Franchise Spotlight: Grocery Stores
Featuring IGA, SPAR, and 7-Eleven, this franchise category boasts some stellar retail brands.
Many of Australia’s leading grocery chains offer aspiring and independent convenience store owners the chance to run a grocery store under a globally renowned brand. But while this is done through the franchising model, it’s often not exactly franchising as we know it.
Indeed, IGA CEO John Ross once told Supermarket News that “we’re not a franchise, there’s no percentage of sales” paid to franchisors. Instead, IGA and other grocery brands generate revenues by supplying stores, including with their own-brand ranges.
Franchisees also typically have the freedom to choose which product lines to stock, among other things. For instance, FoodWorks, which has more than 400 outlets in Australia, says it does not “explicitly tell you how to run your business,” while providing “the tools, support and services you need” to succeed.
This gives store owners many franchising benefits – including ongoing support and lower prices born of economies of scale – with fewer constraints.
Grocery franchise analysis
With more than 1,400 stores throughout Australia and operating in 30 countries, IGA is the country’s largest grocery franchise brand.
7-Eleven is also a major player, with more than 670 stores – 470 of which double as petrol stations. The brand, which also operates in 17 countries, offers prospective franchisees 24/7 support and a minimum profit guarantee.
SPAR, meanwhile, which has more than 150 outlets in Australia, promises franchisees a potentially multi-million dollar annual turnover. Established in 1975, NightOwl has 80 stores in the country and claims to be its first 24-hour convenience retailer.
As well as take-home groceries, these brands can generate revenues through on-the-go sandwiches, snacks and hot drinks, tobacco, lottery tickets, money transfer services, public transport tickets, ATMs, parcel lockers and automotive fuel.
This analysis, and the fact that food is the ultimate non-discretionary good, suggests the sector’s future is bright.