Fast food franchises: deploy and maintain profitability
Recent months have seen an acceleration in the number of fast-food franchises, with a +14.5% increase in volume compared to 2019. In this ultra-competitive world, how do you roll out your franchise and maintain profitability?
A franchise is a business model in which an entrepreneur, called a franchisee, buys the right to use the concept and brand of a well-established restaurant, called a franchisor.The restaurant thenopens using all the procedures, systems, products and services developed by the franchisor. In exchange for using the company's tools and brand, the franchisee pays a royalty.
The strength of fast food franchises lies in their easy-to-duplicate models. As Mohamed Soualhi, founder of the Tacos Avenue chain, explains: "The franchisee will be looking for a fairly innovative concept with trendy specifications, easily duplicated and easy to set up. Today's entrepreneurs are therefore looking for a way to rapidly create a profitable business with limited risk, backed by a recognized brand.
Franchisors are expanding at breakneck speed
Developing a franchise network in the fast-food sector means you can multiply your outlets without having to invest in each new location. It's a fast way to expand your territorial coverage. With this model, the company founder shares the financial risks with the franchisees, who are responsible for financing their own business. Franchise fees and royalties are used to remunerate the franchisor for the concept and the provision of services to franchisees: transmission of know-how, animation, legal watch, product innovation, customer path innovation, ongoing training, central purchasing, etc.
These support functions also enable quality control of a franchise's products. Established procedures and standards must be respected. This ensures brand consistency.
Franchisees backed by a recognized concept
Franchises offer a number of advantages for future managers looking to enter the fast-food business. One major advantage is that they reduce the risks associated with opening an independent restaurant. By joining a franchise, they benefit from the brand's experience and know-how, as well as its network of suppliers and distributors. The franchisor's reputation is well established. These recognized brands are appreciated by the general public, which helps to generate clientele as soon as the restaurant opens.
By choosing to develop a fast-food franchise, managers benefit from the sector's ongoing growth. This dynamic sector has been growing steadily for several years: sales are up 19% compared to 2019, with a value of 23.4 billion euros (source: Etude Speak Snacking Avril 2023 - CHD Expert-Datassential).
How do you prepare for your franchise rollout?
Here's some advice from two fast food leaders who are at different stages of their franchise development: Benjamin Attal, Co-Founder of Franks Hot Dog,after opening 12 corners in less than 2 years, the brand has just opened its first franchise, and Mohamed Soualhi, founder of Tacos Avenue, who already supports 19 franchisees in France, Switzerland and Morocco.
1. Offer a simple, original concept
In a competitive environment where many restaurateurs offer similar concepts, you need to be able to stand out from the crowd. One solution is to develop a unique concept, based on quality and customer satisfaction. By developing an original fast-food franchise concept that can't be found elsewhere, you'll gain a competitive edge in the market and attract a large number of franchisees. You need to be able to open quickly, without excessive investment.
Benjamin Attal tells us why his Franks Hot Dog restaurants are so successful: "Our concept is simple, so it's not very expensive. It costs around a hundred thousand euros to open a Franks. That's not a lot of money. We offer a product that's easy to work with and inexpensive. All you need is a small premises, and it's both simple and profitable."
2. Stand out from other franchises with a strong brand
In an increasingly competitive market, it's important to stand out from the crowd. Before you launch, you need to have worked hard on your brand image to stand out and be visible. Benjamin Attal of Franks Hot Dog understands this well: "It was very important for us to have a strong visual, so that people would recognize us immediately. For example, our bag is immediately recognizable in a shopping mall: it's royal blue with stripes and a big Franks logo."
3. Developing your model
Before starting to recruit franchisees, the business model must be solid and proven to enable the network to expand rapidly and efficiently: negotiated purchases, controlled material costs, a tried-and-tested concept store...
You need to take the time to define your franchise model, providing as much information and support as possible to help franchisees succeed. You also need to ensure that the franchise model is profitable and can be duplicated in another environment.
An audit can help you identify areas for improvement: customer experience, restaurant design, menu, operating procedures...You can use this information to implement processes and tools to improve your franchise's efficiency.
As Mohamed Soualhi of Tacos Avenue explains: "When we carry out an audit, it enables us to improve our internal processes and document them. Our 3-month audit enabled us to simplify processes and eliminate errors that could have been reproduced in different franchises. This involves the brand, the processes, the cooking methods, the opening and closing of the restaurant, and so on. It's very comprehensive. It allows us to check if it's duplicable: if it works here, could it work elsewhere?"
The aim is to guarantee successful network expansion and a consistent customer experience across all restaurants. Franchise firms can help you in this process. Their experience will give you an overview of best practices in the sector.
4. Prepare your supply
To guarantee the quality and uniqueness of your products, you need to ensure that you have a solid supply chain in place. This includes raw materials sourcing, inventory management and logistics. Franchisees are looking for your expertise in this area. In fact, it's one of the main reasons they look to join a network.
