Monthly Archives

August 2018

Getting Back to Business – Gearing Up for Your Best Franchising Year Ever

By | Field Audits, Franchise Audits, Thought Leadership

It is the hot month of August… but September is around the corner.

As the weather gets cooler, thoughts turn to “back to school” if you have kids, and “back to work” for the rest of us.

I was talking to a few colleagues about this the other day. It seems that even though the “official” New Year is January… it seems like September is the time when we get “back to business”. It is the time when releases get done and decisions get made. Everything about the fall leaves and the cooler weather says “new start.”

So… what will your September look like?

We know our audience of franchising professionals does not always have time to read some of the bestselling business books. If you want to have a quick look at the best, we took some of the most innovative ideas out there, to help you get started in September the right way!

1. Management by OKR (Objectives, Key Results)

measure what matters coverOKR (Objectives, Key Results)  as described in Measure What Matters by John Doerr shows how the venture capitalist “works”. As one of the original investors in Google, John Doerr is legendary in the Silicon Valley community. The principal behind OKR is simple:

  1. Set goal
  2. Set tasks to achieve this goal (key results)
  3. Make the tasks measurable

For example, if you sell junk clearing services online. For one location, you want to grow revenue to 1 million this quarter (that is your objective).

Your key results would be:

  1. Get 5 leads/week at $100/lead from Google Ads.
  2. Run a 20% discount advertised in a Direct Mail campaign to 10,000 residents with a repetition of 3.

While a lot of this seems pretty practical, how many franchises really measure what matters, and connect it to key results? With these principles in mind in the context of the field auditing process, you can show it moving from overall organizational goals, to country to region and more.

2. Dare to be Original

originals coverOne of the best books last year we recently read here at FranchiseBlast was Adam Grant’s Originals. Grant, a very popular professor at the Wharton School at the University of Pennsylvania, brings forward a researched-backed thesis that non-conformists will rule the world. While this can be a tough “pill to swallow” in a franchise world connected to the compliance on systems and processes, the book is an excellent read for the following reasons:

  • He teaches us that entrepreneurs are not necessarily wild risk takers, but thoughtful people who hedge their bets.
  • He discusses some of the BENEFITS to procrastination.
  • Originals try a lot, succeed a lot AND fail a lot. They don’t have better ideas than their peers though they persist much more.

3. Checklist Manifesto

checklist manifesto coverIn the Checklist Manifesto by Atul Gawande, we learn about how checklists have taken a number of different fields by storm. Although in the Franchising world we are very familiar with the QSR checklist for food safety, other fields such as Medicine, Finance and Aviation also make great use of digital checklists. This simple management tool has enhanced care, and even saved lives. Here are some interesting pieces to think about:

  • Work has become incredibly complex as the science behind it has increased. It is impossible, at this point, to expect one person to be the master of a procedure such as an operation, where literally hundreds of things could go wrong. Checklists help capture the complexity behind today’s jobs.
  • A best practice that was discovered was that medical people knowing each others names before a surgery perform that surgery more effectively. This could extend to franchising, where everyone on a team knows each other’s name can make a big difference.
  • Having a checklist is not the only important thing – it is having THE RIGHT checklist. The world of aviation has known this for some time, which is why they spend so much time on them. Is the future of franchise manuals a checklist?

If you want professional management of your franchise, you want the effective management tools, especially for franchising. Check out FranchiseBlast’s Franchise Field Audit and Franchise Scorecard tools.



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Career Mobility in Franchising

By | Battle Tested Strategies

Is it possible to create a career from the ground up in franchising? For Christie Cruz, Director of Operations Support at Tropical Smoothie Café the answer is “yes”. In a recent LinkedIn post that unexpectedly went viral Christie discussed her recent promotion, and how she an entry level job can lead to infinite possibilities.

She discussed her journey from crew person at McDonalds, to being a Manager, to an Area Supervisor at Arby’s and her recently announced position as Director of Operations Support at Tropical Smoothie Café, a very popular fresh-food destination with over 600 locations.

