Wednesday April 18, 2012 Naza Tutti Frutti attributes success to word of mouth testimonials

LIKE durians ripening in abundance during harvest season, numerous Tutti Frutti stores offering the popular self-serve frozen yogurt (froyo) from the United States have been popping up all over Malaysia.

Naza Tutti Frutti (Malaysia) Sdn Bhd managing director Izham Hakimi Hamdi attributes the brand’s strength and popularity to the word of mouth testimonials from its customers and franchisees.

Naza Tutti Frutti (Malaysia) Sdn Bhd, a company within the Naza Group of Companies, invested an initial RM4mil to acquire the master franchise title for Tutti Frutti in Malaysia. It then expanded to Singapore, Cambodia, Brunei, Thailand and Qatar.

Tutti Frutti opened its first flagship store in Sunway Pyramid, Selangor in October 2009, and then five more over the following three months.


Master franchisee: Izham said the company invested an initial RM4mil to acquire the master franchise title for Tutti Frutti in Malaysia, and subsequently Singapore, Cambodia, Brunei, Thailand and Qatar.
With Naza Tutti Frutti as master license holder, Tutti Frutti has grown to 90 outlets — with 85 in Malaysia (including 53 in the Klang Valley), two each in Singapore and Cambodia, and one in Brunei.

The company is looking at aggressively expanding Tutti Frutti throughout Malaysia and other regions, with 30 stores targeted for this year, including three in Qatar, two in Thailand, and one in Singapore.

Tutti Frutti Malaysia’s rapid expansion nationwide and in South-East Asia, Africa and the Middle East is carried out via its sub-franchising programme.

Izham recalled that it was not easy bringing a new brand to Malaysia, and that Tutti Frutti was developed as if establishing a homegrown brand.

“The first 12 months of the business was challenging as people were unfamiliar with the brand and what froyo was. But people grew to learn the benefits of consuming froyo, and to differentiate between froyo and ice cream,” he said.

“Education and awareness remain a constant process, with Tutti Frutti employing platforms like its website, Facebook, staff members and in-store promotional materials. Our target market is dominated by women aged between 20 and 40 and families.”

Asked about first-timers’grouses that Tutti Frutti charges by weight (per gramme) rather than per cup, Izham said price is less relevant as it is about customers buying only how much they want to eat.

Tutti Frutti presently offers over 40 flavours and over 40 toppings, although not all are offered at each outlet as only the original, chocolate and vanilla flavours are permanently featured.

“The brand has expanded exponentially due to its franchise model, which has attracted many franchisees who believe that Tutti Frutti is a proven, successful venture,” he said.

“Under Tutti Frutti Malaysia’s franchising deal, the franchisee has to propose a good retail location and be of good financial standing before coming on board.

“The master franchisor will provide everything including store design, training according to our operations manual, operations and marketing support and stock delivery.”

Depending on the size of the outlet and design, a franchise would cost between RM500,000 and RM700,000, which covers franchising fees, equipment, training, initial stock, renovation cost and marketing materials.

“One attractive factor is that Tutti Frutti Malaysia presently does not impose royalty charges, which will only be implemented in 2015 when the brand is well-established,” revealed Izham, who attributes the brand’s success to its self-serve concept that allows Tutti Frutti stores to able to operate efficiently with minimal overhead costs and staff.

“We do not forget our role as master franchisor and regularly send a quality-control team to evaluate all stores to ensure adherence to standards and provide after-sales support. Tutti Frutti has a structured organisation with departments for operational support, marketing, stock planning and purchasing, forwarding and logistics. Training also plays a role,” he added.

A 15,000 sq ft warehouse in Kuala Lumpur serves as a distribution centre that delivers stock to all outlets, which are located in commercial blocks near residential areas (80%) or shopping malls (20%).

“We advise franchisees that it takes two to three years to recoup their investment. Depending on location, an outlet can take in sales between RM40,000 and RM250,000 a month,” said Izham.

He noted that though the Klang Valley crowd has the spending power, Tutti Frutti has been doing well in Batu Pahat, Kuantan, Penang, Ipoh, Sungai Petani, Johor Baru and Kuala Terengganu.

“Competition is not a concern as long as we maintain the quality of our products, provide good service and make ourselves relevant to market needs,” said Izham, who foresees froyo being a viable and not merely a trend.

“Our advertising and marketing campaign, focusing on brand awareness and customer loyalty, includes a radio campaign, loyalty and membership programme, and ongoing monthly promotions.”