces. Our freshness gives us a competitive advantage and we are proving consumers like it.”
Noodle Box has been building partnerships in the US for two years. Newly appointed general manager – international and retail at Noodle Box, Callum Mackay is leading the push into international expansion and is actively seeking area development agreements.
“Asian food is great value for money. A couple can spend $22 for a meal delivered to their home, that’s outstanding value. We’ve always done well in hard economic times,” Lee said.
In Australia Noodle Box has developed a partnership with Ampol and has three sites open. The big potential is overseas.
“We are super serious about taking Noodle Box to the international market. We see opportunities in the Middle East and Europe too,” Lee said.
Source: Franchise Executives
