We talk about the transition from corporate sales rep to business owner, building relationships, finance and sourcing expertise. – Benjamin Fernandez / Georgia on Tennyson.
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Ryan Jennings: This is the Ryan marketing show and you are listening to episode 4 of 100.
Benjamin Fernandez: Are you even in the industry?
Ryan Jennings: Just got into the interviewing game and you are interview number 4.
Benjamin Fernandez: That’s my lucky number.
Ryan Jennings: Introduce yourself.
Benjamin Fernandez: I just really loved coffee and I kind of made it into a business.
Ryan Jennings: What did you do before this?
Benjamin Fernandez: Sales.
Ryan Jennings: Selling what?
Benjamin Fernandez: Energy drinks to kids.
Ryan Jennings: So you’ve come from a really ethical background.
Benjamin Fernandez: Now I sell energy drinks to adults so it’s a good transition.
Ryan Jennings: Are there particular similarities between the two that you are drawing up on with your experience on Georgia on Tennyson?
Benjamin Fernandez: There’s actually heaps of learning experience from the company I worked for.
Ryan Jennings: Where was that?
Benjamin Fernandez: A good company; Frucor beverages limited part of Suntory group, a great company learnt heaps and applied loads of what I learnt through those guys here. So they got some good systems in place I left on good terms. I think if I had left to go work for a competitor it would’ve been a downer but I think because I was leaving to go do my thing it was quite positive thing.
Ryan Jennings: Did you learn more from what you did on the job or more from training courses or development courses they put you through while at Frucor.
Benjamin Fernandez: Probably there’s a bit of everything there’s a lot of stuff that you get taught how to do and there’s a certain systems that you are encourage to employ there’s a certain methodology to sales and execution and follow through and closing and if you follow these systems the likely hood of you getting your ultimate result is that much higher and a lot of it for a lot of people is quite natural and for a lot of people you really have to work at it. I think I could do it a little bit but what I learnt when you apply it that’s incredible. I was at a stage where we were coaching for the new generation of sales reps coming through. So my manager would be coaching me and I would be coaching X guy or girl. So you had this sort of intrinsic system where you are encouraged to expand and share your experiences and what works for you and when you’ve got a team of 6 people everyone has a different approach no two people do things the same and some shit that work for other people may not work for me and vice versa. But there was heaps to be learnt from a team like that. you just take it on board and you try it and if it works for you, you keep doing it.
Ryan Jennings: What are a couple examples from Frucor the sales side that you learnt from your manager took on board as a part of what you then taught to your sales department?
Benjamin Fernandez: Yeah so what we were doing the channel that I worked on last before I left was very much relationship based and impressions were a big part of that. so from the get go my manager was like look this is going to be challenging because my predecessor had left a huge mess so there was probably almost a year of cleaning up and then we started doing business and so it was trying to turn the Frucor story around from what was negative to flip it and change peoples’ perspective of the business ultimately their perception of you, you’re representing the business if you do a cropped job the whole business is looked upon in a negative way and it’s really critical. I only realised from being in that position just how critical those people are to the business. So I think what I learn early was a really good saying from my manager it was somewhere on the lines of the ass that you’re kicking could be the ass that you’re kissing tomorrow. So treat everybody well from the guy that’s putting the fucking veggies on the shelf to the manager to the car patrolling guy .
MINUTE 5 AND 4 SECONDS
Benjamin Fernandez: Become as the guy that is nice to everybody like it’s reciprocated for the most part that was good learning.
Ryan Jennings: So that’s two things there; an organization that’s negative you’ve got to get to neutral before you can move into positive territory to then start the sales process and part of that is building those relationships regardless of whether there’s an end goal of selling with the hope or expectation that by giving over a period of time that eventually there will be some receiving when they’re ready they’ll reciprocate.
