The relentless competition of the food franchise industry means that businesses will try out nearly everything in search of an edge over everybody else. Surprisingly, one thing few food franchises seem willing to do is sell beer or wine. Why is this?
We put the question out on our Facebook page yesterday after reading an article on the subject in the New York Times. The article looks at the story from the perspective of chains like Starbucks, Sonic and Guy & Gallard, as well as Burger King, who’ve started selling beer at their new higher-end Whopper Bars.
Despite the potential upsides of selling beer (ie, profit), it seems that food franchises aren’t suited to the alcohol trade.
“Fast-food restaurants aren’t set up to be bars,” David Henkes, restaurant advisor, told the New York Times. “Based upon the amount of sales that most restaurants would get from alcohol, it’s just not feasible for most restaurants to do it.”
The challenges range from the practical (policing the bar, the large numbers of underage staff at food franchises) to the financial. In the end of the day, most franchises have decided that selling a bottle of beer or glass of wine simply isn’t worth the trouble.
We’ll be monitoring the scene, as especially at Whopper Bar, to see if any franchises can buck this trend.
The IFA has released a new study stating that President Obama’s health care plan with stunt jobs growth when it comes into effect in 2014.
According the franchising lobbying group, the Patient Protection and Affordable Care Act will ‘negatively impact’ ‘tens of thousands’ of jobs and impact 3.2 million fulltime employees. As the Wall-Street Journal reports, the poll was conducted by free-market policy think tank, the Hudson Institute.
The report is especially critical on the government for forcing food and hospitality franchises to provide health care for their staff. As the report itself states:
“The health care law unintentionally discourages franchisees from owning and operating multiple locations. The law creates a competitive disadvantage for franchisees who do own more than one or two locations. The employer mandate in the law provides an incentive for franchisors and franchisees to replace full- time workers with part-time and temporary workers.”
Interestingly, Susan Mills, head of the SBA, has come out in favor of the health-care legislation in an interview with the Wall-Street Journal:
“Currently, small businesses pay around 18% more than big businesses for the same health insurance because of administrative costs…every day, America’s entrepreneurs and small business owners are finding more ways to access affordable health insurance coverage because of the Affordable Care Act.”
Still, many franchisors like Gordon Logan of Sports Clips remains opposed to the act. We hope the IFA can continue to use its lobbying power to ensure the continued growth of franchising.
We’ve encountered some interesting statistics from the UK franchise market which proves that the UK market is starting to show legitimate signs of growth.
At a time of serious economic stagnation in Britain, a franchise organization called the Franchise Development Services claims that franchising can create over 500,000 job in the UK over the next 5 years.
Professor Ray Seaman, MD of FDS, is making a hard push to raise government attention to the economic power of franchising, especially in the area of East Anglia, where there are 110 franchise units in the city of Norwich alone.
Seaman asked the following question about what franchising can do:
“We are looking at about 2,000 new franchises over the next five years which means by 2016 it will mean an extra 70,000 new businesses. That means 500,000 new jobs and that’s being totally realistic. What would happen if we could increase that by 10pc?”
These are some of the statistics on UK franchising, according to Mark Scott, director of franchise development at Natwest bank, stats which show the potential of serious profit in a highly-established market:
“There are 37,000 franchise locations across the UK and a total turnover of £12.4bn. The failure rate in any one year is less than 5pc and nine out of 10 are profitable. It really is a strong place to be.”
We often hear the business acumen of military veterans trumpeted, but what specific skills do they bring to franchise ownership?
In a new book, retired U.S. Army Reserve Special Forces officer Chad Storlie, a veteran with an MBA, makes the case for veterans in business (and by proxy, in franchising). His new book Combat Leader to Corporate Leader: 20 Lessons To Advance Your Civilian Career and Battlefield to Business Success: Applying Military Leadership and Skills in Your Career, Storlie seems to have created the definitive portrait of the veteran as business leader. His book will open the eyes of any franchisor unsure about offering discounts to veteran franchisees.
He sat down with Inc magazine for a Q&A session and his answers were particularly enlightening, especially as what veterans can contribute in these uncertain business times. From comprehensive training strategy to knowing how to cope in the face of chaos and uncertainty, it does seem that military training can provide excellent preparation for owning your own business.
It’s especially interesting what Storlie has to say about the link between McDonald’s and the military:
One of the things McDonald’s does well is training. It’s about standardizing employee procedures, so we have the most efficient way to sell food, and it’s done across the board. The company also is remarkably adept at operating at different locations. Menus adapt to what different localities need. This is very similar to the U.S. Military; it adapts the equipment and operations based on location. One thing the military can take from McDonald’s is to stress simplicity. That simplicity approach, with the store layout, formulaic kitchen, simple pricing, straightforward menu, and standardized training, ensures the restaurant can be effective 24/7. The final similarity is “we can never be happy with success.” McDonald’s is constantly adapting its menu to consider, for example, how to be more health-conscious, and how people’s tastes are changing.
Who knew the synergy between the military and franchising was so strong?
Food franchises are always keen to take on trends, especially when they involve utilizing local talent. The latest trend that QSR franchises have looked to tap into involves using local art.
One of the biggest criticisms leveled at food franchises is that they have a reputation for being stale, cookie-cutter restaurants. Food franchises have found that local art or design touches can go a long way for making audiences feel at home and making national restaurants seem more local.
QSR Magazine have profiled the phenomenon in its latest issue. They discuss the coffee franchise Coffee Bean & Tea Label, which while on the verge of launching a new self-brewed coffee and tea concept, hired Gensler, an LA design company, for guidance. Gensler employed a local art school graduates to reimagine the stores.
“That they were all young emerging artists was a parallel to this brand, which is a young emerging brand,” Gensler branding expert Dominick Ricci told QSR.
Here’s a great example of a local franchise shaping its own image in the world. Rush’s, a South Carolina burger franchise, was also singled out in the article for commissioning a local painter to depict some important moments in the franchise’s history.
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