Food franchises have an appetite for success
The food-on-the-go industry has never been more competitive. With the rise of mobile technology and the emerging cult of health, brands are having to do more than ever to stand out from the crowd and not only attract customers, but to keep them coming back. Joel Levy spoke to some of the industry’s leading lights and up-and-coming stars to discover their strategies.
The food industry is evolving. New perceptions and increased awareness of health issues are changing the way people eat, and the calorie-conscious consumer of today pays more attention to what they are putting into their body, whether it is on-the-go before a day at work, or when eating out.
The food industry and food franchises are adapting to align themselves with this new line of thought. New healthier options are making their way onto the menus of more and more established food players, who have listened to feedback and are giving customers what they want. In SUBWAY, for example, you will now find flat breads and low calorie sandwiches as an alternative to traditional footlongs, while your local McDonald’s branch can now sell you a salad, and offer choices from its low-calorie ‘Favourites under 400’ range.
The strongest established brands are those that are able to devote the resources to quickly changing their image and menu options based on consumer demand. On the other side of the coin, new players in the market enjoy an advantage in their ability to launch from the outset as a healthy brand, and have this image from the beginning, without needing to battle against long-held perceptions.
For this reason, you will find food franchises on the high street offering only healthy options, from smoothies to salads and wraps and regional foods perceived as healthier, such as Mexican burritos, and frozen yoghurt (fro-yo). In a time-strapped society, there is an increasing desire for food-on-the-go to contribute to the ‘five-a-day’ fruit and veg recommendation and have greater nutritional benefit.
Quick service, oriental-inspired brand Chopstix operates 21 sites across the UK and Republic of Ireland. Chief Operations Officer (COO) Max Jenvey equates the company’s recent success with its ability to respond to consumer needs and cater to the health trend. He explains: “We have definitely felt that the customers have become more health-conscious the past few years. People are more and more informed and concerned about the diseases caused by a bad diet. That’s why, although the Chopstix concept was conceived more than a decade ago, it has rapidly expanded in the last four years, probably the time when people have become more health-conscious.
“Chopstix cares about and listens to our customers constantly. Their comments and concerns drive our decision process and recipe development in order to improve our offer. Driving out MSG from our Oriental dishes is a clear point of difference, in addition to using freshly prepared vegetables on-site, every day.”
Coffee brands that also sell food are in turn reacting to this trend. Esquires Marketing Manager Kerry Noble recently set out the company’s strategy for 2015: “We pride ourselves on the range and quality of our food and beverages. We see that the current trend in healthy eating is here to stay and we are fully embracing this. From April 1, we are adding a ‘Green Smoothie’ packed with antioxidants, vitamins and iron, to our existing fruit smoothie line. The rise of hot food to-go has also been on our radar for some time; we will be introducing hot food cabinets to all of our re-branded stores in 2015. Hot meatball wraps, soups, porridge and demi baguettes will feature.”
Even brands specialising in ice cream, certainly not traditionally considered a health food, have still managed to tap into a growing health trend, with the brand Latteria Ugolini serving exclusively gluten-free gelato. This is a fine example of a brand, as mentioned before, that has launched from the outset with health very much a part of its USP. Matteo Frigeri is Business Director at Seeds Consulting, a consultancy firm advising a wide range of fast-casual and casual dining brands, including Latteria. He comments: “It is impossible not to notice the health trend: on TV, in restaurants, in people’s conversations and every market report points to it. Health in Italy used to be regional, it has now has become a national trend that has been shaping the industry for more than a decade.
Gluten-free consumption is growing at an exponential rate because consumers perceive gluten-rich foods as unhealthy so gluten-free appeals not only to celiac people but to a much larger consumer base. “All Latteria Ugolini products are available on a self-service basis and customers pay by weight at the till. The gelato is gluten-free and its fruit varieties are also vegan and lactose-free and thus appealing to customers who are health-conscious or have specific dietary requirements, without compromising on taste.”
