In the Beginning

In 1977 at a partnership meeting of Costless Chemists group (James Delahunty, Neil Baynes, and Garry Kennedy), item no. 57 on that night’s agenda was the establishment of a mini lab to neutralise the effect of the discount chemist, Carl David 2 hour mini labs in Brisbane Central Business District – Capital City of the State of Queensland, Australia.

One A4 size page faxed flyer from the Pics Pty Ltd (Mr Mike McInnes & Mr Ross Ogilvy now of Kodak) outlined the forth-coming PMA conference at the Hilton Hotel Sydney where they acted as agents for the (as yet untried) 1 hour Noritsu QSS-2 high-speed processor.

James, Neil & Garry readily adopted the idea to further investigate it. They obtained an expert in the field Mr Kevin Hewitt, a Developing & Printing Representative, who had his own businesses in Queen Street, Brisbane City. He was consulted then sent to investigate and to buy what was the 3^rd prototype in the world (the other 2 were upstairs in the Tokyo buildings on the 2^nd and 12^th floors).

Meantime Neil and James sold their life insurance policies to help finance Kevin Hewitt into a 4-way partnership in a company structure known as Chemcolour Pty Ltd. Garry went back to weekend work to help finance his way.

The $180,000 AUD (equivalent (1979) in June 2003 x 5 times $900,000) was raised by a very astute financial broker Mr Ross Porter from Beneficial Finance (a division of the Bank of South Australia

The drama of getting our original site

James lined up the original proposed site, an arcade in front of Lennon’s Hotel in Queen Street, Brisbane City, owned by Stocks and Holdings. Great drama occurred when the QSS-2 was on its way from Sydney, the real estate agents informed them that the landlord "did not want a piece of farm machinery” in the windows of their so called ‘up-market’ arcade. They reneged on the pro-forma lease. Panic! Their hearts were in their mouths, luckily James heard from Mr Andy Georges of the Cabana Café, (Brisbane’s first coffee shop), that the pancake shop at the front of Wallace Bishops (the Jewellers) arcade was trading badly. We made a cash take-over offer of $33,000 for them to immediately shut and took over their ground floor site of 36 square meters at the front of Wallace Bishop Arcade, which thankfully (in hindsight) had a basement restaurant and certainly was a superior position to Lennon’s.

James pulled Mr Wallace Bishop Jr out from under his Stag Triumph veteran’s sports car on a Saturday morning at his home to consummate the deal on a ‘shake of hands’ over the phone! The partners have never forgotten this most generous act.

We literally gave the stock of pancake mixes etc. plus buckets of milk away, some to Andy Georges, and some to the needy. Tony Runde, the shopfitters, went to work with very basic plans and working 24hrs a day. Remembering this was the first time that an M/L had been placed in a retail street level environment and we had to invest, create and have the work competed to receive the lab by the Wednesday (3 days). A most senior technician (who wore white gloves) from Japan did the installation and so by the following Monday the first one-hour mini-lab in the world opened for business creating the first saleable colour prints in just one hour.

"These were the best of times; these were the worst of times.”

There were storm clouds internally on the horizon in our first week of operations; Kevin insisted that his wife Elaine work for Chemcolour. After Kevin gave a show of ‘footpath’ pathos and cried ‘crocodile tears’ further berating and pleading with James. However, Gary & Neil they gave in. James warned the others that it would be "on their heads!” As one of their first policy decisions had been broken of not employing any spouses.

Elaine with her tough attitude must have trained half the M/L staff in Queensland! They could not hold loyal staff under unreasonable pressure and circumstances.

The great thing was that these first 7 tremulous weeks saw us hiring the police to control the crowds on the footpaths, for this new wondrous machine could produce customer’s prints in one hour (and the world could see them as they came down the drying tower of the old QSS-2 machines).

Never believe an advertising brochure! Instead of employing just 3 staff we soon had 9 staff, working 24 hours a day.

