Why Can't My Franchisor Innovate Better Returns?

Having system standards rated close to 100%, here I am, a model operation of the franchise network. Doing so was supposed to raise my return on investment, but honestly, it's still low. My money would do better in a bank CD than the returns I get from all the hard sweat that I put into my store. There. I said it. So why should I expand to a second store just because it can be cash positive? Who wants to invest $1.5 million to get $50,000 a year in cash after the bills are paid? I need help from my franchisor in rethinking efficiencies and greater revenue per cost center. With this in mind, here is an interesting story coming down the pipe that I hope my own franchisor will take to heart in rethinking the map on getting better returns for the franchisee.

CEO Greg Brenneman and his team at Burger King are masterminding a 21st century prototype of its restaurant. In an era of skyrocketing land prices, Burger King is innovating the space layout of their stores to handle the same customer volume but signifcantly decrease wasted space. Franchisees like the economics. A new owner of the prototype in Miami is positively beaming about how the ROI is significantly improved on a franchisee's investment. The new restaurant has half the seats and is about 30 percent cheaper to build than the old-style Burger King, which costs an average of $1.1 million, not including land costs. In an era of skyrocketing real estate prices, the new format also needs only half the land.

The article goes on to quote Jim Hyatt, executive vice president for global operations. "We have made changes that let us be a lot more efficient. There's also a labor savings of close to 2 percent. To a franchisee, that's real dollars."

Burger King set up cameras in its stores and discovered that its customers are even more on the go than they were in the 70s and 80s, which was when their store layout was probably last designed. They found that of the 80 to 100 seats in a typical restaurant, the maximum used were 30. So, the new prototype has 40 chairs.

BEAUTIFUL! Why don't more franchisors get this? They need to use their grey matter and rework their typically rusty 1980s layout to increase space efficiency. Doing so would greatly help new franchisees get better returns, and significantly decreasing start-up capital requirements will open up a larger pool of franchise buyers in this competitive market. Now why can't anyone figure out a better design to get more throughput for drive-through services. That should significantly improve ROI too.

Now why can't my franchisor do the same for me? They are always preaching that I would have wonderful returns if I just ran the store the way they want. Well, I'm close to 100% and I'm still not happy. They tell me to buy new expensive equipment to expand my revenue centers. The problem is that my margins still are small. Why can't they rethink their model from time to time. It's good for them and for us. I'm going to watch carefully the development of the new BK layout and report to the community. More to come in the future...

Source: Knight Ridder via the Billings Gazette