Using its loaf: why Paul is finally ready to franchise across the UK

By James McAllister

- Last updated on GMT

Using its loaf: why Paul is finally ready to franchise across the UK

Related tags: Paul UK, bakery, expansion, Franchising

Having previously concentrated on the capital, French bakery group Paul is preparing to expand across the country through a franchising model that could see its UK estate double in size.

There can’t be many businesses that are able to say they share a birthday with the Eiffel Tower. In 1889, while crowds were flocking to Paris to see engineer Gustave Eiffel present his now iconic structure to the world, over in the quiet village of Croix in northern France Charlemagne Mayot was preparing to launch his bakery business. More than 130 years later, both the business and the tower are still standing strong.

From humble beginnings, Paul has grown into a globally recognised bakery brand. Having started franchising outside of France in 1985, the group has gradually established a significant footprint around the world and now has venues in some 50 countries spread across five continents. The majority operate under franchise – only in France, Singapore and the UK will you find any company-owned sites.

“Paul has a heritage of franchising,” says Mark Hilton, chief executive of the bakery group’s UK operation. “It’s something the business has been doing for more than 30 years, and it’s been very successful.”

Hilton previously oversaw the Paul franchise in Romania, and joined the UK team in 2019 to help develop the brand here by opening up franchise opportunities outside of its London base. Despite the ensuing uncertainty caused by the Coronavirus pandemic, the group is pushing ahead with its plans.

“The time feels right,” insists Hilton. “We have a longer history of opening franchises than we do operating in the UK market. It is something we’re comfortable with; something that’s familiar to us.”

Building the franchising model

Paul opened its first site on these shores in Covent Garden back in 2000 and has grown steadily over the years. To date it has 38 UK locations, the majority of which are concentrated in the capital – although it also has a handful of sites in both Surrey and Oxford.

With the help of franchising, Hilton expects Paul’s UK estate to double over the next five years.

“The potential for the brand across the UK is very high,” he says. “Initially, you look at it and assume that now would be a difficult time to find franchise partners, as who’s going to invest in a bricks and mortar business when the market remains so uncertain?

“However, we’re really encouraged by what we’ve seen and heard so far. We’ve had a number of positive initial discussions with people who have come to us, and we’ve also approached a couple of prospective partners too.”

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Hilton’s end-of-year aim is to have successfully signed several franchise partners and hopefully launched Paul’s first UK site under franchise, with a view to having a larger pipeline of openings set for 2022. Areas for potential growth currently being considered include Scotland, the north of England, Wales and the Midlands.

"Over the next five years we can double of the size of our estate. We've drawn up what we think is an appropriate plan for expansion; it's not conservative, but it's also not aggressive.”

Paul is promising to provide franchisees with a national supply chain, economies of scale, and a flexible retail format to fit any location; as well as training and help with recruitment, marketing and PR.

Partners will be offered a choice between a Café model that will typically hold around 40 covers and be roughly 1,500sq ft in size; and a smaller, Express-style set-up that can range from 500 to 800sq ft and will be targeted for areas with high commuter footfall.

“The potential for the brand across the UK is very high”

Café sites are typically designed for busy town and city centre locations, as well as suburban villages; areas that Paul has typically gravitated towards over the years. The more fledgling Express model, meanwhile, is positioned to fit in travel hubs or high street locations, and operates a casual, quick-service style.

Investment from franchise partners will generally range from £300,000 to £350,000, with royalty payments being ‘in line’ with the market.

“We’re looking for franchisees who have capacity to open multiple stores,” explains Hilton. “The expectation would be for them to open five sites over five years. However, if they open one or two sites and are getting the right returns then it’s likely they will want to accelerate that expansion. Having that five-year goal in place, though, means there isn’t the pressure to grow too quickly.”

Hilton is a veteran of the franchising world with more than 30 years’ experience. Prior to joining Paul he was CEO of Sphera Franchise Group, the holding company operating the franchises for KFC Romania, Italy and Moldova, as well as Pizza Hut and Taco Bell in Romania. He listed the business on the Bucharest stock exchange, doubling the number of stores and introducing new brands and new markets. Before that he was COO for Yum! Brands’ franchise business in Europe.

When he first joined Paul’s UK team, Hilton spent a lot of time getting the economic model to a place that would comfortably suit both the company and the prospective franchise partners.

“When we first began looking into this, the investment costs were too high,” he says. “We’ve had to do a lot of capex work and value engineering of our fitouts to help reduce outlays.

“If the initial investment costs were too high, then sales expectations would immediately have been much bigger and I’m not sure our franchise partners would have got the financial returns to make it right for them. So, we’ve made investment cuts now to ensure what we offer is a proposition that works for both parties, which is important when we look towards our long-term growth.”

