The very first Burger Bistro restaurant was launched in Pretoria in June 2012. Today the Burger Bistro brand – which serves gourmet burgers with a selection of quirky milkshakes and craft beer in a retro diner setting – has grown to four outlets employing a total of 55 people.
How did they get there? Through franchising.
The founders, Corné Read and Jan-Hendrik van Staden, who are both hospitality industry veterans, made the decision to franchise the brand in 2014.
“Our concept had been going for almost two years and, with our restaurant in shipshape, our recipes tried and tested, our staff fully trained, all our systems operational and our profits soaring, we felt that the time was right to invite like-minded candidates to join the organisation as franchisees and to share in our success,” says Louis Mienie, a franchise consultant from The Practice Business Consultant and part of the team that executed the Burger Bistro franchise strategy.
Franchising is one of the more popular expansion routes taken by business owners as it typically requires less capital outlay and is considered less risky than other growth methods. It is also one of the fastest ways to expand over wide area.
Two years later and the team is already seeing results. Three new Burger Bistro restaurants were sold a year after the decision to franchise was made, “all of which are performing superbly and very profitably,” says Mienie. The franchise brand has seen an average growth in turnover of 20% per franchised outlet for the past 12 months.
Last year the Burger Bistro won the Newcomer Franchisor of the Year category at the Franchising Association of South Africa (FASA) which is awarded to an innovative franchising newcomer who they believe has the “next-new-concept that is going to take the world by storm.”
SME South Africa speaks to the Burger Bistro team about using professionals to build their franchising model and why you need a recognisable and memorable brand.
We got professionals on-board to help us build our franchising model.
We employed the services of reputable franchise consultants, The Practice Business Consultancy, to direct the formulation of the franchise model. An in-depth analysis was done on the existing business model, including turnovers, margins and overhead expenses.
The demographics and the profile of our typical customer were also taken into account. Franchising as a mechanism for expansion was specifically chosen because it would ensure the growth of the concept, as well as the incorporation of operators who have made investments into their business. This would guarantee best efforts in maximising operational efficiencies and profitability.
Only franchise if your concept meets the following criteria.
Have a viability study done on the concept and its franchisability which would typically include criteria such as uniqueness and barriers to entry, the sustainability of the concept, the transferability of skills and the possibility of the business becoming a recognisable and memorable brand.
Furthermore, franchisors should realise that they are in for the long haul and that they will have important obligations towards their franchisees, including ongoing support. They should also have sufficient funding to drive the process.
There are compliance issues to be taken care of too.
Once the franchisability of the concept has been determined, a franchise agreement, disclosure document and operations manual need to be drafted and compiled – once again, by professional consultants since these documents need to be Consumer Protection Act compliant, as well as adhere to FASA’s Code of Ethics. The franchisor should also have a good idea of the areas in which outlets would be established, as well as a definite strategy regarding the marketing, selling and roll-out of the franchise system.
Potential pitfalls to avoid.
Franchisors should guard against trying to open too many outlets too quickly. It is important that every new outlet is carefully guided by the franchisor into a position where it is as profitable as anticipated, is able to successfully continue operating and strengthen and enhance the brand, without the franchisor’s complete involvement.
How we chose our franchisees and locations.
Franchisees – franchisees need to comply with the franchisor’s criteria for franchisees and should preferably have industry experience. It is however more important that the prospective franchisees are enthusiastic about the business, that they are willing to put in the effort and that they have an absolute desire for the business to succeed. If necessary, psychometric testing may be performed on prospective franchisees.
Locations – First and foremost, it is the franchisor’s policy not to overpopulate territories with too many outlets. Opening a new outlet should enhance and strengthen the brand, and should not have an adverse effect on the turnovers or profitability of existing outlets. The demographics of the proposed area need to also be similar to those of existing, successful franchise outlets.
What we wish we had known before we started.
That the pressure on the franchisor to fulfil all its functions properly would be severe and relentless, and that the responsibility towards franchisees is immense. Yet, knowing what we know now, and given the choice whether we would follow the same franchising route, we would gladly do exactly what we had done at the first place.
What has been behind our success so far.
Solid groundwork before commencing with the franchising process, thorough training of the franchisees and their staff, unfaltering franchisee support, as well as exercising strong management and control over the franchisees’ systems, their operations and their attitude towards customer satisfaction and brand holding.
Reference: SME South Africa