This new McDonald’s character, Happy, was intended to promote healthier Happy Meals for kids. Instead, the box with the big teeth has become an object of ridicule. And that’s not the only mis-step the big chains have taken as they jockey for position in an increasingly crowded and competitive market.

 


There are already 26,000 Subway outlets in the United States, making it the biggest franchise by units in that country, but founder Fred DeLuca reckons there’s room for 8,000 more. "Maybe it will take 10 years or so," he commented. "If we do a good job building consumer demand, that number might change and be higher."



But many observers disagree. “Operationally the brand is too weak, not innovative and inconsistent,” wrote Max Liederbach, a franchise consultant, in a recent LinkedIn forum. “HQ has lofty goals but in the trenches things are not going well. I hope they don't open another 8,000. That could be their kiss of death.”


With a total of 34,000 stores in the United States, Subway will have one store for every 9,300 people. By comparison, McDonald’s have one store for every 22,000 people and Domino’s have one store for every 64,000 people.


How do you know when you have too many franchisees?


Another competitive favourite of the big chains is encroaching on each other’s menus. KFC moved into McDonald’s territory with burgers, McDonald’s responded by offering more chicken burgers, 7-Eleven moved into everyone else’s territory with pizza, chicken, burritos, salads and sandwiches, and now Subway is moving into Domino’s territory with what one food critic has described as a “pizza thing” known as a Flatizza.


“Too much, already!” was the cry of many franchisees when McDonald’s kicked off its healthy/gourmet/beverage phase in the early noughties.


When does a wider choice become too much? 


Flat whites, cappuccinos and iced beverages with funny names are the first things to come to mind when you think of Starbucks, but the global semi-franchise is looking to move beyond coffee.

Tea, beer and alcoholic beverages have been trialled, and the coffee giant recently announced that it would begin serving handcrafted carbonated beverages known as "Fizzios".


At least by expanding its range of beverages, Starbucks is doing what the railroad companies should have done in the early 1900s – realised that they were in the transportation business, not just the railroad business. Starbucks has realised they’re in the beverage business, not just the coffee business.


But how far do you go in expanding your business concept without losing sight of your core business?


Of course, as we've seen with Starbucks, not every step the big chains have made recently have been disasters. Here are two more - including another stroke of genius from Starbucks.



Honourable mention #1: The genius of Starbucks’ “secret menu”


“Dad, can you buy me a cotton candy Frappuccino?”


When his 11-year-old daughter made that request, Bloomberg Business writer Mohamed El-Erian thought he knew better. After all, that type of beverage wasn’t listed on the Starbucks menu board. But his daughter had the last laugh when the barista nodded and started making the drink.



“What a great marketing move on the part of Starbucks!” raved Mohamed. “Having already expanded their offerings for adults to food and other items, they're now targeting my daughter’s generation.”


In less than five minutes, his daughter had taught him about the power of power of peer-to-peer marketing, customisation and consumer awareness.   

 


Honourable mention #2: What franchise has the best point of difference?

Standing out in a crowded marketplace is one of the biggest challenges of any franchise, and in particular a new franchise. Some franchises achieve “brand cut-through” by means of shock tactics.


You wouldn’t expect your typical blokey home handyman to be wearing a pink shirt, but that’s exactly what Hire A Hubby franchisees used to gain national media attention and brand recognition in the late 1990s. Of course, the Hubbies insist their shirts are “magenta”.



Now another has taken a similar approach – but with a twist. In 2002, Vancouver-based Scotsman Nicholas decided to add a little fun and humour into his window cleaning and building exterior washing business by wearing a kilt – and Men in Kilts was born.



Seven years later the business had grown to a million-dollar turnover and attracted the attention of Tressa Wood, former VP of Operations at 1-800-GOT-JUNK? Today the Men in Kilts franchise has locations across North America and is putting the wind up its more established competitors.

 






Article by Robin La Pere, No Ordinary Business and Franchise Consultants

Contact me at robin@noordinary.co.nz.




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Robin La Pere of

No Ordinary Consultants has been a marketing manager, franchise manager, CEO, franchisor and, now, a franchise and marketing consultant.


If you're looking for a smarter way to improve your business model, increase your franchise's sales and profitability, or develop your product range and marketing, contact me for a free Initial Consultation.

 

 

 

 

"Robin had a significant and positive
impact ... on Signature Homes as a whole, as evidenced by the fact that our business became one of the fastest growing businesses in New Zealand, winning a Deloittes Fast 50 Business Award in 2003, seeing total sales soar by more than 500%."

 

          Gavin Hunt, Signature Homes