Coffee-fuelled dreams for Esquires

LAURA WALTERS
Last updated 05:00 30/06/2013
coffee
Grahame Cox, Fairfax NZ

COFFEE CRAZY: Stuart Deeks, founder of the Esquires coffee chain in New Zealand.

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Esquires Coffee House wasn't born in New Zealand and Stuart Deeks didn't come to own the rights to 58 Esquires stores around the world because of any hospitality industry experience.

Instead it was Deeks' urge to find a viable business to bring back to New Zealand, where he wanted to raise his daughter, that attracted him to the Canadian chain.

Deeks' family moved to Auckland from the UK when he was six.

As a boy, Deeks always wanted to be a pilot, but his dream was dashed when he found out he was colour blind. Air New Zealand even rejected his bid to be a flight attendant because he was too tall.

Leaving school as soon as he gained University Entrance, Deeks started his working life in sales at the Post Office. Then a colleague convinced him to attend a Tony Robbins self-help seminar, which Deeks swears changed his life.

"I came back from the weekend course and spent all my money on new clothes, a new haircut, and I got a new job."

Deeks moved to the Middle East in 1990, just as the Gulf War was about to erupt, relishing a chance to work abroad.

"People thought I was mental," he said.

That's when his ties with Saudi Arabia, which would later prove crucial to Esquires, were formed.

Deeks managed to snag the last Cathay Pacific flight out of Saudi Arabia before the war, and moved to England. And that's where his Esquires journey began.

Every day Deeks would visit an Esquires coffee shop on Gloucester Rd in London. One day he picked up a magazine in the cafe and saw the boss of Starbucks staring out at him.

"He was saying how profitable the industry was, and he couldn't believe there weren't any other international coffee chains."

Deeks thought about the article for a while.

"Sometimes it takes a long time for things to click for me," he laughs.

But he got there eventually, and realised bringing the Esquires chain back home would be a worthwhile opportunity.

Deeks called his brother Lewis, and asked him to jump on board.

Pretty soon the brothers were in a full partnership, and in 2001 Esquires was established in New Zealand. It began offering franchises in 2004. In 2005 and 2006 Esquires claimed the Franchise System Award for the Food and Beverage category.

Lewis Deeks recalls the brothers working the coffee machines in the local stores when they first opened. Neither had any training as baristas, but they learned about coffee, and they learned fast.

After selling their first cup of coffee to All Black Carlos Spencer, the Deeks brothers were off and running. At that point they changed their coffee to Fair Trade, and looked at cracking the worldwide model.

Deeks said they were now working towards securing all the master franchise rights. "We want to secure the rights to the rest of the world, lock, stock, and barrel," he said.

Deeks' company, Franchise Development (FDL), the owner of the rights to the coffee chain, bought the master franchise rights to Esquires through the acquisition of the Canadian company Esquires International in April.

The Deeks now own the rights to the 11 Esquires stores in China, 13 in the Middle East, 29 in the United Kingdom, and five in Ireland.

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However, FDL sold the rights to the coffee chain in New Zealand and Australia to Retail Food Group, an Australian listed company, in February 2011.

Deeks said he would buy back the rights to Australia and New Zealand "under the right circumstances". But Retail Food would have to want to sell.

Twelve years on, Deeks is looking at further growth by listing on the New Zealand stock exchange listed shell Cooks Food Group.

Cooks chairman Keith Jackson approached Deeks about an investment opportunity nearly a year ago. Deeks responded by outlining a "cunning plan" for Cooks to buy out FDL, and list Esquires on the NZX via the backdoor.

"They liked my cunning plan," he said.

During the past 10 months the "marriage" has evolved, Deeks said. "It makes excellent business sense."

Listing using an existing shell company saves time and a lot of money, he said. On the other hand, Cooks is taking on an established company with good earnings.

"You don't have to do it all from scratch."

Esquires is part of a run of food and beverage companies to target the New Zealand exchange. Moa Beer, Burger Fuel, and more recently the Mad Butcher have all jumped at the chance to watch their share value grow.

There's a huge appetite for "brand New Zealand", Deeks said. "Being a New Zealand company is like being part of a club."

Deeks said the listing was not a capital-raising exercise, but a chance to expand the brand, and give Kiwis ownership of Esquires. The Esquires brand is appealing to "mum and dad" investors who know the brand and want to feel ownership of the chain.

"It's a David and Goliath story," he said. "You have to dream big. People don't dream big in this country."

If you didn't get it, Starbucks is the Goliath in this story. However, Deeks respects what the global coffee giant has done.

"It's very easy to be second, or third, because you can learn from the mistakes of others," he said.

Deeks spends his spare time infecting others with his drive through the Entrepreneurs' Organisation mentoring programme, sitting on the board of the New Zealand branch.

Cooks Food Group, soon to be Cooks Global Foods, sees the acquisition of FDL and Esquires as a great opportunity for both companies.

"Merging the companies brings experience from both sides to the table," Jackson said. "There was no need to go down the road of listing a company from scratch."

Jackson likens Esquires path to that of Burger Fuel. Both companies have expanded into global brands, with Burger Fuel running 44 stores worldwide, and 13 stores in the Middle East.

Deeks currently owns the franchisee rights to 13 stores in the Middle East. The most recent store opening was in Kuwait last week.

Deeks says he's inspired by what Burger Fuel has achieved. Its success validates Esquires' business plan.

Kiwi businesses are successful in the Middle East because of New Zealand's reputation, he said.

"It's clean, green, and we aren't involved in the political situations."

The locals' way of socialising was also an advantage. Rather than drinking in pubs they go to malls, restaurants, and meet in coffee houses, he said.

"They drink coffee like it's going out of fashion."

Esquires has some big backing overseas, with the royal family in Bahrain involved, and a government organisation in China.

Deeks said the model worked because there was excitement about New Zealand, Fair Trade Organic. And no doubt, Esquires is playing the Fair Trade card at the right time.

"We are going to be the good guys in the coffee industry," Deeks said.

All Esquires coffee is roasted in Mt Eden, then exported around the world. The aim is to have all products, including syrups and powders, manufactured here.

However, with the high New Zealand dollar this could be a challenge, Deeks said, especially considering Esquires was now eyeing the United States.

New Zealand was the toughest market in the world for coffee, with 11 brands fighting it out, but in the US it was pretty much just Starbucks, Deeks said.

One mall in Beverly Hills had only one coffee shop, and the lines of people were snake-like, Deeks said.

"There is clearly room to move into this market. There's blue sky everywhere we look."

Planning global expansion naturally means a lot of travel. In one week Deeks has flown to Bahrain, England and Ireland. But the high-flying Aucklander doesn't mind, as long as his hotel is near a yoga studio so he can satisfy his appetite for a daily Bikram workout.

"It's a perfect job for me."

- Fairfax Media

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