Category

Franchise Trends

Franchising Trends: Stay-At-Home Customers

By | Franchise Trends

One of the biggest trends coming out of the end of 2021 is stay-at-home customers. People are spending more time at home than ever, affecting some industries where franchises operate powerfully.

According to Google, there are a few underlying behaviors of the at-home consumer.

  • A new relationship with time and space. Time is more fluid, and we are finding more uses for space. The bedroom is becoming the home office, and the living room is turning into a gym for at-home workouts. The kitchen table is doubling as a classroom as kids continue to homeschool. As a result, home services franchises are thriving.
  • Seeking novel ways to enjoy the outdoors. Travel restrictions mean that people are looking for new ways to have adventures. One way is enjoying their own backyards and outdoor spaces, helping pool, deck, and similar companies.
  • Redefining companionship. As people are spending more time apart, human beings, who are social creatures by nature, are looking for companionship. This has led to a boom in pet buying and the services, such as boarding and daycare, that support animals as part of the family.

Home Services, due to their essential nature, are often considered recessionproof. In fact, during the pandemic, some of these businesses are booming. According to CNBC, “Home extensions and additions jumped 52%, and security and privacy also saw much greater demand with interest in fence installation and repairs up 166%.”

Premium Service brands, which offer lucrative and unique brands in niche areas, stood out as a group sharing positie news. 360° Painting grew their system by 15 units, and saw 35.5% increase in sales Q1 2020 over Q1 2019. In fact, several brands had success stories to share in 2020.

Pools and other outdoor activities are booming. According to MSN, “Pool demand is so strong that even Wall Street investors are taking note. Poolcorp, an international distributor of swimming pool supplies, parts, and outdoor living products, hit an intraday all-time high this week and is up over 54% year to date. The stock is on pace for its best year since 2003.”

Poolwerx, one of the world’s largest pool and hot tub maintenance providers. opened 11 stores in 11 months in Australia. “The home service industry has proven time and time again to be recession-resistant, and this has become particularly evident during Covid-19,” CEO John O’Brien explained.

As stay-at-home customers look for companionship, they are finding it in animals. Many of us have friends or neighbors recently buying a dog to fill the void created by the pandemic. According to the Washington Post, “Shelters, nonprofit rescues, private breeders, pet stores — all reported more consumer demand than there were dogs and puppies to fill it. Some rescues were reporting dozens of applications for individual dogs. Some breeders were reporting waiting lists well into 2021.”

Camp Bow Wow, North America’s largest pet care franchise, includes dog daycare and boarding. During the pandemic, they opened nine new camps nationwide, and continued their high-growth trajectory with twelve franchise sales across the continent.

Stay-at-home customers is a trend here to stay in 2021 and beyond. The examples above are just some of the businesses that will emerge stronger as we move forward together.



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Franchising Trends: The Rise of Multiunit Ownership

By | Franchise Trends

One of the biggest trends for 2021 people are seeing across the franchising community is multiunit ownership. This trend, is driven by a few key factors, including:

  • A small but growing number of franchisors are seeking out multiunit owners due to their overall advantages.
  • More sophisticated concepts require owners with more experience (and capital) needed to enter the market.
  • If a multiunit franchisee has 30 units already, they likely have strong operations, so adding one more will be less risky than a new franchisee with no experience.
  • Technological advancements such as video calls, online accounting, and more means that owners can live from anywhere.

Multiunit owners were more likely able to weather the pandemic’s storm and any economic uncertainty that may be coming in the future. Additionally, according to Global Franchise Magazine, “Large territory, multiunit franchisees are the best way for a franchisor to operate a franchise business with less effort put into monitoring franchisees and a much higher return when they sell the company.”

In general, if you are a 150-unit system, it is easier to manage 30 50-unit franchisees than 150 franchisees.

Being a multiunit owner is different since it is less tactical and hands-on and more managerial. We take a look at three successful multiunit systems and how they manage at scale.

