Growth Advice From Three Big Multi-Unit Franchisees
Becoming more than a one- two- or three-unit franchisee is no easy task. What brands to go with? How far from home can you wander? We talked to a few of the biggest, most successful multi-unit franchisees in the biz to get their advice on growing a larger franchise operation. As a bonus, we asked them what to expect in the economy during the rest of 2016.
Tom Garrett of Atlanta-based GPS Hospitality is one of the largest Burger King franchisees, and his company is on a hot streak after successive upward revisions to its growth plan reflecting advances that keeps unfolding faster than expected.
Of the current market, he said QSR traffic has been a “zero-sum game for some time.” Because of that, he said growth has to come at someone else’s expense. Even so, he’s expecting a good year under the BK umbrella, with additional expansion underway.
“I’m not necessarily concerned somebody’s going to take a bite out of us,” he said. "It’s competitive, but I think our performance and gain gets even better in ‘16.”
Sharing his advice for aggressive, smaller franchisees, he suggested developing a specific strategy and building from there, rather than getting overly excited about a certain brand.
“Make sure you start with a strategy, not a brand, and use your skills and capability to inform your strategy,” Garrett said. “If you do that, you’ll get started in the right direction.”
Dallas-based Sun Holdings is another of the largest Burger King franchisees, along with having a large number of Popeyes and Arby’s, and CEO Guillermo Perales said 2015 was one of the company’s most active years to date.
Looking through the end of the year, Perales sees elevated consumer confidence improving business conditions, even as increase competition adds another degree of complexity.
“Lower gas prices have helped the confidence of consumers, so they’re out spending more even though in some segments the competition is getting stiffer,” he said. “This year we have seen double-digit growth in most of my brands, so it has been a very good year.”
For smaller multi-unit operators, he recommends taking calculated risks to break out from the herd and become a large-scale franchisee.
“You’ll never grow without taking risks, because as things get more expensive, if you’re not making the next step you’ll never get anywhere,” he said. “I know a lot of operators are finding reasons to grow or not to grow—if you want to grow, you really have to diversify and be aggressive by buying and developing.”
Aslam Khan of Westlake, Texas-based Falcon Holdings runs a large portfolio of restaurants including Church’s Chicken, Long John Silvers, Hardee’s and A&W Restaurants. With a stake in several different protein groups, he is bullish on the coming year, particularly because of commodity prices. Government interference, he said, has been the counterweight to price relief.
“As far as our commodity prices are concerned, we’re going to benefit this year, because chicken is at an all-time low—there’s an abundance of supply,” Khan said. “The government stuff is causing problems, the wages are causing problems, so it will eat up all of the benefit of commodities and more.”
His advice to smaller operators is simple: focus on getting the perfect locations to avoid significant losses.
“Building a brand costs a lot of money, so they have to be very careful of the selection of locations,” Khan said. “It could go south and they could lose money—and small operators cannot bear million-dollar losses.”