Business of summer: gelato franchise chain Gelatissimo chases growth

Caitlin Fitzsimmons Online editor

Business of summer: gelato franchise chain Gelatissimo chases growth

Felipe Barbosa wants to reinvent Gelatissimo as a “destination”. The hot weather so far this summer is good news for the new management of Gelatissimo. It is a far cry from the summer of two years ago when wet weather and the Queensland floods prompted founders Dominic and Marco Lopresti to embark on a global expansion strategy in part to mitigate seasonal risk.The Lopresti brothers stepped down as joint CEOs three weeks ago and long-standing employee Felipe Barbosa was promoted to take their place.

The Lopresti brothers founded the business in 2002, but Henroth Investments has owned 100 per cent since 2004.

This year the weather is hot and main thing that would stop Australians buying gelato is the competition from the burgeoning frozen yogurt sector.

“We’re looking at reinventing ourselves and trying to become more of a destination,” said Barbosa. “Most of our locations that have frozen yogurt operators, we hold our own pretty well [in] with a flat or marginal increase, but it does have an impact.

“I think there are some good operators in frozen yogurt but I think there are too many of them and they’re going to cannibalise themselves and need to rationalise.”

One of the new ideas introduced this year to create the sense of a “destination” is a viewing area at each store, called the Galleria del Gelato.

“Most of the new sites we’ve opened over the past few months have the concept,” Barbosa says. “Visualise a glass enclosure where the gelato-making machine is on show so people can partake in the process a little bit, watch the gelato being made.” The facility brings them a little closer to their customers, he explains.

The company has also created an Academia del Gelato at its headquarters in Rydalmere, Sydney for training franchisees.

Expansion and contraction

In 2013, Gelatissimo opened four extra stores in Australia: in Norwood, South Australia; Broadway and Balmain in Sydney, and Mackay, Queensland. More are in the pipeline and the business hopes to open an additional 10 stores in 2014 – six or seven of them in Australia.

However, the chain has suffered setbacks as well and is ending the year with about 43 stores, compared to 45 a year ago.

About six stores closed in Indonesia in a staggered shut-down throughout 2013, after the master franchisee in Jakarta concluded the venture was not working out.

Gelatissimo also lost its claim to be selling gelato to the Italians when it was unable to renew the lease for its single store there, which operated as a joint venture, though Barbosa plans to return once they find a new site.

In the 2011-2012 financial year, Gelatissimo stores reported a collective turnover of $20 million. Barbosa declined to reveal updated figures, but says that revenue grew double digits and profit margins held steady, implying profit growth.

Barbosa says Gelatissimo is unaffected by the change in law requiring franchisors to show “good faith” to franchisees.

“We’ve always understood that in order for us to be successful, our franchisees need to be successful,” he says.