The business has developed a reputation for delivering eye-popping desserts to customers at cafes located on the urban fringe. Having recently secured backing of $9 million over three years from sophisticated investors through Royce Stone Capital, the brothers are now turning to the crowd for an additional $3 million in funding to open six new stores in the next year.
“We have plans for an initial public offering in the next few years, and we’d rather look at an IPO than to franchise [to grow],” Simon says.
If the company was to make its way to the ASX, it would be a unique addition to the public market. Other cafe brands on the local bourse, like Retail Food Group, operate with a franchise structure and have been under scrutiny in recent years over the viability of their models and treatment of franchisees.
The Jolly Group says it wants to have as many as 60 cafes across Australia within five years, though it rejects the franchise model.
“For a franchise to be profitable, the franchisor has to be less profitable…It’s not a viable model, unless you have a really great brand,” Simon says.
The company believes a better way of getting the community involved in the business is through offering them an early chance at equity through a $3 million crowdfunding offer via Birchal, set to launch in coming weeks.
Tapping into the vegan movement
The Barbars say that if you live in Melbourne’s inner city, there’s a fair chance you’ve consumed some of their food.
Their wholesale food business Fig Food Co supplies both their cafes and hundreds of other Melbourne venues with salads, soups, cakes and slices.
“It allows us to be innovative with what we do. We service so many different customers, from mum and dad operators to [bigger] cafes,” says Rimon, who oversees the wholesale business.
Future investment in the business will be used to help roll out a fully vegan menu that can be sold to cafes across the country.
The push for vegan cafe food is here to stay and there’s space for a business to be the go-to supplier for those needs, Simon says.
“Vegan is not a fad, it’s a way of life. Our customers have been asking for it and we want to deliver.”
The founders say they can move quickly on these trends because they have avoided the temptation to franchise.
“We’re a company-owned model, we’re unique. We can make these decisions and we can roll out new offerings and menus pretty quickly.”
Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.