Millennials Drive Menus In Fast Casual Restaurants

MILLENNIALS DRIVE MENUS IN FAST CASUAL RESTAURANTS…. These Newer Concepts must not only live up to the marketing message but also ensure that their operations can provide consistent, quality products in every location…. Their business models must be replicable and easily managed.

By FranchiseMoneyMaker Contributor

As recently as 15 years ago the idea that you could grab a nutritious, healthy and still tasty meal from a drive-thru or fast food restaurant was unheard of. It wasn’t until the post Y2K era that fast food consumers became concerned with what they ate. As the Millennial generation started spending money on food outside the home the industry has been “forced” to move toward healthier, high-quality menu alternatives. Once begun this movement toward fresher, greener menus has continued to accelerate at an ever increased pace.

Does Better for You equal Better for Business

Consumer attitudes regarding the link between diet and health have shifted. Data shows that Millennials and aging baby boomers are taking a more proactive approach to healthy eating. Many have adjusted their dietary choices to promote better health. The demographic with higher levels of education and more disposable income is at the forefront of this trend. These health-conscious consumers take the time to research before they dine out. In addition, they seem more willing to pay higher prices to ensure that what goes into their bodies is nutritious.
With this new consumer focus on nutrition, sustainability and ‘clean food’ comes a revolution in the Quick Service Restaurant (QSR) industry. According to a recent article in Business Leader, 83% of Americans believe that fast food from traditional Quick Service franchises is not healthy. This has created the rise of the ‘better for you’ brands that now compete with fast food giants such as McDonald’s, Burger King, and KFC. For example, healthy quick service brands such as Dig Inn, By Chloe, and Sweetgreen are creating their own niche by specializing in organic, locally sourced meal options that contain more vegetables and fewer calories than traditional burgers and fries.

Quality comes with a Cost

As enticing as these food offerings may be to our palate Consumers may find themselves paying almost double what they would at a traditional fast food location. Locally sourced, organic and sustainable food suppliers still see this segment as small compared to conventionally processed ingredients, so access and availability remain a challenge. As a result, many healthier focused chains are developing altogether new selling propositions by positioning “value with reasons” as a way to compete with the traditional fast food chains of the industry. These “better for you” concepts post nutritional information, health benefits as well as the sourcing and methods used in their products. The emphasis is on local, clean, humanely raised and organic.

One such concept is Salad and Go. Branded as a healthy drive-thru option, Salad and Go offers large salads, smoothies, soup and breakfast with an “Always Organic” list of ingredients. In addition, the brand highlights their competitive prices. Salad and Go currently has in 10 locations in the U.S. with plans to nearly double that number by the end of 2018.
Another U.S. chain, LocoL, offers food made only from local ingredients. Founders & Chefs Roy Choi and Daniel Patterson claim “We at LocoL want to live in a world where eating healthy doesn’t take a lot of money or time.”
New quick service food concepts like these are branding their menu items as healthy, high quality alternatives to the sugar, fat, and salt-heavy meals provided by traditional fast food franchises. Recently developed QSR concepts give consumers a choice. Whether it’s organic, farm to table, all natural, gluten free, vegan or humanely raised, the race to innovate and meet this rising consumer trend has never been more of a priority in the Quick Service Restaurant segment than it is today.

Forcing Innovation in Traditional Brands

As new brands continue to make their mark in the minds of U.S. consumers, established brands are attempting to keep up with changing demands. Fast food chains such as Taco Bell have promised to use cage-free eggs and reduce artificial ingredients, and McDonald’s has started selling antibiotic free chicken, and now cooks many of its items to order and offers more salads. It is yet to be seen if that alone will be enough to keep the long-standing leaders in the QSR industry on top.

Serving up Quality, Quickly and Consistently

These QSR pioneers are faced with the challenge of living up to the expectations of an informed, proactive consumer. These newer concepts must not only live up to the marketing message but also ensure that their operations can provide consistent, quality products in every location. Their business models must be replicable and easily managed. This may also prove to be a challenge when food is being prepared to order using fresh locally sourced ingredients instead of processed or precooked menu items. If they can accomplish these tasks, the potential for growth is unlimited.

