Investing for growth? Veterans flag top priorities
Panelists consider key questions for investing in growth. Photo by Matt Tilbury.
Success in commercial foodservice relies heavily on growth. Achieving growth requires investment in resources, which in turn requires planning. A panel during the Fast Casual Executive Summit at the Nashville Omni explored the tough questions management should ask before investing in growth initiatives.
|Moderator Stephen Polanski asks panelists how they select new markets for growth.|
The panel, moderated by Stephen Polanski, senior vice president of Buxton, covered a variety of questions ranging from what data resources commercial foodservice businesses should use to how to best qualify potential franchisees.
Where to target for growth
Tim Muir, chief development officer of Focus Brands, which owns Carvel, Schlotzsky's, McAlister's Deli, Moe's Southwest Grill, Auntie Anne's and Cinnabon, said his company looks to grow in places where it will have the highest probability of success.
"Do you want to go into markets where people don't know your name?" Muir asked.
Muir said in his 30 years, he's always believed in the importance of location. He said he's seen poor brands succeed due to their location. But in assessing the quality of a location, he said it's important to know what other businesses will be located nearby.
Jeff Baldwin, vice president of franchising and development at Donatos Pizza, noted there is software available that specifically analyzes a company's best geographic opportunities.
|Tim Muir cites the importance of location to success in commercial foodservice.|
What are your resources?
Focus Brands relies heavily on companies like Buxton that provide critical business data, Muir said. It then develops action plans based on critical data.
When the company decides to focus on a new market, it bolsters its sales force in that market, Muir said. When it entered East Texas, the company doubled its sales force there and hired a senior vice president.
What to consider
Jim Thompson, vice president of operations at Chicken Salad Chick, said his company asks itself if it has the food distribution in place before expanding into a new market. The company also considers what support it could offer franchisees with real estate, an area where small operators especially need help.
Thompson said to make sure you can replicate your operations as you expand.
"The simpler you can make it (the better) and stay true to who you are," he said. Don't try to be everything to everyone.
|Jeff Baldwin cites the need to have operational support in place before expanding.|
Baldwin of Donatos Pizza echoed Thompson in noting that before expanding to a new market, a company must make sure it has the components in place to support the new market operationally.
Much of the discussion focused on challenges related to franchising.
Berge Simonian, co-founder and CEO of Salata, said that after offering franchise opportunities in 2007, the company got out of franchising in 2013, when it realized many of the franchisees were not buying into the company's culture.
When Salata returned to franchising in 2016, it only approached multi-unit operators with a minimum of $5 million in capital, Simonian said. These requirements proved exceptionally beneficial to the company's success.
Know your customer
All panelists agreed that knowing the customers' habits is critical to growth.
Simonian said his company uses focus groups to get a better understanding of customers. They also get a lot of data from loyalty rewards programs.
The biggest change in the customer base for Simonian's health-focused eatery is no longer predominantly female since nowadays everyone is health conscious.
Food delivery services on the rise
When Polanski asked about the impact of food delivery services on business, the panelists agreed the services will have an impact.
Baldwin said he sees delivery business as organic extra business.
|Jim Thompson says every restaurant should be looking at food delivery.|
"If you're not looking at it, you need to look at it," said Thompson. "The younger generation, that's what they want."
Simonian said his company is studying three different delivery services. A big concern is making sure product integrity remains intact.
Muir said more restaurants will be offering delivery on their own in the next two or three years.
As for the impact of delivery services on his company at the present time, Muir said it depends on the brand. The best performing Carvel restaurants are located near supermarkets. This is because shoppers don't usually think of buying a birthday cake until they leave the supermarket.
What regions are hot?
When asked what markets today are growing the fastest, Baldwin said the major metropolitan areas are showing stronger growth for the pizza business.
Simonian said Texas is a high growth area, along with the Sun Belt.
What to watch out for
As for the biggest impediment to growth, Muir cited lack of patience.
"Don't swing at every pitch," he said. "Find the right person that's for us." He said it helps to establish expectations 10 to 20 years out.
"If you don't have the stomach, don't get in this business," he said.
Photos by Matt Tilbury.
Topics: Operations Management
Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.