Founders of Franchising: Bobby Hashemi-Coffee Republic
With his sister Sahar, Bobby Hashemi has built one of the high street's most recognisable coffee bar brands, which is now embarking upon a strategy of franchise expansion. Stuart Anderson interviews
When a 'light bulb moment' occurs, what sets an entrepreneur apart is the willingness to act upon it. Bobby Hashemi established his entrepreneurial credentials through not only his initial willingness to pursue his bright idea, but also his perseverance in seeing it through. As a result, he now serves as Executive Chairman of a nationwide high street coffee bar chain that operates in 45 locations.
'I used to work as an investment banker in New York, while my sister Sahar was a lawyer in London,' he recounts. 'In 1995 our father passed away suddenly and we both took leaves of absence from our jobs to have a rethink about where we were in life. It was during a lunch with Sahar that a light bulb went off in my head. She had come back from a trip to New York and was telling me about the different coffee bars mushrooming there. We did some research and realised that there was quite an opportunity in the UK market to establish a chain serving a higher quality coffee than the brown sludge in plastic cups served in sandwich bars.'
After numerous bank loan rejections, Bobby and Sahar raised the capital to start Coffee Republic through a government guarantee scheme and opened their first coffee bar in London by the end of that year. 'Our aim was to provide a female-friendly meeting place with large windows, soft music,' says Bobby. 'At first, business was slow - people didn't understand the concept. We listened to our customers, changed the wall colours and music, and after a nine-month finetuning process we started to see lines form at the counter.' With Sahar looking after product sourcing, Bobby concentrated on developing the commercial side of the business. 'We formed a very successful partnership,' he reflects. 'Working with your sister cuts through a lot of niceties and allows you both to get straight to the point, which can only help you as entrepreneurs. We have developed a relationship that is very open and symbiotic.'
After growing the business to 45 corporate-owned outlets, Bobby and Sahar took a step back for a couple of years before being drawn back in to face new challenges. 'We saw another opportunity in the USA, with deli bars popping up offering fresh ingredients and fresh bread, to eat in or to go,' says Bobby.
'We felt that this was the national evolution for coffee bars, and came back into the business to take it to its next phase. After initial testing of the new deli concept in a number of our outlets, we wanted to roll it out across the network and open new bars to grow the network. That was when we began considering franchising as an avenue for growth.'
The attraction of franchising for Coffee Republic was the chance to install highly motivated local entrepreneurs in charge of its outlets. 'I think our managers do a great job and we're very proud of them, but on a personal level I identify with franchisees because they are people who want to work for themselves,' says Bobby. 'But, they are probably smarter than me and my sister because they want an established brand and to learn best practice - we had to do it the hard way. We got lucky, but most entrepreneurs don't get lucky. Franchising provides the safety net of an established brand and business concept for a start-up.'
In the summer of 2005 Coffee Republic launched its franchise concept, and was able to draw upon a well of interest from investors. 'With our brand equity across the UK we had always been inundated with requests for franchises,' recalls Bobby. 'Our launch strategy was not to have a launch! We knew there would be demand, but we didn't want to get overloaded so we decided to take a 'softly softly' approach, using the contacts who had called us in the past.
We then started with very low advertising spend, and in our first year we spent only 20 per cent of our advertising budget.'
The first Coffee Republic franchise opened its doors in December 2005, and the company now has eight franchisees up and running. 'We have a very healthy pipeline of prospects in front of us,' Bobby reveals. 'We already had a strong business infrastructure in place, which was designed to own and operate outlets across the UK, covering recruitment, training, management and operations.
Our growth strategy has shifted to mainly franchising - it is not something one just dips their toe in, it needs an all-encompassing effort that touches every aspect of the business. One of the fundamental principals of franchising is that you take a long-term approach.'
Bobby identifies three crucial areas, which affect the success of developing a franchise. 'The first is recruitment,' he clarifies. 'It is important to be very strict about the people you grant franchises to, and we say 'no' much more than we say 'yes'. Second, a vigorous training programme is essential. This must equip franchisees for their future, but also allow them to get a feel of whether this is the right business for them. Third is support and monitoring - once you have the right people in as franchisees this becomes much easier, instinctive and natural. We regard our franchisees as partners who are the face of Coffee Republic on the high street - their success is our success and I love the fact that our interests are aligned.'
As Coffee Republic prepares to enter its second year of franchisee recruitment, Bobby reflects that the franchisees that have signed up so far have bridged a wide spectrum of candidates: 'We've had an area manager in fast food retail, a high level executive from a big company, and someone who had previously operated another franchise. It's more about attitude and enthusiasm for the brand and product, plus a genuine desire to become an entrepreneur. We've been through the difficult bit - getting the first franchisees in place. Moving forward will be more of the same - we will be taking advantage of our national recognition to recruit more franchisees and aiming to grow in a prudent way, which keeps the focus on the franchisee network.'