Multi franchisors talk about expansion plans and issues holding back growth

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Franchising can be difficult at the best of times, but add supply chain issues, labor shortages, and a pandemic and it can be downright impossible. A panel of expert franchisors discussed modern multi-unit franchising at a panel discussion at the Restaurant Franchising and Innovation Summit held in Atlanta, Georgia.

Mastering the franchise is difficult at the best of times, but COVID-19, supply chain issues and labor shortages have forced brands to be at the top of their game. Mastery of multi-unit franchising was the focus of a panel discussion at the Restaurant Franchising and Innovation Summit hosted by Networld Media Group and held in Atlanta, Georgia.

The event is one of many restaurant industry summits hosted by Networld Media Group. The media company’s Fast Casual Executive Summit will take place October 3-5 in Charlotte, NC, and a #QSRNext virtual event will take place on November 9. Now in its 16th year, the Fast Casual Executive Summit brings together the best brands in the world for three days of interactive sessions that delve into the topics that concern restaurant chefs today.

Michael Manlapas, vice president of partnerships for Revel Systems, led a panel discussion on franchising with: Nicole Di Pietro, vice president of Jeremiah’s Italian Ice; Rafik Farouk, senior director of global business development for PF Chang’s; Mahesh Sadarangani, COO of Wingstop and Steve Schulze, co-founder and CEO of Nékter Juice Bar.

Jeremiah’s Italian Ice is growing cautiously, Di Pietro said, adding that the company chooses its franchisees selectively because brand integrity and culture is paramount. “We are a people-focused company,” she said. “I think now more than ever, this is extremely important, even with technological advancements. You have to focus on that point of connection.”

The company is 65% owned by several units with a few unique store owners and a regional representation program that helps them expand their footprint faster. The regional representative agreement allows the company to have a presence further away from its headquarters in Orlando, Florida. It acts as a mini-franchisor as the company shares royalties on a 40/60 split. It has proven its worth, but Jeremy’s is only a year away.

PF Chang’s is a complex brand to operate, said Farouk. The company only works with multi-unit franchisees. “We are not making one unit, we are not making one country,” he said. “We are trying to have a large operator who can financially and operationally support the development schedule that we have put in place.”

The company is looking to expand into current markets, including the Middle East, places like Kuwait, Dubai and Saudi Arabia, and with franchisees ready to move with “sophisticated” franchisees with multiple units and multiple country.

Sadarangani said Wingstop has 260 different franchises around the world and “in the long term we want this to be around 150 franchisees,” he said. “Most of our growth around the world today … 94%, has come from existing franchisees.”

Wingstop is looking for “brand partners” who embody the core values ​​of the company: being service-oriented, authentic, fun and entrepreneurial. The average Wing Stop franchisee has about five units, and the company wants to slowly grow that number.

Schulze said Nekter Juice Bar grew with patience and structure during its first five years. While they could have sold a lot of franchises in their first few franchise years, the business would likely go bankrupt by opening too many stores too quickly. He thinks it is important to develop in a centered manner.

“Far too often I’ve seen brands that didn’t have enough corporate skin in the game,” Schulze said. “And the second aspect is that I see a shotgun approach” with franchise claims far outside of brand recognition and reach.

Now that the company has a presence in 17 states, it is more inclined to explore these point markets, “but we have the depth of experience to handle it,” he said.

Problems afflicting franchisees today

Supply chain issues, labor shortages and closures related to COVID-19 have all affected companies’ ability to grow over the past year and a half.

“Supply chain issues have been even more damaging to us than labor issues, as we only serve two products,” said Di Pietro. “When we get a call from our distributor that there is a national plastic shortage, and we don’t have cups for you and I have franchisees who are not only currently operational, but I have them. also 25 more to open the rest of this year, you need to pivot quickly. You need to start stocking up wherever and wherever you can. “

Farouk said multi-unit franchisees have the ability to recover faster if things go wrong. His business built more Outback Steakhouses because they could take the menu from 74 items to one-third of the menu, and his business focused on 36 ghost kitchens during the pandemic.

“It is much easier to have multi-unit franchisees who can leverage their experience in the market specifically internationally than a smaller franchisee,” added Farouk.

Sadarangani said using cross-functional ingredients solves supply chain issues, and Wingstop was able to reduce the cost of goods by 4.5%. “I think allowing franchisees to reduce the number of SKUs, maintaining product integrity, maintaining ingredients and working with partners” are important aspects of working as a franchisor.


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