Benjamin Fernandez: It’s like you have to prove yourself to those people there’s two distinct models for the supermarket industry on a whole I guess. In New Zealand you’ve got the progressive model which is company owned and they’ve got multiple sites so obviously very competitive with Foods stuff which is owner operator. You’ve got owner operators trying to compete with big companies like progressive one huge very powerful business. It’s tricky because there are certain things that happen like an accountant manager that deals with the guys at Progs they have an entire programme and calendar of promotional activity if you like that sort of information you can’t share with anybody at Foodstuffs because that information is really critical. It’s hard too because you have almost more loyalty to these operators who are tough sometimes and it’s a really competitive environment. It’s like Kiwi owned versus Australian owned and you’ve got the big versus the little guy for the most part and a lot of the business you do is with these owner operators, a lot of the time deliberately I tried to deal with the owners wasn’t as pleasant as you think sometimes others are on the floor everyday filling shelves, talking to customers and these guys are like super successful guys and then you got some owners you might see once every six months. So you get a lot of variety so I only had probably 7 supermarkets I dealt with and they all had very different opinions on how their store should be run even if they came on a bigger, better they all have their own little ways and they’re always kind of digging for information and it’s so competitive.
Ryan Jennings: To go along the relationship building side were there processes identifying the decision makers; the influencers, the champions were there a particular proprietor standardised sales model that was not only followed on but that they reported on to show progressive and if there wasn’t revenue because every day you were rebuilding relationships?
Benjamin Fernandez: You can’t really quantify relationship builders you can’t go I made X amount of sales because I dealt with this person it’s not that straight forward. There was a big part of mentioning that role was the reporting piece showing that there were things that were being put in place with the view to succeed in the future and it was great from my perspective now being in business I have a really good understanding of why these systems are in place. But you’d get the odd person that might go to the day or 2-day long course on sales and they just sit there and take the personal day they don’t really give a fuck. But I made a point of listening and writing stuff down because I know that eventually I wanted to do my thing and a lot of the stuff was really transferable and that’s free obviously it’s in the interest of the big business to make sure you understand and that you apply it but a lot the stuff is really useful day to day like just in your life. So I was definitely thankful for that.
Ryan Jennings: Moving then to Georgia on Tennyson is this your first business as a such?
Benjamin Fernandez: Yeah, first go.
Ryan Jennings: And what made you move in to coffee?
Benjamin Fernandez: So I have history in (inaudible@09:47) I studied (inaudible@09:49) I’ve done some really cool establishments overseas while I was away and just having a passion for coffee I love it and I’ve always had it and always had in my mind that I have to do my thing eventually I think. I sort of think back and when we were first thinking about actually doing it.
MINUTE 10 AND 2 SECONDS
Benjamin Fernandez: We’ve got three kids and a mortgage and a life to support and thinking back I felt nervous when we made the decision well it makes me feel nervous now and anxious to thinking about what we were doing at the time and actually doing it putting your balls on the blood chopping block and actually quitting your job and doing it. It was like a big deal and pretty nerve wracking but I think looking forward it was only going to get harder for us so boys were going to get bigger, boys going to get bigger need a bigger house a bigger loan. The dream of doing something like this would’ve just gotten further and further away and we just like let’s have a go and it’s actually working which is pretty cool.
Ryan Jennings: So you made the decision to move, where did you start where were you going to open up, what were you going to do? Where did you get that inspiration or who was your team around you? Was it all Bennie?
Benjamin Fernandez: My wife for the most part, I always had the idea of what I would do if I had the opportunity so that’s always been there so because I did that whenever I would go anywhere or travel somewhere or go to a new place or see something different I’m always making notes and I find it hard to just go into a café because I’m always looking at how they do stuff and how the food looks and how the flow and where the door is and how the sink looks. Yeah I’m constantly analysing cafes.
Ryan Jennings: So you’ve kind of being in this journey for a while watching in the background looking at places and saying I like that I don’t like that. So building the picture was a little bit easier then, what was some of the big decisions where you knew ok this is getting real now?
