Growth in the quick-serve, fast-casual space is very fickle. All the signs of a strong brand can be present, yet when a brand expands beyond it’s current turf, failure can be swift and fatal.
For the record, size doesn’t matter when it comes to success. There are small brands (under 500 locations) and larger brands (some with tens of thousands of locations) that have seem amazing and profitable growth. An each brand has a different approach to how it works with franchisees. Chick-fil-A as an example has a rule where operators my only have one location whereas others encourage multiple units.
The only thing that is certain when it comes to growth in the QSR sector is that it must never be done for the sake of growth alone. It has to be done with purpose and in meaningful ways that will reflect the brand’s values and purpose.
Let’s look at two important ways that brand are growing the right way:
1. Developing strong owner-operator relationships. Smart QSR brands develop great relationships with their operators – to the point where it feels like a family. When these relationships are at their best, a brand gets access to some of the most honest and important feedback there is – from the front lines. Happy owners will gladly tell you what’s working, what’s not working and what they think needs to be done I order to fix it.
In turn, a brand needs to give really good support in terms of marketing and other support to make ownership a positive and profitable venture. Operators who wok in their business, not simply as a passive owner, as well as in the community, make the best owners and are an asset to any QSR franchise.
When you develop good relationships, you are developing the perfect candidates to help a brand expand into new territory.
2. Doing research on new markets. Heading into a new market is a costly venture for a franchise. Without the proper research and number-crunching, a brand has no business in even thinking about inking a deal to buy space or seek operators. And there’s a LOT that has to be considered. Demographics, logistics, warehousing of product, marketing, current competition – are all things that can make or break a franchise’s expansion.
On the other hand, simply expanding a current market territory can be a simple and effective way to increase market share, since there are many of these elements already in place.
3. Look for ways to serve a current market better. Sometimes, franchise growth is as simple as asking the question: “would our current customers be better-served with an added location?” Domino’s pizza is a good example of this strategy. They’ve examined their current markets and determined where their customers would benefit from a new location.
Of course, offering that new location to a franchisee who may be otherwise impacted by the new location (in the form of lost sales) makes sense – to avoid having a valued owner feel like their market share was just handed to a new operator, which is never a good thing.
As usual, these three strategies for QSR growth only scratch the surface. We’ll try to cover more of these strategies in the future. As usual, if you have any questions or comments about the post – let us know!
