Diversification of the franchise portfolio: trends take shape in 2022 | Modern restaurant management


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The COVID-19 pandemic has ushered in a lot of chaos and accelerated several trends within the restaurant industry. From full service to casual fast food brands to old fast food brands, the only constant was disruption. Many brands have been able to take advantage of blocks and social distancing commands by moving operations to drive-thru, delivery, pickup and curbside models. This approach required fewer reception staff to maintain a dining room, complied with government orders, and prevented many brands from closing.

As the pandemic progressed, initial approaches to the challenges subsequently required a high level of flexibility. Just as one problem seemed solved, another arises. Today, running a restaurant can be more like a mole game than running a profitable business. Labor shortages and other factors are affecting the global supply chain in unprecedented ways, and some commodities are not available intermittently, or if they are, they are expensive. One week is ketchup packets, the next is cooking oil, then take out packaging, and then another necessary part of the business, and so on. This level of uncertainty obviously makes restaurant owners and fast franchise owners nervous that the industry is going through fundamental change, and what used to be considered standard practice can become unrecognizable.

The process of adapting to the changing dynamics caused by COVID has sparked the idea among many franchisees that their big box brand portfolios may be too bulky to continue with pre-COVID expectations and thought of further societal disruption has placed their sources of income and family finances at risk. The idea of ​​diversifying portfolios towards lighter concepts but offering the same – or better – ROI began to take shape.

Diversify vs Simplify

As multi-unit, multi-brand franchisees seek to create the most efficient portfolio, many have turned to diversification to maximize their profits. The Big Five have been diversifying for years, if not decades: burgers, pizza, Mexican food concepts, sandwiches and, more recently, chicken. The “Chicken Wars” had made most of the headlines in the months leading up to the COVID pandemic, and a crowded field of fast food and fast food concepts attempted to enter the game. the pandemic comes and goes, however, diversification appears to be moving towards simplification, especially given the ongoing economic turmoil, labor availability issues and supply chain nightmares.

According to a report from S&P Global Market Intelligence, U.S. supply chains have suffered major damage due to the combined factors of the coronavirus pandemic, short-term business planning and underinvestment in logistics. For the restaurant industry, disruptions to a disrupted supply chain can remove key ingredients from inventory, which then forces locations to remove menu items temporarily or indefinitely. Additionally, as inflation rises and a lack of available workers drives hourly wages to or beyond $ 15 an hour, many brands are forced to pass these rising costs on to their customers. For example, a CBS MoneyWatch item As of June this year, several well-known fast-casual brands cited the decision to increase prices by up to 4% to help offset rising labor and other costs. More recent price increases have almost doubled that number. Recent supply chain issues have only exacerbated the problems in the restaurant industry.

An unstable supply chain coupled with a nationwide labor shortage and rapidly accelerating wages, has many multi-unit and multi-brand franchisees looking for concepts with optimized menus and less labor. Concepts with this level of simplification greatly benefit franchise owners who seek profitable diversification of their portfolio.

Staying one step ahead of COVID-19 and its variants

Savvy franchise owners are seeing the writing on the wall and are moving towards concepts that are not only profitable but also forward thinking. Aloha Poke is a good example of how simplification can help portfolio integrity and profitability while navigating the current situation. We see this trend developing daily thanks to the many discovery calls we receive from seasoned franchisees looking to simplify their portfolios of quick investments.

Compared to big box brand concepts, and even compared to other poke style concepts, our operational, labor and construction requirements are optimized for start-up and maintenance. For example, the Aloha Poke concept does not require a staff to run a 30 foot service line as our menu consists of helpful items, most of which are raw, natural, unprocessed, and straightforward foods that are sourced from from sustainable sources. Additionally, our tuna and salmon are freshly packaged, certified eco-friendly and sashimi-grade, and come from dedicated supply chains that allow us to follow our product from ‘ocean to bowl’. Concepts like ours also don’t require large back-house kitchen utilities such as grills, fryers, or ovens, reducing our overall construction costs and optimizing overhead. These are all attractive operational aspects of the Quick and Occasional Franchise that resonate with franchisees as they seek to protect and stabilize their portfolios through 2022 and beyond.

According to industry analysts, the market for poke and similar food concepts is expected to grow by $ 1.2 billion by 2024. sustainable and responsible food supply which is clean, unprocessed, eco-friendly and less reliant on large-scale supply chains, while requiring fewer catering staff, concepts like Aloha Poke Co. are the fast-paced and laid-back franchise model of the future. .

As we continue to fight the fallout from COVID-19, many multi-unit franchisees are beginning to seek quality investment opportunities where operations are geared towards less friction with consumers, less reliance on interaction. physical, fewer workers and more focus on digital controls and convenience. The pandemic has exposed the pitfalls and pain points that many legacy franchises likely continue to face in the short and long term. The new trend, today and tomorrow? Reduced overheads, limited manpower requirements, and a sustainable and stable supply chain.

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About Imogene T. Bishop

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