 

After thousands of likes and almost 100 comments, the idea of upward mobility in a franchising career has clearly struck a cord. We had the chance to ask Christie the following question:

What advice would you give to someone who is on the “front line” right now in order to advance their career?

“It was hard to narrow it down to just one thing. As I reflected on my career and each stage of it, there are 3 things that stuck out to me as the most important: Grit, Accountability and Relationships.

“The restaurant business is fast-paced, results driven and messy at times.  You have to have grit (a mix of tenacity, endurance, determination) to get through the grind. You have to love the grind and see obstacles as an opportunity to win not an excuse to lose.

“In any business you have to hold yourself accountable to a high standard of performance. I just taught a class on standards and one of the things I imparted to the class was the fact that until you hold yourself accountable you cannot begin to hold anyone else accountable. People are always looking at the leader to see how they do business, and if they cut corners so will their teams. You have to do the right thing no matter who is watching.

“Lastly, and probably the most important is building genuine, solid relationships with everyone you come into contact with. You cannot succeed in this business alone. You need your boss, your peers, your vendors, your subordinates and most importantly your customers to win.”

On the LinkedIn post, dozens of people in Senior roles discussed their journey from the front lines to Sr. Management.

One Senior Executive commented:

I LOVE seeing fast food experience on a resume. Show me someone who has had a couple of promotions over a couple of years at McDonalds and I’ll show you someone who shows up on time, is honest, and will do what it takes to get the job done.  Skills are transferrable, and one picks them up quickly in fast food.  Attitude is critical and can’t be taught.

Industry insiders and managers value attitude and a “get it done” work ethic over a long list of skills.

Another commentor said:

Those are great stepping stones Keep them they will always remind you of where you have been and how to find your way home.

This reinforces the idea of staying grounded all the while moving up the chain.

One woman, who worked her way up from cleaning floors and sweeping tables to a Sr. Director position said:

Life and work is often all about attitude and perspective. One can choose to be miserable, even if they are in CEO role and are able to dictate their own agenda, and no one to report to. Another approach would be, to take pride in your work at any level, try to do your best regardless of the task and difficulty level, don’t settle, but always learn and improve. I love the journey, and there is no end destination. It’s like a trip that never ends, and every day just brings a new adventure.

Attitude, perspective and hard work come up over and over in this discussion from some of these top leaders in the franchising community. This type of focus likely had a positive impact on their lives outside of work as well.

Are you trying to find a way to boost your career as a franchise coach? Download our free eBook, 5 Ways to Boost Your Field Audits. 

In it, we look at the cycle of a field audit, and how each of the phases can be positively boosted through both high tech and and low tech methods. Some of the biggest brands in franchising have already downloaded it, and the reviews have been great so far.



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Important KPIs for Spas and Salon Franchises

By | Spa and Salon

While many Spa and Salon businesses recognize the need to measure KPIs, the truth is many rely more on intuition than analyzing the numbers. While creating an atmosphere, happy clients and happy employees takes fantastic soft skills, “knowing your numbers” will help your spa or salon find its place in the market.

Think of a KPI indicator as a map. You have a destination point, and you have your path, with a giant “you are here” sticker as well showing where you currently stand. You talk to your clients about balance, and the numbers are a big part of the balancing act for any business. Here is a helpful list of the top KPIs for spas and salons.

1.    Cost Per Lead (CPL)

Every marketing effort should be tracked, since what gets measured, gets improved. It helps you understand how much you are spending on leads, and if you should continue to invest. For example, if you are getting $25/lead off of Google, and a bunch of traffic off of Facebook, but 0 leads, you should reconsider the time, money and energy you are investing in Social.

CPL = Cost of Marketing Program/Total Number of Leads

Note when calculating, a lead has two main aspects:

  • They are actively searching for the service
  • They provide a way for you to contact them for follow up

It is a good idea to put aside a small amount of your budget, such as 10%, to experimental initiatives to make sure your marketing mix is the right one for your spa, your target market and your area.