Flynn Restaurant Group is a multiunit and a multibrand concept of Appleby’s, Taco Bell, Panera Bread, and Arby’s. With a turnover of over 2.4B annually and 47,650 employees, they are among the most respected brands in the community.

Flynn stays on top of their units by having incredibly high standards. They accept nothing less than perfection when it comes to the physical condition of their restaurants, according to their website. “we believe in ‘zero tolerance,’ which for us relates to the physical condition of our restaurants. We strive for our units to remain as close to “perfect” in their appearance as possible because we believe it is a critical component of the guest experience and a key factor in retaining the best talent.”

The Saxton Group is a family-owned multiunit franchisee with locations throughout Texas and beyond. Since 1982, they have developed and operated over 125 restaurants.

They introduced the popular McAlister’s brand to Texas, where it took off. One of their strengths as operators is their solid locations strategy. According to the Dallas Business Journal, “One of our initial growth (drivers) in Texas was to open in college towns. Everywhere we have a market for development of McAlister’s, usually one of the first places we go is to the college market.”

Dyne Hospitality Group is Tropical Smoothie Cafe’s largest multiunit franchise with 60 cafes in 6 states and many more under development.

They manage a wide area with this iconic health brand by instilling a powerful culture. For them, culture is a living, breathing part of the business. According to their website, they “encourage their teams to live by it, and hold each other accountable to it.” They use it as a foundation of key business elements, including hiring, promotion, team member reviews, performance, and communication. The pillars of their culture are:

  • Invest in people
  • Understand why
  • Make smart decisions
  • Make it happen

Last Word

The rise of multiunit ownership is here to stay. FranchiseBlast has tools available for both franchisors and multiunit franchisees to manage their brand, communications, and more. Book a demo with us to learn more.



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Franchising Trends: Delivery and Remote

By | Franchise Trends
Delivery and Remote trends header image

2020 has been a year like no other. And, we have been in awe of the franchising community’s resistance and flexibility in the face of these changes. When the COVID-19 outbreak eventually goes into the history books, we foresee some of the accelerated trends during this time to be here to stay.

One of the biggest trends we have seen is an increase in delivery and remote models. For restauranteurs, 70% of Americans order delivery or takeout once a week, and digital ordering and delivery has grown by 20.2% in one year. There are similar trends across other sectors served by the franchising community. Take a look at how franchisors of all sizes and industries are leading the way into 2021.

Virtual Tours Done with Care

CarePatrol, a National US Senior Care Placement firm shifted as the world has to provide virtual tours of care homes to their clients. According to their website: “While we may not be able to meet with you in person, we are able to assist by audio and visual chats and provide virtual tours. As such, we are fully committed to continue providing you with the expertise and guidance you have come to trust.”

The company is also offering support calls remotely to their franchisees, recording the information in FranchiseBlast. These new delivery models could translate into new options for CarePatrol customers.

Providing Options to Unstick Parents

With parents globally scrambling to offer homeschooling to their children, Mathnasium is offering a remote option. The math-only learning center dedicated to building a love of the subject in students offers Mathnasium at Home using the same method and instructors that one would find in the center. In another creative way to bring options to customers, they also offer Prime Study Space, a safe, clean space for a remote classroom. Some of these creative options could make it into a Post-Pandemic environment.

chipolte logo

Packaging for the Win

In a world where delivery is moving to the forefront, packaging plays a key role, as it does in the Consumer Packaged Goods (CPG) world. Among those ordering takeout and delivery, 84% agree that packaging is important when placing an order. Eco-packaging is emerging as a key trend in this space. Chipolte uses a combination of customized and non-customized eco-friendly packaging in its 2,600 plus. This balances both cost and eco-friendliness. Packaging will continue to play a key role in delivery culture.

Ghostkitchens Unleash Creativity

With Ghostkitchens getting more and more capable from a culinary standpoint, franchisees are chosen for their Marketing power, including celebrities. Nextbite has recently partnered with Wiz Khalifa to build food concept, Hotbox by Wiz. With no need to remodel, change expensive menus, or no worry of perceived failure if there is a menu change, they can be data-driven and flexible in their approach. As consumers buy more and more online, these innovative concepts are here to stay.

