April 2012

Which Pizza Toppings Could Boost Your Franchise’s Sales?

Lobster? Hot Italian sausage? Prosciutto with ricotta cheese? These might not be the most traditional pizza toppings out there, but believe it or not, according to a recent study by global marketing company Affinnova, these kinds of innovative topping offerings could actually help pizza franchises boost sales.

Affinnova surveyed customers’ preferences for nearly an infinite number of pizza possibilities, tracking preferences for dozens of cheeses, sauces, crusts, and topping possibilities and combinations. All in all, the study produced more than 2.5 billion potential pizza concept combinations. The optimized pizzas were then tested against in-market specialty pizzas.

Why all of this hype about flavors? “Marketers invest millions of dollars and months of development creating great tasting food products, but taste really doesn’t matter if you can’t drive trial purchases,” Affinnova President and CEO Waleed Al-Atraqchi recently said in a statement. “To drive trial purchases, a new product must first create an expectation of a great tasting flavor – or an anticipated taste – with the consumer.”

Ultimately, the Affinnova study found that “consumer perceptions of flavors are highly flexible; flavors which at first sound uninteresting become more tempting when combined with other ingredients.” This flexibility can power breakthrough products as well as drive growth. “Products with aggressive flavors can create enough differentiation to attract new consumers,” the study noted. The fascinating Affinnova report indicates that intense flavor combinations can actually help to boost incremental sales without taking sales away from existing products. For example, the study suggests adding a lobster, prosciutto, and spicy Italian sausage pizza to Papa John’s menu would boost the company’s sales by creating new interest and drawing new demand.

Furthermore, novelty is also a key factor when it comes to consumer perception of a flavor. “Consumers are intrigued by flavors that are not widely ingrained in their local heritage,” the study explained. The idea is that these kind of novel flavor combinations attract consumer attention.

The study does prove an interesting point: Consumers like wacky flavor combinations. This point goes well beyond just the pizza franchise industry. From Taco Bell’s Waffle Taco to KFC’s Chicken Corsage to Boston Pizza’s Pizza Cake, seemingly bizarre combinations are generating brand hype and social media frenzy. Now is the time to mix up the options in the food industry.

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

What Makes a Franchise Company Stand Out?

If you are going to invest in a franchise, you are going to want to invest in a standout franchise. But what makes a franchise company stand out? Let’s take a look at the top three standout traits of the best franchises out there.

  1. Executives with integrity. Do the franchisees trust the people running the company? Are the executives looking out for the best interest of the company’s employees? Or is their primary concern fattening up their own wallets? A standout franchise is a franchise with a strong sense of purpose, direction, and inspiration; and that starts at the top, with the executives. Before you invest in a franchise, do a Google search on the executives if you can. See what kind of charities they’re involved in, what their background is like, etc.
  2. A business model that is unique and enduring. Just because a franchise is making money today doesn’t mean that it will still be making money tomorrow. Remember, a franchise is a long-term investment: You need to wait five to ten years to see a return on your investment. What’s hot today might not be hot next year. Before you invest in a franchise, make sure that the business model is enduring; it should be as viable ten years from now as it is today.
  3. Respect for franchisees. Let’s face it: A franchise company wouldn’t be anywhere without its franchisees. These are the people who very often make or break the success of a franchise, dedicating their time and energy to franchise success. McDonald’s is right at the top of the list when it comes to franchisee respect. This franchise standout is renowned for its collaboration with its franchisees. In fact, many of the multimillion-dollar McDonald’s ideas, including the fillet-o-fish, were developed by franchisees. All in all, the company’s success can be attributed to the company’s innate ability to not only recruit the best of the best, but to also listen to and collaborate with franchisee talent. In the franchise business, respect for franchisees not only translates into a positive working environment, it also very often translates into more business success.

 

Sources:
http://www.entrepreneur.com/article/219998

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

Look Before You Leap: Evaluating the Franchise Risk Factor

Investing in a franchise is a huge deal. Before you take the plunge, you want to know exactly what you are getting yourself into. After all, you don’t want to make a risky investment; if a franchise has financial problems or appears to be struggling to create and retain business, it is probably best to look elsewhere. Here are some red flags to look out for when considering investing in a franchise.

Check unit counts. First and foremost, it is crucial to evaluate whether the franchise company’s number of operating units is growing, staying constant, or declining. Luckily, this is pretty easy to do: year-to-year units information is published in Item 20 of the FDD, and you can also get this data for hundreds of franchises from annual studies, such as Entrepreneur’s Franchise 500. If the number of units is on the decline, beware. It is indicative of increased risk, suggesting that there may be problems with the company’s franchise system or that the business may just simply not be profitable.

Pay special attention to Item 3 of the FDD. Before you jump into a franchise investment, it is important to determine if there has been an increase in litigation between the franchisor and franchisees during the last several years. When a franchise is struggling or failing, there is almost always an increase in litigation between the franchisor and the franchisees. Therefore, any kind of spikes in litigation numbers is a huge red flag.

Pay attention to same-store sales trends. Franchisors aren’t required to disclose this information in the FDD, so you will need to ask directly for it. Here is what you will want to ask: “Have the same-store sales figures for your system gone up, down, or stayed the same over the past couple of years?” If the sales trend for a company’s units is flat or down, it is an indicator that the business volume is susceptible to economic downturns. This isn’t a total red flag, but it is a warning sign that you should do some investigating prior to moving forward.

Take a close look at a franchisor’s financial information. As part of the FDD, the franchise company is required to provide copies of its last three years’ audited financial statements. Make sure that you take a very close look at this information! There are two main things that you want to determine from these statements: A) whether or not the franchisor is financially stable and has the resources to survive for the long run, and B) whether or not the franchise can pay its bills. You can determine this first point by looking for a financial statement that indicates that the operation is profitable, that cash flow is positive, and that capital reserves are strong. The second point you can determine by examining the balance in the accounts receivable entry of the balance sheet. A rapidly increasing balance is a very bad sign and a huge red flag. For most franchise companies, the largest accounts receivable are payments from franchisees. A rapidly increasing balance would indicate that the franchisees are struggling to pay their bills.

Make some calls to current franchisees. Attitudes of current franchisees are definitely something to evaluate; they can reveal a lot about overall company morale and what the actual experience of being a franchisee is like. The easiest way to get a read on the attitude of current franchisees is a quick phone call. You don’t need to conduct an extensive, drawn-out interview here. A few simple questions will suffice: “How do you feel about the business?” “How have the past couple of years been?” “Knowing what you know now, would you do it again?” This should give you a pretty clear impression of how things are going. If you decide to proceed with the franchise, later on in the process you can do more extensive research. But remember, if you sense negative vibes from franchisees in these initial conversations, it is most definitely a red flag.

 

Sources:

http://www.entrepreneur.com/article/219998

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.