VF Franchise Consulting’s Post

FAST FOOD WARS AGAIN This is a very good #restaurant franchisee survey with comments from real franchisees dealing with the current spate of value menu wars currently underway. CNBC's own Kate Rogers has done a great job of covering this from the McDonald's perspective and elsewhere. We analyst types could see this fast food war coming. It is unfortunate and has happened at least twice in the past. This condition, a circumstance and downside of the franchise model, happens because restaurants copy one another--all the time, in almost all ways. My question is did this really need to happen again in 2024? Is there any evidence that this spate of low prices will solve the "price shock'' that is present with some consumers because of our own pricing mistakes in 2019-2023? Chris Kempczinski and staff can take a stab at this. The industry needs to focus on the middle of the P&L to find cost savings. What is the next step to transition guests out of discounting mode?

I found this article on BK interesting. The significant increase in Burger King's franchisee profitability from 2022 to 2023, nearly 50%, is a remarkable achievement. This progress underscores the Brand's ability to navigate a challenging QSR environment while driving gross margin growth at the restaurant level. Their commitment to improving franchisee profitability pressures is commendable and reflects what a franchisor should be concerned about – a healthy model and a win/win orientation. I’d be interested to know how 2024 profitability has been affected though. They say their $5.00 Your Way meals offer a “reasonable” gross profit margin for operators, and they are balancing these value offerings with more premium menu innovation, but I’d like to see the difference in unit level profitability at the end of the year. These tactics may help minimize a loss of traffic or profit, but I doubt it will help them with their stated goal of improving franchisee profitability, at least in 2024. More importantly, as Burger King continues to leverage deeply discounted products like the $5 Your Way Meal to attract customers, it is crucial they consider the sustainability of this strategy. While value pricing can effectively drive traffic and cater to price-sensitive consumers, it also presents inherent risks that could undermine profitability in the long term, especially if you are positioned as a premium Brand in a premium category. The biggest risks in my mind is the impact on their long-term Brand perception and the discount dependency this can create with their customer. Perhaps they need to figure out how to create, or how to communicate more effectively, their key points of difference to the guest to steal share based on that and not on a cheaper price. Value is not all about how much something costs…..its only part of the formula. https://lnkd.in/gNF3BNDi #QSR #RESTAURANTS #FOODSERVICE #PROFITABILTY #BRANDS #BRANDHEALTH

Bojangles' Restaurants, Inc. , with 800+ restaurants nationwide, isn't just a franchise; it's a culinary journey tailored to delight consumers. Brooks Speirs, VP of Franchise Sales, sheds light on what sets Bojangles apart and how it's captivating the taste buds of diverse consumers. The menu evolution goes beyond trends, with a keen understanding of consumer preferences. They are curating an experience that resonates with a wide audience, especially the younger demographic. Beyond the menu, Bojangles is transforming the physical experience. The Genesis Prototype, featuring a streamlined kitchen and a visible biscuit station, isn't just about efficiency; it's about transparency. https://zurl.co/Ofr9

Which restaurant metrics is your franchise measuring to drive success? Setting and tracking the right KPIs is crucial to: ⚡ Optimizing operations across a franchise network 📈 Ensuring consistent performance 💰 Boosting profitability for each location 👉 Discover the 15 key metrics that will help you make strategic, data-driven decisions and fuel growth: https://lnkd.in/d3v4gGHC And while you're there, gain access to our FREE metrics calculator to unlock your numbers. #restaurantKPIs #restauranttechnology

One of the most common ways to compare #franchiseopportunities is to look at AUV (Average Unit Volume). Here's a great example; while McDonald's and Wendy's certainly have more recognized brand names, did you know the average Chick-fil-A restaurant does TWICE as much in sales versus the more mature competitor? Don't always count on the well-known brands for your business success - sometimes those "new kids" offer greater #opportunities! https://lnkd.in/gPPYZw7Z

Great piece by Jonathan Maze over at Restaurant Business Online on the astounding performance of Chick-fil-A franchisees in 2023. With AUV's of $9.4 million, with the highest coming in at $19 million, Chick-fil-A is without a doubt, the most profitable franchised business in the US. Jonathan's analysis on Chick-fil-A's operations and financial outlook is spot-on in saying "the brand has also ensured that its growth doesn't get out of control. Too many brands, when they generate early success, push overly aggressive unit growth at the expense of unit economics, spreading demand too thin. The most successful brands over the long term work hard to ensure that each individual location can work well on its on. Chick-fil-A is the best example of this, given that it operates just 3,000 locations, far less than any other major U.S. restaurant chain". This is a crucial point for emerging brands as they work to become fully established in the franchise space. Only once your unit economics are in order, is longevity and grand expansion possible. In today's world, the data-driven franchisee is crucial for success in franchising. Tools like the solution offered by ProfitKeeper by PrimePay, work to increase visibility into P&L and KPI data for franchisees by providing an interactive, user-friendly platform that highlights areas for improvement that will produce growth at the unit-level. If you'd like to learn more, send me a message! #franchising #growth #chickfila