As we look to 2021, we will continue to watch these exciting trends play center stage as the world heads for a change.



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Presentation: 7 Ways Franchise Operations Have Changed in 2020

By | COVID-19, Franchise Trends

The world has changed, have you changed with it? Take a moment to explore this enticing content about how franchising has changed in 2020, and what you can do.



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

By | Franchise Trends

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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Franchise Growth Trend Hunting: On-Demand Food

By | Franchise Trends

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.

Digital Disruption in Restaurants – Franchise Growth Trend Hunter

By | Franchise Trends, Restaurant, Retail

Industry folks are talking a lot about digital disruption in restaurants these days. According to Steve DeSutter, CEO of Focus Brands, “The industry is changing […] One of the challenges I’ve put in front of my team is, if we are not innovating and remaining relevant to our loyal customer, we’re losing.”

The focus brands umbrella includes: Moe’s Southwest Grill, McAlister’s Deli, the Schlotzky’s sandwich chain, Cinnabon, Carvel and Auntie Anne’s Pretzels. And more than ever, offering customers enhanced choice and improved speed are the ways to define your restaurant franchise.

Driving this paradigm shift (and so many others) is the ubiquity of mobile phones, and their access to the marketplace. To put it in perspective, most people would rather lose their wallet than their phone — that’s how important they’ve become! Positive reviews have always been great for business but now they’re becoming essential. In fact,  33% of Google searches include starred reviews, and they’re no longer a “nice to have” — they’re a need to have.

We live in a noisy world – there are a lot of brands are clamoring for our attention. According to Steve Jobs, “Marketing is all about values. It’s a complicated and noisy world and we’re not going to get a chance to get people to remember much about us. No company is. So we have to be really clear about what we want them to know about. “

The retail transformation is here. According to Forbes, “e-commerce and shopping platforms such as Amazon — where 43% of all U.S. online retail sales are coming from.” With that in mind, let’s look at three franchise brands that are managing digital disruption beautifully.

To see the first two installments of our “Franchise Growth Trend Hunter” series, go to:

Off-Premise
Sustainability

Dunkin’ Donuts

Units: 12,435

Overview: Dunkin’ Donuts has long been at the forefront of mobile marketing in response to digital disruption in restaurants. Since the beginning of the digital era, they have been capitalizing on its ability to connect with consumers. As such, the company’s DD Perks program boasts 8 million members.

They are also considering a rebrand, removing the word “Donuts” from its name to appeal to modern, health-conscious consumers. But that’s only the very beginning.

Dunkin’ is trying to make their strategy even more future-thinking, with steps that include the following two strategies according to AdAge: “Use the face recognition on the iPhone X to see whether someone looks tired and suggest a coffee delivery if so, Weisman suggested. It is exploring an integration with Outlook that could suggest ordering food and coffee when someone schedules a meeting.”

They also have a new “concept store” which allows mobile orders to go in a different line, going right to the front, accelerating the process for customers willing to dive in digitally:

Bottom Line: Embracing mobile technology holistically is a big part of connecting with today’s consumer – it does not stop at a rewards program.

McDonald’s

Units: 36,899 Restaurants Worldwide

Overview: McDonalds has kept pace with digital transformation through their partnership with UBEREats in 10,000 restaurants and their mobile app, which offers a pay option.

They call this transformation “Experience the Future”. According to Diginomica: “(2018 is) set to be a year of massive investment in new digital platforms, with most of $300 million of savings elsewhere being pumped into technology spend.”

There is also an in-store component to the initiative, for those who still like to go into the restaurants. According to the same article:

“In many of our markets we’ve scaled the Experience of the Future platform providing our customers a more seamless, personalized and enjoyment experience with digital menu boards, self-order kiosk, greater hospitality and a modernized look. They are telling us they like the new McDonald’s better. They are rewarding us with more frequent visits and they are spending more on average when they do. We deployed Experience of the Future in about one-third of the restaurants in the McDonald’s system, including nearly 3000 restaurants in the US.”

