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Having a successful individual concept is one thing, but transforming it into a franchise is a whole different challenge. During the Restaurant Franchising and Innovation Summit, a discussion was held on the path restaurants can take to transition from a startup to a fully expanded entity.
Having a successful individual concept is one thing, but transforming it into a franchise is a whole different challenge. A panel at the Restaurant Franchising and Innovation Summit held in Kansas City, Missouri from March 24 to 26 examined the journey of restaurants from startup to full-scale expansion.
Rachael Nemeth, CEO and co-founder of Opus Training, led the conversation with Craig Haley, president of Smokey Mo’s TX BBQ, Josh Halpern, CEO of Big Chicken, Andrew Pudalov, founder and CEO of Rush Bowls, and Ryan Weaver, CEO of Lee’s Famous Recipe Chicken.
Venue
When exploring growth strategies, the approach will vary depending on the current status of your establishment. Haley mentioned that Smokey Mo’s TX BBQ was primarily driven by family leadership, and the founder’s vision played a significant role. However, for them to expand, they had to redefine their foundation due to several elements that were not contributing positively.
Conversely, with Big Chicken, having NBA player Shaquille O’Neal as the founder led to rapid expansion, requiring careful management.
“The challenge is to channel this growth into a coherent structure,” Halpern stated. He highlighted that they had to reject 4,200 franchise applications.
Pudalov emphasized their selective approach to choosing franchise partners because having a wrong partner in a suitable location would not be as effective as the right partner.
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An essential aspect of franchising or general expansion is determining the appropriate pace of growth, particularly in challenging economic conditions.
Haley mentioned that “Construction expenses have risen. Banking and financial costs have increased.” As a result, it becomes challenging for franchisees, especially those operating one or two outlets.
To navigate these uncertainties, Smokey Mo’s TX BBQ has opted to slow down its growth and expansion. Pudalov concurred, indicating their focus on adhering to established methods to demonstrate returns for franchisees and offer clear forecasts up to 2029.
However, Halpern expressed that he lacked control over the growth pace due to receiving calls from Shaq stating, “Hey, we are entering the U.K. in April.”
Instead, his focus lies in ensuring they have the appropriate leadership and all puzzle pieces in place to support growth because “once you stretch your team too far and they break, growth halts.”
Technology
Technology plays a crucial role in facilitating restaurant expansion. However, a significant challenge lies in selecting the right tech solutions to address actual issues.
Halpern stressed the importance of asking, “What problem are you trying to solve?” In the case of Big Chicken, technology is primarily utilized to aid franchisees in cost analysis and training.
Haley supported this notion that tech “needs to provide value.” It is not about imposing standardized solutions on franchisees.
Pudalov warned against becoming distracted by “fancy gadgets.” For instance, despite foreseeing the transformative potential of AI, it is imperative not to leap from A to Z, skipping the intermediary steps, as we are still unraveling AI’s capabilities.
On a positive note regarding AI, Weaver noted its application in drive-thrus, leveraging the experience of a franchisee with the tool to validate its time-saving benefits.
Education
Lastly, any expansion strategy will fall short without adequate training to ensure consistency across the brand and customer experience.
Halpern mentioned that communicating in a language understood by employees is among the crucial tactics.
“By language, I don’t mean English, Spanish. Are you addressing them as a 20, 30, or 40-year-old? Each person is their distinct brand,” he remarked, underlining the importance of tailoring communication to each generation’s preferences.
Haley supported this perspective, mentioning their shift towards less scripted approaches, focusing instead on teaching outcomes. For instance, emphasizing the desired food appearance and customer experience upon entering the restaurant.
Weaver highlighted the franchisors’ responsibility to ensure that franchisees apply the training received during their 7-week ‘Chicken School.’
Consistency is the key element in all these strategies.
“Restaurants do not fail due to bad ideas,” Haley emphasized. “Maintaining consistency is exceptionally challenging.”
To uphold consistency, Haley recommended commencing with a plan and reflecting on it after 90 days. Many individuals get deterred after setbacks and fail to revisit their original plan.
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