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Two weeks after briefing Brooke and Brian on her plan to expand into Florida, Jinnie was on her way home from a day in Crawley where she had been catching up on SuperBurger and DKL business when her mobile rang and the car’s infotainment system announced, ‘Brian calling’. Jinnie pressed the ‘Talk’ button on the steering wheel and said, “Hello Brian, how’s Florida.” “Hot and incredibly humid,” said Brian, “I couldn’t live here; it looks good for a holiday but after two or three weeks I would be drained. Anyway, that’s not what I wanted to talk about. We have been talking to a few KFC franchisees and have discovered something interesting. They have all said the same thing; it is horrifyingly expensive to buy a franchise. But if you can scrape together the money, it will pay you back pretty quickly.”
Brian continued, “The average cost of setting up a new franchise in the US is reckoned to be over $3 million and KFC won’t talk to a potential franchisee unless they can pay a $45,000 up-front fee and have an unencumbered $2 million. The average franchisee pays over $2 million for the land and building, but they make a decent living. Annual turnover is about $3 million and 5% of the gross profit goes straight to KFC in royalties. Then they must pay for staff, supplies, loans, etc., but the owner is said to make around $200,000 a year. This is why so many franchises are taken by corporations; few individuals can afford the up-front costs.”
Jinnie replied, “But we haven’t found that in the UK, Caribbean and Canada. We have very few franchisees owned by corporations. I know some of our franchisees have 2 or 3 branches, but they are hardly corporations.” “That’s because of a number of things,” replied Brian, “we really have a different model. Our up-front fee is £25,000 and that includes branch design and all point-of-sale equipment including initial uniforms, and the likes of straws, paper cups, packaging and signage. In fact, everything they need to open the branch. Of course, the franchisee is responsible for the building and kitchen equipment, but most of them lease the building and buy the equipment on HP, but we do the fit-out of the restaurant for them. We make our money from resupply of supplies, including chicken and a 5% royalty, but we charge it on net profit, which means the franchisee is much better off.”
Brian continued, “I have just been talking to a KFC branch owner in downtown Miami, he had a large branch and was happy to chat when I said I was interested in opening a franchise, probably in Tampa. His first words were ‘Don’t bother even approaching KFC if you don’t have access to $3 million’. I said I wasn’t looking at spending anywhere near that amount. He said, ‘Well, land and building costs must be a lot lower in Tampa.’ I said they were about the same as Miami, but I was not looking at KFC, but a new chain that was opening in Florida. He said every so often someone thought they could take on KFC, but they had all failed to get past a single branch and often quickly failed. I said but this was an overseas chain that already had over 220 outlets and would have another 100 or 150 by the end of the year.”
“His reaction was to say, tell me more,” added Brian. “So, I started telling him about our model as if I was a potential franchisee. After a few minutes, he reached for a paper napkin and started making notes. Then he pulled out his phone and started plugging numbers into its calculator. He got a final number and wrote it on the napkin and whistled before saying ‘On these numbers I would be making half a million dollars a year and I could easily afford to open a second franchise and live better than I do now’. I said that was my plan, to own a few branches. By now he was really interested and said his bank loan was paid off next year and even then he wouldn’t be making that much money.”
“Then he asked me if the product was similar, and I said yes but it is a little spicier, as preferred in the Caribbean,” said Brian. “He liked that, saying that many of his West Indian customers found KFC a touch bland compared to the Caribbean version. Anyway, he asked where the nearest outlet was where he could see and try it, and I had to say I had tried it in England but the closest was probably Jamaica. That didn’t seem to faze him as he asked for a contact, and I said I was dealing with the Head Office in Barbados and gave him Monica’s number. As soon as I got out of the meeting, I rang Monica and warned her he might ring her. Of course, I had to let her in on the project, but she can keep a secret.”
“That is interesting,” said Jinnie, “do you think the branch owner will talk to KFC.” “I don’t think so,” said Brian, “he knows that KFC are making a lot of money out of him, and they would try to shut us down immediately if they knew. If we do start up, he could be making much more money if he opened an Aunty JoJo’s. I think he is a serious player. As I said earlier, both Brooke and I have made a point of visiting maybe a dozen KFC outlets and I have got the same impression from all of them, they were making money, but it was hard to get the money together to set up a franchise. I think that could be our USP, we are a cheaper franchise for individuals to get into and you will make more money, more quickly.”
