Pumpkin Patch VS Burger Fuel

Sitting in the Takapuna KFC today eating my 3 piece quarter pack I got to thinking about brands again.

Putting the Colonel's badly run brands in this country aside I would like to discuss two up and coming brands that have their genesis in New Zealand and both with ambitions on a global scale.




Pumpkin Patch(PPL) the trendy kids wear manufacturer and retailer and Burger Fuel (BFW) the trendy Gourmet Burger maker share few traits with the well established KFC brand as operated in NZ.

Both PPL and BFW are in the infant stage as far as size and brand awareness go, although Pumpkin Patch seems to have a very high brand recognition even in areas where they don't have stores and one could assume on that fact alone it could become a true global brand.

BFW are well established in New Zealand, with two stores in Australia and the brand is seen as the place to buy quality fast food.

PPL are similarly ensconced in NZ and Australia and have a small presence in the US and UK. They are represented in other international markets via department stores and mail order.

PPL have a total of just over 200 stores and BFW just over 20 and both had their beginnings in the early 1990s.

Both companies have had their images carefully nurtured over the last 15 years or so and that attention to the brand has paid off and will continue to sustain growth as they look to go global.





While BFW only listed this year PPL got the jump in 2004 and has grown substantially since then, entering the US West Coast and now in Texas and New York.

The biggest risk for PPL is the cost factor, as they expand from a small base, likewise ,BFW will struggle as they enter new markets. This is likely to be ameliorated as economies of scale kick in and the brand gets additional awareness.

Strong branded companies like Starbucks have expanded this way. From their local area of Seattle they quickly spread their well managed brand across the US States and then globally.

Burger Fuel and Pumpkin Patch will attempt something similar in reverse. Probably harder to achieve than Starbucks but with their strong brands both these companies have a great shot.

The US market is arguably the most important market for both companies and the scale and exposure that will be available to them will either make or break them.

The cost of expansion will be high and must be done carefully and with much thought and planning. Getting it wrong in the US could well mean the death of either company. It is a very competitive market and there are giants there ready to match your product.

Thankfully, as management of Burger Fuel and Pumpkin Patch have been careful to keep their brands as strong as they are, as they have grown, this has given them an edge as they expand overseas and any company with an edge on the competition through strong brands and therefore brand recognition will have a better chance of surviving in a though market like the USA.

The possibilities for growth of these companies is truly mind boggling.

With around 100 Pumpkin Patch stores in Australia and a population of 20 million, it doesn't take much to extrapolate the figures in the US alone, with a population of 300 million.

The possibilities in India and China, while probably many years down the track, is enough to make ones eyes water.

Burger Fuel's future growth story isn't as easy to gauge as they have just started their foreign expansion although it will probably be tougher for them to expand than PPL as the fast food sector in which they operate in has a lot more competition. Their strong brand and differentiation to the competition will make this task easier however.

While not guaranteed global success and the associated riches that would surely follow, Pumpkin Patch and Burger Fuel have put their global expansion plans squarely in the hands of two very strong brands in the markets in which they currently operate.

Their success will hang largely on how new consumers respond to their carefully crafted brands and the backup management give them.


Disclosure I own PPL Shares



Burger Fuel Worldwide @ Share Investor


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Discuss BFW @ Share Investor Forum - Register free 




c Share Investor 2007

A Rare Breed

The bullshit that passes for accountability amongst our leaders; politicians and business leaders alike, makes a farce of the meaning of the word "leader".

What does a leader do Darren?

Well, it is quite simple really, even though some individuals in the positions that they find themselves in and in rarer and rarer cases those than actually achieve those positions, would like others to think that being a leader is a complex issue only understood by the likes of those with over sized craniums.

Being a leader as such is as straightforward as setting examples for those that you lead, for it is clear, even to a two year old, for those that observe a good leader doing good things are likely to model themselves on good behavior. Psych 101 really.

