You don’t need me to tell you that 2009 was a bad year. Even when positive news broke through the doom and gloom this year, it had the Great Recession-era gallows humor that doesn’t make us chuckle or even pause anymore. We could all go a long time without having to hear “flat is the new up” ever again.
So I’d like to slam the door shut on this year by discussing a more optimistic, long-term business initiative that’s stuck with me since this summer and came back to the forefront a few weeks ago.
Back in July when I interviewed Papa John’s founder and chief executive John Schnatter, I asked him how his pizza chain could afford to fund its aggressive franchise development incentives. To celebrate its 25th anniversary, Papa John’s waived its franchise fee and royalties for the first 12 months and even paid a $10,000 bonus to franchisees who opened their units ahead of schedule. Schnatter estimated that the moves pushed as much as $16 million back into the system this past year.
“I look at a franchisee as a partner,” he said. “Once that franchisee is up and going, if you take the average unit, they’re paying us about $35,000 a year. Well, that’s an annuity I have for the rest of my life, so why would I charge them to pay me? Why wouldn’t I pay them to get in business, get open and get successful?”
Papa John’s is extending these efforts with its 2010 U.S. Development Incentive Program, which still axes the franchise fee, cuts royalty rates for units opened on time, and provides enormous assistance for purchasing two pizza ovens. Back in July, Schnatter said one reason why he thinks so long-term about his business is because he expects his son to be working his way through the company in about 15 to 20 years.
Obviously, not every operator or restaurant company has the luxury to buy everyone a pizza oven or shell out $250,000 for a Camaro these days. But the mind-set that this is a marathon and not a sprint, and that making an investment now in your concept or your people can pay off handsomely when times get better, merits consideration.
Companies that help franchisees get started when banks are too risk-averse or insolvent to lend know this. Chains that stage big giveaways on opening day know they’ll take a sales hit, but they’re going after guests’ long-term loyalty and good will. Now’s as good a time as any for some capital improvement, and it can be as easy as changing out your restaurant’s light bulbs. Don’t be afraid to do something.
Some of your guests probably are thinking the same way after a year of getting back to basics and belt tightening. I’m getting a puppy.— [email protected]