***
By the time she had arrived home, Jinnie had been replaying the conversation with Brian in her head and decided that she was on the right track. However, she was a little worried about getting a supply of chicken as KFC seemed to have contracts with all the big producers. It might be a problem if they set up franchises and a processing plant but then couldn’t get a supply of chickens. She said hello to the twins, Larry and Izzy, and headed to her garden office to chat with Brooke. She caught Brooke having a late lunch in a Denny’s and asked how she was getting on with sounding out processing plants, chilled delivery companies and other suppliers. Brooke told her that she had spoken to several processing plants and had decided on one she particularly liked, she described it as working to standards well above US standards, more akin to UK standards, and had quite a lot of spare capacity. At the moment, they mainly supplied independent restaurants.
Next, Brooke had talked about chilled delivery and had suggested setting up their own company as she couldn’t find anyone who delivered to the whole state who was interested in talking. Jinnie suggested she talk to the Canadian team who were doing a pretty good job. Brooke added that she had also been looking at everything from paper straws to kitchen equipment and printing of menus, saying she had little doubt it would all be readily available. Finally, she got round to talking about chicken and explained what Jinnie had worried about. The market was dominated by 5 or 6 big companies and they all had contracts to supply the big chains, especially KFC and Chick-fil-A. It would be easy to apply pressure on the suppliers to squeeze an embryonic Aunty JoJo’s out of the market.
Brooke continued, saying that there were some small producers that would be OK for starting up and if they were to contract with 2 or 3, they may be able to support 60 or so outlets across the state. Jinnie had thought for a moment and said, “How about we work with a small producer to grow bigger?” “That could work,” said Brooke, “but most of these companies are what they call here ‘mom and pop’ operations and have found a niche that brings them in a decent income and a big expansion is probably beyond them.” “I see a few solutions to that,” said Jinnie, “we find a young, energetic producer who we can team up with, we buy up a ‘mom and pop’ operation and put in our own management or we start up an operation.”
“I am yet to come across anyone young in the small businesses,” replied Brooke, “when ‘mom and pop’ retire or die the business passes to the family who usually dispose of it, we could set up our own business, but that could be expensive, and I would worry about getting the permits and regulatory approval. It would be easy for an established producer to make life very hard for a start-up. I favour buying an existing business as it would already have all the paperwork, and we could run it to our superior standards and advertise it as such. We have the animal welfare people in the UK onside, no reason why we can’t do the same in the US. It would make a great advertising point. You know the sort of thing ‘All our chickens come from our own farms and are raised to standards well above federal standards’.”
“Yes, I like that idea,” said Jinnie. “Can you concentrate on costing buying a chicken farm or two and organically growing them, the cost of setting our own distribution business and say four in-house branches, Tampa, Miami, Fort Lauderdale and Palm Beach in longish leased property, say 5 years with an option on another ten years. I also want an idea on setting up a franchise business and if our franchise model will work in Florida, I think Brian is looking at that part. Oh, and look for some local offices in say Tampa, get a cost for a ten-year lease on the spreadsheet. Having spoken to you both, I think we are pretty near a go decision, it all depends on the final costings. I want to send you a bit of help to get this moving quickly, I get the idea that someone from Procurement might be useful, and I think someone from Legal should be out there setting up the Bearcat infrastructure. It doesn’t cost much to register a few companies even if they are never used. I will also talk to Jack Baker; I want someone from his transport business down there to help you.”
***
It had been Jinnie’s morning to drop off the twins at school that Tuesday morning, and when she got to the Potters Bar office, Brian was back behind his desk for the first time in well over a fortnight. He looked up as she walked to her office and stood up. Before she had managed to sit down at her PC, he dropped a plain cover folder on her desk and said, “I think you will like this, it’s the final report on what Brooke and I called Project Olympus, just so we could talk in the hotel restaurant and bar. There are only 3 copies, this one, one locked in my office safe, and Brooke has one. The only other people who have any idea about it are Lee from Procurement, Scott from Legal, Monica, Jack Baker, Pierre Bouchard, and Belinda who put in a bit about cost of outfitting a branch and offices in Florida, but none of them know the full story.”