Regardless of the challenges facing these new “better for you brands”, the move away from traditional fast food to healthier quick service food options is unstoppable. As a means to address consumer concerns, in late 2017, the FDA announced new regulations requiring large restaurant chains to add calorie counts to their menus by 2018. This, combined with health-conscious consumers, will continue to push these new QSR chains to sharpen their competitive edge by offering a wider variety of great tasting, healthier options. As I see it, the success of the “better for you” fast casual concepts will depend on their adaptability to trends, consistency in product, as well as the price point and expense management.

6 Tips When Buying A Franchise

Starting a business can be a life-altering event both good and sometimes not so good. One of the ways people reduce their risk is to purchase an established brand with a proven business model – a franchise.

Franchising has proved over and over again to give a new business owner the highest probability of success. If you follow the system, choose an experienced franchisor, work diligently, are appropriately funded and understand what you’re getting into then operating a franchise may be a perfect business model for you.

Selecting a franchise and purchasing a franchise combines gut reaction with solid research. Although there are many steps to buying a franchise here are my Top 6 Tips that will keep you moving forward in the process. I recommend never skipping or overlooking any of them.

Tip #1 – Begin With Some Soul Searching
Make a written list of what you believe you’re looking for in a business opportunity. However, for this exercise, you cannot put the words “make money” on your written list. The reason for that is simple. I want you to look inward at your dreams, background, hobbies, likes, dislikes, skills, social and community positions and all the elements that a business would need to deliver to you, despite the money. I know many franchisees and entrepreneurs that dread getting up every day to work their business even though are making all sorts of money. Franchisees that are great at selling or corporate engagement should seek a franchise that puts them in front of customers in a corporate environment, perhaps in the advertising business or financial business. Entrepreneurs that like to craft things or work outside or work with their hands should never seek out opportunities that land them behind a desk or stuck in a shop 12 hours a day. Although ultimately in time you will not be doing the “work of business” keep in mind that in the startup phase you may need to. Moreover, if you don’t like the work or have neither the time, desire or inclination to develop new skills you may never get to the next level in developing your business. If you can’t “see yourself” doing a particular type of work, then walk away, no matter how much money you think you’ll make. Look in the mirror and be honest when you sit down to write your list.

Tip #2 – How Much Available Capital Do I have?
Numerous business reports cite the number one reason a small business fails is that proper thought and consideration wasn’t given to the appropriate capital required to open and sustain the start-up of a small business. A lack of adequate money can destroy you before you even begin. It is crucial that you understand the numbers. Before you start your quest for a franchise, you should access your available liquid capital, your borrowing ability and the net worth necessary to collateralize a business loan. Also, there are various ways to finance your new business. That includes your savings, investments or loans from friends and family, bank loans, SBA loans and using the funds in your 401K to finance the new venture. Once you know the number, you can go shopping, or you may decide you don’t have enough money now and need to create a plan to accumulate the appropriate amount of start-up capital. Your accountant may be able to help you access your investment ability. Keep in mind many accountants (and lawyers) are not entrepreneurial minded or risk takers. Some will attempt to “protect you” by trying to convince you not to go into business. Remember you’re assessing your investing capability not looking for permission. That said, knowing how much you can invest will save you and the franchisor time. In addition, it’ll place you in a better position to succeed.

Tip #3 – Meet The “Parents”
In this case, the Franchisor. Once you’ve selected the type of industry you’d like to be in, its’ now time to search for a company that meets the criteria on the list we discussed earlier in this article. There are many ways to seek out opportunities, Franchise Trade Shows, Websites, Franchise Business Brokers and others. I’ll cover that in a subsequent article. Once you reach out to a franchisor, a franchise sales representative will most likely contact you. At this point be prepared to answer some questions over the phone. You may also be asked to fill out an application before going any further in the process. Many reputable franchisors will not engage in any serious conversation with a candidate without an application. My experience has been that franchisors willing to forgo written applications or skip asking qualifying questions at the start of the process may be desperate to “sell” a franchise. That should be a red flag for you. Beware, because it may be a sign the franchisor is undercapitalized and/or more interested in selling franchises and collecting licensing fees instead of supporting the franchisees long term by focusing on royalties from successful franchised locations.

