5 best practices to drive growth in a restaurant chain
It happens. You load up your latest sales report and see that sales have stagnated over the last quarter. Again. Things could be worse: you’re glad that you are not that restaurant chain which got people sick last month. Time to cheer yourself up by procrastinating on your iPad and reading the news. Surprisingly, you notice an article about your employer in one of the opinion pieces. Looks like the author didn’t have the best customer experience and started a rant about how your menu hasn’t changed in a decade. At first, you chalk up the negativity to the less-than-perfect experience but, now that you think of it, maybe menu fatigue is the root cause behind your stagnation. The author is right: you have kept your menu relatively unchanged and purposefully simple over the past decade.
Anyone with a bit of restaurant industry experience knows that food costs are one of the two biggest controllable costs in a restaurant (along with labour costs). Your menu simplicity is actually one of your strengths: it has helped your profitability and made new employee training easy over the years. Perhaps these new competitors offering similar products have slowly eroded your differentiator without you realizing it?
Time to get the R&D department involved. Yeah, that means Joe. Joe’s the whole department. Maybe this is proof that you haven’t been doing that much innovation these past few years. You meet with Joe and brainstorm together. You come up with crazy ideas involving lobster or pulled pork. Beth walks by and says she’s a big fan of this new thing from Canada called poutine. You leave the project with Joe and he does more research, more development, more experimentation. He comes back with a few interesting options: they all taste great. You’re determined that you should add these to the menu. But you can’t add them all. Not at the same time. What do you do?
Best Practice #1: Involve the franchisees and/or store managers
In a franchising environment, increasing franchisee engagement should always be a priority. Franchisees aren’t just there to do what you tell them to; they are independent business owners who want to be involved. They’re a part of the brand as much as you are and they are the ones out there executing the brand promise every single day. Your decisions affect their bottom line. The happier they are, the less churn you will see and more new units you will open. The managers and/or chefs are also important stakeholders in this process. They know what takes too long to make during rush hour, they know what customers are asking for.
But how do you collect feedback from distributed individuals? Isn’t it like herding cats? It is a lot of work to do manually, but FranchiseBlast offers a franchisee polling app which lets you blast off a survey to all franchisees and store managers to collect feedback. You can thus send over the details of the three main options R&D prepared, with pictures, and ask for people to give you their thoughts. You can even ask them to try to prepare the recipes themselves and get feedback from the rest of the store staff.
What you discover is that some franchisees are concerned about the price of lobster and the risk that it would spoil and food costs would rise. Others comment about how pulled pork would be a poor choice in their demographics due to religion. Finally, one of your first franchisees would be severely disappointed if you went forward with poutine. Isn’t one of your core values to serve healthy options? It would turn off a large portion of your clientele.
There’s no easy answer. It’s normal for a group to have diverging opinions. The greater the group, the more divergence. As a franchisor, you can’t just always listen to the loudest group but it is in your best interest to bring up the subject with your franchisee advisory council, if you have one.
End Result: You’re moving forward with lobster.
Best Practice #2: Leverage limited time offers (LTOs) to experiment
To the best of your knowledge, adding lobster is the best option. You’re concerned about the food costs, especially since the price skyrockets during the off season. You’re pretty much forced to launch the item as a Limited Time Offer (LTO) because of this, but it would be a best practice regardless of what menu item you picked. You could run a test in a handful of locations and see what happens (and potentially still should), but a localized test doesn’t produce statistically significant results and can easily be skewed by local preferences. It’s time to do a nationwide LTO and get marketing involved to make sure it’s a hit. If menu fatigue is one of the root causes of your stagnation, a good campaign will help bring back previous customers or win new ones. It does also get your brand in front of more people so you’ll stay top of mind in your loyal customer base even if they’re not attracted by the LTO.
Marketing produces a brilliant campaign with stellar messaging. You love it. Time to shoot off an announcement to all locations about the upcoming campaign. FranchiseBlast offers a franchise news function for this purpose. You can also upload the digital files for your marketing collateral in our document repository for franchisees to download and print locally. Alternately, you can sell off preprinted goods in our franchise marketplace or just ship them off directly to the franchisees at no cost to them (paid out of the ad fund).
Best Practice #3: Systemize complex roll-outs
Some rollouts are fairly simple. Perhaps you already use the base ingredients in other recipes and you just need to install a few posters. Perhaps, you’re past the pilot or LTO stages and want to integrate the menu item to your permanent menu. In some cases, new pieces of machinery need to be installed gradually over time in all locations. An easy example would be a new toaster oven, but in our story we’re selling lobster and management has decided to install live lobster tanks in every location. (This is a horrible idea, please don’t do this and blame us if it fails!).
The best practice, however, for complex roll-outs is to systemize the whole project. Build a standard project plan which lists who (franchisee, franchisor, etc.) needs to do what (order machinery, get quotes for installation, have it installed, etc.) by when (days before the grand launch). Once your project plan is systemized, you can execute the project in the context of every store. In FranchiseBlast, we call these Action Plans. During the whole process, franchisees may voice questions or concerns via each individual Task or via the Support Desk if they need assistance.
By systemizing the project, you ensure fewer tasks fall between the cracks and you and your regional managers can centrally track the progress of the full roll-out.
Best Practice #4: Review the roll-out.
In best practices #1 and #2 above, we were focusing more on “are we doing the right thing?”. In this best practice, we focus on “are we doing the thing right?”.
From a marketing standpoint, if you’re spending hundreds of thousands or even millions of dollars on nationwide marketing campaigns, it is in your best interest to ensure that all stores have rolled out the LTO banners and other collateral. To drive consistency, some users of FranchiseBlast leverage our franchisee polling app and shoot off a self-assessment to all franchisees. The self-assessment will request that they snap a picture of the campaign using their mobile phone to prove it has been properly rolled out. This is a very affordable way to ensure consistent branding across all locations.
A more expensive yet more powerful technique is to leverage your franchise business coaches to go out in the field and review how the staff is actually preparing the limited time offers using our franchisee field audits app. Reviewing LTOs should be a staple of any field audit questionnaire because it has a direct impact on sales, just like making sure staff are upselling during a transaction.
To the best of your knowledge, this campaign is what will drive results. If half the stores aren’t offering it, then you obviously won’t see the expected results. If you are ultimately responsible for the whole process, your job may be on the line here even if the LTO fails at the execution level, not the strategy level.
Best Practice #5: Evaluate the impact. Make data-driven decisions.
Alright, buddy. The limited time offer is over. Time to look at some numbers and evaluate how it performed. Franchisors often utilize our benchmarking app to compare and contrast performance over time and drill down into certain key performance metrics. By monitoring gross LTO sales and food costs (both $ values and % of sales), you can effectively determine if the campaign had a positive impact on both sales and, more importantly for your franchisee, profitability.
If the campaign is a resounding success, time to analyze why it was a success – perhaps your gut assumptions are wrong. If it was a total failure, time to learn from your mistakes and try something new in the future. The most likely outcome is you’ll end up with a mixed bag of results with some locations performing better and some performing worse for a variety of reasons. Your job isn’t easy, but having the technology at your fingertips to make data-driven decisions is key.
As a final note, a post-mortem analysis is obviously a good idea – but you’re in a much better place if you have the tools at hand to make real-time performance reviews while the campaign is running.
I’ll hope that the lobster campaign was such a success that you’re making the lobster your new official mascot. If so, you should get a costume made for Joe to wear during your next annual convention.