Janet arrived with Jinnie’s coffee and asked if she should also bring Brian one. Jinnie said, “I think we could be some time, so yes please, if Brian wants one.” Janet was quickly back with the second coffee and Jinnie said, “Please close the door and tell anyone who calls or wants me I’ll get back to them once out of this meeting.” With the door shut, Jinnie said to Brian, “I think we need to bring Brooke in on this discussion,” and hit the button labelled Brooke on her desk phone.
Brooke answered after half a dozen rings and said, “Hi Jinnie, sorry I was on my mobile, but the desk phone showed your name, and I told them I had to take this call. So, I guess you have seen our report.” “Strictly speaking, yes I have seen the report, but I haven’t read it yet,” replied Jinnie. “I only just got in and Brian just dropped it on my desk. My first reaction is it is a lot more substantial than I expected.” Brian said, “That’s because we wanted to cover every angle we could think of.” “Hi Brian,” said Brooke, “I take it you are on speakerphone. Anyone else there?” “No,” answered Jinnie, “and that wasn’t a criticism about it being substantial, it just took me a little by surprise, you only got back yesterday.” “We wrote most of it while still in Florida, on Brian’s laptop and he emailed me a final copy last night,” said Brooke.
“Right oh,” said Jinnie, “let’s go through it together and then I can ask questions.” Jinnie opened the folder and found it start with an Executive Summary. It explained the purpose of the report, summarised what they had found, gave an overall costing of setting up in Florida with 4 company-owned branches of $29.4 million and recommended that the project should proceed on the basis that those 4 branches alone would return an estimated full-year profit of about $600,000 net each. However, franchises were where the real income stream lay and it came in the form of sales to each branch of everything from chicken pieces to the containers to sell them in. Plus, it included the 5% royalty on the net profits.
The report expected each franchised branch to contribute around $350,000 a year in margins on sales of supplies and royalties. But this still left a fat profit for the franchisee, estimated to be substantially more than from operating a KFC branch. The summary detailed the cost of purchasing and running their own chicken farms, the annual costs of chicken processing by paying on a per bird basis to a third party or by owning a plant capable of handling sufficient bird to supply 100 outlets (which was included in the total set-up sum) and starting a chilled distribution business.
The Executive Summary suggested a target of 100 outlets by the end of the first year, of course few of which would have made anything like a full year’s contribution to the accounts, but the report suggested that the business would lose around $9 million dollars the first year. But by the second year, with another 200 outlets, the business would show a post-tax profit of about $20 million, even after ploughing money into expanding the chicken-rearing farms, the distribution business and the processing plant. The summary concluded that this represented a huge business opportunity that should be invested in immediately.
Jinnie asked, “I suppose we can afford this level of investment.” “Yes,” answered Brian, “I think we might have to prioritise it over other areas of internal investment, there is clearly a much wider profit margin to be made here.” Jinnie said, “We have a reinvestment programme plotted out for the next few years; would you really want to abandon it. We know our existing business is growing organically at around 10% a year which is pretty good. Would you be willing to risk it on this venture. Have you looked at borrowing the money over and above what we have available.” “I thought you were against bank borrowing,” replied Brian. “I am,” said Jinnie, “but as you know I could make a director’s loan to the company if necessary, I have always got my money back. Although when some loans have been interest-free, the tax man can get a bit iffy, so it’s better if I charge a very low interest rate and then get the benefits of growing the company and getting a bigger dividend.”
“Right,” said Brian, “I haven’t worked out exactly where we will stand financially if we go with the project, but I don’t think we will have to borrow anything. We should have three hotels adding to our income shortly and we seem to be adding 4 or so Aunty JoJo’s a week worldwide. I am pretty sure we will have no cash flow problems; I was just looking at a worst-case scenario, but I will keep your offer in mind.”
