Blurring the line between Franchisor and Franchisee

 

While the world is reopening after the pandemic, the shakeout within the restaurant sector is just beginning, to be uncovered.  Many legacy restaurant brands are asking themselves; where do we go from here. All the while banks are flooded with extra case as consumer savings has skyrocket to all-time highs in large part due to federal stimulus. Now bankers are making the rounds explain to restaurant companies why now is the time to either buy a chain or sell a chain. 

Heeding that advice foodservice franchisee and franchisors are buying, selling, legacy brands.  According to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® one thing is clear, and that is the bankers are making a lot of money.

Johnson continued, franchisee are becoming franchisors, and now selling franchisee in a competitive world all food retailers are seeking a larger share of stomach, a larger share of food dollars, is anyone really winning?  

Consider that Ampex Brands LLC, a franchisee of 7-Eleven Inc. and Yum! Brands Inc. that has more than 400 convenience stores and restaurants, acquired the Au Bon Pain brand from ABP Corp., a subsidiary of Panera Bread.

Now, Au Bon Pain's 171 locations will join Ampex Brands family, increasing the company's revenue by approximately 10 percent annually. The deal also grants Ampex franchising rights to an additional 131 sites and expands its footprint internationally. (That’s banker talk, not a word about the brand or its customer base according to Johnson.)

In a Battle for Share of Stomach

and Share of Food Dollars

Can you Win

Ampex CEO Tabbassum Mumtaz. "Our QSR brands performed extraordinarily well throughout the pandemic as guests moved to drive-thru. That performance allowed us to diversify and jump on a great opportunity to reposition a legacy brand. The bakery café category will rebound, and Au Bon Pain is well-positioned to grow."

Talk about share of stomach / share of food dollar disequilibrium, post-acquisition, Ampex will assume the role of franchisor for the first time in its 16-year history. Remember that it has been a longtime franchisee of 7-Eleven, Pizza Hut, KFC, Taco Bell and Long John Silver's.

Ampex plans to apply its operating strategy to ramp up Au Bon Pain's existing cafés starting in the brand's key markets in the Northeast and Mid-Atlantic. Once existing cafés are reopened and executing with positive results, Ampex will kick off expansion efforts, starting with corporate-owned locations, according to the company.

Yes, here is a little more, the parent company of Taco Cabana has agreed to sell the 148-unit Tex-Mex chain to the largest franchisee of Jack in the Box and TGI Friday’s for $85 million. In case you did not know, the seller, Fiesta Restaurant Group, said it will use the proceeds from the sale to Yadav Enterprises to pay off $79.2 million in loans and related fees.

In this case the deal, leaves Fiesta with a single brand, Pollo Tropical. The transaction will enable “us to create a more effective, efficient and focused organization, applying appropriate resources to accelerate delivery of the exciting growth potential we have in our Pollo Tropical brand,” Richard Stockinger, Fiesta’s CEO, said in a statement.  Yes, you understood that correctly

For Yadav Enterprises, the deal will add another brand and 142 restaurants to its current holdings of about 400 restaurants. It will also deepen the company’s role as a franchisor; six Taco Cabana units are franchised.

In addition to operating units of Jack in the Box and Friday’s, Yadav is also a franchisee of Denny’s, Corner Bakery and El Pollo Loco. Its restaurants are located across 18 states, with a concentration in Texas and northern California. Does anyone think that they were thinking about brand differentiation or how to build a strong point of differentiation for each brand?  No, I bet most of you thought they simply were looking at you might say dollars not donuts.

Many multi-food concept companies appear to think that each brand is just a widget. In this case in a prepared statement they said, “We are confident he will be an effective steward of the Taco Cabana brand for the long-term.”

Does anyone reading this blog post believe that the buying and selling of C-stores, Chain Restaurants, or Grocery stores is over?  The team at Foodservice Solutions® believes that widgets churn and brands with differentiation grow.

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter