Food: The Heart and Soul of Franchising

Food: The Heart and Soul of Franchising

by Christopher Connor

The food industry is what most people think of when they hear the term “franchise.” And that’s no coincidence. There are so many success stories in the food category that people often credit food franchising as an example of how well the franchise model can work. Legends have been born in the food franchise market in Ray Kroc, Colonel Sanders, Jimmy John Liautaud, as well as many others. It’s one of the few franchise systems, where franchisees can become multi-unit owners fairly quickly.

Franchising has helped the food-service business enormously. This industry is one of the more difficult businesses to operate successfully thanks to the many moving parts: lots of staffing, face-to-face customer interactions, the sensitivity of both food and money. The integration of the franchise model seemed to do two things for the industry: First, it pushed the restaurateurs and entrepreneurs to streamline their business models, operating systems, and supply logistics to allow for scale. Secondly, franchising allowed food-service businesses to leverage the benefits of franchising to grow their brand into new markets and create scale. Franchising took one of the most unscalable businesses and turned it into a platform that could duplicate—effectively leverage buying discounts and compete with much larger organizations thanks to franchise investors.

But food franchising hasn’t always worked. In fact, there are many brands that have franchised without having the model well defined or the systems in place to take the business effectively to franchisees. Others had leadership that handicapped growth. With the star power of brands like McDonald’s, Subway, and Pizza Hut, it became easy to see how others made the mistake of franchising their businesses too early, or launching without having a business model that made sense.

All Star Café, which had elite celebrity investors such as Ken Griffey Jr., Joe Montana, and Shaquille O’Neal all had short lifespans, and yet all seemed like incredible opportunities. Quiznos, which has one of the best sandwiches on the market and an incredible track record in terms of selling franchises, turned out to be a terrible collapse of a franchise brand.

COMMON ATTRIBUTES

Fortunately, there have been more good versions of food franchises than bad and with the right due diligence. At Franchise Marketing Systems, we’ve noticed that good food franchises share some common traits: Leadership of a food-service brand should be focused on operational success and on unit-level economics.

Good franchise systems often have an operational eccentric leader. If you think about scenarios from the movie “The Founder,” you see depictions of owner Ray Kroc walking through various McDonald’s parking lots, picking up trash as he inspects individual franchisees’ businesses. He was incredibly focused on the details and the extreme minutia of what made a McDonald’s a successful restaurant. Food franchises that stand the test of time have a leadership team who fights every day for the integrity of the operating unit and the brand itself. Jimmy

John’s, for example, only allows franchisees to show the logo on a black background, and the company is enormously critical of anyone or anything that goes against the rules in the brand book.

Successful food franchises have a strong technology platform in place, which streamlines operations; great inventory management systems, supply chain logistics, and a marketing system that can be duplicated efficiently. Food service can be a complicated business and complicated doesn’t duplicate well. Good technology, great documentation, and proper vendor arrangements make a franchise system possible and effective, and ultimately allow franchisees to be successful as part of the network.

Third, food service, like any market segment, goes through trends and shifts in consumer demand for different menu types, service structures, and other aspects of the business. Some food-service franchises have withstood the test of time and seem to offer products that just never go out of favor, while others offer something very niche that may have a shorter lifespan. Today, a franchise investor should be concerned with what millennials are eating and make sure that a potential food-service investment is relevant to them.

The food-service segment of franchising can be one of the most lucrative in the entire franchise industry. Many franchisees have been able to duplicate their success with multiple locations within the same franchise brand. It’s a unique market segment in that way—franchisees have been able to become multi-unit owners successfully in large volume. Find the right one, and you can grow with the franchise in a big way.

Conner leads the Franchise Marketing System’s team in business consulting and franchise development projects. For more information, contact Chris.Conner@FMSFranchise.com