O'Brien's Irish Sandwich Bars enters examinership

RoadKillTs

I'm prity shocked I have to say. Did not see that coming.
Thought they were doing very well.
You very know I suppose.


Link

FusionNet

Im not surprised at all. The food was poor, the prices very high and the retail they invested in very very expensive. Everyone knows the food business is one of the toughest to survive in and these guys were throwing money around like mad men. Another bloated celtic tiger wonder.. Every business should take a close look at itself and do one simple calculation.

If my gross sales dropped by 60% could I survive? If the answer is no then Id start looking to make savings. We should all prepared for slow sales, if your not prepared you'll be closing the doors..

O Briens in my opinion were run by a bunch of office guys that didnt really know what was going on ten floors down where the "ordinary man" existed and ate!!!!

RoadKillTs

They are very expensive allright and the quality did seem to vary between different sites.
They have some good locations and a well recognized brand which I thought would have seem them through.

What happens the people that have franchises with them?

FusionNet

I would hope they are protected because they were charged a lot of money for those set ups. I presume they will either sell the brand or maybe another chain like subway will move in? These big corporates do annoy me sometimes. Ill put any money on it that they owe a ball of money to small operators..

Pablod

They opend a shop in south kildare mid last year and it was closed down within 3 months (pretty stupid place to open it though - on a main street directly opposite a sandwich bar that was operating there for years before it arrived)

blue4ever

'they' possibly didn't open it - a franchise did!

Clytus

TBH...they went down the same route so many high street names did. they expanded too rapidly, locking them selves into sky high lease ( which they remained the priciples on the leases ). The UK shops started off doing poorly and for th4e last 18 months were being subsidised from ireland.

Heisenberg.

This post has been deleted.

lecheile

FusionNet wrote: »

O Briens in my opinion were run by a bunch of office guys that didnt really know what was going on ten floors down where the "ordinary man" existed and ate!!!!

Not sure if that is true. Brody started cutting and buttering bread at the beginning. Key challenge was playing a high stakes game in a very crowded market, which obviously did not pay off.

super_furry

Anyone changing €6.50 for poorly made, bland sandwiches is in trouble.

Hanley

Scien wrote: »

It's fine to have a separate discussion here.

I'm also surprised to hear this. We did a lot of case studies on the apparent 'succcess' of this franchise in College.
They were flying only a few years ago, opening franchises all over China, Saudi, & Australia, not to mention the States.

Was never a fan though. Their pricing model was pompous & assuming.

One might argue rapid expansion's a classic warning sign of over trading... However not knowing the particulars I wouldn't be so sure.

I think they probably jsut got locked into expensive leases that they couldn't afford to cover when people realised they were being ripped off for sh!te.

Viva la Munchies!!!

Hanley

Does anyone know how this is going to effect the individual franchies anyway...??

Like they're hardly liable for the debts of the co, but presumably the stand to lose the brand name and positive association that did go with it. And without they won't be able to charge as much, but will probably still have similar overheads to cover??

mcaul

Its a difficult one to fathom as the branding was good and had improved recently especially with excellent seating.

One of their problems is brody sweeney went off trying to get elected and took the eye off the ball. Subway / starbucks / insomnia & cafe sol moved in and took business from them - their response was very poor.

Unfortunately the franchisees could not do anything without hq permission. - no meal deals, no special offers, nothing.

The upgrading of the seating was great, but the menu should have been upgraded at that time too annd it should have been rebranded as a Coffee House rather than "sandwich bar"

There other problem is they expanded greatly over the past 3 years, guaranteed all the leases and where some closed, they still have the rent to pay even though they're not trading.

They will come out of examinership leaner and possibly meaner. - It would be a big loss if they didn't.

stepbar

I knew that O'Brien's were in trouble for a long time so it really doesn't suprise me. I expect that the company will try to pay off the leaseholders, and that today's actions will force the leaseholders hand.

browne_rob5

They have entered into examinership in an attempt to pay off their leases at a reduced rate I imagine. Landlords may not agree to this as they are unlikely to get new tenants. Although they will regret that if it goes into liquidation! Quite a poor move by O'Briens to guarantee the leases. Surely very risky in a franchise situation.

Totally over priced for what it was. The coffee was never good and after a while, the "triple decker" was boring and a rip off.

Not surprised they are in trouble but I really thought they would have known what they were doing to avoid this.

bokspring71

Hanley wrote: »

Does anyone know how this is going to effect the individual franchies anyway...??

Like they're hardly liable for the debts of the co, but presumably the stand to lose the brand name and positive association that did go with it. And without they won't be able to charge as much, but will probably still have similar overheads to cover??

Most franchises charge a percentage of your GROSS turnover. Withouith that, thought to be +-10%, the franchisees will have one large cost gone.

Additionally, if O'Briens HO did deals with supliers for supplies, then they made it a contractual condition in the agreement with the franchisees, ostensibly to maintain quality, that they must use the suppliers nominated by O'Briens. In all liklihood they would have done additiona deals with suppliers for what is humourously called a "long term agreement" whereby the supplier paid O'Briens a percentage for all goods sold to the franchisees. The result of this is higher costs to the franchisees.

