What is in this article?:
- Restaurant operators look to diversify interests
- Franchisees discuss differentiation
- Commodity costs, consumer behavior challenge franchisees
Operators invest in multiple concepts to hedge against economic hardships
There was a time when franchisees built their empires focusing on a single brand, but that was before the Great Recession underscored the importance of a diversified franchise portfolio.
Today a growing number of franchisees are ditching the simplicity of operating a single brand and rounding out their holdings as a buffer against the stop-and-go economy. Multiple brands also help to smooth out sales swings between dayparts and seasons, and to ensure continuing expansion opportunities within a chosen territory.
“Having a diversity of brands is healthy for a franchisee’s portfolio,” said Stephen J. Caldeira, president and chief executive of the International Franchise Association. “Increasingly, as credit has been difficult to access, especially for aspiring franchisees, opportunities for existing successful multiconcept franchisees have become more prevalent.”
In light of this growing interest in a multifaceted portfolio, Nation’s Restaurant News asked five multiconcept franchisees included in its 2012 Top 100 rankings to discuss their strategies.
Bill Boddie, president and chief executive, Boddie-Noell Enterprises Inc.
After years of operating several brands, Boddie-Noell Enterprises Inc. now is picking favorites.
The Rocky Mount, N.C.-based company is shedding its Cafe Carolina, Moe’s Southwest Grill and Texas Steakhouse & Saloon locations and returning its focus to what it knows best: its 335 Hardee’s locations in the Southeast United States.
“When we were looking at what we could and couldn’t do in the economic crisis, this is what it made sense to do,” said Bill Boddie, president and CEO of the company, which is one of Hardee’s largest franchisees. “Hardee’s is doing really well,” he added.
From 2010 to 2011, the company’s revenue grew more than 2.7 percent — from $426.7 million to $437.1 million, according to NRN’s most recent Top 100 data.
In October the company sold its 19 Texas Steakhouse locations, and by the end of the year, it will sell its other entities. Both the company’s Moe’s and Cafe Carolina locations will be sold “in a friendly kind of hand off” to the people currently running those locations, Boddie said.
“These are people we’ve been working with for a long time,” he said. “They’re great concepts. … We weren’t going to be able to grow them.”
Boddie said resources would be put toward a major remodel of its Hardee’s units, and his company would focus on developing its current geographic footprint rather than expanding out.
“We look at ourselves as a regional company,” he said. “If you get too spread out, it’s hard to market the brand. It’s also easier for us to manage locations, [not] being too far away. It’s worked well for us. There’s lots of opportunities in our footprint.”
Along with restaurant holdings, Boddie-Noell also operates BNE Land Development, which specializes in commercial and residential real estate. The BNE Land division took a hit with the crash of the real estate market — particularly in its residential department — during the past few years, Boddie said. Still, it’s important to have a broad business scope, he added.
“You go and do what things are working,” he said.
In focusing on Hardee’s, Boddie-Noell will be returning to its roots. The company started in 1962 with four franchised Hardee’s locations, the first one in Fayetteville, N.C. But that doesn’t mean it will stay that way.
“We will probably be diversified again in the future,” he said.
In the meantime, more regulations and the rising costs of doing business, such as pending health care reform, have presented big challenges for franchisees, he said.
“We have the same issues that have been going on for the last several years,” he said. “It has slowed things up because [franchisees] aren’t sure what these regulations are going to cost.”