Having unique references to offer your franchisees is a real competitive advantage, as Benjamin Attal, co-founder of Franks Hot Dog, points out: "The point is to provide the best service to a franchisee. And that's the case for product sourcing. If they come to Franks, it's because they want to find a particular bun, a particular sauce, all these differentiating products. Otherwise, they'd open the restaurant on their own. So our job is to work on product sourcing and distribution."
Limit the number of suppliers and the number of references, giving priority to those that set you apart.
As Mohamed Soualhi of Tacos Avenue explains: " We rely on a national purchasing group. This makes it easier to deliver to certain remote sites and to stock products, as well as ensuring compliance with price lists. Thanks to this, we can negotiate purchases from manufacturers and modify products as we see fit. At a certain stage of development, we need to be able to manage sourcing and distribution, negotiate prices and cover the whole country. This is an element that needs to be dealt with quickly to avoid sources of tension with franchisees."
5. Anticipating multisite management
As a major challenge for restaurant franchises, the management of multiple sites must be carried out efficiently to guarantee the success of the brand. Expert technological solutions for multi-site management enable real-time monitoring of each restaurant's activity.
Performance tracking systems are essential for monitoring sales, profitability and customer satisfaction. Franchisees and franchisors can access these tools online, enabling them to check operations, analyze performance and make decisions accordingly. Providing this support to franchisees is essential for detecting problems as well as opportunities for growth.
"Today we have planning software, cash register software, hubs that collect information from delivery platforms and which we find directly in the cash registers. Every day we receive the scores that have been given on Uber Eats or Deliveroo per restaurant, so we have an extra check and know when something's going wrong." Benjamin Attal.
When it comes to franchising, the choice of inventory and supply management software is second only to that of the cash register. Like Inpulseit must enable you to quickly duplicate a tried-and-tested model, and that means automation:
Centralize all purchasing guidelines, price lists, lists of suppliers and their terms and conditions, and recipe sheets: so that franchisees can easily manage prices, and the purchasing group can negotiate the best prices and maximize franchisees' margins.
Enable new franchisees to place the right supplier orders thanks to sales forecasts.
Transmit reliable ratios to franchisees: material costs in real time, yield variance to accelerate franchisee profitability.
"We're in a sector where most entrepreneurs only look at turnover, whereas the mainstay of the restaurant business is margin. They wait until the first balance sheet to discover the reality of the margin they've generated, and sometimes it's too late. With Inpulse, I can check the real gross margin, optimize and understand why there are discrepancies. We take inventory of our best-selling products once a week, which enables us to analyze the different periods, to see if there's run-off or if it's non-compliance with technical data sheets that's causing the discrepancies between theory and reality." Mohamed Soualhi.
Support for fast-food franchisees
Franchisee support is essential to ensure the profitability of your outlets and the success of your fast-food franchise. Here are a few tips on how to provide effective support for your franchisees:
1. Providing solid training
Solid training is essential to help franchisees understand the requirements of your franchise model and help them succeed. You need to provide in-depth training before the restaurant opens, as well as ongoing training to help franchisees adapt to changes in the market. The purpose of this training is to assist franchisees in all the stages leading up to opening, but also to support them throughout their journey.
At Tacos Avenue, franchisees are offered a minimum of 5 weeks' initial training in the field: "Initial training starts as soon as you discover the franchise. Then there are 5 days of theoretical training, followed by 4 weeks in the field. This period can be extended if the franchisee is not ready."
Franks Hot Dog also takes the process a step further and starts the restaurant with its franchisee:"We plan to open the restaurant with them. They may have spent 4 weeks in a restaurant, but when they arrive in a new location, it changes everything. So we accompany them through the opening as if it were our restaurant."
2. Provide ongoing support
Franchisees may encounter difficulties along the way, so it's important to provide ongoing support. This can include regular visits, performance reports, management advice and updates on new initiatives or software.
"Ongoing training takes place as we open. We often visit him at the beginning, then we space out the visits. We visit at least once a quarter" , says the founder of Tacos Avenue.
3. Create a community
By creating a community of franchisees, you can encourage theexchange of best practices and help franchisees to help each other. You can organize regular events, online meetings and discussion groups to encourage exchanges.
The aim of this community is to drive the brand forward. Each franchisee contributes his or her experience and tips to the group. It's a good idea to pass on these innovative practices and integrate them into other restaurants if they have proved their worth. Intranet or extranet solutions are ideal for this.
Franchise representatives can also communicate training requests and needs, and work on areas for improvement. Finally, a seminar can be held once a year to forge links between the various entities.
In conclusion, to succeed in fast food franchising, it's important to prepare your rollout well, set yourself apart from other franchises and effectively guide your franchisees towards profitability. We hope you find these tips helpful. available here.
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