Tip #4 – Take A Good Hard Look At All The Documentation
Once you fill out the application, the franchisor will most likely interview you over the phone or in person and then is required to issue you a Franchise Disclosure Document (FDD). Depending on the State where you live, you must have the FDD between 10 and 14 days before you can enter into any agreement or hand over any money to the franchisor. You will be asked to sign a receipt that you received the FDD and indicate the date you received it. This disclosure document has all the required information that the Federal Trade Commission (FTC) and various States require the franchisor to tell you. Please read it and reread it. Have a franchise attorney review the document and offer legal counsel regarding the franchise agreement. Then follow up with the franchisor. I would recommend that if you’re interested in moving forward, it’s now time to meet the franchisor in person (if you haven’t already) by scheduling a Discovery Day. Make a list of questions and spend the day to meet the team and get answers as well as a feel for the culture of the organization. Find out how deep the franchisor’s organization is and, please make sure you feel comfortable that the franchisor has enough experienced staff to service the franchisees.

Tip #5 – Speak With The Franchisees
Your best source of information is going to come from the franchisors customers, that means the franchisees. Call and visit as many franchisees as possible. Since many Franchisors don’t disclose Average Unit Sales and Operating Expenses in their FDD, they can not discuss it with you. Franchisors can only make claims and address financial issues published in their FDD. Be wary of the sales rep that starts telling you how much money the franchisees are making and how much money you can make. This practice of making “earning claims” not documented in the FDD is not only a violation of franchise regulation but also another red flag. However franchisees are not bound by franchise regulation and if they choose, are free to answer any question as long as they do not disclose proprietary information belonging to the franchisor, such as recipes or processes. When visiting the franchisees, build a report, let them know you’re close to making a decision and carefully phrase your questions so that they are not intrusive. I always ask about support and if they had the opportunity to “do it all over again” would they? Keep in mind there will always be a few disgruntled or struggling franchisees. Without knowing all the facts, it’s tough to condemn the system or franchisor. That said, if the majority of franchisees regret their decision or feel that the franchisor is not supportive, then you need to make further inquiries with the franchisor before signing the franchise agreement.

Tip #6 – Ready, Set, Go
Not so fast. Before the franchisor prepares a franchise agreement is it essential to discuss the best way to structure your new company. Many attornies will recommend that you not sign the franchise agreement in your name but instead set up a separate business entity such as a Limited Liability Company (LLC) or an S-Corp. Seek competent legal advice from a franchise attorney before you sign a franchise agreement or set up a new company.

Franchise ownership can provide you and your family a lifestyle that can not be achieved by working a job for a company. Building a business can be rewarding, exciting and stressful all at the same time. As an entrepreneur, I believe business ownership is the best form of work for many people.

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Photo by rawpixel on Unsplash

About the Author
Gary Occhiogrosso is the Founder of Franchise Growth Solutions, which is a co-operative based franchise development and sales firm. Their “Coach, Mentor & Grow Program” focuses on helping Franchisors with their franchise development, strategic planning, advertising, selling franchises and guiding franchisors in raising growth capital. Gary started his career in franchising as a franchisee of Dunkin Donuts before launching the Ranch *1 Franchise program with its founders. He is the former President of TRUFOODS, LLC a multi-brand franchisor and former COO of Desert Moon Fresh Mexican Grille. He advises several emerging and growth brands in the franchise industry. Gary was selected as “Top 25 Fast Casual Restaurant Executive in the USA” by Fast Casual Magazine and named “Top 50 CXO’s” by SmartCEO Magazine. In addition, Gary is an adjunct instructor at New York University on the topics of Restaurant Concept & Business Development as well Entrepreneurship. He has published numerous articles on the topics of Franchising, Entrepreneurship, Sales, and Marketing. He was also the host of the “Small Business & Franchise Show” broadcast over AM970 in New York City and the founder of FranchiseMoneyMaker.com

Six Ways to Finance a Restaurant Franchise

Six Ways to Finance a Restaurant Food Franchise…

Before seeking financing of any kind, make sure you’ve done your own due diligence. Prior to beginning your search, it’s important to know your own net worth, your credit rating, and to have a comprehensive business plan that includes pro forma documents, operations details and market comparison analysis.