“Jinnie, I wanted to add a few things that may not be obvious on a quick reading of the report,” said Brooke. “We have identified the first chicken farms that we think we could purchase and, more importantly, expand as we grow the number of outlets. But I worry that we may ultimately need several such farms. Pierre was pretty good; he really knows his stuff when it comes to chilled transport, and he wrote and costed most of that bit of the report. Then there is the processing plant, I really think we should take the Canada option and purchase a plant, again one that is expandable. But I think we should be looking at a huge plant, one that could service the whole of Florida and Georgia, maybe even Alabama.”
“You are already looking at Georgia and Alabama,” said Jinnie. “Not yet,” said Brooke, “just doing a bit of forward planning. If we sited the processing plant in the north of Florida, say Tallahassee or Jacksonville, we could serve both Florida, Georgia and Alabama from one central point. That’s ultimately 300 branches in Florida, 160 in Georgia and 90 in Alabama. I suggested this to Pierre, and he said the road system favoured Jacksonville, but if we ever go into Georgia and Alabama, he would look for a distribution hub in Atlanta.”
Brooke continued, “One other thing, setting all this up from scratch is going to be extremely complicated. We will need those offices we talked about up and running first so we can organise things locally. We can’t open any branches until we have a regular supply of chicken, chips, wraps, even customised packaging. Then we need the prep plant and the distribution system in place. But we also need the supply of chickens, and it’s a lot of chickens. Our average branch sells around 1500 pieces a day. That’s about 167 chickens, and then you need to add in the nuggets, tenders and other bits and pieces, so let’s say 200 chickens a branch, so that’s 800 chickens a day for four shops. The chickens we use are between 5 and 6 weeks old, so we need to start them off in batches 5 weeks before we need them at the processors. If we have one big plant for Florida, Georgia and Alabama that serves, say, all 550 outlets, so we will need to be able to produce and process 550 x 200 chickens, that’s 110,000 a day, 7 days a week, 365 days a year. That’s an awesome number of chickens to raise, process and ship.”
“I realise we are pushing things,” said Jinnie, “but if I didn’t think we were capable then I wouldn’t have suggested it. Is there anyone in our organisation you think could run the American business?” “There is only one name in the race as far as I am concerned,” said Brooke, “it has to be Monica; she knows the Aunty JoJo’s business inside out and she is smart.” “I agree,” replied Jinnie, “but do we leave her with the Caribbean operation as well?” “I don’t see why not,” replied Brooke. “She has a very able deputy who can run the Caribbean business, after all, it is mature. My suggestion would be to get her to run the American company which is divided into the Caribbean arm and the US arm. We already have the Caribbean company set up as individual companies for each island under Aunty JoJo’s (Caribbean), why not do the same with Bearcat in the States. Bearcat (USA) Incorporated as the master company, with a company per state, say Bearcat (Florida), trading as Aunty JoJo’s (Florida). Then the processing plant, farm or farms and distribution all follow a similar set-up. Then we have a company over Aunty JoJo’s (Caribbean) and Bearcat (USA), which is where Monica sits as President or Managing Director or whatever the head of the company is called wherever it is registered. Let’s call it, say, Bearcat (Americas).”
“And where does this all sit in the current divisional structure?” asked Jinnie. “I see it exactly where the Aunty JoJo’s (Caribbean), Aunty JoJo’s (UK), Aunty JoJo’s (Slovenia) and Bearcat (Canada) currently sit, under the Fastfood Division,” replied Brooke. “I have a small problem with that,” said Jinnie. “If we do that, we could land up with an enormous fast-food division if we expand into a lot of states and into other countries like Australia, the Philippines or France.” “Then I suppose we could always have a Bearcat Foods Division,” replied Brooke. “I have been sketching out this family tree as Brooke has been talking,” said Brian, “and I like it. It makes sense financially. We have lots of limited companies, and if one fails it is isolated enough not to bring a load of others down. I think we should add this to the board presentation.”
