Five Pillars of Successful Franchises, Part 2: Repeatable Operations

Dunkin Donuts was named the brand with the fastest speed of service by QSR Magazine’s 2019 Performance Study.

What did they do that other franchises didn’t? If you read the the organization’s annual report, their company executives summarize it perfectly:

“We are intensely focused on speed of service, order accuracy, and making the guest experience as frictionless as possible, whether in our restaurants, at the drive thru, or through our mobile app and other digital channels. We simplified restaurant operations with new equipment and technology to help deliver an even better guest experience.”

In short, Dunkin mastered the art of repeatable operations. Will your brand do the same?

In this series, we’ve been breaking down The Five Pillars of Successful Franchises, according to the internal framework we use every day:

1. Unit Economics 
2. Repeatable Operations
3. Scalable Supply Chain
4. Passionate Consumer Base / Brand Reputation
5. Strong Executive Team
   

Today’s focus is on repeatable operations. We’ll explore this second pillar, along with few examples of franchises that you likely know pretty well.

Let’s start with a definition, which we’ve tailored to the realm of franchising.

Repeatable Operations: a brand’s service or product must be straightforward for franchisees to learn and deliver consistently.

This is a key growth driver for any successful franchise. If you want to accelerate same store sales growth, as well as new unit development, repeatable operations are a must have.

From an industry perspective, the low hanging fruit for this pillar is going to be fast casual and fast food franchises. These businesses are popular because the overall brand experience is far more trainable and repeatable. Compare that to sit down restaurants which specialize in their bespoke, higher end experience, often including hierarchical staff with waiters, a deep focus on ambience and not just the Chipotle style assembly line.

Ultimately, as a small business owner, you’re going to want a playbook that you can run with someone who has zero experience in the industry. Let’s now look at a few case studies to help put the pillar of repeatable operations into perspective:

OrangeTheory

• $1,142,442 average gross revenue per studio/gym*
• 342/750 (45.6%) exceeded the average *
• Average number of members per gym = 674 (47% of gyms exceed that average)*
  

*According to their 2020 FDD

No “industry” Experience? No problem!

Prospective owners don’t need to have worked in fitness before buying a gym. The programming at OrangeTheory is science based, focusing on varying movements in an effort to help members to avoid plateaus and boredom. That’s an attractive value proposition for a franchisee, even if they haven’t worked as personal trainers, gym owners or other positions within the health and wellness space. Their whole brand is based around the color orange, which is said to inspire people to achieve more. That kind of positioning appeals to business owners with experience beyond the fitness world.

Technology to Simplify Operations

Solid franchises always have turn key operations handed over to franchisees. When this includes proprietary technology facilitating operations, it’s a win for everyone. If you’ve ever worked out at OrangeTheory, it’s unlike anything else. It combines fitness and technology. They have in studio monitors, wearable technology and 24/7 access to results and fitness data. This is the definition of repeatable, as it’s centralized in cloud based computing, rather than the physical location itself. No matter where you choose to open a new OrangeTheory location, customers are going to be able to sync up their bodies and devices in the exact same way, without additional cost.

Great Clips

• 35+ years old, 4400 locations at end of 2019*
• Average revenue per location of $370,458 *
• Average operating cash flow per location of $75k after all expenses (per 2020 FDD)*
  

*According to their 2020 FDD

Technology ‍

Seeing a trend yet?

GreatClips offers proprietary technology to franchisees that makes it easy for customers to choose the brand, and also gives franchisees the tools they need to operate their business. This tech includes POS systems, training tutorials for their stylists and an app for customers to find the nearest location. 

The app has a feature called Online Check-In, with estimated wait times at hair salons near you and add your name to the waitlist from anywhere. The app helps clients save time and reduces the chance of stylists having to send the customer to another location because they’re all booked up. Their initial test markets when they rolled out the app in 2011 show about eighty percent of folks who check in remotely wait less than five minutes on average once arriving at the salon.

GreatClips also turns their existing data into actionable intelligence. According to their case study from a respected consulting firm, they now utilize the data coming off of its point-of-sale systems to make their operations even more repeatable. Several years ago, the franchise organization implemented a global network to share customers’ haircut preferences across all of the Great Clips salons in the U.S. and Canada in its secure data cloud. It’s a program Great Clips calls Clip Notes. So even while traveling or sitting with a new stylist, customers can be sure they will receive the haircut they desire. For those of us who love having the same haircut time after time, it’s priceless to be able to repeat that aesthetic nationwide.

* * *

As you can see, repeatable operations is industry agnostic. Whether it’s the low hanging fruit of fast food, or a beauty service like hair salons, brands that offer a product that’s straightforward for franchisees to learn and deliver consistently are going to find success.

Use this as a key criteria in your franchise search.

Stay tuned for our next post in this series when we dive into pillar three, scalable supply chain.