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Lessons learnt in this nutty pop up ?

 

Maybe this wasn’t just a nutty pop up concept !

In 2016 an Aussie entrepreneur had a plan – to launch his new food business exclusively via pop up. And he had a pretty successful start… appearing at events all over town in a food truck, opening fast food outlets in Melbourne’s Lygon Street and LaTrobe University… even bringing the concept to a major shopping centre. And meanwhile he blasted their story out on social media, gaining a healthy following (currently 32k on Insta, 9k on Facebook) and attracting heaps of local (and international) media coverage. He launched and built a nutty pop up business at a time when extravagant fast-food desserts were all the rage…

The Nuts-About-Tella concept uses a sweet hazelnut spread in many and varied dishes… not always where you’d expect it. Their “Tella” burger variations include donuts stuffed with the ‘spread and stacked with fruit, peanut butter and /or marshmallows, caramel and/or chocolates (that’s a lot of sweet in one mouthful…). And then consider their savory burger is based on a standard meat patty – cheese, onion, hot sauce etc – oozing with a hazelnut / chocolate sauce (that’s a “Gold Digger” burger)

Why do I say it is a nutty pop up concept ? (apart from my personal thoughts about a beef burger with hazelnut sauce…eeeuw) Well I’m not being critical – the concept is focused on the very popular Nutella spread. The pop up business stresses it is not affiliated in any way with Nutella (but they must use an awful lot of it !)

Over the past couple of years the Nuts-About-Tella social pages have kept fans up to date on recipe variations, pop up locations and their opening hours… with a smattering of colourful language (“#F…kYourDiet”, “one crazy mthrfcker”)

Their graphics are also slightly edgy… the main logo is the infamous Mona Lisa smirk smudged in hazelnut spread, and the Facebook banner has Michelangelo’s Creation of Adam (Sistine Chapel) with God spattering Adam with the same ‘goo.

But recently things have gone from quite sweet to pretty sour for this nutty pop up business. SmartCompany.com.au ran a couple of articles in November – initially reporting that Nuts-About-Tella had entered voluntary administration “after dealing with a range of issues which can’t be published for legal reasons”# – hinting there’d been a protracted dispute with management of a CBD shopping centre. Business owner Mark Elkhouri was quoted as saying he’d been “abused and used by retail landlords after trying to expand his business with several pop-up locations in Melbourne… after investing $10,000 in a pop-up in Melbourne’s CBD (he) was soon told he needed to move to make way for another retailer, and was relocated to a less trafficked part of the shopping centre”. “I didn’t have the freedom, the availability to do what I wanted to do,”# he said.

Ouch. The ‘Tella woes were magnified when their original pop up store – in Lygon Street Brunswick – finally closed last month (“what started off as a 3 month pop-up, lasted over a year and a half… Truth is we were working towards converting the pop-up into our flagship store, however complications on a new lease and property agreement just didn’t work in our favour” was posted on their Facebook page, 11th November.*

Elkhouri was also quoted as saying “If you take over a place and the landlord expects a certain return on the property, they’ve asked for a large amount, it does strangle the tenant … [they] can’t focus on the actual business…. you have to play around with your costs … [which] brings down your quality.”#

Nuts-About-Tella aren’t the only sweet-creations specialist to hit a hurdle recently. In March 2018 the Doughnut Time chain collapsed, owing nearly $3million (it has since been taken on by new owners and started opening stores again)^ Doughnut Time had quite a spectacular rise – growing to around 30 stores in Australia and the UK, but founder / owner Damian Griffiths found they couldn’t pay staff wages, superannuation or the rents… and eventually had to admit he’d “expanded the company too quickly… had too many big ideas…”%

And Max Brenner (Australia) had a “tumultuous month” in October, after calling in administrators who then “shut 20 stores and put the remaining 17 stores up for sale”. That sale fell through when the international franchisee “withdrew the license for the local (Australian) Max Brenner business and successfully applied to have liquidators appointed…” Those liquidators thought they’d sold the business to yet another party, but that deal also collapsed. Finally, receivers were appointed in mid October@. Wikipedia / Max Brenner has recently added an update that in “November 2018 a major Australian cinema company bought the Australian Max Brenner franchises out of receivership”.

So, what are the lessons we can learn from the Nuts-About-Tella and Doughnut Time experiences ? (I won’t count Max Brenner, as that wasn’t a pop up concept… had been operating successfully for nearly 20 years) Well, it seems a lot of the challenge for ‘Tella and ‘Doughnuts had been growing quickly and not quite adjusting from a culture of “pop up” to the reality of “permanent” retailing… Those two genres are quite different, and not necessarily transferable. What starts out as a reasonably successful test-it-and-see concept can soon spiral out of control when the costs and obligations of trading become more than just temporary.

Landlords and suppliers will take a different view to negotiating a long-term commitment compared to a pop-up arrangement. Hopefully the short-term pop up is a win-win for all concerned (the business finds space and terms with relatively low cost and commitment, while landlords and suppliers see a little income and the potential to sign up a better deal…). But when they start negotiating for a flagship store – that’s when a landlord can knuckle-down to get the deal which suits their longer-term objectives (not necessarily the tenant’s). And suppliers may ask for new trading terms, requiring additional obligations for the business. All of which seems quite reasonable to me…

If a budding / nutty pop up business can’t make the numbers stack up when moving from start-up to the next level… the concept probably needs some tweaking. Permanent locations require commitment to commercial arrangements, infrastructures and staffing – and may also require significant investment with fit-outs… possibly more than the business can afford.

My thoughts on all this… ? When a start-up business enjoys success via pop-up, that’s awesome – it suggests the concept may have potential as a permanent. But if the next logical stage is to expand and settle into bricks and mortar…it’s worth re-assessing the whole business model before making those new commitments. What starts out as nutty pop up concept just might not translate to a flagship store and additional locations, staffing etc. And if the business has been doing well for a couple of years, riding the wave of popularity in a growing industry… look closely at how that industry is doing, before leaping ahead (if competitors are failing, be wary of committing to a fading fad…)

 

 

#source :     SmartCompany.com.au / Nuts About Tella landlord dispute

*source :      Facebook / Nutsabouttella

^ source :    The Advertiser / reopening of Doughnut Time

% source :   News.com.au / Doughnut Time forced to close stores

@ source :  SHM.com.au / Max Brenner sale

 

 

images :    Google Images / Nuts About Tella, Doughnut Time, Max Brenner

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