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Finding the right franchise partner

For Hilton, the focus isn’t on trying to find franchisees in specific, logistic-friendly locations; it’s about finding partners that he trusts will be able to successfully grow the business.

“You can be the best brand in the world, but what makes a franchise successful is the quality of franchisees you bring on board,” he says. “Franchising is a two-way thing. Most agreements last 10 years with a renewal option at the end, which is longer than most marriages. From the very start you have to be confident the partnership is going to work.”

A key driver for Hilton is knowing whether franchisees will be good ambassadors for the brand and have what it takes to grow it.

“Strategically, if you’re going to do franchising in the UK then you go away from your core estate in concentric circles moving outwards. That way your logistics are smaller and therefore more efficient. It’s the ideal way of growing a franchise platform across the UK, but it doesn’t always fit.

“If you have a good-quality prospect who’s based way outside that zone, and they have the skillset you require – someone who operates other non-competing brands as a franchisee, understands the relationship, has the right infrastructure in place, and a demonstrable capability of accessing and converting sites – then you’re still going to take them on as it’s right for the business.”

Consistency is another core consideration. Paul prides itself on being an authentic boulangerie brand that’s rooted in French baking tradition. While many ingredients are now sourced from within the UK, the flour still comes from France. Bread is prepared daily, by hand, at the group’s central bakery in Acton, and baked on site alongside a range of fresh pastries and cakes.

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As Paul looks to grow, Hilton intends to establish other central bakeries around the country to ensure there is the infrastructure in place to support its perspective franchise partners. This coupled with the group’s legacy of franchising will, he says, help ensure a consistent offering as the business grows.

“If you have the right partners and they have the right processes in place then maintaining consistency is easy to manage. Over and above that it’s about how we supply our franchisees; the training and support we provide them; and how we deliver product to them from our central bakeries.”

"When you look at London, there’s clearly further opportunities for us to grow"

While franchising will drive Paul’s growth around the UK, new openings in the capital will continue to be company owned. The group recently launched a new Express location in West Hampstead and hopes to open at least one more London site this year.

"When you look at London, there’s clearly further opportunities for us to grow," says Hilton. "Particularly in south London, where the brand is less well represented. While we only really plan to open one or two more sites in the capital this year, it is our intention to be more aggressive with our London opening schedule in 2022.”

Whether Paul would ever open more company-owned sites in the UK outside of London, though, is moot.

“Never say never, but having decided to launch our franchising model it wouldn’t feel right to then cherry pick locations for in-house sites,” adds Hilton. “If we have an opportunity to develop the brand in an area where there are no franchising options, then we may well take it. But this isn’t part of our core strategy at the moment.”

Going digital

Like many other hospitality businesses, Paul has found itself having to turn to a digital platform in order help it through the pandemic. Another of Hilton’s key aims when he joined Paul UK was developing the brand’s online presence, which has been accelerated as a result of Covid and led to the launch of Paul At Home.

“As well as franchising, the way we wanted to grow the brand beyond London was through the accessibility of products through digital platforms. Lockdown forced us to look at those ideas and get them to market much quicker than originally intended.”

The business has been able to operate delivery and click and collect on breads, cakes and pastries from the majority of its stores throughout the pandemic, but Paul At Home is different in that it’s available nationwide. For now the product range, all sent from its central bakery, is limited primarily to home bread-making kits and gift sets, but Hilton hopes to develop a much broader offering in the months to come.

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There’s also scope to get some products onto retail shelves. The group has already begun working with Amazon Fresh, with a range of breads, pastries and ‘sweet treats’ available for delivery daily in London, Hertfordshire and parts of Surrey.

“The challenge is there are no additives in our products to extend shelf life, and putting them in goes against what we believe in. So it’s about developing a product range that gives a shelf life long enough to make it viable for retailers to stock, but doesn’t counter what we stand for as a brand.”

Learnings from lockdown

Only Paul’s central bakery has operated continuously throughout the pandemic. When the first lockdown struck, all sites were closed, but gradually the estate has reopened for takeaway and, when restrictions have permitted, dine in.

Some sites, including Paul’s Tower 42 restaurant and its kiosk location on the Strand, have remained closed, although Hilton is hopeful they will reopen as and when things move back to a level of normalcy.

“It’s certainly been a learning curve,” he says with a chuckle. “When we first closed, we really had to look at the way we operated, in order to ensure we kept our teams and customers safe. The first four stores we reopened initially offered just a pavement service; we only went back inside once the screens had been put up.

“I’m pleased about how we’ve navigated our way through this, though. It’s not been perfect, and we’ve made mistakes, but we’ve also learnt from them. And when we do come out of this, we’ll be a stronger business for it.”

Related topics: Business Profile

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