Multi-Unit Masters Series: Part I
At Franchise Update Media’s Multi-Unit Franchising Conference, Eulerity’s team had the opportunity to interview industry leaders within franchising to hear firsthand about the effects of the COVID-19 pandemic on their brand, what crucial communication with team members looked like, what lessons they learned during that time and what is to come for multi-unit franchising as a whole. The first part of this series features food-concept franchise brands, including below sessions from interviews with this year’s Multi-Unit Masters, leaders who showed unwavering commitment to their brands, team and mission.
“We had to re-pivot everything,” said Seth Jensen, Chief Financial Officer and Partner of Slim Chickens. According to the National Restaurant Association’s 2021 State of the Restaurant Industry Mid-year Report, on-site dining decreased by an entire 30%. Owners and operators had to quickly change business models they had been working from for decades, with new off-site and delivery options taking reign within the restaurant industry. As of April, 2021, 57% of all restaurants offer on-premise, outdoor dining. “We found ways to break the bottleneck of the traditional drive-thru, which is the only way you can reach some guests. I think there will be some residual effect of the next generation of consumers wanting to know and expect that the food you eat doesn't have to be at a restaurant. That will be a big part of the business model, but so far we've done well.”
Other food franchises faced a reality where their products were among the highest in-demand, with grocery and convenience stores selling out of items within hours at the start of COVID-19. “When people couldn’t get bread in grocery stores, our bread business went from 0% to 200%. Locations that embraced that and advertised well saw their sales improve in 2020, through the pandemic, over any previous year,” said Mike Ferretti, Chairman and CEO of Great Harvest Bread Company. For anyone who hasn’t seen the internet explode with bread recipes, tutorial videos and more, it’s important to note the uptick in the fascination with the food. The demand for the food is higher than ever, with Ferretti saying, “Bread is in again. People want comfort food and the market has roared back within the last 18 months. Our business is stronger post-pandemic than it was going in.”
Ferretti also spoke on the impact of technology and working together as a leadership team, saying, “In February of last year, when things started getting wonky, our president said that we need to get ready for this. We needed to understand how we get labeled as an essential business and how we position ourselves. We split into two efforts in mid-February of 2020. He developed an advertising campaign that reminded people that we're an artisan, comfort-food bread, and another team developed all the digital platforms we used. We had all of our apps ready to go, so we were able to deploy them in March of last year.” The implementation of technology and apps should come as no surprise, with almost every brand turning to automation and cloud services to lighten their marketing load. Technology has never been more in demand.
Jackie Lobdell, VP of Franchise Development for Slim Chickens, is one of many leaders that believe curbside is here to stay. She also told Eulerity about the impactful ways of anticipating the rise in technology and its impact on customer communication of technology, “ust the whole changed behavior — we fared very well through COVID — partially because we anticipated technology, in general, changing the way we do business a long time ago. We have a really robust app, so when COVID did hit, our customers were used to ordering online, coming and picking it up, and not really interacting with us all the time. It was super easy and we were super nimble in turning those dining rooms into parking lots. We had everything set out to our franchisees within a week and a half — all signage, everything related to that,” said Lobdell.
Lobdell’s description of the franchisor/franchisee relationship came out in our conversation, with nothing but positive anecdotes on the bond between the two parties. “We are partners. Our whole purpose is to make our franchisees successful,” said Lobdell. David Ostrowe is the President and CEO of O&M Restaurant Group, as well as a member of Franchise Update Media’s Multi-Unit Franchise Advisory Board and multi-brand franchisee. He shared similar thoughts, with an emphasis on how important growth is for both parties. “The franchisor has to understand what the relationship is, and some of them don’t. You have two sides of the same brand that, theoretically, should be moving in the same direction, from two different perspectives. Our growth is dependent on their growth.” He shared that the only way to stay afloat within the restaurant industry is knowing that, “...you have to know how to go ahead and do something new.”
Seth Jensen of Slim Chickens also shared how the brand set their franchisees up for success, saying, “We did things like investing in systems, so they were ready to be deployed, so that our franchisees could benefit from those systems. A lot of them were built way beyond the years and unit counts we had in place. We invested into them so they were ready to be available.
Secondarily, we got together and all agreed to not take a margin on any of those systems, because we never wanted to wonder if that was a good idea for us or for the franchisor to find a revenue stream. We put it all on the table and fair-shared everything. We don't want to ever have you second guess the direction of the brand.”
Sunita Sagar, COO of Multi-Concept Management, LLC, and a multi-unit franchisee of 15 Denny’s and Jack in the box locations, relayed the transparency and dedication franchisors and franchisees both had to one another’s support and success during the pandemic. “It's interesting, as franchisors have been very sensitive as to what franchisees are going through. There has been a lot of open communication of the hardship,” said Sagar. The growth that came from both parties was evident, with Sagar telling us about the “daily communication with franchisees on conference calls, making sure we're all in it together, and anything that needed to be done to improve or change the business model, as they were getting feedback from the franchisees.”
Great Harvest Bread Company’s outlook on the franchisor/franchisee relationship was no different. The entire pandemic was make or break it for not only the businesses themselves, but for the relationships franchisors and franchisees shared. “We've gone back to more of a cooperative effort and I think that bodes well for the future. We've become good listeners again, and I think the pandemic did that. We're better at listening to our customers and better at listening to the franchisees.”
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Stay tuned for the second part of the Multi-Unit Masters Series, where service industry franchise brands take the stage to discuss the effects of COVID-19, the impact of technology, brand communication and more.