Benjamin Fernandez: So obviously it all kicked off when we signed the least here so once we signed the least it was like we’re in. So getting to that point was also tricky because and this is the old adage of location, location is actually true we looked for probably 8 months before we found something suitable. So there were a few boxes to tick we had two sons we had to be in a building where it wasn’t going to be too complex and it wasn’t going to be a bunch of demo and (inaudible@12:31) like this was good this was like a blank canvas. Location as far as proximity to people who spend money on coffee without even thinking about it. So we’ve got lawyers across the street and real estate agents we’re kind of in a nice hub here because we kind of transcend the really high quality retail in the form of medicine and Alex; Alexander’s and you’ve got all the working types as well, so you’ve got a real nice mix and in the same breadth I wouldn’t have gone any further down the street because I think you start to get a bit risky so you want to be a destination but 50 metres for people top want coffee is enough to make them not to want to go there. you would have to have a really exceptional offering.
Ryan Jennings: So because of the type of business that you’re in location is that granular.
Benjamin Fernandez: It’s so important dude.
Ryan Jennings: So I do remember before you opened up and this was happening thinking there’s so many good places that you’re opposite. There’s a review by David Burton that there are so many good cafes we don’t need another. So now of that put you off or dissuaded you.
Benjamin Fernandez: I think that I had a pretty good feeling about what I was going to do. I mean the feelings are great but at the end of the day it could’ve easily just gone the other way and we could just be easily be having a conversation about liquidation but I felt confident enough in our model and what our offering was going to be. Even now we’re still different there’s even a couple of three new places that have opened since we opened and we’re still different and I’m glad to see that this model worked. I can’t imagine that it will forever but I imagine people will see this working and be like that works and maybe look to replicate it I don’t know. I’m glad that they haven’t yet because we’re still getting a nice foothold for what we do being a little bit different and maybe the quality being a little better and lore consistent.
Ryan Jennings: Can you share here anything on the numbers side of it like how many customers do you need to make more things start to float? Once you start break even, how much do you need in a great location?
MINUTE 15 AND 8 SECONDS
Benjamin Fernandez: It’s definitely subset numbers I guess they would all vary depending on your fixed overheads as far as rent and the stuff that you know more or less is going to cost you. We set out some projections without accountant well before we even signed a contract which was probably the most useful thing we could’ve done. But even the advice was make sure that this is what you really want to do because ultimately there is already a lot of offerings but at the same breadth we had done our homework I felt strongly enough that we had done what we needed to do to make sure that it was executed correctly but as far as breaking even point I don’t know if we did the right or wrong way but we kind of loaned the business a certain amount of money and we had a lot of assets that we passed onto the business so all of that combined. So we were able to take drawings more or less from the beginning in the form of repaying that loan if you know what I mean and that has it’s benefits from a tax perspective after a year we starting to see depreciation on the assets and then after a year that all start to come into play. So the way that we structured the loan and the way that the assets were passed onto the business was also quite deliberate but we are well ahead of what we expected as our projections so the easiest way to get to that for the first 4 or 6 weeks we had targets that we kind of aiming for and we’re still now smashing what we had predicted and the easiest way to kind of visually see this is by the amount of milk that we’re using so we’re using almost twice as much milk as we thought that we would we talked to our supplier about how much milk he thinks we’re going to use because they’re not big, they’re very niche like super premium quality milk and they have to then talk to the farmers. So we’re pretty well exceeding our projections still which is great. I think most (inaudible@17:47) business the 3 year mark is when you start and we’re doing significantly better than that now. I guess things have fit out where we’re pretty frugal with the (inaudible@17:54) we’ve done ours in a way that it’s going to last and it’s good quality stuff. We were clever about how we sourced things and the deals that we strike with the (inaudible@18:07). We made allowances and luckily got some great concessions, great concessions so we’re pretty lucky in that respect.