Kodak (Peter Ratray) didn’t know what to do with us as we were chewing up rolls of paper and gallons of chemistry. They were worried about our line of credit and predicted we’d go broke so Kodak kept us on a very tight leash credit wise. Within 18 months we were spending over $1 M with Kodak per annum and as other more staid and established photographic businesses fell by the wayside or were taken over by Kodak wanting to preserve the old order. We continued to blossom as we kept our margins and a sane and manageable expansion program.

The next downer was our ‘Race to Japan’ to secure the business blessing of Mr Nishi Moto, President of Noritsu Koki Co., Ltd (who to this day at 85yrs old, still turns up to work everyday) for his endorsement of a franchise scheme that would see a more rational expansion around Australia and into South East Asia. Unfortunately the word had got out and so Kevin & Neil were beaten to Japan by 2 days by the ‘Quick as Flash’ group.

This was after having already purchased our 4^th Noritsu lab. So we bought 4 Copal’s in the next few months as we were expanding more rapidly. However we recognised with this error of judgement that the workhorse ability of Noritsu far exceeded the fine sensitivity of the Copal machine.

We expanded to 11 labs as well as 2 shops. Mostly they were in stand alone street frontage shops but 2 M/L were in department stores in Ipswich and Mackay, so one of Queensland’s largest provincial cities.

Mr Bob Evans (proud to be the only non-Japanese CEO for Noritsu) helped oversee our continued growth. Fotofun was the first export client of Noritsu Koki Co., Ltd worldwide. This has grown into a huge multi million dollar-a-year businesses with over (10,000 employees in Japan and in 22 countries).

Fotofun 3 biggest promotions were

• Using Jeannie Little an Australia ‘Ocker icon’ to re-emphasise 2^nd set of prints. It was a $64,000 ‘suck it and see’ program on TV. It worked well and got us recognition but was not cost effective. The outstanding memories are a long lunch at the old Milano’s restaurant in Queen Street with Jeannie. Heaps of patrons approached our table to say G’day to Jeannie. The other memory was the actual making of the TV ad – lights, camera and plenty of action!

• A grand dinner at the then new Michael’s restaurant (on the site of the present Broadway Arcade) as we needed to get recognised by the landlords and shopping centre manager and big retailers particularly GJ Coles and Woolworth’s and Myer etc. This videoed six-course function achieved more than we could dream as we were offered sites all over Australia. The down side was that it awoke the retail chains up to a highly profitable specialised area. Unfortunately long term Woolworth’s went with AGFA equipment but Coles went with Kodak and hence Noritsu. Fotofun is the reason why the Australian market has the highest percentage (74%) of films being processing in M/L in the western world. Approximately 40%. These remain the two biggest influences on the retail price and are the lowest in the western world. In the long run we obtained good sites as a result of this grand promotion.

• With the XII Commonwealth Games coming to Brisbane in September 1982 we decided 2 years prior to become associate with this great event and would produce 1 medallion per sport per month. We spent over $168,000 over the 18 months leading up to the games. See photos of the medallions that we produced. We thought this would build the business even more but we found out there weren’t as many numismatic (coin collectors) out there as we originally thought.

We originally produced up to 30,000 medallions per month to start with but this fell to about 15,000 per medallions month towards the end of the promotion. Each director had a set of gold and silver medallions made for themselves. These are greatly sought after now by the coin collecting community, the common bronze sells for $5, silver $250 and the gold $1000.

The very experienced Michael Browning (Commonwealth Games Merchandising Manager) was able to extract the maximum royalty fee from us. The opening promotion was a press conference in a trendy coffee shop with 2 girls dressed in medallion bikinis. They certainly made the daily and suburban newspapers. On the funny side, right in the middle of the press conference all the reporters’ beepers went off at once. The 25 pressmen and photographers virtually up and left as a group to cover a robbery over the road in Queen Street. Public relations are a fickle science.

Another funny side, in retrospect is that the directors’ set of gold and silver medallions made for the four of us had the side effect of our becoming keen on silver buyers. At this time Neil noticed that Nelson Bunker-Hunt and his brother were trying to corner the worlds silver market. Hence my fellow directors were very bullish about silver. So they bought enough so that even today they now have ended up with the silver ‘doorstops’ as the price of silver plummeted!

