From the source: Scott Meneilly, Sushi Sushi
BIO: Awarded 2016 NRA CEO of the year and retail executive of the year in 2012, Scott Meneilly has established himself as a leader in retail food specialising in franchising. He has been CEO of Sushi Sushi since September 2017.
Meneilly has held various positions in his career and spent many years at Retail Zoo from general manager of Boost Juice Bars, CEO of Boost Juice Bars and CEO of Retail Zoo between 2013 and 2017.
COMPANY PROFILE: Sushi Sushi first launched in Australia 20 years ago and has more than 120 locations across the country, with plans to go international this year. The brand offers on-the-go Japanese cuisine, including the recent addition of salads to the menu. Qualified sushi chefs prepare all meals from scratch in-store daily, using premium ingredients including Australian avocados, Tasmanian salmon and authentic Koshihikari rice.
Inside Retail Weekly: How would you describe 2017 for Sushi Sushi?
SM: 2017 was a really exciting year for us. From a sales perspective, we had a really strong year, which is good, given the retail landscape is relatively challenging. We were really pleased with our sales results and we managed to grow our store footprint by double digits.
We opened additional stores last year which was positive, too. Expanding into SA was great and that came with a couple of key things, including great recognition because we had opened in the centre of the CBD but also because we opened at the Royal Adelaide Hospital, which got us a lot of exposure. It is a fantastic success for us. Obviously given we sell fresh, healthy whole food and have that offer in an environment that’s all about health and wellness like a hospital, it just works really well.
IRW: You don’t often hear of many well-known food retailers entering hospitals. In fact, I’d say that hospitals aren’t usually known for the delicious cuisine on offer…
SM: It’s not the thing you think of when it comes to hospitals. Good food has been important for hospitals for many years and they’ve wanted to really encourage retailers to come up with suitable food for them, so some of some have come up with traffic light systems. If it was a good choice, it would be green, if it was a fatty option, it was labelled red.
Hospitals are conscious of [bringing in good food retailers], but it’s about getting retailers involved and creating the right retail environment for those spaces. Hospitals are not retailers and they don’t always understand that you can have a 20sqm space, but we also need cool rooms and there might not be the facilities for us.
It will take some time for that to change, but there are definitely some retailers that do it well within hospitals. For us, we’re looking at opportunities in terms of partnering with them rather than putting in an entire sushi store. We might be able to deliver daily fresh, Sushi Sushi-branded products that they can on-sell.
[Food in hospitals] is one of those things that is heavily regulated. In a lot of instances, hospitals will work with catering companies and they’ll have the rights to doing the food in the entire hospital. Hospitals will have to look at that in the future to see where they should separate it out so there’s a retail environment.
We think there’s a great opportunity in delivering our food through hospitals because sushi is so good for everyone. It’s a health and wellness space and we’re a good, clean, fresh product offering so we think it marries up really well.
IRW: You joined Sushi Sushi last year as CEO, after having spent some time as CEO at Retail Zoo. What lessons did you learn over there that you’ve been able to implement in your new role?
SM: I would say that Retail Zoo is a fantastic environment for breeding growth and positivity so for me, it’s now about injecting growth and positivity over here – it’s about bringing transparency to the business and educating team members on the benefits of franchising and how we can get the best out of our franchise partners.
Sushi Sushi’s in a very good spot being a category leader. It had first mover advantage, given it’s 20 years old – it really brought sushi to the mainstream. Prior to Sushi Sushi, you had to go to a Japanese restaurant to get that kind of cuisine. It’s the largest sushi brand in Australia but we need to continue to innovate. It’s about bringing in a culture of continuous improvement and continually attacking yourself to be the best and continue to drive the category.
IRW: What would you say are some of Sushi Sushi’s main areas of focus for the year ahead?
SM: We’ve got 135 stores and we have zero in New South Wales so for us, when we look at where the opportunity lies, the opportunity for us is to grow across the rest of the country. The majority of stores are in Victoria. We have 20 in Queensland and 20 in Western Australia and we’re in the Australian Capital Territory, South Australia and the Northern Territory.
2018 is all about growth. It’s about continuing to grow our footprint across the country and then this year, we intend to take the brand offshore. We’ve been doing significant work with potential partners in the likes of Malaysia, the UK, the US and Dubai. We’ll commence international expansion this year by launching into one of those locations.
Taking a brand overseas requires a lot of focus and it requires a lot of research and diligence. When you take a brand overseas, you’re relaunching it and you need to get the nuances right within those regions. What worked in Australia won’t necessarily work overseas, you have to tailor it. It takes an incredible amount of focus and resources to get it right.
So a lot of businesses do it and some succeed, but it’s a slow growth, so some don’t succeed or just don’t hit the highs that they should. I think that it’s something a lot of retailers do attempt, but it’s about how you do it. Then there are the choices – you can do it directly, or you you can do it as a joint venture or master franchise, which will impact the likelihood of its success as well as the risk.
IRW: What plans do you have for the menu at Sushi Sushi?
SM: We have a lot on the cards in relation to growth and innovation, so from a menu perspective, we’ll be looking at creative new products that keep our consumers talking. We’ve got products like poke bowls that we’ve just launched, then we’re introducing wagyu hand rolls or grand rolls, which are larger than a hand roll.
