Carlos joined the Chatime Group in June 2015 and is charged with overseeing the Australian operations for the Chatime and Goobne brands.
Carlos has more than 25 years’ experience in the franchise and retail industry, including roles with Nando’s Australia as General Manager and Director.
Carlos’ experience in developing retail brands was honed by his previous experience within the Australian advertising sector, developing strategy and integrated campaigns for many Australian retail and international FMCG brands.
Can you tell us a bit about your retail business?
Chatime Group operates a mixture of franchise and company operated businesses including Chatime bubble/iced tea and Goobne Korean oven roasted chicken in the Australian market located in a mix of strip and shopping centre locations. Chatime has 125 locations across Australia excluding Tasmania and one Goobne restaurant location at Darling Square, Sydney.
Have any of your retail locations had to close due to COVID-19 restrictions?
Since March, all Chatime locations traded on reduced trading hours, however by April 12 we had 37 locations close temporarily due to a significant drop in foot traffic predominantly in CBD locations and high-density Asian suburbs around the country.
Goobne continued to trade via take away and food delivery aggregators, however, we closed this restaurant temporarily on April 5.
We are continually reviewing trading conditions and with federal and state government assistance packages considering to open more locations as conditions improve, while maintaining aspects of social distancing protocols for the safety of our customers and staff.
What impact have these restrictions had on your sales?
Sales across the Chatime Group have declined since the beginning of March, equating to more than 60% decline during the past six weeks. Interestingly, we have a small number of strip locations scattered across the country that are trading positively from a like 4 like (L4L) performance and due to the growth in food delivery aggregators sales a significant increase in our national average ticket value (ATV).
How has Chatime Group adapted to some of the challenges the business has faced during this downturn?
To ensure we protected the working capital of our business partners during the COVID-19 pandemic, we provided various support assistance to partners including reduced royalty and marketing fees, waiving marketing fees on delivery aggregator sales channels and providing extended payment terms for the months of March and April, with a view to extending post this period. Our business development/finance teams are working more closely than ever on daily profit and loss reports and cash flow projections for all locations. At the same time, we stood down the majority of employees across central support in late March for a one-month period, however due to the JobKeeper stimulus package all eligible employees (with the exception of two at Central Support) are now returning to work on reduced hours.
What are your thoughts on the various government stimulus packages?
The federal and state governments should be commended for their swiftness and alignment ensuring the community received support including; rental and mortgage assistance, JobSeeker and JobKeeper stimulus packages and the number of business incentives including instant asset write off, payroll tax waivers/deferment and working funds among many assistance options. The Jobkeeper stimulus package is enabling Chatime to return many employees back to work and, more importantly, providing our business partners (franchisees) additional stimulus assistance to reopen locations that are temporarily closed that have seen a significant decline in revenue.
In what ways can centre landlords assist your business in the recovery phase?
While the federal government’s Rental Relief Package legislation is welcome and provides a framework for landlords and tenants, we initiated an approach with national shopping centre landlords requesting rental relief percentage approach to rent utilising a location’s calendar year 2019 for base rent, promotional, outgoings and storage be applied to the sales achieved in March 2020. In most cases, this results in a percentage rebate request similar to the relative downturn in sales and is consistent with the government’s communication on co-operation between landlords and tenants. The new mandatory code with the requirement to defer a portion of rent to later in the rental term will have adverse impacts on business partners (franchisees) to not only pay monthly rental amounts and any rental deferment amounts with no surety of when and if revenue will revert to back previous periods. As to extending lease terms this will also cause challenges to franchise and franchisors’ agreements where franchisors hold the main lease and licence a location to franchisees, in the event franchisees don’t wish to extend their franchise agreements to align with any lease extensions, franchisors may be left vulnerable to operating locations for short periods of time. With the option of collective bargaining available to retailers, l suspect there will be much discussion surrounding this option for retail groups to join forces together or seek the support of a key industry body to drive fairer and more equitable outcomes for parties.
In your opinion, in what ways will retail shift, and what is your outlook for the future of shopping centres?
Business and consumer confidence will be soft for quite a period of time, therefore it’s more imperative than ever that landlords and tenants work together to find equitable commercial solutions that enable businesses to continue to trade with improved commercials where landlords receive income without a significant number of vacancies appearing within shopping centres. There will be a consolidation across the QSR and broader retail landscape and in particular within the bubble/iced tea category. The ‘dizzy’ commercials some entrants would pay in rents and manage their business costs wasn’t sustainable, the consolidation across the retail environment will provide a more balanced and level playing field for businesses doing the right thing for all stakeholders, while contributing to rebuilding our economy together.
What lessons have you learned from this experience?
Not necessarily a lesson learnt but reaffirmed; the courage, strength and perseverance of our business partners and employees who continued to serve customers within their communities. COVID-19 poses many challenges but is testament to our broader network to continue to service the public in a safe environment with a product and experience they love, to escape the challenges of the COVID-19 pandemic.
How have you and your family personally coped with social isolation?
With more than 25 years in franchise and retail, l cannot recall when l have been home as consistently as now. With work from home options available to our workplace, l have relished the opportunity with the additional time to support my wife and children; including children’s homework, extracurricular studies and loads of home cooking. I’m definitely more relaxed and have enjoyed this time, however l’m looking forward to restrictions slowly being relaxed and the “new normal” coming into play; perhaps my family is secretly wishing this as well!
What are you looking forward to doing once social distancing restrictions are relaxed?
Zoom, Facetime, teleconferences and the like all have a place, however I’m looking forward to spending time ‘face-to-face’ at the coalface with our business partners, employees, customers and suppliers. With many key initiatives to be deployed post the COVID-19 pandemic, supporting our partners post the recovery phase will be our number one business priority.
