Issue of the Month - Success in 2013 will require commitment to innovation, great customer service and tight cost control
The Australian QSR industry faces a challenging 2013. While the major branded operators, particularly those in the Burger, Pizza, Chicken and Coffee/Beverage sectors will see modest growth, both organic and via new unit openings as consumers adjust to the new economic realities and continued need for convenience, independent and smaller chain operators will see competitive and cost pressures negatively impacting their unit economics resulting in stagnate to declining levels of profitability and some subsequent unit closures.
Increased cost structure pressures, driven by high rental, wages (from unsustainable levels of penalty rates) and escalating utility costs combined with the continued reluctance for financial institutions to fund independent operators will see curtailed unit growth.
Branded QSR operators will strive for growth via new unit openings with a focus on regional towns and growth corridors in the major cities. While franchising will continue to be the business model of choice for many QSR brands, the ability to attract and retain quality franchisees will present challenges which will require creative strategies including funding, financial and marketing incentives.
Brands pursuing new unit growth will need to carefully balance the need to create an attractive dinning environment consistent with their desired brand positioning with the resulting capital investment to ensure acceptable returns.
Successful brands in 2013 will be those who demonstrate an ability to innovate. Introducing new products and flavours that will attract new customers while building the frequency of their existing customer base without adding operational complexity and cost will be critical.
Recent trends in buttressing traditional media with online social media will accelerate. Successful brands will increasingly strive to build customer loyalty and increased customer frequency through value incentives via Facebook and group buying sites.
Despite increasing cost pressures, with the ever increasing alternative customer choices available ensuring appropriate levels of customer service with well trained and motived team members will be more critical than ever. The days of providing franchisees/managers with a couple of week’s initial training and hard copy operating manuals and expecting them to recruit and train team members are over. Brand owners will continue to invest in on-line training platforms to ensure consistent delivery of quality training programs for all team members, not just franchisees/managers, from food safety to customer service to local store marketing.
In summary, while consumer sentiment will continue to be subdued and cost pressures will increase, QSR operators focused on product innovation and delivering great customer service with well trained and motived team members will succeed and build solid foundations for future profitable growth.
Ian Martin is a Retail & Franchise professional who has held senior management positions domestically and internationally at Yum!, Burger King, Gloria Jeans Coffee & Dunkin Brands