The Second Cup Ltd. just announced the beginning phase of its exciting new strategy, which is designed to raise franchisee profitability and satisfaction levels while enhancing overall company performance. Ms. Alix Box, The Second Cup's CEO and President, issued the news along some details about the plan, including notes about its organizational streamlining and changes to the company's economic model for franchises.
A part of Canada since 1975, The Second Cup Franchise currently operates over 350 locations throughout the country. When the need for revitalization became apparent after a thorough review of the organization, The Second Cup Franchise responded by forming an action plan to reduce overheard and company size. Coffee Central, its main office in Mississauga, Canada, has been trimmed from 77 to a total of 53 employees for more focus and unity in vision. The move will induce a one-time cost of around $1.5 million, largely due to severance packages, but will save the company an estimate $2.3 million per year hereafter.
According to CEO Box, The Second Cup has previously shown it operates more efficiently with a smaller central office staff and less overhead. A smaller staff will allow the Coffee Central team to return to the company's roots and provide faster and better quality service to franchise business owners.
The annual $2.3 million dollars in savings will be redistributed to franchisees to increase profitability by an estimated $14,800 per location on a yearly basis but will have no effect on operating income, according to The Second Cup's management team. Franchise business owners will realize this increase in the form of co-op marketing, savings on procurement and decreased royalties.
CEO Box noted that the franchisees are truly the backbone of The Second Cup franchise, which is why these moves are necessary to rebuild trust and encourage new franchisees to join the family. Hamilton franchisee Terry Lee and Edmonton franchisee Ada Pescott, both Second Cup Advisory Council co-chairs, strongly echoed Box's sentiments.