Aside from the health trend, cost is, and always will be, an important aspect of a food brand’s success, but even in these times of financial hardship, there is a sense that people are prepared to pay a little more for quality, fresh and more nutritious offerings.
Matteo comments: “Value for money is more important than price and health options are gaining ground as a key deciding factor. A large menu is no longer a value, judging from the success enjoyed by restaurants that specialise in a particular product or dish.”
Compared to other industries, the food-on-the-go sector was able to weather the economic downturn with relative ease, however it did not prove as recession-proof as some had suspected. While people continued to visit fast food branches as a low-cost alternative to full-blown restaurants, figures indicate that they consistently spent less while there.
Now as we enter our modest recovery, the rise in the cost of raw materials and ingredients – including livestock, wheat and corn, and the reluctance to pass on these additional costs to customers in a fiercely competitive market, have put pressure on profit margins.
With so many established names saturating the market, the onus is on new food businesses and franchises to offer something different to stand out from the crowd.
The consumer of today is much more adventurous and discerning in their culinary tastes than even their 1990’s counterparts. Where perhaps 20 years ago, people would have been inclined to stick to familiar choices like American-style burgers, fries, and fish and chips, 2015’s diner is more in touch with foods from a variety of cultures worldwide. The rise of Asian restaurants, like Wagamama’s, Yo-Sushi, and of course Chopstix, the abundance of Italian chains and the popularity of Mexican food offerings are testament to this trend.
Max Jenvey agrees: “The British public want quality, healthier food on the move with an exotic twist which is either fully prepared or in component parts that they can easily prepare at home. With a seven per cent increase of Oriental fast food dining in 2014 the trend for good quality, freshly prepared Asian cuisine has never been higher.”
Customisation is another major selling point. Customers now prefer more control over what they eat, and enjoy building their own meal with their preferred ingredients from the store’s selection. SUBWAY, El Taco Loco, El Mexicana and Latteria Ugolini are all good examples of this trend, which also serves the health-conscious in that they can choose the less fattening ingredients to constitute their meal if required.
What seems increasingly obvious is that people now expect more from food sellers than at any other time. They don’t always just want a quick calorie hit, but to buy into an experience. They enjoy watching food being prepared and sometimes playing a part in its creation. Of course, setting and decor is important too.
Brands with a strong gimmick can quickly become the buzz about town. Barely a week goes by without the news or social media going crazy for the latest porridge-only café or artisan pop-up in London, and these businesses often thrive on the coverage to become high street chains in a short space of time. Established companies may have the floor space and customer-base, but are constantly pushed to adapt and evolve their range and image in order to stay ahead of the game.
With little sign of the Starbucks/Costa/Nero/Esquires et al trend slowing, a great deal of food franchises now offer coffee, tempting customers requiring a caffeine-kick into restaurants with the aim of achieving a food sale at the same time. McDonald’s, for example, actually became the UK’s biggest coffee seller in 2010, overtaking well-known brands that specialise in the drink.
Mobile technology has also impacted greatly on the way people discover, rate and return to a food brand. Many companies have their own dedicated apps where the customer can learn more about and engage with the brand, unlock loyalty rewards in the process as a return incentive, discover restaurant locations, and read and contribute to online reviews and feedback. This leaves the consumer feeling empowered in their ability to have an impact on the menus of their favourite eateries and even the way the ingredients are sourced.
Domino’s Pizza UK recently launched its new digital platform, ‘Pizza Legends’, which it claims will offer pizza fans a unique way to personalise their pizza.
The Pizza Legends concept aims to do something different with the notion of ‘create your own’, transforming a functional decision-making process, of choosing a pizza, to an engaging, entertaining experience, which takes full advantage of our love of sharing our experiences.
Through the platform, customers can build their own ‘Pizza Legend’ by selecting from a range of bases, sauces and toppings, along with a few extras. Users are invited to name their creation, which is then transformed into a short animated video.