Ryan Jennings: I see you’ve got great support from the suppliers you’ve deliberately gone out loading out the capital side of that and taking some of the personal assets and putting it in the business and then paying yourself first, you paying all those loans which is a tax efficient way of doing it. Was that something that you came up with or did your accountant help you with that?
Benjamin Fernandez: Definitely the accountant so we’ve been originally being told that when we first start out maybe talk to a tax agent which will deal with your end of year stuff and also your GST end of year stuff but then we kind of looked into it and talked to a lot of people and that’s what we probably did well as we floated these ideas and their ideas with many people as we could.
Ryan Jennings: So you didn’t keep it a big secret?
Benjamin Fernandez: Number
Ryan Jennings: You’re trying to get the ultimate answers from the experts.
Benjamin Fernandez: That’s the thing we talked to people that were in the industry not necessarily here like the guys at Flight Coffee for example those guys were awesome. Those guys have done such a good job and they’ve built a super-premium brand out of nothing.
Ryan Jennings: They’re coming up on the show actually a few more episodes with Richard Corney.
Benjamin Fernandez: He’s such a good dude and even those guys we’re getting set up as far as our systems what they should be and what worked best that sort of stuff you can’t buy that sort of thing. Again it is as a result of good relationships I think. But I think as far as the financial we finally decided to go with an actual accountant for the factor we’ve never had a full entity business before.
MINUTE 20 AND 7 SECONDS
Benjamin Fernandez: There was so much to learn even to the point where we actually contacted the IRD and they put on seminars in the big cities. Every month they have a seminar you can go they don’t do that here because we’re not very big. So they sent someone from IRD to our house and we had like a 3 – hour meeting about effectively the dos and don’ts which was great so we took that and we went to our accountant and we were like this was what the IRD said what do you think about this? And that’s where it all kicked off as far as the most efficient ways for us to do what we do and keep the tax based not at bay but certainly manageable and that helped so that was definitely a good move.
Ryan Jennings: It sounds that gave you not only the confidence to use some of your time to focus on but how did you get the word out from the day you opened how did people find out about it?
Benjamin Fernandez: How did they? I still don’t actually know we got everything we needed we got done the joinery it was finished. The last thing was to get the tick from the environmental health so we got the tick from environmental health like 11 O’clock on 21st of July and then we opened the doors. So the first couple of days was really quite man like if we did 2 dozen coffee in those first two days I’d be surprised and that was pretty nerve wracking and what I did quite deliberately before we opened when we first took on the least I kind of approached most of the local business and said this is what we’re looking to do and this is when we’re looking to do it. Would you support something like that and everybody was like yes absolutely so I think.
Ryan Jennings: So you went door to door and saying here’s the plan before you even opened the door.
Benjamin Fernandez: Yeah before we even signed the least.
Ryan Jennings: So building a relationship with the people that you expect to be your customers.
Benjamin Fernandez: Yes. So looking back it’s probably the best thing that you could’ve done. It’s one thing for people to turn around and say yes we’ll support you but then you think of coffee as a commodity for people that’s so habitual to break people’s daily habits is virtually impossible unless you’ve got something very special and very different to break that cycle. You go to the car park to park your car you go to the coffee shop to get your coffee and you go to work. So I was very conscious of making the most of that trial so there’s always going to be a trial and there’s always going to be people drinking coffee. I don’t know where they used to drink it but they drink it here now so the idea is that if we can break that cycle once then it’s a big thing. So we had to make sure that we executed so well that it would be memorable and make them come back. That was really important.
Ryan Jennings: I think that was an important message to get across is that first time for a customer is the hardest the second time is the second hardest but from the third onwards it get easier and easier. I think you’re right although coffee is a commodity experiences aren’t and it happens in the morning so psychologically are almost impossible evenings are different but certainly in the morning trying to change some ones breakfast is hard. Or which order they shower, shave and use the tooth brush so all credit to you for actually breaking that for the coffee drinkers out there.
Benjamin Fernandez: Thanks man.