In a challenging year for the restaurant industry, sandwich chain Potbelly has emerged triumphant, demonstrating strategic vision, adaptability, and resilience. Capitalising on gaps in the market, Potbelly successfully transitioned to offering reliable takeout and delivery options, contributing to significant third-quarter earnings growth and an 8% increase in same-store sales growth. Potbelly's success extends beyond financial achievements, with shop-level margins increasing from 10.6% to 14.6%, indicating its commitment to efficiency and profitability. The company has set ambitious expansion plans, aiming to grow to 2,000 units, 85% of which will be franchised. To facilitate this, they've launched a franchise growth acceleration initiative, aiming for a 10% annual growth rate in new units. A comprehensive five-pillar strategy focusing on food quality, employees, traffic growth, digital-driven awareness, and franchise development forms the foundation of Potbelly's success. With the sandwich category predicted to grow nearly 7% through 2028, Potbelly's growth trajectory aligns well with industry trends, and the company is poised to become a dominant player in the sandwich market. Potbelly's success story is a testament to its ability to seize opportunities and rise above adversity, positioning itself for continued growth and success. I'm inspired by this story and look forward to seeing their further achievements. I invite you to share your thoughts on Potbelly's strategic approach and its implications for the industry. Original article: https://lnkd.in/edyPwCM6

McDonald's SWOT Analysis: - McDonald's is a global fast food chain that offers a variety of burgers, fries, and other food items. The company has a strong brand recognition and reputation, and it is known for its efficient operating model and low prices. McDonald's is facing some challenges, such as changing consumer preferences and increasing competition, but it is still a strong company with a bright future. Strengths: - Strong brand recognition and reputation - Global reach with over 39,000 restaurants in over 100 countries - Diverse menu that appeals to a wide range of customers - Efficient operating model that allows for low prices - Strong financial performance with over $21 billion in revenue in 2022 - Customer loyalty due to consistent quality and service - Strong franchise network Weaknesses: - Rising costs, particularly for labor and food - Increasing competition from other fast food chains and restaurants - Negative publicity about unhealthy food and labor practices - Franchisee dissatisfaction due to high fees and lack of control - Reliance on a limited number of key suppliers Opportunities: - Growing demand for convenient and affordable food - Expansion into new markets - Development of new menu items that appeal to health-conscious consumers - Increased use of technology to improve customer experience - Acquisition of other fast food chains Threats: - Changing consumer preferences towards healthier eating - Government regulations on food and labor - Economic downturn - Natural disasters - Increased competition from non-traditional fast food outlets, such as food trucks and ghost kitchens   I have added the following points to the SWOT analysis: - Customer loyalty due to consistent quality and service: McDonald's has a loyal customer base that is attracted to the company's consistent quality and service. This is a major strength that helps the company to maintain its market share. - Strong franchise network: McDonald's has a strong franchise network that helps the company to expand its reach and grow its business. The franchise network also helps to improve the customer experience by providing a consistent level of service across all of McDonald's locations.   - What is your opinion? I would love to hear your thoughts on McDonald's SWOT Analysis and what lessons you think other businesses can learn from it. Please share your thoughts in the comments below.   I hope this is helpful!

🔍 How a Pizza Place Makes Money Ever wondered how a pizza place generates and allocates its revenue? I have gathered benchmarks and coefficients from multiple sources and reports to visualize the details using a Sankey diagram, illustrating the financial flow for a $2 million annual revenue scenario. 🍕 Pizza Sales: - Pizza revenue accounts for 65% of total sales. - Gross margin on pizza is around 67%. - Cost breakdown for a $12 medium pepperoni pizza: - Cheese is the highest cost. - Dough and pepperoni also contribute significantly. Total cost to make and package: $3.96. 🍟 Side Dishes & Desserts: Represent 25% of total sales. High margins that contribute well to overall profitability. 🥤 Beverages: Account for 10% of total sales. Also, contribute good margins to the bottom line. 💼 Cost Allocation: ~1/3 of revenue goes to the cost of goods sold (COGS). Another 1/3 covers labor costs. Franchise fees are around 5-6%. Net margin typically sits between 6-8%. Based on industry benchmarks and Domino's Pizza data for a $2 million annual revenue scenario. Sources: Franchise Chatter, NetSuite, IBISWorld, Toast POS, QSR Magazine, DominosPizza Domino's - Pizza Hut - Papa Johns - Proper Pizza

Texas Roadhouse continues to roll despite macro pressures impacting most of the restaurant industry. The company reported Q2 results this afternoon, including strong traffic trends yet again, as well as: * A comp store sales increase of 9.3% at company restaurants and 8.3% at domestic franchise restaurants. * Average weekly sales at company restaurants were $158,991 compared to average weekly sales of $146,727 in Q2 2023 * Restaurant margin, as a percentage of restaurant and other sales, increased to 18.2% from 15.7% in the prior year driven by higher sales. * The company is also becoming more global, surpassing over 50 international franchise locations. "We continued our momentum in the current quarter as strong traffic trends and some relief on commodity inflation led to increased profitability across all of our brands. With our operators delivering solid operating results, and a balanced development pipeline, we are well positioned for the second half of the year.” - CEO Jerry Morgan More: https://lnkd.in/ehJbXrdZ