Monthly Archives: November 2019

Concessions

Let’s go to the movies this Foodie Friday. I did the other day. If you’ve been spending time at home streaming your entertainment and none at the theaters, you might not be aware that things have changed dramatically at the old cineplex with respect to food. I happened to go to my local Alamo Drafthouse, which features recliners as well as a large menu of food and beverage.

You are probably aware that theater owners make more money from concessions than they do from admissions. You might have noticed that most movie concessions are high-margin items such as popcorn and soda. Still, I generally didn’t spend much more than $10 on food and beverage. Boy did THAT change at the Alamo. Even factoring in the additional labor costs for the servers bringing the food to my seat, I’m pretty sure that the theater owner netted a heck of a lot more from me than they might have in the past.

The Alamo overall is an interesting model. There are fewer seats in the theater but that really only reduces the take from admissions. My guess is that the concession net more than makes up for the fact that there are fewer bodies in the seats. Of course, my Alamo also has 10 theaters under one roof, ranging from 50 to 100 seats. What I like about this from a business perspective is how they’ve rethought the business model and focused on the part of the business that makes an owner money. The concessions are a significant upgrade. There are craft beers, top-shelf cocktails, and even a vegan menu. Sure there is popcorn but it’s served with real clarified butter. It’s also a bottomless bowl. There is also an herb popcorn that is tossed with that same butter and fresh herbs. Do I give a second thought to paying $8.50 for it? Nope – it’s delicious. So are the sandwiches, pizzas, and salads. $45 on drinks and food? Even at a 20% margin, my concession purchases yield the business owner as much as my previous bill might have been in total.

Any business can learn from what the Alamo and other theaters are doing as they transform their business models in the face of unlimited streaming options. It’s the Wille Sutton Rule – go where the money is.

Leave a comment

Filed under Consulting, food, Thinking Aloud

Why This Brand?

When you have over 500 different brands that you represent, the reality is that you can’t know each and every one of them to the same degree. As I’ve been speaking to people interested in changing their lives for the better, I’ve come to have a list of “go-to” brands in each of the major categories. How these brands got on this list is, I think, instructive for every business.

I was actually speaking about this topic to a development director at one of the brands who reached out. Her first question was about the commission structure. We consultants get paid by the franchisors based on people signing franchise agreements and not by the candidates. I gather that for some consultants that how much of a commission they can make influences their choice of which brands to put forward. Point number one: while it’s obvious that the brands are my customers since they pay me, it’s impossible to work in a situation where the candidate’s interests diverge from the brand’s. In my mind, therefore, the commission is a non-factor. I can’t expect to earn anything in a situation where I hand off an unqualified candidate to a brand. My point is that in any sales situation, every stakeholder’s interests must be considered and subordinating what’s right for one party to a potential higher commission isn’t going to work.

One thing that influences my choice of brands a lot is the amount and quality of information the brand provides. You would not believe how little information I have about some of these franchises, several of which are businesses I don’t quite understand. In some cases, all I have is bare-bones information about costs and royalties and a link to the consumer website – not even a “want a franchise?” page which I have to find on my own. Where some brands give us presentations, folders, one-sheets, and research, others give us nothing. You can guess which brands get pitched. Point number two: don’t send your troops into battle without arming them properly.

The next thing I consider is responsiveness. In many cases, getting the candidate engaged enough to want to speak to a franchisor is a time-consuming effort. Once they are ready to go, I want someone at the franchisor who will be as proactive as I have been to get the candidate this far.  Once I’ve made an introduction, I expect the brand to reach out within a day, hopefully within an hour or two. Point number three: if you’re not going to work as hard on making a sale as others engaged in the process, you need to know that there are other businesses out there who will. Be responsive. Return phone calls and emails in a timely manner.

Finally, I also consider communication. Some brands tell me every time they have an interaction with my candidate. Others have been radio-silent. You can guess which type I prefer. It’s very hard to over-communicate in any business.

Those are things I consider when choosing partners. Anything I’ve missed that you think is critical?

Leave a comment

Filed under Consulting, Franchises, Helpful Hints

Mental Health Is Business Health

Happy Foodie Friday! One thing I’ve learned in my franchise consulting is that people have a fascination with the food business. A significant percentage of the candidates I speak with want to invest in something food and beverage related. I’m generally fairly blunt with them, reminding them that it’s often a business where you’re open for 14 hours a day and are really busy for about 90 minutes. The margins aren’t great, the labor is often unskilled and sketchy, and there are liability issues hanging around everywhere.

Today it’s those 90 minutes I want to talk about. The really busy time. It’s incredibly stressful from what I remember of my days working in foodservice. The stress precipitates everything from accidents caused by rushing to fistfights. It’s not for the faint of heart! That’s why I was happy to read the following this week:

Chipotle Mexican Grill will be providing access to mental healthcare and financial wellness for more than 80,000 employees in 2020 through Employee Assistance Programs and enhanced benefits offerings. This is just one of the many ways that Chipotle continues to enable its workforce by offering world-class benefits.

By simplifying access to mental health benefits and identifying work-related risk factors, Chipotle is trying to minimize the effect of mental health in the workplace.

So many good things here. First, I’ve worked for bosses to whom employees were disposable cogs in the business machine. Someone burns out and isn’t getting it done? Replace them and move on. It’s frustrating as hell when you don’t share their attitude but your hands are tied with respect to offering a solution to the stressed-out team member. Having also worked in places with an Employee Assistance Program I can tell you that they can be literal lifesavers and well worth the cost.

Second, you probably haven’t forgotten that Chipotle had some issues with e.coli a couple of years ago. You know you have a problem on your hands when research showed that 22% of all respondents and 32% of those who don’t currently eat Chipotle said that “nothing” would make them want to visit more often.  The food issues have been fixed but the bad taste lingers. Demonstrating concern for your employees is part of rebuilding the brand. Happy employees don’t make stress-related mistakes that lead to bacterial contamination, right?

You can never go wrong doing right for your staff. As a manager, they are your eyes, ears, hands, and voice. Keeping them happy and healthy is doing the same for your business.

Leave a comment

Filed under food, Franchises, Helpful Hints, Thinking Aloud