We’ve got a fair amount going on in terms of new product development. We’re looking to target different groups, like catering more to kids or working on more packaged value options for families.
In terms of continually leading in the space, we have to attack everything. We’ll be reviewing packaging, store design, visual merchandising – all will be focused this year. 2018 will be a big year for growth and for change.
IRW: What’s the sushi category like in Australia?
SM: Healthy. The category is very well sought after. From a consumer-driven point of view, it’s a very desirable product. There is competition in the market and I think it really underscores industry demand, so it’s good, because it drives us to look for more ways to get our customers coming back to us. I think being in an industry that’s competitive is a healthy thing for a business that wants to continue to grow.
My belief is that consumers are always looking for something that will make them feel good and that’s got to do with their food and daily lifestyle choices, so they’re also more interested in the providence of their food these days. They want to understand, not only if something is good for them, but where is it from, is it sustainable and is it Australian-made? All those things are of a great deal of interest.
Australia is a very foodie nation, especially with the likes of Masterchef that’s now been on-air for at least 10 years – that’s opened Australians’ eyes to the fact that food can be fast, fresh, healthy and tasty and have good stories behind it. People want to look after themselves.
IRW: How would you describe the Australian QSR landscape right now?
SM: The QSR landscape is highly competitive at the moment and it is driven by a number of things. The passion for food and the QSR landscape are both more advanced than many other countries, because of our availability of fresh produce, people’s awareness of it and its transparent in our country.
Shopping centres are creating environments where they want people to come in and have an experience and now when you go to a restaurant, visit a QSR or even just a kiosk, it’s all about that high energy experience. Food is emotional, so shopping centres are creating more opportunities for the QSR industry and with that, it means increased competition, so all of us are looking ways to improve ourselves at every step, like better looking store design. We’re spending more money on building stores and thinking, ‘How does it make the consumer feel when they walk in? What’s the experience that we’re delivering?’ The competition is really driving innovation and then expectation.
IRW: What would you say are the most difficult challenges right now?
SM: I would say absolutely competition, because the marketplace is becoming highly competitive. You’re fighting for the dollar. If you’re looking at a shopping centre where a lot of QSR retailers play, the areas that were dedicated to food have increased or doubled in certain centres, so there are twice the choices for the same amount of consumers coming through the door.
You’re trying to get the income in the door, followed by profitability, then you’ve got continued rising costs – food costs, employment and rents are rising. Even though shopping centres are adding more competitors in the category, they are still continually driving rents up. So you’ve got less consumers, you’ve got to pay more rent and you need more employees. You have to keep the number of staff high because the expectation is quick service. Managing profitability in our environment is the most challenging thing.
Like any other business that has to continually re-engineer itself, shopping centres are turning themselves into experience centres. Food is an emotional thing and it makes you feel good, so they’re trying to bring in those retailers that will offer an experience and centres want to give customers a broad range of choice.
I do think that’s good – the idea is that centres will drag more customers in, get more dwell time or get customers in during the night time as well. It’s good for QSR and it does provide more opportunities for retailers to get in.
However, centres need to be very aware that retailers have to make a dollar. They’ve got to continue to be profitable to stay there and one of the things that centres can control is the occupancy cost – they can’t control whether there’s going to be 10 million people coming in or not. I’m all for shopping centres re-engineering themselves, but my request would be for centres to be more commercial around the rents that are being charged to food retail operators.
IRW: Would you look at moving away from just doing shopping centre locations?
SM: We do have street locations now and that’s a great opportunity for us, because they’re restaurants but at the moment, they’re predominantly daytime restaurants. We can cater to evening dining and expand our menu though – that’s definitely something that we’re looking at and we’ll start to focus more on street sites and not just shopping centres. We’ll continue with centres too, because we enjoy working with them and have great relationships with landlords.
IRW: Franchise businesses have been under a lot of scrutiny in recent years. How do you think that’s impacted the industry?
SM: Look, the impact [negative media reports have had] has been quite significant. When we look at 7-Eleven and the underpayment of employees, its impact on the industry has been quite large. There is new legislation in place that has the franchisor liable for what a franchisee plays and if you’re looking at large franchise chains with hundreds of stores and tens of thousands of employees, it’s hard for the franchisor to regulate how those franchisees are actually going about making payments for their team members.
The legislation has become more stringent on the franchisor – there are now more follow-ups, more checks and more procedures. That all adds more cost to the business and it’s not something that’s done to every business – it’s just done to franchisors. The impact that some of these things have had has put a financial burden on businesses. I think it also taints the franchising industry as being a little underhanded or rogue and I think that’s a problem from a consumer perception point of view, which might be that potentially, franchising businesses don’t always do the right thing. That’s been a challenge.
In terms of what’s the hardest thing for us as franchise businesses at the moment, I think it’s about profitability. Our sole reason for being is to get franchisees into our system, to teach them how to make money by running one of our businesses. Making franchisees profitable is our sole purpose, so the hardest thing for us is to continue to do that and ensure that people aren’t cutting corners, just to be profitable.
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