Bottom Line: Digital transformation will be on the fast food menu in many different forms. Taking a multifaceted approach helps follow the consumer’s new habits, while hanging on to the basics such as friendly service and delicious food.

Dominos

Units: 9,285

Overview: In an interesting “parting shot” as he left his role at Domino’s, outgoing CEO Patrick Doyle said that Domino’s is on the path to go from 60% to 100% digital.

Pizza has lead the way in terms of home delivery. But as others catch up, they are now needing to be even more progressive. Domino’s is doing a lot, including a digital assistant named DOM who can take phone orders, similar to Amazon’s Alexa.

Part of their innovation is to have digital “hot spots” which have no traditional address for food lovers who want pizza at the beach or in the park. There will be 200,000 locations created, maximizing access for their customer base.

According to Doyle:

“The ability to now deliver to spots without a traditional address and other rather unexpected sites will not only continue to drive incremental orders in the near term, but it is yet another meaningful step on our mission of industry-leading convenience; and the ability to order from us anywhere, anytime. This is thanks to outstanding technology helped by continued aggressive investment, sound operations, which are vital to making the Hotspots process work and proper execution participation at the store level, a nod to our terrific franchisees, managers and drivers.”

Bottom Line: Innovative franchisors can still focus on “what is next?” An investment in innovation now, can help manage the digital transformation of the future.

Conclusion: As the digital and mobile technology continue to disrupt the restaurant industry, savvy business are leveraging new technology to connect with their customers in unexplored ways.

At the forefront of this movement are major chains like Dunkin’ Donuts, McDonalds and Dominos, all who have shown themselves more than capable to remain at the bleeding edge of innovation.

By maintaining the old-school ideals of quality products and expedient service, these companies and those like them can increase profitability and customer satisfaction by leveraging the latest digital technology available.

How FranchiseBlast Can Help

As things continue to evolve, you want to make sure that your operations are still strong, and that your service is at a high standard. FranchiseBlast’s Auditing and Performance tools help organizations stay on track and evolve with the times.

Sustainability – Franchise Growth Trend Hunting

By | Franchise Trends

smart sustainable franchiseOne of the hottest topics right now in franchising is sustainability. Basic steps like employing reusable cups only scratch the surface of the sustainable franchise, and consumers know this – if it’s easy, then chances are, it’s not enough. According to Spoon University as quoted in the Huffington Post:

“Sustainability is all about moving in an eco-friendly direction by reducing waste, composting, recycling, and focusing on conservation. Many restaurants throughout the U.S. have been trying to become more sustainable and are now serving more organic food than ever before.”

Sustainability from the Inside Out

Although sustainability is often viewed as an idealistic vision divorced from every-day concerns, the truth is, it is an important part of every business. There is a business case for  the sustainable franchise.  The biggest reason is our increasingly interconnected world. “Fands” or “Brand Fans” will defend you if they know what you stand for. Increasingly, brand is a verb, and you want to show your customers, franchisees and franchisee teams alike what your in “for” – that you care and that you are there to help.

Here are three sustainable franchise brands who are leading the way in terms of sustainability:

Freshii

freshii sustainable franchiseUnits: 286 in 15 countries
Overview: Freshii is expanding at a rapid rate, offering healthy options to consumer. In fact, the CEO, who founded the company when he was just 24, recently wrote open letters to both McDonald’s and Subway encouraging them to convert their locations to Freshii:

According to the CBC: “Let’s explore a partnership in which we together convert select Subway stores to Freshii restaurants in a quick, low-cost way,” said the letter from Freshii founder and CEO Matthew Corrin published as a full-page newspaper ad in the Globe and Mail on Tuesday.”

When you compare the unit growth, the differences are dramatic:

“Freshii aims to have between 810 and 840 franchise locations by the end of its fiscal year 2019, according to regulatory documents filed before its initial public offering… Subway’s expansion also slowed dramatically from 2014 to 2015. Subway opened a net total of just 34 franchises in fiscal year 2015, down from 313 in 2014.”