2.    Average Treatment Rate (ATR)

You may think that because your salon or spa is busy, it is successful, but that is not necessarily true. At the end of the month, it is a good idea to get an idea about how much you are making for each treatment as well.

ATR = Total Number of Treatment Hours Sold / Total Number of Treatment Hours Available 

As you look at this metric, one thing to take into account is that some treatments take longer than others. So – a 2-hour treatment of $180 is less efficient than a 1-hour $100 treatment.

3.    Spa Productivity or Occupancy

With the rent or mortgage costs associated with the space typically being the biggest cost associated with a spa understanding the usage of treatment rooms is an important indicator of how productive your space is.

Spa Productivity = Total Number of Treatment Hours Sold / Total Number of Treatment Hours Available

4.    Capture Rate: Retail

Spa and Salon revenue comes from two sources: services and retail sales. According to Winn Claybaugh, co-founder of Paul Mitchell Schools,  “Per square footage, the footage devoted to selling products [like shampoo and hair gel] is more profitable than footage devoted to service”.

Capture Rate = Total Retail Guests/Total Spa Guests 

5.    Net Promoter Score (NPS)

Offering an exceptional experience will not only keep your guest coming back, but they will also tell their friends. Best of all, they may even take a “selfie” of them looking fabulous after their treatment! Technically a loyalty measure, the Net Promoter Score (NPS) is a fantastic way to measure this on a quarterly basis.

This measure compares your biggest fans (promoters) compared to your biggest critics (detractors). Learn more about Net Promoter here.

NPS= % Promoters-% Detractors
Your NPS can help you in your marketing efforts, by asking promoters to leave reviews or recommend to their friends and family and it can help prevent churn in terms of the detractors.

6.    Repeat Guests

Repeat guests generate a higher return on every dollar spent getting them in the door. Also – practical experience shows that repeat customers tend to spend more on subsequent visits as well. This metric is calculated through the following:

Total Number of Repeat Guests/Total Number of Guests 

7.    Employee Retention

Customers are more likely to develop a bond with their stylist or therapist than the brand itself. If you have an employee who leaves, you risk their clients moving with them. For this reason alone (even though there are many others), you want to make sure your team is happy. Employee retention is measured as follows:

Total Number of Employees that Left for a Period/Total Employees at the End of that Period 

8.   GOPPATH

This is a strong indicator of performance because it looks at how good you are at generating revenue, controlling expenses and making strong utilization of your hours.

GOPPATH = Total Spa Gross Operating Profit (GOP)/Total Treatment Hours Available.

9.    Earnings before interest, tax, depreciation and amortization (EBITDA)

EBITDA is a measure of a spa or salon’s operational effectiveness. It is a way to evaluate a company’s without having to factor in financing decisions, accounting decisions or tax environments. Although difficult to say or even fully comprehend for gym owners who have come up through the health and fitness operations side, it is a key indicator.

To calculate the adjustments needed for EBITDA, please see this article from Quickbooks.  

EBITDA shows how good your business is at generating cash thus your business is valued as multiples of this metric.

While you encourage your clients to balance mind and body, at the same time, you want to make sure your KPIs are balanced. With FranchiseBlast’s Scorecards, you can track all of your metrics in one place, and modify metrics on the fly. Learn more here…



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Franchise Growth Trend Hunting: On-Demand Food

By | Franchise Growth, Franchise Operations

Pretty much every Franchise Coach has heard this from their franchisees: one of the biggest trends for customers of franchise locations is on-demand food or off-premise. But, as discussed in an earlier post, there are two options when it comes to delivery for the franchisor as an organization, and the franchisees themselves.

  1. Creating ordering capabilities in-house
  2. Using a third-party service or food delivery service app

Today, we are going to look in-depth at the third-party services, and explore key considerations for restaurants in franchising working with these services. There are many new considerations to understand when looking at this trend, and what matters in terms of supporting your franchisees with this transition.

What is a Food Delivery Service App?