“Right,” said Jinnie, “I’ve decided, we proceed with a Project Olympus presentation to the board. Let’s turn this report into a board presentation. We will need to include what Brooke has just told me about chicken numbers. I want to see a project plan with milestones for when we need to have things done by. Brian, has anything we have talked about altered the costing you have come up with? I know we have already got some companies set up in the US. Have we got the right ones for the discussed structure?”
“I also want to get Monica on board with this, she might not like the idea of running a company which has the potential to be enormous, although I doubt it, she has proved more than capable in every position she held in the company. I also think we should hand over Aunty JoJo’s Caribbean to her deputy, this has the potential of being enormous. I think we need her over for the next Group board meeting when we present the plan. I don’t really want to brief her remotely; I would really like you two to be present when I tell her what we have in mind. The next board meeting is Friday at noon, which means I will have to talk to Monica today to be sure we get her here in time for a briefing on Thursday. Can you two have the presentation ready by then and be in the office on Wednesday and/or Thursday to talk with Monica.”
***
Jinnie spoke to Monica mid-afternoon her time, which was mid-Monday morning in Bridgetown. Jinnie told her she had a new project she needed to discuss with her urgently but was reluctant to do so on the phone, as you never knew who was listening. Jinnie explained to Monica that she wanted to present the project to the main board on Friday, which meant that she really needed to talk to Monica no later than Thursday. But if she was on the Wednesday evening flight, she would only be in London on Thursday morning and might not be in a fit state to brief after a night flight. Jinnie added that Brooke should try to get on a flight leaving Bridgetown on Tuesday evening, but if she could get on one that evening she should do so, and she would meet her off the plane. At this very late stage, Jinnie said, “Don’t mess around, go for Virgin Upper Class, you are much more likely to get a last-minute seat with them. Ring me as soon as you have sorted out your travel.”
Jinnie had just arrived home when her mobile rang and Monica gushed, “Hello Jinnie, I’m busy hurriedly packing, I’m on the overnight Virgin flight to Heathrow. Monday is a good day to fly, Virgin have two flights to Heathrow, one at 17:30 and a second at 22:35, which I’m on. It’s scheduled to land at 12:30 at Heathrow. So, I’m not in too much of a rush to get to the airport. Michael is going to give me a lift, so I will lock my car in my garage. Have I got to book a hotel? What’s the weather like, do I need warm clothes; do I need posh clothes for the board meeting?” Jinnie said, “I know you don’t get summoned to Britain every day, but slow down a moment. I’ll be there to collect you when you come out of customs at Heathrow. No, you don’t need to book a hotel, you’re in one of my spare bedrooms. It’s nearly June and that is officially the start of summer in the UK, but it’s nowhere near as warm as Barbados. I think the forecast for the next few days is forecast to be about 21/22°, and it should be sunny.”
“That’s not woolly weather for me, but you might find it a bit cool,” continued Jinnie. “No, you don’t need anything posh for the board meeting, just an ordinary dress or business suit like you usually wear to work. Now, have you booked the return flight yet?” “I’m on the Monday morning flight to Barbados,” answered Brooke. “Excellent,” said Jinnie. “I have sorted out dinner at the Trattoria Trevi on Saturday evening, it’s early so the twins can be there. So, you will need a nice dress for that, but it’s not posh. Oh, Sir Nigel will be joining us for dinner. We are going to my parents for Sunday lunch, and she is doing a traditional British roast dinner: roast beef, roast potatoes and Yorkshire puddings. Dad says he has enough runner beans in the garden for one of the vegetables. There is one thing you might like to bring with you, that is a swimming costume, the twins love to go swimming after breakfast on a Saturday and Sunday morning in Sir Nigel’s pool. Don’t worry, it’s indoors and it is always lovely and warm.”
Over dinner, Jinnie told the twins that Monica from Barbados was coming to stay with them for a few days, as she was going to be working on a special project for Mummy. She added that they all would be going to Trattoria Trevi on Saturday evening and Uncle Nigel would be coming with them. “We like Monica,” Millie announced. “Yes,” said Willie, “she is very pretty. I think Larry will like her.” ‘Damn,’ thought Jinnie, ‘I forgot to ask her if she was allergic to cats.’
In Chapter 18 – The Vineyard
© WorthingGooner 2025
