Inland Revenue made an application to liquidate the company that owns the store, Lovett & Sons, earlier this month.
The application was heard in the high court a week ago. Justice Jeremy Doogue ordered Lovett & Sons to pay $3122 to Inland Revenue and a liquidator was appointed.
The previous store to go under before Silverdale was the original Mad Butcher store in Mangere, Auckland founded by Sir Peter Leitch in 1971.
It was put into liquidation in July, with liquidator Peter Jollands saying the business model was in favour of the franchisor over the franchisee.
Parent company Veritas vehemently disputed this. It has also previously brushed off speculation that the stores folding are part of a pattern.
Last year, it said four stores (Rotorua, Massey, Glenfield and Kapiti) going into liquidation at the same time was merely a coincidence.
“The closures or changes are all unrelated and are primarily due to the personal circumstances or property lease issues of respective franchisees,” Veritas said.
But the issue is getting harder to deny now the number has escalated to seven stores folding.
Veritas also made a loss of $4.8 million for the year to June 30, compared to a $3.3 million profit the year before.
First Retail managing director Chris Wilkinson says that many stores going into liquidation might be a sign that a butchery chain isn’t the best fit for a franchise.
“What this could be proving is some business models aren’t suitable for franchising just because of the numbers that have gone under in comparison with the wider portfolio. There’s a disproportionate amount of distressed Mad Butcher franchisees,” he says.
The Peter Leitch-shaped hole
Wilkinson reckons some of the trouble began when Leitch sold The Mad Butcher chain Veritas for $40 million in 2012.
The brand DNA of The Mad Butcher has always been intrinsically linked to Leitch and his crazy, larger-than-life personality bouncing off the TV and out of the radio, he says.
The colourful Kiwi personality founded The Mad Butcher chain when he was 23 and was recognisable to most consumers upon sight or sound.
“Now there’s no correlation between the brand and the delivery. What’s mad about The Mad Butcher? People don’t know about that heritage,” Wilkinson says.
“At the moment it’s not a clear proposition. There’s significant opportunities they have in terms of repositioning the brand and defining that to consumers.”
Currently, the brand is still using Peter Leitch’s face for its branding, but he no longer is the voices or appears in its ads.
A new brand ambassador fronting its social media marketing seems to be a sausage named Sammy, while the catchphrase at the end of its TVCs is now ‘Your BBQ HQ’ and ‘My Mad Butcher saves me more’.
This has changed from the distinctly memorable ‘You just can’t beat the Mad Butcher’s meat.’
Wilkinson says Veritas need to act fast and redefine what its brand means to customers, as the high-profile store closures are starting to catch the public’s attention.
“The store closures are very noticeable in the commercial spectrum, but this will be starting to filter through to consumers and it will be casting some doubt in their minds as well.”
There are still 33 Mad Butcher stores in operation around New Zealand, two of which are in Veritas’ ownership.
This is down from 40 stores in 2015.
To stop the exodus of franchisees, Wilkinson says Veritas needs to look to the two Mad Butcher stores it owns and lead by example on what to do.
These stores need to be resilient and a source of confidence for franchisees, he says, who may be disheartened at the number of liquidated stores cropping up.
“What they need to be doing is creating proof of concept so that they can quite happily say to these franchisees, ‘Here is a model that’s working extremely well,’” he says.
Whether this is through its branding, in-store experience or product offering, something has to change, he says.