Conversely, bad behaviour by a leader will almost guarantee a negative culture: at the workplace or anywhere else for that matter.

Bad leadership flows down to individuals in a company. It can cause resentment among workers, gossip and it saps productivity, morale and effects the long term viability of the organisation or business.

The worst and most public example of leadership failure in New Zealand would have to be Teresa Gattung, the recent retiring CEO of Telecom New Zealand [TEL.NZ]

Her culture of blame, resentment, lies and underhanded competition at leadership level managed to pervade the company culture to such a core extent that any customer getting in touch with a customer services representative at Telecom would have been well aware that there was something going horribly wrong at head office.

Gattung was the head at that head office and she was fully responsible for the disastrous mess that she managed her way into while in tenure behind the big desk.

After leaving of course she was rewarded for her mismanagement with a bundle of cash and plaudits from other mediocre managers of other businesses and arse kissing mainstream "business media" who patted her on the back for "a job well done".

Excuse me!!

On the other hand, the quiet achievers like Don Braid, the CEO and Bruce Plested from Mainfreight Ltd [MFT.NZ]:


"As we grow to become a world player we must maintain our culture and style of business by keeping a strong grip on our policy of being anti-bureaucratic; continuing to allow branch managers to make bold decisions; being energetic and entrepreneurial; and so continue to grow our business.

Don Braid, GM 2007.


Braid and Plested lead from the front and as a result an excellent company culture has evolved. The workers love working there and most of all customers enjoy their contact with Mainfreight.

Without this strong, leader led, focused running of this business Mainfreight would no doubt be floundering in the extremely competitive business environment that they operate in.

Plested and Braid would be sorely missed if they ever left the company so hopefully they can pick a good replacement when that happens.

Given that company culture is so good, the likelihood is that other good leaders will emerge, thanks to the example set by Mainfreight's leaders.

The lack of accountability by leaders when things go wrong in an organisation or business is probably the biggest barrier to business excellence for the medium and long term in this country.

Corporate history in NZ is littered with the corpses of businesses mismanaged to the point of surrender and over the last 8 years the level of managerial incompetence has continued.

The difference over the last 8 or so years though is that management and specifically leaders of that management haven't been accountable or been made accountable by fellow board members, shareholders and customers.

We have had a litany of cases of unaccountable leaders recently. Tim Saunders, former director at failed Feltex Carpets has recently been voted back in as a director of Contact Energy Ltd [CEN.NZ] after being found by an independent body as being partly culpable for Feltex's demise.

Is it any wonder why those working at the coal face at Contact are suffering from low morale. Its CEO or its board should have summarily dumped Saunders. Totally the wrong message sent to the troops and not good for the long term health of the company, global warming fuzzies or not.

Countless heads at the restaurant operator, Restaurant Brands Ltd [RBD.NZ] have failed miserably at the helm, none of them were held responsible in any way, other than they were forced to leave, long after the rot of their management had set in. RBD continue to suffer this vacuum of leadership all the way down to store level and it is obvious in almost every aspect of the business, from the non responsive middle managers all the way down to the surly staff serving customers.

There is a more successful culture in low fat yogurt than at RBD head office.

Sky City Entertainment Group Ltd [SKC.NZ] CEO Evan Davies made a series of mistakes that ended in his being pushed out the door earlier this year but not before he resided over dramatically falling fortunes in gaming profits, a couple of bad asset purchases and a conflict of interest case when his wife was promoted to a position of significant importance in the company.

Davies was allowed to stay at the helm despite his failures because his fellow board members and Sky City shareholders failed to make him responsible and he himself failed to realize that he wasn't managing the company the way it should have been and to fall on his own gilt edged sword.

Management under him at the time are still there at head office and continue to run around like headless chooks wondering what to do, while bargain hunters are hanging around, presumably with better management skills, waiting to pounce on the mismanaged beast that is Sky City.

When is it that leaders will take responsibility for company success and its failures?

