Tag Archives: Strategic management

April 29, 2020 · 3:47 pm

A Whole New World

The thing you hear often these days is some expression to get back to “normal.” The truth be told, those days are gone for good, I’m afraid and I’m not sure that it’s a bad thing in many ways. I’ve been thinking a lot about what the “new” normal looks like because as I’m talking to folks about franchises, some of the businesses that I would have recommended a few months ago are suddenly not as attractive as they were then. Others have emerged as having even more potential.

I want to share some thoughts with you today mostly to get you thinking about what the new normal is for your business. The first thing you’ve probably noticed, maybe because it’s affected you directly, is how many people are working from home. Business meetings take place virtually. I’ve seen a number of professional conferences rescheduled from some hotel ballroom to a virtual meeting place.

What will this do to the real-estate business? If you’re leasing 10,000 square feet of office space now but find you’re being just as productive with the staff working remotely, can that 10,000 become just enough space for a few offices and a conference room? Maybe investing in secure networking is a better use of funds. Some 60% report being either as productive or even more productive than they were working from the office according to a recent study and once the economy reopens, 24% say they’d like to work either entirely or more from home compared to how they worked before,

What will this do to the convention business, at least in the near term? Yes, there is huge value in the face time and spontaneous meetings conventions provide, but I’m not sure people will want to travel. Business travelers are the highest-profit customers airlines and hotels have. Between executives not needing to travel as much and vacation travelers being scared to, what happens to the travel business?

I worked in sports for many years. I’ve seen where some organizations are talking about revamping arena and stadium seating to spread their customers out. Of course, this will reduce capacity quite a bit. What does that do to the economics of those sports (I’m looking at you, NHL) and entertainment shows (concerts, etc.) that are heavily dependant on ticket sales? Seating capacity is an issue for restaurants and bars too. How do movie theaters stay in business with reduced capacity and with an audience that’s now learned to enjoy the theater experience at home?

We need to be thinking about supply chain disruption. Does manufacturing come back here? Are new factories built with social distancing in mind? Does this accelerate the trend to automation since robots can’t catch a virus (well, at least not of the non-digital kind)? We also suddenly are aware that our economy rests squarely on the people who seem to be paid inversely to their importance. Nurses, truck drivers, meat cutters, and others on the front lines are compensated far below the worth that has become evident to us all over the last few months. How does this enter into the conversation when the time comes?

Those are just a few things that have popped into my brain while this disaster goes on. What do I say to folks I’m working with, many of whom have been forced to rethink their employment or who have chosen to? In a nutshell, I think these businesses are worth a strong look:

  • Senior care – people were already wanting to stay in their own homes as they age and the issues in senior group quarters during this have accelerated the trend;
  • Cleaning, both residential and commercial. Self-explanatory
  • Education – both afterschool programs and tutoring. People always spend on their kids and more schooling is going to take place online and at home. Traditional programs in the Arts, STEM, and other areas will be hurt, I believe, and parents will seek them elsewhere.
  • Pets – I can’t tell you how many people have acquired new pets during this time. It also seems all of a sudden that everyone I know is posting something about their pet. Pet supplies, pet boarding, and pet grooming. Dog training too, maybe, if the new puppy we have is any indication (the other 2 dogs don’t seem to be fans yet).

Those are a few of my thoughts. There are a number of other business sectors that look promising in the new world but the important thing is that we recognize that things have changed, probably forever. Have you thought about how that affects you and your business? Is it time for you to change as well?

 

Leave a comment

Filed under Franchises, Thinking Aloud, What's Going On

Tagged as , , ,

April 17, 2020 · 3:04 pm

We’re Trucked

Believe it or not, it’s Foodie Friday again (I know, you can’t keep track of what day it is). Obviously, we’re not dining out here and I’m pretty sure you’re not either. We are, however, bringing in for from some of our regular haunts in an effort to support them during this difficult time. In a couple of cases, the restaurants are moving closer to us by rolling out their food trucks into various places nearby.

