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“Chinese food and beverage brands are increasingly betting that opening franchises in smaller cities will revive their lagging growth. In March, Hong Kong-listed Chinese hotpot restaurant chain Haidilao International Holding Ltd. announced it would launch a franchise model. It joins a number of popular F&B chains that have started franchising since late 2022, including tea brands Hey Tea and Nayuki as well as spicy sauerkraut fish specialist Tai Er. In May 2023, Luckin Coffee devised a new franchise model as it was competing head-to-head with upstart Cotti Coffee. The capital-light franchise model typically allows brands to invest less than they would in a directly operated store, but to quickly grow the number of outlets with the help of people who are familiar with the local market. Franchising is a contractual relationship in which a business owner authorizes a franchisee to use its brand, equipment and expertise to sell its products, with both parties sharing profits and risks.” “The number of franchisees partnering with brands specializing in Chinese cuisine as well as beverage and dessert chains grew 178% and 85% year-on-year, respectively, in the first 10 months of 2023. Smaller cities have increasingly become the target of chains due to stiff competition and higher operating costs in big cities. More than half of the chain brand franchisees were located in larger cities last year through October. The remaining of them were in third- to fifth-tier cities. Several franchisees told Caixin that stores located in lower-tier markets tend to outperform those in big cities. ‘There are so many options in first- and second-tier cities, but choices are comparatively limited in lower-tier markets,’ said one franchisee of snack chain Haoxianglai. The spending power of residents living in smaller locations is also considerable. The Haoxianglai franchisee said the average spending per customer at the brand’s stores in county-level cities is about 50 yuan ($7), higher than at its stores in bigger cities.” “While households in the smaller cities have a lower annual income on average, a report by consumer-focused fund Ba Capital said they don’t suffer from the high housing costs that cut into urbanites’ disposable income. However, this is no silver bullet for an industry still struggling to recover amid weakened consumer spending and an uneven economic recovery. Li Xiangpu, director and vice president of grilled fish specialist Bantianyao, said that the company’s profitability had yet to rebound to pre-pandemic levels. Now, there are more loss-making catering companies than profit-making ones, Wang Mingzheng, a franchisee who partners with several chains in Central China’s Henan province, told Caixin. State-backed securities firm Bocom International Holdings Co. Ltd. lowered its mid-2024 sales forecast for sauerkraut fish chain Tai Er, saying that revenues from its franchises are typically lower than those from directly operated stores.”

Can You Finally Open a Panda Express Franchise? (Cost + Analysis) Fast-casual restaurants are sprouting up all over the United States and they’re expected to continue growing at a rate of 10.6% until 2032 in spite of challenges to the industry as a whole. These types of restaurants are known to serve high-quality food in a casual setting. Many also deem them to be healthier compared to fast-food. Whatever the case, fast-casual restaurants are on the rise and one of the top players is Panda Express. https://lnkd.in/gHJaRHAX

“Chinese hotpot chain Haidilao International Holding Ltd. announced Monday that it will launch a franchise model to further support the expansion of its restaurant network. In a filing with the Hong Kong Exchange, Haidilao said it has set up a franchise department to formulate the details of the franchise model and the business cooperation process. Franchised restaurants will be provided with central and back-office services, such as staff training, supply chain system, management experience, food safety control, brand marketing services and performance appraisal by the group, to ensure food safety as well as customer experience, the company said. Wang Ming, a franchisee in Zhengzhou, told Caixin that he is interested in joining Haidilao’s franchise network, but not clear what the company’s requirements might be. He currently operates several hotpot chain franchise restaurants as well as bubble tea chain franchise stores.” “Another franchisee operator said he expects Haidilao would have strict requirements. Founded in 1994, Haidilao restaurants are best known for providing extraordinary customer service, such as offering free manicures for waiting customers, as well as free photo printing services and leather shoe care for diners at the stores. As of June 30, 2023, Haidilao operates 1,382 restaurants in Greater China, all company owned. About 17% of its restaurants are in first-tier cities, with 40% in second-tier cities and 40% in smaller cities. In the first half of 2023, the average daily same-store sales were 77,000 yuan ($10,700). In the same period, the company reported operating revenue of 17.94 billion yuan and a net profit of 2.26 billion yuan. Haidilao expected to annual operating revenue of at least 41.4 billion yuan and no less than 4.4—billion yuan of net profit for 2023, a significant increase from 1.64 billion yuan in 2022.” “The company believes that the introduction of the franchise model will strengthen its operating capabilities, introduce high-quality resources and improve its operational efficiency while maintaining its management standards and customer experience and allowing expansion in more regions, according to the exchange filing. The restaurant industry in China faces fierce competition as operators are eager to expand quickly. According to a report of the China Franchise Exhibition, Chinese restaurant franchisees increased by 178% year-on-year in 2023. Meanwhile, higher operating and labor costs in first and second-tier cities are making chains eye expansion in smaller cities. From 2018 to 2022, the ratio of restaurant chains in first and second-tier cities has slightly contracted, while the ratio of stores in third-tier to fifth-tier cities has increased significantly, according to a report jointly released by China Chain Store & Franchising Association and food delivery giant Meituan.”