Whether it is the ubiquitous GrubHub or UberEATS, high-end Caviar or 45-minutes or less hub, DoorDash, a food delivery service app is more like having a virtual foodcourt in your pocket. There are a lot of these apps right now in a “land-grab” for space, which are both regional and national. If the customer does not have a specific restaurant in mind, they can simply scroll through the app and browse by city, address, cuisine or menu. Do you have a very specific craving for Korean Pork Bone Soup, “Fall Off the Bone” Texas ribs? Well, with a food delivery service app, you can even search by menu item.

If your franchisees are considering signing up for one or many of these services, you will want to take a few things into consideration.

Market Dynamics

As your Marketing Director will tell you, different areas have different advertising dynamics. For Pay Per Click (PPC) advertising on Google for example, the franchisee in Brooklyn, New York will have a different experience than the one in Tulsa, Oklahoma. Why? Because there is more competition in Brooklyn for just about… everything, driving the cost of advertising up.

The same dynamic is at play in Food Delivery Service Apps. There are some cities that will rely on the most popular apps-only, such as GrubHub or UberEATS. There are other cities where there is such a proliferation of apps, that franchisees need to have several iPads to keep up.

Take Mighty Quinns BBQ based in New York for example. In order to keep up with the different apps they manage their different ordering system using several iPads for each delivery service. For Christos Gourmos, co-founder of the company, he says that the back-end would be the biggest headache – as in – it is not about bringing in the customers, it is about defining who is paying.

The opposite is true for markets where there is no proliferation of apps. For some Australian businesses for example, the 35% premium just one app charges means that the cost of entry is too high.

Finances and Fees

Food Delivery Service Apps offer a challenge for franchisors, because of the added fees can put a lot of pressure on the franchise model. For example, while the apps can offer up to 35% onto the price of a meal, a franchise like Dominos can charge their franchisees just 1% for their delivery service. This is why so many brand aggregators and large franchisors are either building this capability in-house, or are partnering or taking ownership in some of these outfits. For franchisors without this option, here are some things to consider. Note, that all quotes are different according to the application and the region, so the percentages are just for illustration.

  • Non-Sponsored Post Commission: A “non-sponsored” listing, means you will simply be listed on the site, with no special treatment in terms of priorities. In some markets, it can be 15% for this cost.
  • Sponsored Post Commission: A “sponsored” post means that your offering will move up in the rankings, and can cost about 20%.
  • Delivery: While it is possible to use these applications without using delivery, there is an added 10% for the delivery for those who need it.

In franchising, we are able to take advantage of economies of scale – and creating the ability for franchisees to do their own delivery is a great start in terms of helping them take control of the costs. Another strategy restaurants use is to have one price on the apps, and another price in the restaurant or on their own website.

Marketing

Similar to the “daily deals” website such as Groupon, the risk of food delivery apps is that the customer may move the relationship from the restaurant to the application. The flexibility the consumer gets with the app can be at the expense of the franchisee. As a result, you want that food and packaging to “hook” the consumer so the next time they order they will go directly to the restaurant. Also, the data behind the consumer behavior is lost to the app, meaning some of your market intelligence abilities will be limited.

Operations

While most experts see consolidation and specialization in the future, the reality today is that there are a lot of these apps out there. As a result, taking orders from multiple apps will create duplicate data entry, which creates opportunities for human error. Also – the disconnected systems creates some administrative challenges – ones that can create a subversion of royalty fees.

Another new trend noted by McDonalds is that on-demand has created new occasions for eating. They have found that late-night eating is a new “thing” that would not be covered by a standard restaurant operating hours.

One interesting form of consolidation for brand aggregators to consider is the trend of Ghost Kitchens also known as “Virtual Kitchens”. This is where there are several brands under one roof, and it is delivery only. These kitchens are growing in popularity across North America and the UK creating a need for highly versatile chefs, but removing the need for “front of the house” staff.

The Future?

Restaurants are not going away… but they are changing. One way to navigate change is by having flexible technology that goes with it. At FranchiseBlast, our brand promise is “You set the course, we’ll help you get there. Let’s enjoy the journey.” Our flexible system can move and grow with you, whether you are a traditional brick-and-mortar restaurant or a ghost kitchen. Request a demo to get started.