The familiar phrase “think globally, act locally” should resonate for companies managing a basket of restaurant chains.
An effective franchise management strategy focuses on identifying strong chains, streamlining expenses, bringing in an aggregation of potential contracts and raising the potential for profitability.
While executives with solid business experience and a global perspective on the industry are most likely to achieve long-term success, the real differentiator involves how closely they can adapt their strategies for each individual restaurant they oversee. This involves a careful balancing act that involves the evaluation not only of location performance but also of menu items, community outreach, and conveniences such as takeout and delivery options.
Based on the experience I have gained, I am sharing a brief overview of how these factors all come together. Before going into specifics, however, it is worth commenting on the importance of the buying power of the parent company. An effective franchise management strategy focuses on identifying strong chains, streamlining expenses, bringing in an aggregation of potential contracts and raising the potential for profitability.
It’s also vital to have a successful business model—one that not only helps the individual restaurants, chains, operators and franchisees, but also benefits the corporation and its shareholders.
Managing a basket full of very different and scalable restaurant chains would also not be possible without an experienced management team. Attracting some of the best and brightest restaurant industry experts to the C-suite can ensure that the management company remains at the forefront of the chain restaurant management arena.
Opening a New Location or Enhancing an Existing One Requires Careful Analysis
What is the best way to optimize the performance of multiple restaurant brands with locations within a specific geographical area? This task involves considerations that involve real estate. The restaurants should be set up in locations that are far enough apart so that they do not cannibalize each other’s business. As those who operate fast-casual restaurant chains can attest, people will drive only so far for a burger, so eliminating the chance of competitive intrusion is a must. But restaurant location is merely the first component of this analysis; it is also important to analyze the demographics of an area’s customer base and its preferences before opening a location.
For example, a restaurant whose menu items have greater appeal to an urban or millennial clientele will likely perform better in a city than it will in a more rural area. With regard to existing locations of a chain, collecting feedback from local managers and customers alike is valuable. Undertaking a full-scale brand analysis—which can entail the use of site visits, questionnaires, town hall meetings and customer opinion—is a crucial tool in determining what can be done to enhance existing stores’ performance.
Menus Should Match Local Tastes
With many restaurants featuring locally produced items on their menus, customer input is critical to determining which menu items work and which do not. As one example, the Little Big Burger chain offers pimento cheese as a topping for burgers in its Charlotte, North Carolina locations—because pimento cheese is tremendously popular in the American South. The same item is not offered in Little Big Burger’s hometown of Portland, Oregon, where the cheese is not as popular. However, Tillamook cheeses, produced in Oregon, are sufficiently popular nationwide that they are available in the chain’s locations on both coasts.
In addition to specific ingredients, cooking style preferences may also vary by region; whereas Oregonians favor a ground chicken burger, Carolinians favor a fried chicken sandwich, a difference reflected on actual menus. Craft beer selections from local breweries can also be offered to enhance the appeal of a specific location. Specific menu items can be evaluated as limited-time offers to gauge their popularity.
Obtaining Feedback from Each Location is a Must
Since it is vital to stay up-to-date on the performance of each location of every restaurant brand under the parent company’s management, it is crucial to appoint brand leaders who are responsible for reporting on a regular basis to the executive team. One-on-one conferences with these brand leaders on a weekly basis can be a powerful way for management to keep tabs on what is taking place at each location.
Electronically, management can also view each location’s sales performance at any time, with sales reports generated every morning that can include comments from the restaurant manager—and that can be acted upon by management in real-time if necessary.
Stay in Touch with Evolving Trends
The advent of the digital era has made social media an indispensable tool for expanding the spotlight around one or more restaurant brands. For example, geotargeting the zip codes around specific restaurant locations can be an effective tool to attract customers with special menu offers via Instagram and Facebook.
Similarly, it can reap great rewards to identify and work with the top “food influencers” within the region where a restaurant is located. In one instance, a food influencer in Charlotte, North Carolina was engaged to design and promote a unique burger concept, which was then actually offered at local restaurant locations—with a portion of the sales being donated to the influencer’s favorite charity.
Separately, with expanded delivery and takeout options increasingly resonating among millennials, it can pay for the parent company to dedicate time and resources into developing these options, and working with delivery companies appropriately.
Evaluate Success Using Sensible Metrics
Finally, it is important for the parent company to utilize the appropriate metrics when it comes to evaluating the success of a particular location. Rather than revenue, the key number is store-level percentage cash flow. Using this measure, a restaurant location with a smaller-than-average footprint may still rank among the top performers in the chain. Ranking the various locations in each of its chains this way can allow the parent company to determine not only per-store performance but give it a better picture of how the entire chain is performing overall.
In short, factors on both the local and global scales can contribute to the ultimate success of any company managing a basket of restaurant chains. Attention to these factors can mean the difference between an empty restaurant and a packed one—and has substantial payoffs in the long run for customers, restaurant managers and the parent company alike.