Food for thought

Jiwon Kim

Alan Lee left the bustle of Hong Kong for the beaches of Australia. After a career that included a long stint in private equity, he returned to public companies as Chief Financial Officer of a unique restaurant franchise, Oliver’s Real Food. A Plus caught up with the Institute member in Sydney

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Jiwon Kim


For the truckers and travellers who associate highway food with endless burgers and fries, grease, salt and sugar, the menu at the Oliver’s Real Food outlet in Hexham, an industrial suburb of Newcastle, Australia, is a bit of a surprise: free-range chicken and avocado sandwiches, falafel and quinoa dishes and a colourful “chickpea bazaar Buddha bowl.”

For Alan Lee, the pita pockets – lamb or vegetable – are the biggest draw. And as the company’s Chief Financial Officer, the Hong Kong Institute of CPAs member takes a big interest in what sells at its 21 restaurants, which arc across 2,000 kilometres of Australia’s heavily populated southeast from Maryborough in Queensland to Ballarat in Victoria.

Alan Lee spent over 12 years working at Wolseley Private Equity where he was CFO and then company secretary.

“Driving along on the highway, there have not been many choices in the past,” says Lee, who is convinced that the company can reach out to previously untapped demand. “It might surprise you but a lot of ‘truckies’ – lorry drivers – are actually coming to us,” he says. “Maybe they’ve had enough of KFC and Macca’s,” he adds, using the Australian nickname for McDonald’s.

Oliver’s Real Food has plenty of competition. As well as the global fast food brands, Australia is home to several independent local chains. Oliver’s most recently opened restaurant in Coffs Harbour, a busy agricultural and tourism town on the north coast of New South Wales, is sandwiched between a Red Rooster, a 47-year-old chicken franchise, and the home branch of Ridgey Didge Pies, a gourmet pie franchise founded in 1995.

“We are in the right sector in the right industry and so far I can’t see anyone else doing at this point in time.”

All three restaurants are off the Pacific Highway, a major national route between Sydney and Brisbane. Oliver’s outlets tend to follow the highways – favoured by its “truckie” customers – but in doing so the company has helped bring healthier fast food outlets, or “quick service restaurants” (QSR) in the trade jargon, to rural Australia.

“We are in the right sector in the right industry and so far I can’t see anyone else doing at this point in time,” says Lee, adding that food perceived as healthier can attract higher margins. “Healthy options are always the highest-priced sector within the food industry. People are happy to pay a little more of a premium for healthy food.”

Lee says Oliver’s Real Food hopes to bring more than just a new menu to Australia’s often-neglected country towns. “We are also doing a lot of community work,” he says. “For example, we support rural aid – more funding for farmers – because they grow our food, and through that we support regional communities.”

Ups and downs

Native Australian Jason Gunn founded Oliver’s Real Food in 2003 amid a burgeoning market for healthy eating.

“Someone referred me to the founder, and it worked out,” says Lee, who was brought on as CFO in November 2016. Lee’s initial task was to bring the company to an initial public offering (IPO), which was completed in June 2017. His previous experience in private equity was useful in helping Oliver’s to corporatize the business as well as in setting clear growth strategies, he says. “Oliver’s was a typical entrepreneur business with significant growth [potential]. There were lots of opportunities to optimize the business processes and strategies. My experience in equity raising and investor relations also helped the IPO process.”

“Healthy options are always the highest-priced sector within the food industry. People are happy to pay a little more of a premium for healthy food.”

The company then experienced a rocky post-IPO period, lowering its earnings guidance in August 2017 and again in May 2018. The previous month, Greg Madigan – an experienced fast-food executive who was formerly head of Subway in the United Kingdom – replaced Gunn as chief executive officer. Gunn was removed from the board in June 2018 and left the company.

Lee says such transitions are an inevitable part of corporate development. “It is a growing company and everything is on the table,” he says. “There are so many things that we can do to understand the business, optimize the capital structure and grow the business further.”

The company’s rapid opening of restaurants has not been without setbacks. Oliver’s Real Food has faced criticism for opening in under-served country locations with much fanfare, and then rapidly closing them when they don’t meet revenue expectations.

“Everyone is still learning every single day and so many things are changing all the time,” says Lee. “When we consider a site, of course we put in all the information backing it and make sure that it is the right site to open. At the same time, some factors just change.”

One example was the town of Horsham, a pastoral town 300 kilometres west of Melbourne. In August 2017, an Oliver’s took over an abandoned Red Rooster restaurant but closed just eight months later due to poor financial performance.

