Economy, Competition remain as biggest challenges to QSRs
Franchises are grappling with a tough economic climate and crowded market.
In our interviews with three franchises, it was revealed that external threats in the economic and competitive landscapes continue to threaten their profitability and survival. Top management is responding to the challenge by focusing on the customer, drilling down to what they really want in order to make their brands relevant and preferred over rival options.
For Roberto Cardone, co-founder of CIBO Espresso, a coffee shop franchise, the economic environment continues to be inescapably daunting. “The retail sector feels it every day of trade. We can’t hide from it.”
Combined with a “challenging” political environment and “stiff” competition, Cardone paints a difficult environment in which a QSR, whether new or established, can thrive. CIBO Espresso manages to do so through a constant evaluation of its products and positioning, as well as delivering a memorable customer experience.
“We take on the challenge by constantly turning inward and questioning every decision we make, to ensure we’re performing well. And we focus on customer service so we make our customers feel like the moment they have a coffee at a CIBO, it is the only thing that matters.”
Over at the kebab franchise Ali Baba, customer focus is also a key survival strategy. Ali Baba though avoids the temptation to create products to satisfy every customer whim, which are sometimes dictated by fads. While it is true that food brands need to be agile in responding to changes in customer preferences, they run the risk of losing their competitive edge and identity by blindly following trends.
“We have one of the most competitive food markets in the world with a wide range of competitors. When you are competing against so many high quality operators for a piece of the pie it can be a challenge and we often find lines blurring between many food retailers,” says Dominic Cain, General Manager – Operations & Marketing at Ali Baba.
“Now everyone sells a bit of everything to try and get the most out of their store. As leasing costs escalate many food retailers increase their trading hours and product range. Staying true to your brand and your core business is a top challenge in this environment because you need to give your customers what they want, but you can't focus too much on what your competitors are doing or you will lose your core focus,” he added.
Forging a distinct identity also plays into the core strategy of the relatively upscale restaurant chain Wokinabox.
Only by creating a unique food experience can it justify its premium positioning and convince customers with ever-tightening budgets to splurge, said Andrew Pearce, National Marketing Manager at Wokinabox.
“The economic climate of the past few years has been tough all round – more and more consumers have been feeling that restaurant meals are unaffordable, and choose to eat at home,” said Pearce.
“Wokinabox’s position as a ‘premium’ QSR, a step above the larger fast food franchises, means we have to fight for our customers’ dollar. That means both attracting new customers and keeping our regulars happy. There needs to be a perception that we’re providing something that’s worth the cost, and that we continue to value our customers after that initial cost is paid,” he added.
Pearce said this is why Wokinabox has been spending heavily to enhance its dining experience so it will be superior to those offered by other restaurants. These include investments in store renovations, premium dine-in options, and loyalty rewards -- while also keeping in check that prices remain reasonably within reach.
