SPECIAL REPORT
FRANCHISING
In collaboration with
CHAINS AND FRANCHISES VS. STAND-ALONE RESTAURANTS From the consumer’s point of view, this provides the comfort of knowing what to expect, a sense of belonging and the ‘no bad surprises’ element. On the other hand, the very same thing that acts as the strength of a franchise - the standardization of service and the sameness of products is its shortcoming in the form of a lack of creativity innovation and passion.
The topic of whether Dubai has yet to establish itself as a true food-destination city is one that prompts animated discussion within the industry. Some experts think independent restaurants are at risk of falling into the standardization trap and losing that all-important passion for food. Daniel During, principal and management director of Thomas Klein International, looks at the pitfalls and how to avoid them One business model that seems to thrive in Dubai is the chain or franchised restaurant. Think of your favorite restaurant outside of a hotel and the chances are that it has several branches across town, quite possibly one in every shopping mall. The franchise model has several advantages for the investor/operator; it basically offers a restaurant ‘in a box’, meaning that everything from the interiors, menus and uniforms to the way in which it should be run has already been set in a series of corporate manuals. This model allows new outlets to be opened fairly quickly and with relatively low start-up costs. This has been a prime consideration for many investors looking to cash in on the boom years: rapid expansion in order to cater to what appeared to be never-ending demand. But as we come back down to earth, it is clear that the franchise model has several drawbacks for the consumer; precisely because everything has been predetermined and standardised, there is little scope for individuality. Chains and franchises have, by definition, something inherently systematic, distant and corporate.
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HOSPITALITY NEWS ME | FEB-MAR 2020
A chain or franchise’s key strength is its sameness and relatively reliable quality from place to place. Standardization goes against creativity, passion and flexibility. Flexibility and creativity tailored to the guest’s whims and desires are what make the individual customer go from “the food was good” to
As franchises and chains menus are defined in head offices, sometimes distant from the day to day reality, it is difficult for franchises to respond to dynamic conditions “they went out of their way to please me”. Applied passion and creativity are what make a customer travel kilometers to try a specific restaurant offering that something special. In the real world, individuals want to visit local restaurants that provide unique and excellent food and service. It could therefore be concluded that the strength of large chains and franchises is also their weakness. The core element of any F&B business is its product - its food. Its success or failure is in the hands of the people who purchase it, cook it and serve it. The USP is passion.
People Chains target the largest market, so individuality or anything beyond the confines of the operational manual is discouraged. Employees are trained to follow strict procedures, but in the process, they are discouraged from catering to individual customers’ needs as this would disrupt the flow. It can seem tiresome to cater to individual needs, but it is hugely rewarding to the employee, the client and ultimately the business to provide a service and product that is truly appreciated. Because everything is standardized, the staff and management employed are not allowed to contribute any form of personal input, and they cannot change anything or add a level of personal touch. This can be frustrating
for an employee with the motivation and the skill to excel, and it may increase employee dissent and turnover. Word of mouth is the most important marketing component of an independent restaurant and happy customers talk. Happy employees are those who feel useful and can hone their skills to learn and grow.
Product As franchises and chains menus are defined in head offices, sometimes distant from the day to day reality, it is difficult for franchises to respond to dynamic conditions, these being seasonal or micro-demographic. Individual outlet managers are prevented from adjusting the menu to take advantage of seasonality or market specials, even though the end result would likely see increased sales. In order to guarantee product standardization, large chains supply semi-prepared products on a large scale, establishing central production areas that oppose the concept of freshness. Additionally, to take advantage of economies of scale, many chains and franchises tend to use frozen produce purchased centrally and distributed globally. Sacrificing quality is therefore inevitable. Not all chains use lower grade products or sacrifice quality during mass production. However, they all distribute globally or at least regionally. Worldwide distribution has a direct negative impact on the local producers and increases airline/shipping traffic, thus affecting the carbon footprint. More directly, it affects the consumer, who does not get the benefit of tasting local seasonal produce at its peak when it comes to flavor and textures. Take the small joint on the beach, where papa goes fishing at night so that mama can serve the freshest fish every day. There you have a product a franchise can never compete with. City chefs that are passionate about their food will go to the fish and vegetable market every morning and select what they judge to be best for their customers: the tenderest cuts, the ripest fruits, the freshest fish etc. Franchises, on the other hand, offer the consumer the same ‘standard’ product