“I understand the timing may have been quick, but things nowadays change very quickly,” Lee says of the business. “In QSR you need to close the less profitable stores and open more profitable ones. And in regional locations, people may not consider healthy food as a priority.”

Hong Kong roots

Given the chance of an Australian education, Lee enrolled at the University of Wollongong, a coastal city south of Sydney. “I went to Wollongong to take a break from my parents, and it was near the beach!”

He faced a dilemma at the end of his university course. “Back then, in the late 1980s and early 1990s, there was a recession in Australia,” he recalls. “I got
a conditional offer here from one of the then Big Six firms in Sydney, but I also got an offer from KPMG Hong Kong, so I went back.”

Lee says his early career “turned out perfect.” Like many Hong Kong accountants, he began as a junior auditor. “After four years, I was audit manager – it was a fast promotion – and back then the audit department was not so specialized so there was variety,” he recalls. “Manufacturing, retail, banks, construction and property, and also the market in China had opened up and there was a lot of state-owned enterprises’ IPO works in the United States. It was very rewarding.”

After four years, Lee qualified and worked for the first time in private equity, a field to which he would return. “It wasn’t pure private equity,” he says of his first foray. “It was a family investment office and I was managing their investments in Asia and then subsequently the team moved into managing more family investment houses.”

Lee says the experience opened him up to more collaborative experiences. “One of the best things about private equity is the people coming from different backgrounds to work together. You have lawyers, you have management consultants, you have bankers, accountants, and commercial people, and you see how people tackle issues together.”

In 1998, Lee and his family made a crucial decision. “My wife and I decided that our son needed to start school and we should return to Sydney,” says Lee, who worked first for a smaller firm, Barry Mendel, Frank & Co., where he was audit manager. That experience, he says, was great in helping him with the transition to Australia. A year later he joined the forensic accounting unit of KPMG in Sydney. Lee’s new Australian adventure had begun. It would include a lot of travelling around the country with his family, and competitive fun – in his spare time, Lee loves playing football, basketball, running and golf.

Lee studied Accountancy at the University of Wollongong. He returned to Australia in 1998 after working in Hong Kong for over six years

Commercial decisions

Lee later spent time at PwC and EY, working on a variety of specialities such as valuation and strategy as well as transaction support. But once again private equity attracted him, and he joined Sydney-based Wolseley Private Equity, an EY client, in 2006.

After more than a decade – and a decision by the Wolseley partners to wind up the funds – Lee decided to leave and take up the CFO role at Oliver’s. “I think it is a typical public company CFO role,” says Lee. “I have to do all the reporting, regulatory and compliance, but the good thing is I can utilize my skill set and my experience. I have always believed that a good CFO will help all stakeholders understand the business, and help them to make decisions and work together as a team to achieve something.”

Lee says data is crucial to a company like Oliver’s Real Food, with its loyal customer base. “There are so many things you can analyse, and with the market industry changing so quickly you need to be proactive, not reactive. That’s why information helps to make decisions quicker – and that’s sort of my role.”

Information is so important, Lee adds, that when the company’s financial controller quit, he replaced him with another commercial data analyst. “It is more meaningful for the operational people to make decisions and that’s what I decided to do and we can feel the benefit of it.”

“We’ve been urged by a lot of people to go international, but we want to make sure we’ve done it right in Australia before we head overseas.”

Like many retail businesses, rent and labour are the two largest cost issues. “We are in a good position, mainly because of our location – we are outside the metropolitan areas – and rent is actually good as a percentage of turnover.” While wage costs are lower in rural areas, availability becomes an issue. “Sometimes it’s hard to get good people,” says Lee.

Overall, Lee is optimistic about the company. “We have a very good value proposition. Highways are our core strategy but it doesn’t mean we can’t have other types of stores with different concepts,” he says. “For example, we could open in hospitals.”

International expansion is another possibility. “We don’t see competition or similar businesses, not just here [in Australia] but also not in the U.K. or the U.S. We’ve been urged by a lot of people to go international, but we want to make sure we’ve done it right in Australia before we head overseas.”

Does that mean even Hong Kong may see an Oliver’s Real Food, despite its absence of highways, and given its isolated rural communities? “Hong Kong is not in the plan,” says Lee. “But we never say never. Everything is on the table.” ​

Oliver’s Real Food is certified by Australian Certified Organic as the world’s first certified organic fast food chain. Over 70 percent of its products are certified organic.

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February 2019 issue
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