Fresh food is more difficult to sell as a “value play” – for example, even the best-managed locations have to throw 10-20% of their food away.

According to the Globe and Mail, a recent report found that “the Millennial age cohort is willing to pay up for meals that they perceive to have higher food value and more personal relevance to them.”

Sustainable Takeaway:  Consumers are choosing healthier and more sustainable options – and are willing to pay for it.

Mixt Greens

mixt greens sustainable franchiseUnits: 11 in San Francisco and Los Angeles
Overview: Mixt Greens focuses on sustainability as part of the DNA of their brand. The restaurant ensures that they source the best ingredients, ensuring that they are GMO-free.

“We know what we eat impacts the earth as much as ourselves, so sustainability is at the core of everything we touch, make and do— even if it negatively impacts our bottom line. We’re not just dedicated to being “green,” we’re passionate about protecting the natural systems that sustain us— a philosophy we hope is shared with our customers.”

On their website, they claim to have the following under “the mixt movement”:

mixt greens metrics

Sustainable Takeaway: Taking a holistic approach to sustainability creates “fands” in a very meaningful way – with the average customer eating at Mixt Greens 21 times/month.

Red Rooster

red rooster sustainable franchiseUnits: 360 across Australia
Overview: According to Franchise Business, Red Rooster has been serving roast chicken since 1972. However, today they do so with a twist: “Their chickens are fresh, not frozen, and are free from artificial colours, flavours, hormones, and MSG. The cooking process is simple too; just a sprinkle of seasoning and then into the oven to be roasted.”

Sustainable Takeaway: Even established brands can reposition food to be more sustainable. Franchisors have to invest in everything from computers, to office supplies to client dinners to help the bottom line. The consumer appeal of disposability isn’t what it used to be – now sustainability strengthens your brand.

Conclusion

jack morton brand experience

According to Experiential Marketing Agency Jack Morton Worldwide, “Brand is a Verb”. They say “Marketers must change the route of their brand experience by moving the brand’s actions ahead of its messages.”

To drive value for customers, showing, and not just talking about sustainability is a solid start.

How FranchiseBlast Can Help

With any change, you need the systems to support it. FranchiseBlast’s Auditing tools help brands stay on track with simpler workflow, reminders and even required photos when there is a violation (such as not-locally-sourced food). These tools help strengthen your brand, and make it more consistent. Let us know if you would like to chat further!

Want to see another restaurant trend? Check out our post on off-premise.



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Off-Premise Opportunities – Franchise Growth Trend Hunting

By | Franchise Trends

One of the biggest trends in restaurants today is the explosive growth in off-premise sales. According to Industry Trends and Data Expert, Darren Tristano:

“Everyone knows it’s no longer a question of whether to go off-premise — the question for restaurants is how to navigate the shift,” says Dardick. “With the global foodservice industry facing unprecedented change, the entire off-premise operating model is shifting under our feet. Restaurant and foodservice operators need to understand sizing and growth trends. Right now the opportunities are huge, and the stakes are high.”

The franchising community, which is slower to change at times, is looking to serve customers who are looking for more convenience. While not supplanting the drive-through, for many brands off-premise is the growth driver. In fact, some find the growth so fast, that they are struggling to keep up with demand. According to Restaurant Business Online:

“Tools such as DoorDash, UberEats, Caviar, Amazon and Yelp’s Eat24 allow visitors to review menus from a variety of restaurants, place an order and schedule delivery. Restaurants using these services enjoy a bump in orders that they can often absorb, and the apps expose them to potential new customers. The delivery services charge a commission on orders and a fee for delivery.”

While this can create many questions in a franchisors’ mind from consistent brand experience across markets to the potential for royalty avoidance, the opportunity for off-premise is vast.