It will happen when others make them responsible for those failures. In the case of company leaders; shareholders, employees and customers fail to make them accountable and need desperately to do so.

It shouldn't be up to others to make individual leaders responsible though. Being taught to be a leader from an early age is the antidote to the sickness that we as a society are suffering in terms of leadership.

The New Zealand Prime Minister, Helen Clark, should be a leader to look up to but her copybook is unfortunately blotted with so much irresponsibility and lack of accountability the ink is turning into a sickly red and spilling over the whole corpse.

With good role models in New Zealand being as rare as 15 year old virgins it looks like the problem is going to get worse before it gets better.

Our socialist education system where it is taught that it is OK to lose and that the word"failure" has been erased from the school vocab to be replaced by the phrase "did not achieve" is certainly only going to make the problem of future good leadership a goal that is "not achieved".


Disclosure: I own SKC & MFT shares in the Share Investor Portfolio

Share Investor Reading from 2010

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From Fishpond.co.nz



Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz




c Share Investor 2007

Share Investor Friday Free for all: Edition 10

Ian gets a Bargain



The Warehouse in Hamilton


Ian Morrice , the head of The Warehouse(WHS) has received good news recently. It was reported in mainstream media today that he is to receive a total remuneration of $3.908 million for the 2007 financial year to June 29.

Nothing wrong with that, Morrice has done well to turn around company fortunes by selling the losing Australian arm and reinvigorating the shop floor by selling more consumer friendly brands in his stores.

Speculation by media in the case of The Warehouse is that one of those targets was an increased share price. Like Auckland Airport(AIA) a few months back managers were given incentives if certain performance targets were met and the link to share price performance was cited by that company.

Both AIA and WHS were/are under takeover speculation so the increase in share price is totally unrelated to the performance by management or the CEO and the incentives paid to those at AIA and Morrice at WHS are clearly undeserved.

If share price increases can be pinpointed to management's achievements then and only then incentives should be paid.

In a closely covered case by business media, the appeal by Foodstuffs, Woolworths and The Warehouse has finished today but a decision is not expected for several weeks.


Playing the game of Monopoly



A Waste Management Trash Unit

Proving that the Commerce Commission can make a ruling in favour of a virtual monopoly business in New Zealand they have cleared Transpacific Industries to buy some businesses off Envirowaste Services.

The company have been trying to buy parts of Envirowaste for some years after being turned down by the CC to buy the whole company a few years ago. That decision followed the purchase of Waste Management by the Australian trash giant and the approval of that purchase by the commission.

Transpacific was yesterday cleared to buy EnviroWaste's solid waste collection businesses in four centres and solid waste businesses in two others.

That decision could shed some light on a decision pending before the commission on whether The Warehouse could be purchased by two dominant retail industry players.

Oils Well?

The recent climb in the price of oil from the low of $US70 per Bbl to over $96 today and the worry over the price is a complex tale of inflation and increases in productivity and technology.

While the price is clearly just below the inflation adjusted April 1980 record price of US$101.70 there are reasons why we shouldn't worry too much, yet.

Since those heady days individuals and companies have increased productivity manifold times and the technology that we now use, for industry and personal use, allows the consumption of far less of the black stuff.

Our cars get more millage to the gallon/litre for a start and vehicles are one of the biggest users of oil, especially you Americans!!

As a footnote to this story, no the world isn't running out of oil. The "Peak Oil" theory is as mythical as global warming and the tooth fairy The left are mining P.O. to advantage their nonsense and collect more taxes.


Acres of Shopping


The new 210 million dollar Westfield at Albany, New Zealand


The expansion of retailing in New Zealand looks set to continue for the foreseeable future if the plans of the mall giant Westfield (WDC) are anything to go by.

Westfield has just opened a giant mall, a former apple orchard from where the "Albany Beauty" apple gets its name, in Albany, just a stones throw from where I live.

