Restaurant Industry Looking Forward To Franchising Upsurge In 2021
Sep 29, 2020 08:52 PM EDT | By Ernest Hamilton
Over the past three months, Bruster's Real Ice Cream has enjoyed phenomenal same-store volumes and sales. As astounding as this may be, it doesn't begin to compare to how popular franchise sales have become. The chain, which is based in Bridgewater, Pennsylvania, has received in excess of 100 franchise inquiries a month over the summer months.
Overall, it finalized 18 franchise agreements during the Covid-19 pandemic, and now has 56 stores that are either in development or under construction. While the pandemic has not been without challenges for restaurant owners looking to franchise their brand, it has also birthed expansion opportunities that may turn out to be extremely lucrative. Next year is promising to be even better as far as franchising is concerned, with Mark Siebert, CEO of consulting firm iFranchise Group, stating that it could be the best year in three decades.
There are benefits to a recession
During July, 16.4 million Americans were unemployed, according to federal statistics. Although this represents a large segment of the population, it is down considerably from the 23 million that were unemployed in April. With jobs being scarce, a growing number of unemployed individuals are predicted to start considering franchising as their saving grace. Although it may be deemed insensitive, franchise salespeople are of the opinion that nothing 'beats a good recession' as it will inadvertently push restaurant franchise sales considerably.
Many single establishment owners will view franchising as the only way to maintain their pre-pandemic lifestyle. At the same time, a multitude of existing franchisees are taking advantage of the unique market conditions to secure prime restaurant locations at below-market interest rates.
Steps need to be taken to prevent financial loss
While the next 12 months may prove to be very favorable for restaurant franchising, not all restaurants are franchise-ready. There are also a number of current franchisors that will not be able to weather the uncertain market conditions. Those who are taking advantage of the conditions, however, need to remember that it is important to have protections in place from the beginning, including food and beverage business insurance to guard against unforeseen events such as theft, injury or a natural disaster. Apart from public liability insurance, workers' compensation and property insurance are both of vital importance in the restaurant environment.
The franchising business model will continue to expand
Although it may still take quite some time for the world to recover from the far-reaching impact of the pandemic, many shrewd entrepreneurs will remember the elemental business principles that have a reputation for surviving severe economic fluctuations. The franchising business model allows for swift business expansion as the franchisee takes responsibility for many time-consuming details. In the existing economic climate, there are a plethora of displaced restaurant execs who have the potential to be superb owners. Even during average conditions, franchising makes expansion possible at a much faster rate than organic growth ever will, and this is what is expected as we approach 2021.
Next year is promising to be a great one for restaurant franchising. This is particularly great news after the tumultuous year 2020 turned out to be for the restaurant industry.
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