🍽️ Thriving in the Ever-Changing Restaurant Franchise Industry 🍽️ What does it take to succeed in the dynamic world of restaurant franchises? 🌍🍔 Explore the strategies that top franchises are using to stay ahead in a constantly shifting market. 📊💼 Understand how adaptability, customer experience, and innovation are shaping the future of the restaurant franchise industry. 🚀🍴 #RestaurantFranchise #BusinessSuccess #FranchiseTrends #Innovation #BLKNews https://lnkd.in/dpU9vDF6

The McDonalds Story As a franchise consultant, I often look to McDonald's as a fascinating case study in the evolution and success of the franchise model. The history of McDonald’s is not just about the rise of a fast-food giant, but also about the transformative power of franchising. McDonald's began as a small barbecue restaurant operated by Richard and Maurice McDonald in San Bernardino, California, in 1940. In 1948, they rebranded their restaurant using a simple menu focused on hamburgers, fries, and beverages, pioneering the “Speedee Service System” that set the foundation for modern fast food. The real game-changer came in 1954 when Ray Kroc, a milkshake machine salesman, visited the McDonald brothers' restaurant. Impressed by their operation, Kroc saw the potential for a nationwide franchise. He opened the first McDonald's franchise in Des Plaines, Illinois, in 1955, and eventually bought out the McDonald brothers in 1961 for $2.7 million. Under Kroc's leadership, McDonald's implemented innovative strategies such as rigorous franchisee training programs through Hamburger University and a stringent focus on consistency and quality control. These strategies ensured that customers received the same high-quality experience at any McDonald's location. McDonald's expanded internationally in 1967, opening its first restaurants in Canada and Puerto Rico. Today, McDonald's operates over 39,000 restaurants in more than 100 countries, serving 69 million customers daily. This global reach is a testament to the adaptability and broad appeal of the McDonald's brand. McDonald's has continually adapted to changing consumer preferences and market trends. From introducing healthier menu options and committing to sustainability practices to embracing digital transformation with mobile ordering and delivery services, McDonald's remains at the forefront of the fast-food industry. McDonald's is more than just a restaurant chain; it's a cultural icon and a symbol of franchising success. Its influence extends beyond the fast-food industry, shaping global business practices and marketing strategies. Have you considered what lessons from McDonald's history might apply to your franchise journey? Let's discuss how you can leverage these insights to achieve your own business success!

Exciting Franchise Opportunity: Firehouse Pizza Announces Nationwide Expansion Are you an entrepreneur looking for a proven business model in the food industry? Firehouse Pizza, a beloved Kentucky-based franchise, has just announced its plans for nationwide expansion, starting with Kentucky and Tennessee. About Firehouse Pizza: • Founded in 2003 with 20+ years of success • Known for a diverse menu featuring pizzas, sandwiches, and salads • Ideal for various locations: vacation spots, waterfronts, and small hometown locations This expansion presents a unique opportunity for business-minded individuals to join a successful brand with a track record of growth and customer satisfaction. Key Benefits of the Firehouse Pizza Franchise: 1. Comprehensive training programs 2. Robust marketing support and established branding 3. Key vendor relationships 4. Ongoing operational support 5. Multiple revenue streams to ensure stability Founders Eric and Tosha Sublett emphasize their commitment: "This is our life's work. We take it very seriously — but what a life. Pizza. Beer. Ice cream. We live for this and love to make people happy while eating quality food done right." The food service industry continues to show resilience and growth potential, making this a great time to invest in a proven concept like Firehouse Pizza. Are you ready to bring Firehouse Pizza to your community and be part of this exciting expansion? Let's connect to discuss this opportunity further or visit the link below for more information. Learn more about the Firehouse Pizza franchise opportunity: https://lnkd.in/eCnBUjpk #FranchiseOpportunity #EntrepreneurialGrowth #FoodIndustry #BusinessExpansion #FirehousePizza

