Is the restaurant franchise model dead or just napping? - Insights

Is the restaurant franchise model dead or just napping?

restaurant franchisesAs the pandemic rolls on, it’s time to think again about your F&B, specifically in this case whether to recruit a restaurant franchisor or not. Initially these were a lifesaver for all manner of select service, economy and upscale hotels. You sign a contract with a prominent restaurant franchise; they manage all their own operations while you collect your dues and keep your guests happy. All was well, except then the model stagnated. Why?

The basic answer is that guests’ appetites evolved. As people rediscover dining out following the lockdowns of 2020 (and this current Delta variant), they want to experience new foods and local culinary specialties, no matter whether they are traveling for work or for pleasure. Many national or international franchises have failed to adapt by adding hyper-regional flair to their outlets, meaning that a guest has no sense of place for that specific locale and thus limited emotional connection to the hotel.

All is not lost; in fact, far from it. Just as hospitality brands have diversified in the past two decades to carve out a myriad of new niches in the lifestyle or boutique segments, so too have more selective and more nimble restaurant franchises come to the forefront.

The primary reason to consider outsourcing your F&B operations remains the same. Although it can be profitable, a restaurant is a nightmare to effectively manage, especially now with all the new COVID-19 safety guidelines. Third parties are able to bring their successful playbook so that you can have peace of mind in addition to an adequately steady source of income from letting them rent the space. The model is hardly dead, but it may still be napping because the right vendor that gels with your specific requirements has yet to make itself known in the post-pandemic market.

One other key worry to this laissez faire approach is that service delivery will be compromised and the guest, not able to emotionally distinguish between the hotel and its restaurant, will fault the former for any shortcomings in the latter. So, while niche franchises are emerging that can meet the modern demand for local authentic menus, you still need to establish ground rules to ensure that your brand standards are enforced.

Do your due diligence, starting by asking the prospective franchise what other hotels are under their belt and what specific alterations they executed to make their outlets bespoke to those locations. Then reach out to those cited properties to get their side of the story.

With any luck, if you are considering going with a restaurant franchise, rest assured you still have plenty of options at your disposal that can augment the guest experience in today’s ephemeral dining scene. But there is one level higher to seek – that of the aspirational franchise.

There are indeed a select few restaurant brands that have accrued such a lofty reputation that their presence will add significant value to your property, both in terms of attracting locals who will feed other onsite revenue sources as well as offering a point of differentiation for hotel guests. For this tier of franchises, the top consideration is whether their customers are a good fit with yours and vice versa.

Of course, any talks of restaurant franchise must be a part of the strategic vision for your property in terms of meeting overall revenue goals, growing RevPAR, conforming to your chosen theme and enhancing guest satisfaction. These are the sorts of big picture questions we sort through with clients at my consultancy and they are not at all easy to resolve! But once you do, know that even in the hypercompetitive F&B world we are in, a franchise can still work when done right.

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