MY own view is that the business model is flawed, and the combination of average quality sandwiches at double the price of the Spar next door spells disaster for them.

Additionally, O'Briens took on the leases themselves and sublet to franchisees, which means they are liable for the rents in the event that a franchisee shuts up shop. This is currently costing them nearly €500 000 per annum! Another great decision, Brody!

oldyouth

I never looked in detail at the O'Brien's model, but I got close to taking a Subway franchise but backed out at the last minute. Great product etc but the way rent is structured via the franchisor, royalties, advertising levies and the rest , it was just too restrictive.

Local units were not allowed adapt separately to local conditions by way of 'meal deals', sourcing of product, office delivery etc. and I wanted to be in control of my own destiny

I'm sure O'Briens is not too different.

greatdane

O briens had a great business at the start, i used to go there regularly. They had some good locations too. then they got greedy...

50c extra to eat in , smaller portions....

they used to have a toasted bagel with cream cheese on both sides, then all of a sudden they only put the cheese on one side....did they think we would not notice ??

I hate to say it but when a company starts making decisions to rip customers off they reap what they sow..

weird

FusionNet wrote: »

Im not surprised at all. The food was poor, the prices very high and the retail they invested in very very expensive. Everyone knows the food business is one of the toughest to survive in and these guys were throwing money around like mad men. Another bloated celtic tiger wonder.. Every business should take a close look at itself and do one simple calculation.

If my gross sales dropped by 60% could I survive? If the answer is no then Id start looking to make savings. We should all prepared for slow sales, if your not prepared you'll be closing the doors..

O Briens in my opinion were run by a bunch of office guys that didnt really know what was going on ten floors down where the "ordinary man" existed and ate!!!!

The problem wasn't the food, the issue was with the lease agreements they held with property owners. They signed leases for exorbitant amounts of rent and haven't been able to renegotiate them. Another issue is they pay this rent on a quarterly basis.

True, the amount of customers coming through the door has come down but this is to be expected when so many people are out of a job and there is a recession. Hence, not as many people going out for lunch... and sure who wants a sandwich for dinner?

Midlandsbase

Pablod wrote: »

They opend a shop in south kildare mid last year and it was closed down within 3 months (pretty stupid place to open it though - on a main street directly opposite a sandwich bar that was operating there for years before it arrived)

I know the people who opened there - it opened in November 5th 2007 (I was at the opening) and closed January 30th 2009 (gave them a hand moving stuff) - so they didn't open the middle of last year and were open for longer than three months - love the so called facts thrown around! And I believe the one across the road was actually only open for one year by that owner.

The issue, from talking to them, was high rent - nothing to do with the place across the road which had no seating and was larglely made up of school kids buying at lunchtime. Of course they were going to open on a main street! Who wouldn't - as for the sandwich bar across the road plenty of sandwich bars (O'Briens, etc) exist across/near from each other. We did when we had ours in another town but it was different clientel and there was plenty of business for all. again, high rents.

Midlandsbase

bokspring71 wrote: »

In all liklihood they would have done additiona deals with suppliers for what is humourously called a "long term agreement" whereby the supplier paid O'Briens a percentage for all goods sold to the franchisees. The result of this is higher costs to the franchisees.

For what it's worth our costs were actually lower than any of our independent sandwich bar operators. I seen the price differential and it was as much as 30% for most goods. buying with that number of stores behind you allowed a great deal - the only advantage of being part of that crumbling group! But i've no doubt Brody made money on the back of those agreements as you rightly point out.

scottyboy1973

A great example of people voting with their feet - it's about time there was a bit of a clearout in this space - I always balked at paying 3.50 for a cappo (tho I stil paid it!!) and the recent downturn is proving that folk wont (or cant) do it anymore . Insomnia seem to be leading the way now with decent food, decent coffee at decent prices.

bokspring71

Midlandsbase wrote: »

For what it's worth our costs were actually lower than any of our independent sandwich bar operators.

It seems quite a claim to know that your costs were lower than any other operators. If that's the case, how come O'Briens charged a lot more than many other operators? Shome mhistake, shurley?

Midlandsbase

bokspring71 wrote: »

It seems quite a claim to know that your costs were lower than any other operators. If that's the case, how come O'Briens charged a lot more than many other operators? Shome mhistake, shurley?

I seen invoices from our suppliers which should have been sent to our competitors that's how I know - hardly quite a claim - bulk agreements with Pallas and Cuisine de France over your independent competitors is hardly unusal. We also had deals with drinks suppliers, frozen food, etc which no independent operator would have been able to negotiate as well as having 7 days delivery. As for charging a lot more - that really depends where the store is surely? From my perspective where we were selling our competitors sold sandwiches and coffee for the same amount. As it was a chain we had to sell at the HQ dictated prices.