To Franchise or Not to Franchise

NACS Show attendees discussed whether foodservice franchising is right for your store during the “Focus on Franchising” educational session.

October 14, 2013

ATLANTA – If you’re considering launching a foodservice program in your convenience store, now’s the time to do it — competition in foodservice is getting fierce, said Tommy Hunt, president of Tennessee-based E-Z Stop Food Marts, and Shultz Hartgrove III, vice president of license development for Colorado-based Einstein Noah Restaurant Group, in the “Focus on Foodservice Franchising” session.

“We’re in competition with grocery stores that are setting up delis closer to the door, Dollar General, Walgreens and CVS,” Hunt said. “So we decided we wanted to be able to compete more effectively. We gave the mom in the minivan another reason to pull into our parking lot. We already had the drinks and the snacks. It was about, ‘What else can we provide?’” Now, E-Z Stop Food Marts have franchise partnerships with McDonald’s, Subway, Baskin Robbins and more.

When you’re looking into foodservice for your stores, consider whether you want to franchise or create a branded foodservice option.

“While it may be more profitable in the long run to create your own brand, it takes a long time to build that credibility among customers,” Hartgrove said. “Using a quick-service restaurant (QSR) is a way to jumpstart that and reduce the cycle time to getting into foodservice.”

A franchise is a magnet for cars and a way to differentiate your store from other fuel retailers, he added. Plus, franchises provide instant recognition, turnkey solutions and immediate sales impact.

“National brands have developed proven recipes and products, and have the marketing and operations systems in place, enabling you to focus on customer service and building sales,” Hartgrove said. Franchises present a unique set of challenges, however. Because consumers are familiar with large brands like McDonald’s, they’ve come to expect a certain level of service and quality of food.

“It has to be the same everywhere, every time,” he said. “The experience is the place. If it’s not the same, the consumer will know right away.”

You also must consider your location and demographics when contemplating whether to bring in a franchise foodservice program. If your store is near offices, you may do better bringing in a lunch place rather than a breakfast provider. “Ask yourself: ‘How much money do people on the street have?’” Hunt suggested. “Look at the demographics. Are you in a higher end or lower income neighborhood? What is the traffic like?”

Finally, make sure you can afford the investment and that the franchise will be a good fit physically and will work with your overall strategy. Hunt recommends visiting a successful franchise in your area to evaluate whether you will be able to bring a similar offering to your store.

“Be honest with yourself,” Hartgrove said. “Are you willing to invest the time and make that commitment to adhere to brand standards and offer great customer service?”

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