Fast Fresh Brands CEO Cody Pepper shares tips for taking an intentional approach to franchise growth.
KEY TAKEAWAYS:
- Developing the right franchise growth strategy is critical for long-term success in the franchise space.
- Effective strategies for scaling a franchise system often include cost reduction, increased sales and new unit growth over time.
- Strategically growing a franchise brand requires time, commitment and a willingness to pivot when necessary to support franchisees.
For franchisors who are working to scale their brands, staying focused on year-over-year growth is critical.
Still, identifying the best strategies to grow a franchise system can be daunting. From operating the right number of corporate locations to evaluating systemwide performance metrics and finding ways to support franchisees in their success as business owners, striking a balance between growth and profitability requires careful planning and a mindset focused on strategic expansion. But despite its complexity, franchise growth doesn’t have to be hard.
“The franchising world, and business in general, is complicated enough on its own. It doesn't need help from us putting together a system or a structure that's complicated,” says Cody Pepper, CEO of Fast Fresh Brands, a multi-brand portfolio and shared service operator of fast-casual healthy dining concepts.
Leveraging scale at every level
With two brands under its umbrella – Nature's Table and Bee Healthy Cafe – and over 50 franchised locations between them, Fast Fresh Brands is no stranger to growth, and Pepper’s straightforward approach to business has been instrumental for the investment firm’s early success.
“My approach is fairly simplistic. I tend to break things down into threes. My general idea there is, if I can't break it down into either three steps or three ideas, I either don't understand it well enough, or it's too complicated,” Pepper says.
For Pepper, that attitude also extends to franchising. When it comes to building a solid franchise growth strategy, Pepper recommends that franchisors evaluate their businesses using a three-step process after ensuring their business model is profitable and marketable.
Those steps include the following:
- Improving system sales.
Strategically increasing top-line sales at both the corporate and unit levels can help franchisors signal to the market that their brand is growing. - Cost management.
Applying downward pressure on bottom-line costs, such as labor, inventory, occupancy and more, can boost unit economics and improve margins for franchisees. - New unit growth.
Opening new units can create marketplace value while elevating brand visibility, customer awareness and franchisee validation.
To leverage scale at every level, franchisors can apply the same framework from the lowest levels of their business to the highest.
Overcoming obstacles and growing forward
Although having an effective growth strategy is critical f or franchisors, it’s also important to remember that obstacles inevitably arise as a brand matures – including unanticipated roadblocks like the COVID-19 pandemic, which forced Pepper and the Fast Fresh Brands team to reevaluate Bee Healthy Cafe’s business model.
“What we found over time was our approach really needs to be able to reduce exposure to risk during the next pandemic, or during a weather event or during one of these multitude of external factors that impact business,” Pepper recalls.
That realization prompted Pepper and his team to develop the concept of pooled operational design, or “PODS” – a model enabling franchisees to pool operations and share resources across units. When some franchisees declined to adopt the new model, though, Fast Fresh Brands bought back those units and became fully corporate-owned. Later, after developing “PODS” outlets in Oklahoma City, the firm created a “city model” based on multi-unit franchise expansion, which the company hopes to take into new markets.
Still, those experiences weren’t the first time Pepper learned important lessons while operating in the franchise space. Early on, when the firm was spending more money than it was bringing in during development, he was also forced to make hard choices about the company’s direction.
“In the early stage, you’re operating out of a position of fear. So, it's a survival tactic. You make decisions that allow you to survive today or tomorrow, but what you're not doing is making decisions that allow your system to thrive in three and five years,” Pepper says, noting the importance of remaining steadfast about business plans and avoiding getting bored or sidetracked by flashier ideas that could derail growth.
Using data to make better decisions
Despite its challenges, Pepper remains appreciative of the growth opportunities that are available in the restaurant space – especially for dining concepts that offer affordable, high-quality products and experiences.
“The idea is, we double and triple down on the guest experience when they come in. Every product we launch starts with, how's the guest? How's this going to make the guests’ lives better? And it ends there. In the middle, we say, can it be profitable? And is it innovative? Does it further our innovation, and does it differentiate us in the marketplace?” Pepper says.
To keep guests coming back while positioning Fast Fresh Brands for future growth, Pepper relies on data-centric strategies to make informed choices about customer service and differentiation, including:
- “Intentional Seven.” When choosing between “fast, good or cheap” on a scale of one to 10, being an “intentional seven” in each category can elevate brands above competitors.
- Weekly reviews. Using the “CUPID” framework to assess customer experience, profitability, innovation and differentiation, the firm’s team meets twice a week – setting goals on Mondays and evaluating metrics on Fridays to determine where improvements are needed.
- Surveys and data. Anonymous surveys measuring customer and employee feedback are conducted regularly to help the company make informed decisions and identify pain points early on.
- Customer feedback. Reviews on websites like Google and Yelp help the firm understand customers’ expectations, while secret shoppers provide insight into the customer experience.
Beyond surveys and feedback, Pepper stresses the importance of evaluating franchisee performance by using key performance indicators (KPIs) to identify potential issues and provide the right amount of support as early as possible – an important job the company recently promoted a data and technology director to handle. Because understanding those KPIs contributes to franchisee validation, it’s a step Pepper and the team at Fast Fresh Brands take seriously when it comes to growth.
“Marketing drives top-line, operation support drives bottom-line, and that's the harmony. And when that happens, it's good. The problem is, if you don't apply the check to it – the final phase of a manager's obligation, which is evaluation – if you don't do that, it's a dereliction of duty. Which means that you've got to be evaluating the performance of your franchisees, and auditing it in a way that isn't punitive, but is in support,” Pepper says.
To learn more about Fast Fresh Brands, visit https://ff-brands.com.
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