La Madeleine Courtesy of La Madeleine

La Madeleine hopes re-franchising spurs growth

Bakery-café chain plans to refranchise most company locations

La Madeleine French Country Café wants to grow faster. So it plans to operate fewer locations.

The Dallas-based bakery-café chain, owned by Le Duff America Inc., plans to refranchise more than half of its company-owned locations. Its goal is to spur the chain’s growth, by selling markets to large-scale operators.

“We believe this is the right formula,” Olivier Poirot, CEO of Le Duff America, said in an interview with Nation’s Restaurant News. “We want partners to bring more growth to the brand.”

La Madeleine was founded in 1983 and was sold in 2001 to the French restaurant company Groupe Le Duff. In the U.S., it also operates Bruegger’s Bagels, Brioche Doree and Mimi’s Café, under Le Duff America.

Poirot, former chief financial officer at Sodexo North America, was named CEO of Le Duff America in January. He promised at the time to grow both La Madeleine and Bruegger’s through “aggressive franchising efforts.”

The French-inspired La Madeleine has grown slowly over the years, and currently has 86 locations. The brand started franchising three years ago, and franchisees currently operate 25 of the system’s 86 locations.

The company essentially plans to reverse that percentage, partnering with investment banking firm The Cypress Group to sell 38 company units in the Houston, Atlanta, Austin, the D.C. area and Louisiana markets. It will keep the restaurants it operates in the Dallas-Fort Worth market.

It will sell the franchises as whole markets, rather than store-by-store.

The sales of those restaurants would be designed to jump-start growth in those markets. The franchisees would operate the units, acquiring talent that come with those acquisitions to learn the brand and add more locations.

“We’ve had a lot of people approach us over the years asking if they could buy restaurants from us to kick start their growth,” Poirot said.

Large-scale operators like controlling entire markets for a brand, so they can control marketing and advertising and not have to worry about a substandard operator nearby who hurts the brand’s reputation.

Such operators prefer acquiring units to learn the brand first. They also tend to open more units faster than if a brand sells a territory to a franchisee who builds it from the ground up.

“We think that’s the way to accelerate growth,” Poirot said. “We find partners who are successful entrepreneurs. They buy markets, and learn the operational ways of La Madeleine and they expand with the brand.”

“We’ve been franchising this brand for three years,” he added. “We have great franchisees who are strong partners. But we realize the largest franchisees out there have built incredible machines. These people are taking over full territories.”

The operators would also be purchasing the brand’s talent who know the concept. 

“They want to buy our people, so to speak,” Poirot said. “Our general managers, people in the stores. Franchisees want to acquire an operational layer, the people who made the brand a success.”

By refranchising those 38 locations, La Madeleine would be shifting its entire business model, one that would be dependent mostly on franchisees for its growth — rather than the other way around. “It’s a big switch, a radical switch,” Poirot said.

He said the company enjoyed six straight years of growth heading into 2016, when La Madeleine “started to hit a soft environment.”

Even then, he said, the company found reason to keep expanding.

“We’re suffering less than most of our competitors,” Poirot said. “In this environment, that’s helping us. It’s giving us reason to continue to push forward.” 

Contact Jonathan Maze at [email protected]

Follow him on Twitter at @jonathanmaze

Correction: March 15, 2017
A previous version of this story incorrectly labeled Brioche Doree as a Groupe Le Duff acquisition. The company developed the concept. A previous version of this story misstated the number of locations La Madeleine has. There are 86 units.
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