That new mall has 5.2ha of indoor floor space and although it was opened yesterday, the 1800-seat Sky City(SKC) Cinemas, will not open until next year.

The company have 12 malls in New Zealand and look set to continue expansion of not only Albany, where there are acres of land to do so, but malls in Newmarket, Auckland and Christchurch as well.

Construction of other shopping precincts unrelated to Westfield, in the Albany area, are going ahead stridently as the population in the area expands rapidly.

Westfield look to have a great future in this country as its covered mall shopping areas don't have the same dominance as they do in such regions as its home market, Australia and the home of the mall, the USA.



NZX Market Wrap

New Zealand shares dropped more than 1 per cent today following significant declines on Wall Street, but the local market's fall was smaller than for those around the region.

The benchmark NZSX-50 index closed down 53.8 points at a one-and-a-half month low of 4154.13. Turnover totalled $113.4 million, with 24 rises and 80 falls.

Telecom shed 2.6 per cent, or 11c, to a more than two-month low of 417 after its quarterly result today. The company said net profit for the three months to the end of September were $225 million, unchanged from a year earlier. But profits from continuing operations were up 29 per cent.

The mobile outlook wasn't good, some of the ways they got some profit seemed to be from lower tax and one-off things like the Southern Cross dividend. Obviously the combination of a bad day and a poor result.

Air New Zealand was one of few leaders to post a rise, up 3c at 215 despite ongoing oil price rises.

Fletcher Building fell 32c to 1168 and continued its dramatic fall over the last week, Contact Energy was down 4c at 900, Fisher & Paykel Appliances lost 8c to 348, F&P Healthcare was 6c lower at 317, and Auckland Airport lost a cent to 287.

Sky City was down 6c at 539, while Sky TV rose a cent to 570.

Smaller stocks to rise were Methven, up 6c at 246, NZX, up 8c at 948, Nuplex, up a cent at 756, and carpet maker Cavalier, 2c higher at 310.

Pumpkin Patch was down 6c at 293 after I bought some earlier this week at 309, Michael Hill lost 20c to 1025, Ebos fell 8c to 537, Freightways was down 7c at 383, and Mainfreight fell 3c to 732.

C Share Investor & NZPA 2007

NZ Dollar Wrap


Reuters currency rates

4.45 today 5pm yesterday

NZ dlr/US dlr US76.25c US77.11c
NZ dlr/Aust dlr A82.99c A82.91c
NZ dlr/euro 0.5277 0.5335
NZ dlr/yen 87.60 88.99
NZ dlr/stg 36.65p 37.13p
NZ TWI 70.61 71.32
Australian dollar US91.90c US93.08c
Euro/US dollar 1.4444 1.4462
US dollar/yen 114.90 115.37

Disclosure: I own WHS Shares

C Share Investor 2007

Trevor Mallard's Anti Violence Advertisement

Trevor Mallard has made a new advertisement in the war against violence in New Zealand and I would like to be the first to unveil it to give readers the full impact.









“ IT ’S NOT OK TO LOOK THE
OTHER WAY AND SAY, IT’S NOT
OUR PROBLEM...”


“OUR CAREERS MAYBE OVER BUT THERE IS
NO EXCUSE FOR VIOLENCE...EVER”.




“ ...BECAUSE IT IS OUR PROBLEM, AND IT’S NOT OK."





“ IT ’S NOT OK TO
BLAME THE DRINK
OR THE FACT THAT I'M
A LOSER".




“ IT ’S NOT OK TO SAY HE
WAS ASKING FOR IT.”




“ IT IS OK TO PUNCH A COLLEAGUE
IF YOU ARE A VIOLENT KNUCKLE
DRAGGING LEFT LIBERAL SUCH
AS MYSELF.”


“ ...BECAUSE IT IS OUR PROBLEM.
AND IT’S NOT OK – EVER.”










C NZ Govt 2007


C Darren Rickard 2007