Ever envisioned owning a thriving pizza franchise? Let us guide you through the seamless journey of becoming a proud Smokin' Oak Pizza franchisee. 🛣️🌟 1️⃣ Intro Call: Connect with our development team in a personalized introductory call. 2️⃣ Attend Webinar: Immerse yourself in the world of Smokin' Oak Pizza through our informative franchise webinar. 3️⃣ Document Review: Explore the details in our Franchise Disclosure Document for a comprehensive understanding. 4️⃣ Management Call: Engage in a productive call with our experienced Franchise Management Team. 5️⃣ Discovery Day: Experience the unique atmosphere of Smokin' Oak Pizza by participating in Discovery Day at one of our locations. 6️⃣ Sign Agreement: Solidify your commitment by executing the Franchise Agreement. 7️⃣ Site Selection: Kickstart the journey by launching site selection, architectural design, and construction. 8️⃣ Marketing: Create a buzz with a targeted marketing campaign to ensure a dazzling grand opening. 9️⃣ Training: Benefit from hands-on, on-site training and ongoing support at your franchise location. 🔟 Grand Opening: Make a splash with an unforgettable Grand Opening Day at your bran... #SmokinOakPizza #SmokinOakPizzaFranchise #PizzaFranchise #FoodFranchise #RestaurantFranchise #BusinessOpportunity

How one small restaurant turned into a chicken wing empire: This is Wingstop In 1994, they opened their first restaurant in Garland, Texas In 2023, they did over $460M in revenue and have over 2,200 stores worldwide Here's how one small restaurant turned into a chicken wing empire: Wingstop's success isn't just about the wings, though their 11 bold flavors are a big part of it One of the secrets to Wingstop's success is its franchise model Today, 98% of their locations are owned and operated by franchisees This asset-light approach has allowed them to grow at crazy speeds All while keeping costs low. It's a win-win for everyone Franchising allows Wingstop to expand rapidly with minimal investment from corporate Because of its popularity, opening up a location is insanely attractive for franchisees In 2023, franchisees would invest around $480K to open a restaurant (minus real estate costs) The average unit volume? A whopping $1.8 million And in their second year, they're seeing 70%+ cash-on-cash return No wonder franchisees are lining up to open more locations To make sure the quality stays consistent in each new store, The franchisees have to complete a rigorous 4-week training program before opening up This helps keep the customer experience the same across all stores So how does Wingstop make money if they only own 2% of stores? They charge royalties, advertising fees, and franchise fees Franchisees must pay a franchise fee of $20,000 per restaurant opened In addition to the 6% royalty on their gross sales Plus 5% of gross sales go to the Ad Fund The Ad fund is used for marketing and commercials like this: It's safe to say that both parties are benefiting The numbers speak for themselves Wingstop's been racking up same-store sales growth for 20 years straight And they want to scale to over 4,000 restaurants in the US and 3,000+ internationally Considering there are around 2,200 stores now, Wingstop has a lot of potential to grow In 2015, they went public under the ticker "WING" at $19 a share Today? Wingstop is trading at $380+ a share & worth over $11 billion And they have their eyes set on being a Top 10 Global Restaurant Brand... Do you think they can reach it? — As someone who's in the industry, I love analyzing successful franchise models Follow me Brian Beers to learn more about the franchise world

Anne-Marie Peterson started her investing career covering restaurants. She explained why franchises dominate the industry. Restaurants are very hard to scale. Why? Because the customer experience happens at the unit level. At each restaurant, you have to get the food and experience right. To do that, you need great people in each unit but that gets harder as you open more units. Compare that to other businesses where a handful of people (management) directly influence all the components that make up a customer's experience. That's why the big restaurant groups tend to be franchises like McDonalds, Burger King, and Yum! Brands. The model gives people skin in the game. Managers are incentivized to care. Speak to any franchisee; they're always mad at the franchisor. That tension between owners is great. Your odds of getting to the right answer are dramatically higher with so many owners looking at the same problems. Chipotle is an example of a business that has successfully scaled without franchising. They've built a winning model through simplicity. Small footprint, few ingredients, and an assembly-line process that moves customers through the store. They've also addressed the turnover issue by paying their people well and giving store managers equity. But it's one of the exceptions that proves the rule.