News & Events

Cafe franchise clouds the issue


The Financial Review - 25 / October 2011


Coco Cubano founder Tony Melhem... Using cloud means having to pay for current technology needs rather that potential needs. 

Reporter: Mark Fenton-Jones 


The founder of a premium cafe chain is using cloud computing to support his decision to transform the business into a franchise system. Tony Melhem, the founder of the Cuban-themed coffee and bar chain Coco Cubano, will use Ninefold's cloud computing to expand as a national franchise.


Cloud computing provides businesses with an alternative to investing in computer servers and processes on their own sites, which initially might not be used to their maximum capability but which the business has to pay for to meet future, but unguaranteed, growth. Instead of paying for expensive technology which needs regular updates and management time to deal with issues like internet security, the business outsources the process to a technology service that oversees the complete process in a remote site, with backup sites.


For example, an accountant keeps all client documentation on the computer servers of a cloud computing provider and is able to access the data externally when needed. Or the provider might collect all the transaction data as Task Retail Technology does for Coco Cubano's point of sale functions.


Opening its first outlet in Kings Cross in December 2008, the chain has grown slowly, adding branches in Sydney's Taylor Square and Paramatta. The steady, some might say slow growth, was a deliberate part of the growth strategy, explains Melhem. "It was about providing the business model and making sure we were happy with the product and that it can run well. I'm confident with the model now."


Prior to setting up the franchise, Melhem has received inquiries from potential partners and franchisees but he maintains he is being selective about whom he accepts. Nor is he setting growth targets to achieve a certain number of sites by a specific date.


The chain has signed a lease for a site in Melbourne and taken applications from seven franchisees who can expect to pay between $350,000 and $550,000 in start-up fees, depending on the size of the outlet.


Expanding has also included upgrading the loyalty program which was not as straightforward as originally expected.


Fortunately, as he has taken a strong position early in the company's life cycle to outsource technology requirements to allow for flexibility and rapid scale, Melhem had outsourced the chief technology officer role to Nick Torpy at Kobalt Systems a year ago. As Torpy explains, the business had the choice of setting up its own dedicated server to host the loyalty program or looking at alternative hosting arrangements.


The first option, which he describes as a "massive overkill" because of the cost involved in paying for technology to meet current and future demand, was rejected for a cloud computing solution from Ninefold, the Australian public cloud computing company backed by Macquarie Telecom. Coco Cubano outsourced its loyalty program to Ninefold.


The loyalty program was connected to the point of sales network which had been installed by Task Retail, which handled the computing and storage requirements in support of sales, procurement, online reporting and inventory management via the cloud.


The goal, says Melhem, was to gain control over costs and to support the business plan for a network of franchisees.


"It makes a lot more sense because we can't be across everything. If we didn't have Task Retail and Ninefold, we would need a massive IT department," Melhem says.


While Torpy does not have exact savings, he says that cloud computing avoided the need to pay for dedicated servers while the pay-per-use charges means the business is only paying for its current, rather that potential, needs.


Learn more about Coco Cubano >>


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© Task Retail Technology Pty. Ltd. 2012
© Task Retail Technology Pty. Ltd. 2012