Bye Bye Bakerzin, Hello Oriel?

So, it has finally happened. The Titanic has hit the Iceberg.

Yesterday, whilst lurking at Starbucks, I noticed that my once-favourite cafe, Bakerzin, (to find out why it has fallen from favour, see 'Thoughts on Kuchen') has changed names. It is now known as Oriels.

Now, I am inclined to think that it possibly has the same owners or at least, it is not a total change of hands as the staff are the same, furniture is the same, and everything is more or less the same. Even if you sell a business to someone, they're going to surely make some changes? But perhaps the name change is the 'big change' then.

I am not surprised that this has happened, although I can only speculate why. The easy possiblity is that the franchise owner of Bakerzin here in Malaysia (Billion Berg) and Bakerzin (which is a Singaporean company) fell out - most franchises go pear shaped over one thing usually and that's $. Maybe Bakerzin Singapore was taking too much of the profit from Bakerzin Malaysia, making it hard for Bakerzin Malaysia to put enough money back into ops and expansion, which may also have been part of the franchise agreement.

The requirement of expansion of a certain number of stores is not uncommon in the franchising world. The doughnut-mad amongst us who are wondering why it is that Krispy Kreme has not set foot in this part of the world or who are considering if a KK Asean franchise might be the key to world domination might want to consider the following criteria (as published on the the Krispy Kreme website):

• Applicants must have current ownership and operating experience or previous ownership and operating experience of multi-unit food service operations in the market that you desire to develop.

• Our franchisees must possess the capital sufficient to fund the development of the market. We currently grant franchises on an area development basis. Specifically, our area developers are required to build multiple stores (10 or more) in a market. The minimum net worth requirement is $30 million or $1,000,000 per store to be developed, whichever is greater. For instance, a 15-store market requires a minimum net worth of $30,000,000. (emphasis is mine)
  

Perhaps Bakerzin Singapore was being very demanding and requiring Bakerzin Malaysia to open up lots of outlets quickly and this put a strain on Bakerzin Malaysia's resources, which in turn created a cash crunch problem.

Or perhaps, Bakerzin Malaysia was insisting on making the cakes here, rather than getting the primary cake ingredients from Bakerzin's central facility in Singapore, and this was a deal-breaker. I know that for some time, Bakerzin Malaysia was working on making the cakes locally rather than getting their primary cake ingredients (sponges, mousses and the like) from the Singapore central facility. (this is the reason for their meagre collection of cakes, which has been the state of things for a good six months).

Now, the obvious reason for this would be cost control - delicate items like sponges, mousses and ganaches need to be stored in a refrigerated storage facility, and also need to be transported in refrigerated trucks. All this adds significantly to cost especially in light of the price of petrol going up (transport costs 30% more now) and electricity bills going up for commercial premises (imagine having to keep a refrigerated facility going). Compare that to having to just store the basic ingredients to make these items (which you wouldn't need to store up in advance since the supplier is local and can just deliver on demand) and not having to pay the considerable freight/transport change of transporting the delicate cake ingredients from Singapore to KL.

But on Bakerzin Singapore's side, the central facility is the key to two goals: firstly, maintaining quality. By centralising the production of the key components of their cakes, they can ensure that the end product will always be consistent since the franchisor is only effectively doing 'assembly' of the cake or just doing modest finishing touches onto the cakes. Secondly, this ensures they are able to protect their culinary IP - meaning, to minimise the risk of anyone copying their cakes or passing off their cakes as their own. It also is a sort of leash that they use to control the franchisor. This is quite common in ALL franchise concepts - the master franchisor always controls the ingredients going out. For example, all cakes at Secret Recipe outlets come from a singular factory source and franchisors have to buy the cakes from the factory. This is a requirement of the franchise agreement.

The plus for the Franchisee (ie: Billion Berg) is that they can concentrate on just operations, knowing that the food is already a winning formula and the brand is already a known brand.

A sign of the impending demise of Bakerzin could be seen when they switched out of Illy coffee to Lavazza (a sign the operator is trying to cut costs to make more profit) and I think when they started wanting to make their own cakes, Bakerzin Singapore either balked or saw it as an attempt to muck around with the quality. Conversely, it is also possible that Bakerzin Singapore just started becoming very unreasonable. Who knows. Whatever happened, it is an unfortunate fact that those of us who are fans of the sublime Lemon Tart, and the divine Jivara cake, that light Japanese-inspired Strawberry Shortcake, and the amazing molten chocolate cake....and the Oreo Cheesecake...and - well, one could go on. I mourn the loss of Bakerzin Malaysia, for it now means I can only get an alternative cake fix in Kiasuland rather than BSV, and there is one less option for cake on the 'must-have-cake' days.

Once again, Alexis (I'm really starting to wonder if the name was an inspired choice now sic Dynasty) rules the cake roost.