They're gaining on Hortons

To date, the company has made good progress in its president's drive to become a billion-dollar business by 2006.

The Hamilton Spectator
July 11, 2001

They're gaining on Hortons
Strategy Afton Group among Canada's fastest growing
Steve Arnold

Burlington - Robert Macdonald's Afton Food Group may not be the investment darling of the fast service restaurant business today. But the local entrepreneur has ambitious plans to change that.

To date, the company has made good progress in its president's drive to become a billion-dollar business by 2006.

For its most recent quarter, for example, the company reported revenue growth of 350 per cent, an achievement that's all the more remarkable given that he's competing against Tim Hortons' overwhelming domination of the area's coffee-and-doughnut trade.

Afton was formed in 1993 to go after what Macdonald saw as a golden opportunity to consolidate the highly fragmented pizza and coffee-baked goods businesses.

Since then, the firm has grown from a standing start to sales expected to hit $200 million this year.

Its strategy of disciplined growth through acquisition and avoiding markets where the Hortons chain has already become established, recently earned the company honours as the second-fastest growing company in southwest Ontario and the 26th in Canada, in a competition sponsored by Profit Magazine.

The company's best-known nameplates are Robin's Donuts, a coffee and doughnut chain that's considered a major player in Western Canada; and 2-4-1 Pizza.

"We really consider ourselves to be the dominant player in Western Canada," Macdonald said.

"Hortons may be absolutely and utterly dominant in Ontario but there's always room for a strong No. 2 or No. 3 in any industry."

Across Canada, Afton operates 258 stores under its five name brands, with another 20 stores in development.

In addition to Robin's and 2-4-1, which each have a single store in Hamilton, the company controls the nameplates for Mrs. Powell's Bakery Eatery, Ruffage and Donut Delight Café.

Macdonald explained one key to his planned growth will be to twin Robin's and 2-4-1 stores under the same roof. That's a technique Hortons already uses by combining its doughnut shops with Wendy's hamburger restaurants, but Afton plans to improve on the concept by integrating the behind-the-counter operations to a greater degree than the competition does.

Afton has four combined stores in operation and they've each reported 110 per cent sales increases.

Strategies like that, which reach for the greatest possible efficiency, are the key to surviving in a fast food industry that's always been known for cutthroat competition.

"The margins in this business have always been pretty good, what you're competing for is market share," Macdonald said.

Another key is to expand the menu. Over the past 10 years, doughnuts have shrunk to only 15 per cent of Robin's revenue while soup and sandwiches have grown to be the big income earners.

For the first quarter of this year, Afton reported net earnings of $536,009 on sales of $42.7 million, compared with $234,389 on revenue of $25.7 million for the same period last year. The company has operations across North America and in Saudi Arabia.

Recent developments include the launch of a 110-person national call centre in North Bay to streamline order-taking for 2-4-1 Pizza franchisees in Canada. All stores are expected to be connected to the call centre by mid-October.

You can contact Steve Arnold by e-mail at moc.rotatcepsnotlimah|dlonras#moc.rotatcepsnotlimah|dlonras or by telephone at 905-526-3496.


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