In the last few months Erle Dardick and I have had a number of fun conversations with franchisors about investing in B2C sales channels or catering.
This doesn’t come as a big surprise, as we know a strong majority of corporate businesses saw two major trends overall, increased sales and profits, and bringing their workforce back to the office. Both significant factors in strong B2B spending.
2023 is now in the books and we will continue to collect and analyze the data but overall I think the picture for restaurants and its consumers already has some clarity.
Here is my summary of 2023, sales are up, but driven by price increases not more visits, and consumers want to utilize restaurants more frequently but are not due to cost. I think this is supported by the NRA’s 2023 State of the Restaurant Industry survey.
So, restaurants are revisiting the idea of investing back into the B2B channel as a way to find new sales growth.
Franchisors especially see this opportunity but also struggle with how to set up a program that creates results. The big questions inevitably revolve around the how and who is responsible for the infrastructure.
A franchisor supports the franchisees. So that the following occurs:
- A happy franchisee will invest in their operations.
- A happy franchisee will defend our brands.
- A happy franchisee cares about results.
- And happy franchisees make more money.
Making money is important, right? Of course it is. That’s how we keep score as business people. Without healthy economics, we are out of business! So what makes a franchisee happy? Well, from what I have observed a happy franchisee is one that makes money!
Yes, help them make money and we will have a healthy franchising ecosystem that will thrive, prosper and grow for many generations forward.
So what about catering in a franchisor/ franchisee ecosystem?
When it comes to catering out of franchisee restaurants there is a “BIG rub” for franchisors. When it comes to catering, many have neglected to make this important sales channel part of their core business strategy, this is a fundamental shortfall.
As consumer markets continue to shift, we as franchisors, brand police and the gatekeepers of standards, must consider leveraging our system scale to grow catering sales. The way forward is to use our scale to create areas of catering specialization throughout all parts of our ecosystems.
There are only three basic customer service touch points when it comes to catering, unless there is something that goes wrong, then there are more.
- Order entry
- Order distribution
Those are the basic elements.
During the lifecycle of a catering transaction,there are subtle and complex dynamics that have to be managed. So complex in fact,that we’d be doing our franchisees a big favor to simply remove this complexity in their operations so that they can focus on scaling their manufacturing and distribution efforts. This will result in more capacity for everyone and sales will increase throughout our ecosystems.
Franchisees do not have the necessary resources to manage the administrative tasks associated with catering such as preparing proposals, estimates, invoices, accounts receivable and collections, follow-up, telesales, and professional order entry. Centralization drives costs down, and increases sales when it comes to catering. When that happens, franchisees have healthier economics, and everyone in the service chain wins.
In catering, there are additional points of control that need to be the responsibility of the franchisor.
There are six key functional areas to focus on. Much of it can be outsourced to third party service providers in the long run. However, these six key principles must be driven to a single control point to ensure that the brand is properly represented in the marketplace and that consumers and franchisees are well served in the catering channel.
- Selling to national accounts
- Marketing using BIG media
- Catering activation packages for restaurants
- Training and restaurant certification
- Call-center services for order entry, telesales, customer relations, invoicing and collections
- Software and IT
For catering to grow, franchisees must focus energy in their communities. If the catering business strategy is executed with precision and the franchisor provides a scalable and predictable service experience with centralized services, then resources will be freed up at the restaurant level.
Once resources are freed up at the restaurant level, franchisees can focus on driving local catering sales in their markets through flawless order execution of the catering experience out the back door of their restaurants. With the right strategy, franchisees can focus on:
- Supporting the BIG media advertising campaign with local restaurant marketing
- Ensuring that catering brand standards are met in their restaurants
- Ensuring that catering certification is in place in their restaurants
- Order execution in each restaurant (manufacturing, quality, accuracy and delivery)
- Maintaining a world class delivery program
- Supporting the catering lead person at the restaurant
- Driving consumers into the corporate sales funnel
If franchisors do a GREAT job at centralized services, franchisees will have more time on their hands to simply serve their communities and get orders out the door instead of being bogged down with the cumbersome administrative processes often associated with catering transactions.
Standardization is critical
As a community, we understand standardization better than any other industry. We have spent decades systemizing and standardizing. To create more wealth in our community, we must drive more sales. The only way to drive more sales is to serve new and changing markets. Catering will grow as the demand for convenience continues to grow. It’s a natural progression for our industry and the only way we can grow new sales on top of existing assets is to find new standards and methods.
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