Ryan Jennings: So where too from here, more cafes or you’re going to something else? Or you’re just at the start of this journey there’s plenty more growth in Georgia on Tennyson?
Benjamin Fernandez: I think so, I think there’s room for growth here talking about this side in particular there’s always more opportunities like even now since this little piece has gone on outside we’re getting fresh faces as a result so we’re getting people coming and going wow did you just open? No we’ve been here like 6 months.
Ryan Jennings: You still have people coming in for the first time?
Benjamin Fernandez: I think that we’re little bit incognito with the fact that there are certain requirements when it comes to being in a heritage building. So you can’t have shit ton of flags and signs saying this is a coffee shop come and have a look. It has to be in keeping with the building, the Art Deco Trust has to sign off anything that happens in these building so having that out there has made us more visual and more prominent I suppose.
Ryan Jennings: So by having actual seating is kind of a contra hedge against not being able to brand the place.
Benjamin Fernandez: Yeah which is huge for us and like I said we had new faces before or at the start of the holidays last year that we’re seeing again this year.
MINUTE 25 AND 6 SECONDS
Benjamin Fernandez: So we’re maintaining that standard when we are getting new faces we are seeing them again so that makes me feel confident that our execution is still good as good if not better than when we started if we’re getting that repeat. So that’s great, that’s fantastic. So as far as the model here this kind of model is unusual here we’re obviously not a café, we’re not food we’re about the coffee, coffee first with some nice food offerings but it’s literally a really simple model. We’ve tried to really pair it back and keep it as simple as possible as far as the layout the way we deal with the suppliers the way we have our coffee machine grinder setup. We’re trying to get things as automated as possible to get that repeatability. So with a longer view to have Georgia on something else, Georgia on Queen Street, Georgia on Queens Town so we’ve deliberately built the model to work with systems so we’re working on these systems in the background while the business is happening to effectively build something that can be pumped elsewhere without too much trouble.
Ryan Jennings: So from day one standardising all your systems and processes keeping it as simple as possible so it can spread out and thinking about the brand and being able to expand that brand in similar but different ways and in different locations?
Benjamin Fernandez: Exactly so that’s key and that’s been the idea from the beginning so being able to take the brand and build the brand as well as trade and do business has been really important. Even the fact that we hand stamped the cups with our brands unless you buy 50,000 cups from China you can’t get a branded cup. So we will stamp every single cup to make sure that our cups are out there with our brand. There’s so much value in that brand and coffee cups are like mini bill boards. I think if you do lots of little things it makes immediate association so they are like I know that brand where have I seen that. So that’s good and it seems to be working people seem to connect well with it. It’s not intrusive or in your face it’s quite subtle and classy. But that was also a part of our brief quality and longevity and class those sorts of words we wanted to associate with our brand right from the beginning. So it’s been a work in progress for sure.
Ryan Jennings: Well I look forward in seeing where you’re going to take Georgia as a brand and Georgia on Tennyson of course is one of my local cafes probably almost my favourite.
Benjamin Fernandez: I like that probably, maybe, almost.
Ryan Jennings: I have a cup from one in the morning and in the afternoon.
Benjamin Fernandez: I think you do and you need to I don’t expect to be an exclusive bar for anybody that’s the thing. I think some places hedge their bets on that a bit too much on that effect that they think that you’re going to get your business twice a day every day and if you take that approach I think you’re playing with fire because people like to mix it up like I like to mix it up I don’t just go to one bar when I go for a drink. I want to go to 6 different bars, there’s certainly a certain amount of loyalty but depending on how you feel you’re going to go to different places depending on your mood you can’t expect 100% loyalty ever now the way society is there are so many good offerings out there. Thanks Ryan.
Ryan Jennings: Thank you Bennie; this is the Ryan marketing show episode 4 of 100 CEO interviews.
Benjamin Fernandez: Nice, thanks man.
MINUTE 28 AND 53 SECONDS