Carl’s Jr, Cinnabon boss offloads IGA supermarkets amid tightening profit margins

The director of Carl’s Jr and Cinnabon stores has ditched half his IGA supermarkets and says the only way to stay in business is to ‘take shortcuts like 7-Eleven’.

A DISTRESSED business owner has called on the consumer watchdog to investigate IGA after he was forced to sell half of his franchise supermarkets to satisfy banks and creditors.

Gaurav Bansal, who put his company OM Mahalaxmii and its two IGA supermarkets in liquidation last month, called on the Australian Competition and Consumer Commission to scrutinise Metcash, the company behind the IGA brand.

“ACCC needs to investigate (the) Metcash model,” he told The Courier-Mail.

Mr Bansal later withdrew his call for an investigation after speaking with Metcash.

Mr Bansal’s other company Bansal Group, which he runs with brother Vishal, once owned 17 of the independent supermarkets across Queensland, New South Wales and Western Australia.

The brothers say they have lost money after selling nine of their IGA-branded stores to pay banks and creditors.

Mr Bansal said the sales were forced by rising rent and wages coupled with flat-lining profits in their supermarkets.

He did not expand on the demand but criticised a lack of support from Metcash.

“Retail is going through a tough time and it’s impossible to run IGA (stores),” he said.

“Wages and rent goes up 3-4 per cent every year but sales don’t.”

Charter Hall development manager Brendan Cannon with Gaurav Bansal at the opening of Mr Bansal’s first IGA at West Ipswich in 2010.

Mr Bansal said Bansal Group was the shining light of Metcash when it was rapidly rolling out new independent supermarkets across the eastern seaboard.

“Metcash support goes to retailers who grow,” he said.

“At one time we were the heroes, we had the support.”

A spokesman for Metcash said, with 1400 stores, it was “not unusual to have a small number of stores turning over”.

“We are encouraged by the confidence of our independent retailers in the future and their willingness to continue to invest and improve their stores,” he said.

“Metcash continues to work closely with them, and is investing significantly in the network to further improve its competitiveness.”

Bansal Group is also responsible for the rapid rollout of American food giants Carl’s Jr and Cinnabon in Queensland.

Mr Bansal revealed the group would shift its focus from IGA to growing the fast-food businesses.

The company will open the Rockhampton Carl’s Jr store in a fortnight and said two Cinnabon stores would open before the end of the year.

Mr Bansal said margins were tight across the retail sector and suggested the only way to make ends meet was to copy the 7-Eleven business model.

“This is the start,” he said.

“I don’t see many independent businesses surviving in the next seven years… unless they take shortcuts like 7-Eleven.”

In April 2018 the Federal Circuit Court penalised operators of two Brisbane CBD 7-Eleven stores $192,961 for short-changing workers by more than $31,000.

Empty shelves after the closure of Cornett’s IGA supermarket in Innisfail.

Mr Bansal said his business was only surviving by “not taking any big salary”.

“I have worked 10 years and still don’t own any property except a house which 90 per cent (is) with the bank,” he said.

“I have put my family on the line to make ends meet and still can’t make it work.”