Pizza lovers can share their Pizza Legend idea with friends on Facebook and Twitter and enter it into the ‘League of Pizza Legends’ – whereby anyone can view, ‘like’ and even order other people’s pizza creations. The most popular and creative entries in the league win their Legend free for a year. On top of this, all customers receive 30 per cent discount off every Pizza Legend ordered through the platform. This is spot on in terms of brand engagement and customer reward, and gives consumers a reason to return.
Simon Wallis, Marketing Director at Domino’s Pizza UK, comments: “Customers love to make things their own, and that doesn’t stop at pizza toppings. We wanted to make the personalisation process as fun and engaging as possible – with a competitive twist. By combining a ‘fantasy pizza’ experience and the ability to share with friends online as well as order in real life – I believe Pizza Legends takes innovation and fun to the next level.”
Matteo Frigeri, commenting on Latteria Ugolini’s own engagement with social media, adds: Technology is affecting the way we choose a food place, the way we order and pay, the in-store experience and any other type of customer-brand interaction. The good thing is that much of this technology is available to both large and small firms.
“The restaurants have features like an iPad, where people can take selfies that are posted automatically on the Facebook page, which adds to a fun in-store experience. Having a great product is no longer enough.”
Chopstix has similarly embraced the digital age, primarily in the management of the business from the franchise owners and staff’s perspective, but increasingly in terms of customer engagement through social media and loyalty rewards. The company has developed its business management software ‘Noodles’, enabling staff to collect, manage and interpret data from a tablet or even a smartphone, and making the gathering and communication of information internally a much faster and efficient process for for restaurant managers and leadership teams.
The current technological focus is on the customer side, as Max explains: “Knowing the success of crowdsourcing on the internet, we are paying a real importance to reviews on websites or social media platforms as we know that online reviews have direct impact on a business ‘sales and reputation’.
“Mobile technology offers great opportunities for customer interaction, but it is also a very efficient tool for internal operations. As mentioned before we created and ERP system for the business, Noodles, are digitalising our processes, reducing paperwork, increasing the speed of communication and giving us and our franchise owners instant access to information anytime, anywhere.
“The next step in our digital journey is more customer-focused, as we will be developing a digital loyalty program me for our customers, which will be accompanied with a mobile app and integrated with our social media channels, such as Facebook and Twitter.”
It is evident that these food franchises have built and maintained their success by embracing the trends of the day and refusing to allow the brand to stagnate for customers, or indeed for franchise owners and staff.
This year sees Chopstix roll out its franchise opportunities internationally, and Max believes the company’s quality food at affordable price-points will deliver customer satisfaction and return on investment for every owner, and an average net profit of 30 per cent, “one of the highest in the food-to-go sector.”
The best Chopstix franchise partners have a passion for customer delight, placing the chef at the heart of our business with a willingness to work as part of a team with an eye for detail and the bottom line.
An experience of food service or a retail background is a definite advantage, but in the end, all our franchise partners realise how much fun and profit is available.
Latteria currently has 13 franchise stores in Italy, and plots further expansion. Matteo explains the strength of the company’s strategy with the franchise format: “To stand out from rivals, you need a strong location strategy, supported by location flexibility and a variety of store formats to suit all location opportunities.
“The Latteria Ugolini concept occupies a small footprint and it does not require extraction, allowing full location flexibility. There is an almost equal split between shopping mall ad high street locations. We also have a ‘store in store’ format for non-traditional location opportunities such as department stores, universities and transport links.
“There are intrinsic good economics in the concept: the product delivers an excellent gross profit at affordable prices and the self-service model allows for lower staff levels, making the operation less labour-intensive than other dessert concepts. Second, all the gelato is gluten-free and suited to people with dietary requirements and health-conscious. Third, in-store entertainment and personalisation make the Latteria Ugolini concept even more relevant in a day and age where having a great product is no longer enough.”
He also advised as to the type of person that could succeed with this franchise, and encouragingly, it is an option open to a large amount of people, even if they lack industry experience.
“To be a successful franchise owner at Latteria, you just need good customer service skills and a passion for nurturing customers. Everything else is taught via a comprehensive training programme,” Matteo concludes.