Strategic succession the secret ingredient to success say Plarre Brothers
Ensuring your children work outside your family business before you bring them into the business is critical for successful succession, Steve and Mike Plarre told attendees at Matthews Steer’s March Success Stories Breakfast.
Ferguson Plarre CEO Steve, and Head of Manufacturing Mike, both grew up in their family business which was established in 1911 by Otto Plarre, an East German immigrant, when he opened his first bakery – Plarre’s Cakes – in Puckle Street Moonee Ponds.
“We both started off with cleaning roles after school,” says Mike. “On Saturday mornings we’d jump on our bikes and head to work to help make pies for first few hours. Then we’d clean under trucks and detail the machines. We went from the ground up, and that was truly grounding."
Mike loved baking and knew from a young age that he wanted to follow in founder Otto’s footsteps, while Steve’s focus was with the financial and strategic side of the business.
“Steve and I work well together because we’re not battling for the same space like other family business do,” Mike says. “I can’t remember when we last had conflict. It’s easy to come into family business to act emotionally, but we’ve worked hard not to make emotional decisions.”
Despite their youthful initiation into the family business, and their simpatico working relationship, the Plarre Brothers say they don’t want their children to follow in their exact footsteps.
“We've been talking about how we're going to protect the business from our families,” says Mike. “We’ve heard too many negative stories about the next generation destroying businesses, and the brand of our business is bigger than the individual.
“(They will) have to deserve their role in the business, have to interview for that role, and work outside for two or three years before they come into the business
so they’ve got that external experience of working for someone that is not a relative. We want to make sure they join the business with the right skills and the right attributes so that they can then build it for the next generation.”
As many business owners in the manufacturing sector will attest, finding and retaining the right people is one of the biggest challenges Ferguson Plarre faces and Steve says his team works hard to identify new employees who will be a cultural fit with the business, and to take care of them.
There aren’t many trained bakers and pastry chefs coming into the industry and retention is nowhere near as strong as it was 10 years ago,” says Steve. “We
put a massive amount of work into helping our staff to meet some of the challenges they’re experiencing in everyday life, whether that is depression or
anxiety or something else that doesn’t allow them to function well inside the business.”
Steve says the shift to online retail, and diminishing popularity of the franchise model are other challenges to the business’ growth and expansion.
“Foot traffic over Christmas fell away by 15 to 20% in shopping centres,” says Steve. “It might not be directly causing us problems at a food level, but it's causing us problems at entry level – we pay a lot of rent to be on someone else's in-trail – and it's not filtering through to rental reductions.
“The quality of franchisees compared to the 1990s is a tough one, and on top of that, people are now thinking, well, if I've got to spend $300,000 or $400,000 for a business, would I really put it into franchising? There are always disastrous stories in the newspaper. So, we've got less people calling.”
Nevertheless, the Plarre Brothers are confident that their family business has the resilience to ride out the changing face of retail, and tough economic times.
“We bring happiness to people through food,” says Steve.
“There are lots of things we do to feel happier about our day. Sometimes it's calling a friend or Mum, and sometimes it's having custard tart or a coffee. Your body doesn’t need it, sometimes you shouldn’t have it, but we sell stuff your soul needs.
We're pretty confident we can navigate through some tough economic times by being the business that we are.”
Ferguson Plarre won the Banksia Award for sustainability 10 years ago and, with the cost of food and power constantly on the rise sustainability is a key priority
for the business.
“We had a massive push on sustainability when we built the business, to build the factory once, build it well, and make it as sustainable as possible, and we’re
building on that moving forward.
“In the last six months, we've fired up our solar power station on the roof that's over 1,600 panels that's now providing up to 80 per cent of our peak energy
requirements. Currently we recycle 90 per cent of our waste, but we're working really hard on reducing waste by another five per cent.
“Those initiatives are so important in controlling the margin. It costs a lot of money upfront to do it, but the payback is well worth it.”
And the Ferguson Plarre focus on sustainability extends beyond the doors of their factory, to their wider community. Continuing their longstanding relationship with the Salvation Army, the Plarre Brothers launched their Hot Cross Bun Morning Tea initiative, at the Success Stories Breakfast, raising $1,700 for The Salvos by selling hot cross buns to attendees.
“As a business, we've always got sustainability as front of mind,” says Steve.
“We hope that the Hot Cross Bun Morning Tea becomes an annual event, and really makes a difference for anyone who's been down to the wire.”
A highlight of Matthews Steer’s event calendar, the Success Stories series spotlights local business owners and operators, who share the experiences and challenges they’ve encountered on their road to success, their growth strategies and advice for fellow business owners. Past Success Stories speakers include Mario Nastri, Daniel Carapellotti from Class Plastics, Fruit Box founder Martin Halphen and fashion designer Lisa Gorman.
March’s event was staged in partnership with Melbourne’s North Food Group and Bank of Melbourne.
Matthews Steer’s Success Stories Breakfasts provide our clients and their guests the opportunity to learn from some of Melbourne’s most successful business identities, and to network with other local businesses across a broad range of industries including the food and supply chain industries.