Off-Premise Demographic

Off-premise dining is most popular among 18-34-year olds. This is a combination of iGen, at the younger side of the spectrum and millenials at the older end. According to QSR Magazine:

“Millennial families are now commonly dual-income—often with the female as the primary breadwinner—and convenience is more important than ever. But millennials also value diversity, healthy choices, and denser urban living. There has been a significant increase in interracial couples, an increase in multi-racial neighborhoods, and an increase in the consumption of ethnic food (aka international cuisine). Organic food sales have grown more than 10x in a generation, with millennials being the most likely age group to seek out organic foods.

“And it is difficult, if not impossible, to build a new drive thru in a dense urban environment.  As millennials come of age, convenience is redefined for the preferences and tastes of a new generation. The ultimate convenience—delivery—brings more options, healthier choices, and speed even in places where drive thrus cannot go.”

These digital natives value ordering online, and are all about experiences over possessions. Interestingly, the convenience of delivery helps these customers experience what is most important to them: family and friends according to QSR.

“After a long day at work with toddlers demanding attention, the ideas of going out or cooking are not that appealing. Having food show up as ordered through the same interface one uses to get toothpaste is. More, if these 20-somethings are in the middle of an experience with their friends or kids, they aren’t going to stop that experience to go get food. They want the food to come to them.”

Let’s explore how major franchisors and franchise aggregators are navigating this change.

YUM Brands

Units: 45,000
Overview: In a very bold move into off-premise, Yum! brands including KFC and Pizza Hut has entered into a partnership with leading delivery service, GrubHub offering up the “best of both worlds”. In exchange, Yum! gets $200M worth of Common stock from GrubHub, among other benefits. Many Yum! brand restaurants were already offering off-premise sales, and Yum! wants to roll it  out across the the system. In the joint press release posted on GrubHub, they say:

“We are committed to making our iconic brands easier to access through online ordering for pickup and delivery, and aggressively pursuing delivery as a strategic global growth opportunity, with nearly half of our 45,000 restaurants already offering it today,” said Greg Creed, Chief Executive Officer, Yum! Brands, Inc.

“We’re pleased to secure this partnership with Grubhub in order to drive incremental, profitable growth for our U.S. franchisees over the long term. Our partnership and strategic investment in Grubhub demonstrate our laser-like focus on two of our growth drivers: Distinctive, Relevant & Easy Brands and Unmatched Franchise Operating Capability.”

As part of the strategy, operators will have to make other changes, such as changing the batter that they fry with so it handles the humidity developed through car travel. CEO of GrubHub, Stan Chia  says that the service was originally developed for independent restaurant locations.

In a recent article in Food in Demand News, he said:

“Chains that have multiple restaurants in close proximity can send the order to the restaurant that can accommodate it the quickest. “If you have three restaurants close to each other, does it really matter which store it goes to?” he asked. (With a franchise that could be a little more tricky than independents, since the same owner may not have all three restaurants.)”

All of these will be challenges to overcome over time.

Message Delivered:  Rather than building, buying the service on a corporate level helps maintain brand consistency rather than franchisees “going rogue” and working with local providers.

Panera Bread

Units: 2,017
Overview: Soups and sandwiches are going mobile… According to Restaurant Business Online,

“Panera Bread recently announced a commitment to adding more than 10,000 jobs, many of them for delivery drivers, as it expands delivery to 35-40% of its locations by the end of 2017, up from 15% of stores. The company is rolling out a new order tracking system that allows customers to track an order’s progress on a map and get a notification when the driver is arriving. The company decided to hire in-house drivers to maintain control.

The company believed keeping the delivery service internal was key to their delivery success.

“For us, hiring our own drivers was the only way we could ensure that our delivery guests get the same high-quality experience they have come to expect from our bakery cafés,” says Blaine Hurst, president.”

Message Delivered: As delivery becomes a bigger part of the brand experience, the delivery person becomes the only human touchpoint. Panera is betting big that this will make a difference.

