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Franchising can help food businesses serve up success

Written by Josh Russell on Friday, 09 October 2015. Posted in Analysis

Many of the world’s biggest food chains have used franchising to build their brand. So why do food and franchising so often go hand in hand?

Franchising can help food businesses serve up success

Somehow the fates of food and franchising seem inextricably linked – if somebody was asked to name a franchise, the first few names to emerge from their lips would undoubtedly be one of the big names in the food sector. 

Franchising has certainly been the making of many a food business, allowing them to become truly global brands. But what is it about franchising that lends itself so well to rapidly building a food empire? We speak to three food franchises at different stages of their journey to find out.

Rolling in the dough

If anyone is likely to understand how franchising can help build a global food brand, it’s Subway. Fresh from celebrating its 50th anniversary, the international sub sandwich chain has grown into the world’s largest franchise with well over 44,000 outlets across 110 countries. “Franchising has been a huge success for us,” says Gregory Madigan, area development manager for United Kingdom and Ireland at Subway.

Having first start selling franchises when it only had 16 stores, franchising has played an invaluable part in helping Subway establish such a significant brand presence. “Franchising is an excellent way of growing a large network of stores,” Madigan says.

In his mind, one of the main benefits of franchising is it allows a decentralised approach to growing a brand; rather than being orchestrated from the top down, growth is driven by individuals with immediate oversight of the particulars of their local market. “Franchisees are entrepreneurs; they’re running their own businesses in their own communities,” he says. “That’s quite different to the typical centralised control model, which can often bottleneck development.”

Another benefit of franchising is its ability to create a replicable product or service time and time again. And, perhaps more than in any other sector, consistency is absolutely vital in the food industry. “Customers expect the same product, whether it’s a sub, a cookie or a drink, in any store around the globe,” says Madigan. Given franchising is based around creating a replicable model, it guarantees consumers will enjoy the same quality of meal, regardless of whether they buy it in Soho or Sao Paulo. “That’s the key to any franchise model: being true to your brand and being consistent,” he adds.

Compared to other industries, it’s also important to recognise that food service is a very strictly regulated sector. “It’s only right that there should be tight controls and regulations in place when you’re dealing with people’s food,” Madigan says. One of the clear benefits for those buying into a food franchise is that, rather than having to wrestle with regulations on their own, they’re buying into a system that has already navigated all the compliance issues that come with working in the sector. “That’s what the franchise model is so perfect for,” he says. “You don’t have to make it up or create it yourself – and that opens the door to a much wider range of people.”

Falling into plaice

When fish-and-chip franchise Harry Ramsden’s was purchased by Boparan Ventures, all of the key ingredients were in place but it just needed someone to turn up the heat. “It was a little bit unloved and lacked the required attention to detail to move forward,” says Joe Teixeira, CEO of Boparan Ventures and Harry Ramsden’s. Fortunately, the company had a very strong track record in the 1980s and its new owners realised that it was well positioned to capitalise on a UK market that supports 10,000 fish-and-chip outlets. “We looked at the business and could see it had a really strong IP that we could leverage and use to expand quickly,” says Teixeira. “The important thing was to try and take it to the masses.”

In Teixeira’s opinion, this is one of the real benefits of using the franchise model to grow a food enterprise: it can allow for much faster growth in what is quite a capital intensive industry. “If you expand using company-owned stores, there is obviously a required capital cost when trying to grow very fast,” he explains. “With franchising, you can accelerate that process and get the numbers up.” As the franchisees themselves are committing capital, not only can food franchises grow much faster but they can ensure that the people running outlets are incentivised to make them as successful as possible. “If you’re investing your own cash in it, you’re more likely to run it as efficiently as you can,” he says.

Perhaps one of the most interesting things about Harry Ramsden’s is that it shows just how wide a range of food concepts can embrace the franchising model. Its approach is threefold: traditional chippies based in the heart of the community, full-service, sit-down restaurants and, currently being trialled, a hybrid, assisted-service model, which Teixeira compares to a Nando’s-style experience. “With these three formats, we’re in the position to be able to increase our presence and leverage the brand to its maximum,” he says.

Another positive of buying into a food franchise is that success doesn’t always require extensive expertise in food service. “It’s all about personality, passion for the industry and a willingness to learn,” says Teixeira. He refers to some Harry Ramsden’s franchisees in Scotland whose prior experience was running a successful dentistry business with over 38 dentists. They have succeeded despite not having experience in running a food business. “The most important thing is chemistry; finding individuals that are as passionate about the brand as we are,” he says.

Thinking outside the box

In franchising terms, Nudo Sushi Box is very much the new kid on the block. Founded in March 2013, it was created as an attempt to bring more nourishing fare to the QSR concept. “We saw a gap in the market for a healthy alternative to fast food that’s more nutritious, fresher and better quality,” says Terence Lee, business development manager at Nudo Sushi Box. The business currently has eight company-owned outlets in the north but Lee expects the franchise model to help it rapidly expand southwards. “We are already expanding relatively quickly,” he says. “And once people actually see this new concept of a sushi franchise working, it could double or maybe triple the current rate of growth.”

But whilst franchising can support quick growth, Lee maintains it’s not for everyone. “You can supply the ideas and ingredients but, in terms of managing it, it all depends on the individual franchisee,” he says. Because every element of a franchise needs to be meticulously documented and easily communicated, food businesses with simpler models more easily lend themselves to franchising. “For restaurants that have proper kitchens and a head chef, franchising would be a lot more complicated,” he says.

One of the real novelties of Nudo Sushi Box’s model is that it has neatly sidestepped this problem and doesn’t actually require any food prep in-store; the outlets’ sushi is prepared at central kitchens before being delivered to stores. “When you look at it, it’s purely retail: customers can look at things in the fridges, see what they like, bring it to the till and pay for it,” Lee says.

This means that it’s far easier for a franchisee to pick things up and hit the ground running; they don’t have to concern themselves with the ins and outs of food prep and can simply focus on making the outlet operationally successful. “Franchisees don’t have the headache of how to make sushi,” he says. “Even investors could just invest money, have a few sites and employ good supervisors to look after the shop and let it run itself.”

And the benefit of this cuts both ways. The food being centrally managed also allows Nudo Sushi Box to ensure its products are continually produced to a consistent nutritional standard. “It means that we can focus more on production and keeping up the quality,” Lee says. “That’s very important.” 

About the Author

Josh Russell

Josh Russell

When he isn’t tooling around on trains in a tux like the Daniel Craig of the Greater Anglia transport system, Russell spends his time living the glamourous life of an enterprise journalist, judging Digital Business of the Year at the National Business Awards and attending conferences like NixonMcInnes’ Meaning 2013. However, like all good secret agents, Russell lives a double life – in his case, as a closet revolutionary. Social enterprise, sustainable business and collaborative practices are his true passions, something that he has had plenty of opportunity to air in his features here at Elite Franchise.

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