Six Ways to Finance a Restaurant Food Franchise

If you are considering investing in a franchise opportunity, the very first question that may come to mind is whether you qualify financially. Most entrepreneurs, restaurant aficionados, or business executives exploring opportunities for a restaurant food franchise will seek outside sources of financing. The golden rule is to expect to contribute 15% to 30% of your own money to start with, and then go from there.

If 30% seems daunting, there’s good news. Often a franchise business opportunity is looked upon by financial institutions as less of a risk, compared to independent business start-ups. This can be further reinforced by the history and recognition of the brand name, the number of units in operation, and even the support provided to the franchisee by the franchisor.

Before seeking financing of any kind, make sure you’ve done your own due diligence. Prior to beginning your search, it’s important to know your own net worth, your credit rating, and to have a comprehensive business plan that includes pro forma documents, operations details and market comparison analysis.

Franchise financing can be complex, but it doesn’t have to feel impossible. Consider these six ways to finance a restaurant food franchise like Taboonette.

1. Friends and family, as well as experienced business owners,d business owners turn inwardly toward friends and relatives to help finance their franchise or start-up business. With this kind of financing, individuals and families get to create their own terms for repayment and enjoy the collaborative support from those closest to them.

2.SBA loans.
The Small Business Administration is a government agency that helps entrepreneurs plan, launch, manage and grow their businesses.1 They work with financial institutions to provide SBA-secured loans. A lender may be more likely to approve financing for individuals backed by an SBA loan because it is 90% secured. This means if the loan goes into default, the SBA guarantees repayment of 90% of the loan to the lending institution.

3.Bank and private loans.
Since the 2008 recession, it has been more difficult to secure bank loans or loans from venture capitalists or angel investors. A bank loan not secured by the SBA is perhaps the most challenging to obtain, but if you have a good relationship with a financial institution, a stellar credit rating and the required minimum liquid capital, it may be a good option.

4.Veterans loan.
The Department of Veterans Affairs, another government institution, offers qualified veterans financing opportunities for franchise and business loans. The program, called the Patriot Express because of its speedy process, makes loans up to $500,000 to active-duty military preparing to transition to civilian life, as well as to spouses and survivors of veterans. The loans come with the SBA’s lowest rates.2

5.Home equity.
A home equity line of credit or second mortgage is a way of obtaining financing but comes with a personal risk. Financing in this way uses your home as security. This means if you default on a business loan, you lose your home. But with sufficient equity in your home, it can be a relatively easy financing source to tap.

6.401(k), stocks and other personal accounts.
It is not unusual for people to tap into their retirement or savings accounts to help finance business ventures. In an interview with the Wall Street Journal, Bernie Siegel, founder of Siegel Capital LLC, discusses a rollover plan where the franchisee creates a C corporation that will own and operate the new franchise business. That corporation then creates its 401(k)-retirement plan. The C corporation’s 401(k) plan then purchases stock in the C corporation. The cash paid to the corporation is then used as the down payment, and the balance can then be financed through an SBA guaranteed loan.3

At Taboonette, we are excited to work with financially qualified individuals to help them reach their goal of owning a restaurant food franchise. Together we look forward to growing both our Taboonette franchisee and customer bases and bringing our delicious trademark Middleterranean® food and a unique dining experience to more hungry guests.

For franchise information contact [email protected] . “Offer by Prospectus only”

1.https://www.sba.gov/
2. http://guides.wsj.com/small-business/franchising/how-to-finance-a-franchise-purchase/
3.https://www.wsj.com/articles/SB120242422031851929