Why Successful Restaurant Concepts Often Fail as Franchises
August 21, 2018 | Nandkumar Awatramani

Why Successful Restaurant Concepts Often Fail as Franchises

Hey, ever wondered why only a few restaurants succeed in franchising their concept while most fail? What makes one more successful than the other?

In the next 2 minutes, you’re going to understand why most franchised locations don’t do as well as the flagship or worse and why only a few restaurants have managed to scale profitably.

Meet Robert, the franchisor, he owns PIZZARUN.

His flagship restaurant has been doing exceptionally well. He always wanted to franchise his restaurant business. He spent the past year documenting his systems and gettings his business standardized and ready to franchise.

His first franchisee, Joe, spotted an excellent location for Pizzarun’s first franchised store. The location had heavy foot traffic, great parking, and wide branding space.

Robert loved it.

A few months after Joe opened his first franchise store, it wasn’t doing well.

Joe failed to franchise the magic.

Joe focused on every tangible detail you could think of, but missed Robert’s core values, core purpose, core competence and even his magical brand promise that is displayed so prominently on his menu board.

This is common in our industry.

Most first time franchisors and franchisees haven’t understood what really makes them a success.

Let’s have a look at why Joe’s franchised store was failing and learn how to avoid these mistakes.

It’s Wednesday evening. We’re at Robert’s PIZZARUN’s flagship store.

A line begins forming at his front door just before his 10:30 AM opening and does not decrease till after 3:00 PM.

By 5:30 PM, the crowds start squeezing toward the front of the dinner line. Robert’s unique all-natural pizza, fair price and lightning-fast service are obviously magic. However, his first franchisee is struggling.

On meeting Robert that evening, he says, “everything is the same, but he’s (Joe’s) not getting the business. We can’t figure it out.” To his confusion and dismay, his first franchise, Joe, wasn’t succeeding.

So what’s Gone Wrong?

The next day we met Joe. Except for the fact that Joe’s restaurant wasn’t very busy, it was hard to distinguish any material difference between Robert’s flagship PIZZARUN restaurant and Joe’s first attempted franchise.

The high-end business and shopping locations were similar. The footprint and interior decor were identical. Joe was meticulous in following Robert’s recipes and preparation protocols. The service system matched the original PIZZARUN.

The two friends had checked every box in the franchising toolkit that Robert worked so hard to perfect. Yet, the first PIZZARUN franchise was failing.

Here’s what’s going wrong.

1. On asking the head pizza chef at Robert’s flagship store, what he thought was the secret to PIZZARUN’S success. With a gleam in his eye, he looked out at the customers passing along the front of the service counter and said,

“them.” 

Pointing to a young family chattering together as they drew drinks for one another from the coke fountain, he added,

“they are the magic of PIZZARUN. We watch them all. If they are happy, we are happy.”

Looking into the cook’s eyes, I instantly felt the magic.

Every employee believed it was his personal job to make the customer happy. They were all clear about their core purpose.

2. On visiting Joe’s franchised store. I noticed every product and possible combination was represented on the POS device.

I remarked to the cashier working alongside me how simple the system was to learn and operate.

“It’s a good thing, too,” she said with an edge in her voice. “I have to watch the cooks to make sure they grab the order ticket quickly, or the orders don’t come out on time. I’m expected to keep an eye on everything. That’s why this register is idiot proof, I guess,” she concluded, shrugging her shoulders.

Eureka! She wasn’t watching the customer. She was watching the other employees to see if they were going to make her happy.

This was very different from Robert’s flagship store, where he had hung a sign that read:

‘It Takes A Team’.

He constantly preached that each employee is a team member who specializes in one element of the customer’s experience. “That’s how we deliver satisfaction every time.”

Somehow, Joe, the franchisee, had failed to communicate that teamwork and every employee’s attention to customer satisfaction was PIZZARUN’S core value.

3. Over coffee the next morning, I asked Joe what he thought his restaurant was particularly good at.

Without hesitation, Joe said, “we must be exactly like Robert’s flagship restaurant.”

However, Robert’s core competence was constant focus on the customer’s happiness.

Joe misunderstood and thought his core competence was to copy the tangible details of Robert’s restaurant.

4. While visiting Robert’s flagship restaurant the following night, I finally read the original company logo carefully. It said: Not Satisfied, No Charge.

I couldn’t believe what I was reading. I hustled back to the kitchen to ask Robert about his logo. “Yes,” he said calmly. “That is our motto. We are here to offer satisfaction. If the customer is not satisfied, we have sold him nothing. We cannot take his money.”

Joe, the franchisee, had removed this promise from his new restaurant’s logo.

“It was too risky in the beginning,” he reasoned.

He said he got Robert to agree that they could put it back after they had his restaurant running smoothly.

Joe looks to me and says, “Perhaps it is time to put it back, no?”

“Yes,” I answered.

Joe had forgotten that Pizzarun’s Brand Promise had to be kept no matter what was happening internally. That’s the only way you create trust between the customer and you in today’s competitive market.

Tip! Have a brand promise, communicate it to your customer, and keep the promise under any circumstances.

5. At the end of the week of research at “PIZZARUN”, Robert, Joe and I sat down to dinner.

“I know why Joe’s restaurant is not working,” I began.

“Joe failed to franchise the magic. He focused on every tangible detail you could think of, but missed Robert’s core values, core purpose, core competence and even his magical brand promise that is displayed so prominently on his menu board.”

Robert has taught each employee to focus on every customer’s satisfaction.

Even Robert’s dishwashers worry that a customer might get a plate or a utensil that is not immaculately clean. They are thinking about customers while they’re out back washing pots.

The cooks make eye contact with every customer. They don’t leave guest contact to just the service staff.

This all adds up to, what we might call, Robert’s X-factor. Joe, the franchisee, has failed to capture it.”

So, What’s your X-factor?

Find it, because that’s what keeps your customers coming back for more.

Once you find your X-factor, create systems and processes to replicate them, so you ensure you repeatedly make your customers feel your magic and keep them coming back for more.

That’s the key to franchising successfully.

 

Hi, I'm Nandkumar Earn more, work less, and enjoy your (life) time in a way that makes you, your family, and employees happier.

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