Denny’s

Units: 1,724
Overview: Restaurant brands dream of one day being as iconic as Denny’s. But sometimes, creating change in the franchise environment is slower than that of corporate – and that is true for Denny’s when it comes to off-premise sales. According to Restaurant News:

“Denny’s CEO John Miller said company units fared better due to multiple partnerships with third-party delivery providers, which are driving incremental sales during late-night hours and among 18- to 34-year-olds… For the first quarter ended March 28, the Spartanburg, S.C.-based family-dining chain reported a 1.5-percent uptick in U.S. systemwide same-store sales. Results were dragged down by a 1.2-percent increase in same-store sales at franchised restaurants in the U.S. By comparison, same-store sales increased 3.2 percent at company locations.

“We think this is a tailwind for the brand,” Miller said during a Tuesday conference call with investors.”

Off-premise sales are a driver of growth, as the amount of in-restaurant diners diminishes.

“In March, off-premise sales accounted for 9.8 percent of total sales, an increase from 8.7 percent in December. Delivery sales drove the increase… Miller said franchised units, which represent a majority of Denny’s locations, are slower to adapt to delivery.”

Message Delivered: Being open to delivery partnerships, rather than closed, can help franchisees capture the 18-34-year-old market. While change typically happens at a slower rate in the franchising, watching and adapting to this change is important for growth perception. With its longstanding roots in the communities that they serve, surely Denny’s franchisees will continue to adapt and succeed.

What is the Future of Off-Premise?

The demand and technology driving delivery have also sparked growth in operations called “ghost” kitchens that skip the brick-and-mortar dining room altogether and simply prepare foods for delivery. Models similar to this have been proposed to supplement franchise operations where demand outstrips supply during specific day-parts. “Ghost kitchens” could also offer future franchisor opportunities to the next generation of entrepreneurs.

How FranchiseBlast Can Help

If you are exploring off-premise opportunities for your franchise, be sure that your customers get the same experience across locations with our brand consistency tools. Also – although we don’t want to focus too much on the negative, our tools also help prevent franchise fraud, which can take place among a small minority when any change takes place. Reach out to us to learn more.



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Modern franchises focus on unit-level profitability

By | Franchise Best Practices, Franchise Trends

Are you profitable? We’ve been building franchise management software for almost a decade. We’ve worked with hundreds of franchise systems and have noticed a trend: best-in-class franchisors are putting more emphasis on continuous franchise improvement. By this we mean working hand-in-hand with their franchisees to improve their unit-level economics; not only their top level sales but also their bottom line. If you’re not doing this today, you will have trouble selling franchises in the future.

Common business knowledge tells us that you can’t improve what you don’t measure. Thus, franchisors need access to data to help their franchisees continuously improve. What data? Sales, cost of goods sold, labour, customer satisfaction scores, field audit scores, number of proposal sent out last month, territory information, etc. The basic premise to continuous franchise improvement is that you can take a snapshot of these key performance metrics in one unit and compare them to not only past results but also the franchise average (or any comparable segment of stores within the franchise). These comparisons give you tremendous insights into the nitty-gritty of your business, allowing you to iteratively address your weaknesses and continuously improve.

Although ingrained in the culture of newer franchise systems, many established franchise systems have never shared much data from the franchisee to the franchisor. “I charge royalties on sales, not profits”, they’ll claim. “The franchisor and the franchisee are distinct businesses”, they’ll argue. “If I get too involved, new and upcoming legislation will negatively impact us”, they’ll fear.

There’s a grain of truth in these elements, but the fact is that all these statements are ways to put your head in the sand, continue with the status quo and miss the profound change that is under way in the franchise world. Indeed, we’ve seen many concrete examples of franchises that have continuous franchise improvement at heart that are seeing tremendous year-over-year growth and are greatly surpassing the competition in their category.

Today, franchisors who work to improve individual unit-level profitability do more than what is expected of them. They also reap the benefits of their hard work as their system outperforms others and their franchisees are more engaged. In turn, this helps them sell more franchise units – a perfect example of a virtuous cycle. After a few years of small improvements which compound to have dramatic impacts, it will become obvious to prospective franchisees which franchise is the best fit for them.



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