Founder Franchize Directions, Bendeta Gordon, 29 April 2019
Lately I’ve been intrigued by the measurements we use to assess the success of a franchised business. Is it franchisor profitability? Is it franchisee satisfaction? Is it franchisee sustainability? Broadway musicals come to mind. Despite evolving from movie productions such as The Lion King, or from novels such as The Wizard of Oz, these theatre productions delight audiences for decades.
The results of the Franchise Factor™ research, tracking the status and growth of franchises in South Africa, provide insights which aid the contemplation of franchise success. The Franchise Factor™ includes primary research where data is provided by franchisors and is then aggregated and analysed for every significant industry in which franchising is prominently used.
The theatre world’s leading bodies, The Society of London Theatre, Theatrical Management Association and Independent Theatre Council developed a new way of measuring the effectiveness of a theatre production. Instead of using box office measurements, social media monitoring or critic’s reviews, the group of three developed a system which assesses the quality of a theatre production based on the audience response. Without consumer patronage no brand will survive so success must be indicated when a Restaurant brand demonstrates longevity.
Comparing Restaurant franchises to the theatre I found many similarities. The restaurant franchisors write the script, the restaurant patrons are the audience and the franchisees are the theatre producers. Together, the franchisor and franchisees, as a collective, perform to delight the audience.
There are 83 full-service franchise systems operating in the Restaurant Industry boasting some 1700 operations in South Africa. The 9 longest standing Restaurant franchise systems (refer to the diagram) which were established before the millennium, have a combined age of 3 centuries. Since February 2017 not one restaurant franchisor has closed its doors. This display of business sustainability, in the most difficult consumer economy we have witnessed, is surely a “Broadway” success that deserves a standing ovation.
Businesses are faced with uncontrollable factors requiring change in order to survive. Technology advancements, social media preparedness, business unit growth, franchisee and franchisor profitability, etc are dealt with on a continual basis. We live in a world driven by change which threatens sustainability and longevity.
Each of the 9 longest standing restaurant brands, have withstood tough competition, a fast-changing environment and disposable income pressure. They are still relevant 33 years after establishment. The franchised Restaurants, as a whole, are sterling example of adaptation and sustainability.
Source: The Franchise Factor™ 2019
Restaurant franchises are one of the most complex of operations to franchise. Each kitchen represents a factory of food production. The front-of-house requires consistent performance in meeting customer’s requirements. Franchise restaurants serve customers who demand value-for-money. Sustainability of a restaurant requires exemplary customer service and quality food production.
The profitability dynamics are complex, including the management of gross profits, portion control, perishable stock, consistent quality production and skilled staff.
Consumers still want to enjoy a meal at a restaurant – I know I do. Burger & Grill, Coffee Casual Dining and Fish & Seafood contribute 61,38% to the annual R19 billion turnover generated by franchises. An estimated 66 000 people have gainful employment in the Restaurant franchise industry.
May Restaurant franchisors and their talented franchisees continue to dish up more small businesses, more jobs, more turnover and more tasty meals. We are standing, and we are clapping …” We want more”!