Mon | Jan 20, 2020

KLE ditches franchise model for Tracks & Records in Jamaica

Published:Sunday | January 12, 2020 | 12:52 AMKarena Bennett - Business Reporter
In this November 14, 2018 file photo KLE Group CEO Gary Matalon and Olympian Usain Bolt attend the launch of the first Tracks & Records, in the United Kingdom in London. KLE is doing away with plans to grow the UBTR brand via franchises in Jamaica but will continue to pursue the business model in overseas markets.

After several years of fine-tuning a franchising model and negotiating deals for the opening of four Usain Bolt’s Tracks & Records restaurant, including a major contract with the United Kingdom-based Casual Dining Restaurants Group, KLE Group is doing away with expansion through such franchise partnerships in Jamaica. On Thursday, the company announced that it has taken full control of all local franchises, the most recent being the Montego Bay franchise, which was owned by prominent hotelier and businessman, Christopher Issa.

Aside from the flagship UBTR, which the KLE Group owns and operates at Market Place in Kingston, KLE had also inked a deal to open the sports entertainment-themed restaurant in Ocho Rios, St Ann, in 2016 and the Montego Bay franchise in 2018.

The business model, which was conceptualised shortly before KLE offloaded the Fiction and Famous nightclubs, was expected to take the business to the next level. But after months of the Kingston restaurants taking hits from the ongoing roadworks along Constant Spring corridor, as well as the closure of the Ocho Rios branch for what the company said was to facilitate relocation to a new property, KLE now says it plans to streamline operations, and take a different path to expanding the brand locally.

“The path we are on is guided by some valuable learning gained along the way. In addition, our network has some of the top people in the industry. We know it’s extremely competitive and we will have to execute with precision. As a company we are looking forward to it,” KLE Group CEO Gary Matalon told the Financial Gleaner on Friday.

International strategy

He reasoned that while franchising is a ‘genius’ business model that allows companies to achieve scale across markets, for KLE these benefits better suit its international strategy.

“In other markets and in the domestic Jamaican market, a corporate-owned and operated approach makes more sense,” Matalon said.

The KLE CEO is now focused on brand modernisation and innovation, and enhancements to customer experience for UBTR in Jamaica.

KLE has also gone back to drawing board on plans for the international market. In October 2018, the company launched the first of 15 franchises in United Kingdom but a year in, Matalon says the company has been forced to re-strategise the roll out programme for the United Kingdom and is eyeing new target locations.

“What we have executed in London stands out even in a market as large and competitive as that one. The first three months after we opened the doors every seat was booked out for weeks in advance, primarily from people of Jamaican and Caribbean heritage. They travelled for hours on train to visit the location,” he said.

“As brilliant as that may be, the challenge is that it’s not sustainable and the local market would need to support the restaurant for long-term sustainability and growth.”

He noted that preliminary research indicates the conditions being experienced at UBTR’s current location at 94 Middlesex Street as a “destination spot” may also exist in many other places earmarked for UBTR in the UK. The company is therefore reviewing not only where the company decides to set up restaurants, but the size of the operation and the offering in each location, so as to ensure consistent customer traffic.

For the nine months ending September 30, 2019, KLE unaudited financial reports showed losses of $3.9 million, compared to profit of $3.1 million for the comparative period of 2018. The company blamed the losses on one-off revenue from the management contract associated with the start-up of Tracks & Records Montego in the first half of 2018.

karena.bennett@gleanerjm.com