Food trucks are one of the businesses I represent along with dozens of other food franchises. I can tell you that the cost to open and operate one of these beasts is significantly less than for almost any other type of food place. I haven’t pulled any of the Franchise Disclosure Documents to check out the operating and earnings claims for trucks vs. brick and mortar but I’m thinking that the trucks probably have better margins.

Margins in the restaurant industry are notoriously small. While you might expect your margin in any other type of business to be north of 25%, in the restaurant world they run 3–9%. Not much room for error and definitely no room for the type of catastrophic business environment in which they’re trying to operate. Having a truck to roll out, either in lieu of or in addition to operating the brick and mortar joint for takeout might just be a lifesaver.

I could spend the rest of today’s screed talking about why the margins are so bad and what can be done about it. The two-word solution is “charge more” but I’ll leave that for another post. What I want us to think about today is how we can “food truck” our businesses. How can we find some other way to operate, maybe even in a more efficient, consumer-friendly manner once we get to whatever the new “normal” will be?  How will you calm your customers’ frayed nerves? How does your business have to change to mirror the changes in society, media consumption, supply-chain and each of the other factors and constituencies that make up your enterprise?

I find I’m spending more time talking to people about businesses that can operate out of the home.  I also remind them that no matter what business they’re evaluating, the process will take time. 2 months for a non-retail business and maybe as long as 5 months if you’re outfitting a store/salon/restaurant etc. The time to be planning and beginning the process is now. Borrowed money is cheap, there will be a glut of real estate, and you want to be ready when the new normal eventuates.

So how are you food-trucking your business?

Leave a comment

Filed under Consulting, food, Franchises

Tagged as , , , , , ,

April 10, 2020 · 2:38 pm

Crisitunity

I think it’s Foodie Friday although it’s fairly easy to lose track when most days are pretty much the same these days as we all ride out the current pandemic crisis. While many businesses have been damaged and many people hurt, the restaurant business has been particularly hard hit. Most places have ordered them not to serve anything other than take-out. Order volume is way down. Many of the staff have been laid off or fired altogether. Couple that with the fact that the food business is generally a low-margin business to begin with and you have a dire situation.

Think for a minute how other industries are affected by the restaurant situation. Suppliers now face uncertainty. Landlords might not get paid. If they own the building that’s one thing but if they owe a lender payments, they’re in trouble as well. But as Lisa points out to Homer, a crisis is also an opportunity.



One thing I’ve noticed is that there is suddenly a much great awareness of the interconnectivity of all the constituencies of every business, restaurant and otherwise. It all starts with customers, of course, but also shows how critical everyone is and how many people touch a business. Need supplies? What if the delivery person can’t work and there aren’t replacements. What if the supply chain is interrupted due to hoarding? I’m sure you’ve seen that as stores began to see hoarding they imposed limits on the numbers of what could be bought, not to limit their sales but to make sure they were serving as many people as possible. I call it equity, you can call it fairness or whatever you like.


I’ve got friends who work in the food business. Some of them have been laid off. Others continue to work, taking the risk each day that they might become ill to help their restaurant survive during the crisis. They can’t work from home. When this is over, think about that as you’re wondering whether to tip the extra 5%.

I’m hopeful that other businesses will think more about equity. Will that mean higher wages, better working conditions, and increased benefits? I don’t know but I know we won’t be going back to the world as it was. I’m sure many great people are rethinking their choice of employer if not their career choices. I’m quite sure that many employers won’t have the same staff back, resulting in the loss of institutional memory, increased hiring and training costs, and even more lost time. What are they doing about that? Using the crisis to put the “new” world in the context of equity is a start. You can’t pretend nothing has changed. How are you going to?

Leave a comment

Filed under Helpful Hints, Reality checks, Thinking Aloud

Tagged as , , , , , , , ,