Our shop designs were getting better and better as we produced more and more stores. We incorporated some new ideas such as ‘in floor’ lighting, under awning signs that were computer controlled i.e. signs that had running messages. In those days the signs used individual light bulbs compared with the modern day LED’s. And so we replaced many bulbs over the period! To overcome our ‘farm machinery’ image we ‘spent big’ on shop fronts. The greatest compliment we could get was that many of our ideas have been copied as this new industry took off and we were able to stay on top by constantly updating our image.

The biggest boom was the Commonwealth Games, in 10 days our 5 Brisbane City Shops took over $450,000 (by 5 to get the approx. equivalent in today’s value).

After this, however, our rapid expansion came to a halt as our accountants had overlooked the unfair tax imposed on growth companies i.e. payroll tax. We now had 148 employees. This tax cost us $123,000 a one off payment.

A new Australian Tax Office ruling quickly followed this set back; our original 5% wholesale tax was changed to 11% and backdated. This cost us $85,000. It affected our cash flow at a vital time and gave us cause to wonder why we were in business.

The worst was yet to come, when the Fraser/Howard government backdated anti tax avoidance legislation. We were caught up in the catch all clauses of legislation that reduced legitimate tax reducing ideas (compared to fraud). This virtually turned us into ‘criminals’ overnight. Each of us ordered to pay $345,000 in income tax (including fines). We had no way of finding that kind of money. After much gnashing of teeth and sleepless nights we were blessed by gaining the service of an 83 year old tax accountant who was able to use his influence to get us a fair hearing in Canberra. He arranged time payment and had the taxation substantially reduce to approximately $115,000 for each director.

Kevin became disillusioned with the industry and opened his first computer shop. He took his hand off the lever of management, and as expected the figures started to slip. He was replaced in a partnership shake-up by the ex-head of Tandy Electronic stores (Radio Shack – Mr Ken Whitlock). He was given the task of either ‘doubling our growth within 12 months or sell the business.’ After his reorganisation, we started in 1984 to franchise shops. This was good but not great. It saved us from group and payroll tax etc. but we didn’t achieve the growth we needed to ‘feed our visions’ cash flow was needed for expansion. We then decide to put the 11 M/L and 2 shops on the market in 1985

"For Sale”

During the selling process we had interesting times speaking to then guru’s of the Australian photographic industry. We had entered the new industry as a strategy for saving our photographic departments in our pharmacies. Now we were dealing with the like of the great Mr Neil Cottee of Rabbit Photo’s. After a few back and forths we sold to the Kodak backed Mr Rick Abrahams, the then Assistant National Leasing Manager for the Westfield Shopping Town Corporation. He had entered the industry in August 1980 well after we started. He looked at all the figures shops in his centres, and saw the extra potential from Fotofast shops and so successfully purchased the shops from us in November 1985. He sold to Kodak in stages over the next 4 years.

James re-entered the photographic market when Mr Wallace Bishop (the landlord for the chemist shop at 245 Albert Street), decided to upgrade the ‘Cabana Arcade’ in 1993 and closed the then Colourcare Minilab (the original site of the first retail Noritsu 1 hour lab in the world). James installed a Noritsu 1801 in co-operation with Kodak ‘click scheme’ in to the pharmacy. It was the second 1801 installation in Australia. James believes this machine still holds the record of 52 rolls in 8 hours for an 1801. This small lab obviously went very well. It obviously could not reach the figures of the old Fotofun Albert Street, but he knew what the potential rollage was.

In October 1998 with the help of Brian and Yvonne Kenna (ex Kodak) James installed a Noritsu 2301 at 370 Queen Street Pharmacy and commenced doing agency work for other chemist shops around the city of Brisbane. After 12 months he realised that this machine needed to be in a better address to make it pay, i.e. it needed to work 7 days a week. So the 2 machines were swapped between the 2 shops.