O'Briens Sandwich Bars Business Model Basically Failed Case Study

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O'Briens sandwich bars business model basically failed as a result of subletting franchisee properties.

O'Briens founder was Brody Sweeney.

He got the idea for O'Briens from a Subway restaurant in New York.

He started O'Briens in 1988 in Dublin.

The business lost money for the first six years of its existence.

A boost in the economy of Ireland brought success.

Employed people came in daily for sandwiches and coffee.

At its peak, the company was selling 140,000 sandwiches daily.

It was the biggest coffee seller in the Republic.

In 2007, franchise stores had a combined turnover of €140m per year.

The holding company had profits of €1.2m.

Sweeney became a poster boy for Ireland's new breed of entrepreneur.

He took the brand overseas.

In July 2007, O'Briens Irish Sandwich Bars Ltd. employed 20 people directly and 800 indirectly via franchises in Ireland.

The brand had 220 worldwide outlets in 13 countries.

Although a law suit cost the company €500,000 in 2007, the profits for that year were €860,000.

In 2008, things started to go seriously wrong.

The turndown in the economy led to a decrease in customers.

Jobs were lost and so were daily customers.

This was exacerbated by increasing competition from Insomnia, BB's, Subway, and even stores like Spar and Centra that improved the quality of their sandwiches for lower prices.

According to estimates, O'Briens lost between €2m and €5m in 2008.

The company was forced into examinership.

At this time, O'Briens had debts to a total of €4.

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1m.

Nine of its outlets had arrears of €276,000.

O'Briens was responsible for €480,000 in rents on closed stores.

Abrakebabra Investments Limited was chosen from a group of nine parties who expressed interest in investing in O'Briens.

The offer failed because the judges would not approve a request to change the company's property arrangements.

O'Briens leased many of its franchisee outlets and sublet these to franchisees.

In good times, this structure allowed fast growth.

With the economic downturn, franchisees were forced out of business.

O'Briens became unable to pay its landlords for the empty premises.

O'Briens went into liquidation in October.

The UK business for the company was also not doing well for at least two years.

They operated under the same lease and sublet system as the company in Ireland.

This caused the same problems regarding rent payments on empty units.

O'Briens Franchising UK Ltd. came to the rescue and bought O'Briens Irish Sandwich Bars Ltd.

Property arrangements did not include subletting.

The franchising business in the UK was not affected when O'Briens Irish Sandwich Bars (UK) went into administration.

Abrakebabra agreed to buy the O'Briens brand master franchise for the Republic of Ireland from the liquidator.

This means that the company will live on.

Sweeney is no longer part of it.

Summary

In Ireland, the O'Briens sandwich bars business became a household name in just a few years. Unfortunately, the business succumbed to the turndown in the economy, mainly as a result of its franchisee subletting system.

Brody.....

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