Franchise trends for the 2020s: the ultimate guide | Global Franchise
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Wednesday 7th December, 2022

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Franchise trends for the 2020s: the ultimate guide

Insight

Franchise trends for the 2020s: the ultimate guide

2020 may be the most disruptive year for many business owners, however, a crisis can rejuvenate the way we operate and help us to rethink and revolutionize our practices

What’s trending in the franchise industry?

2020 may be the most disruptive year for many business owners, however, a crisis can rejuvenate the way we operate and help us to rethink and revolutionize our practices. Nowhere has this been more apparent than the fast-moving food and beverage sector, which encompasses coffee, burger, pizza, QSR, fast-food and many other subcategories.

Currently, this has included an accelerated focus on and adoption of new technologies, such as kitchen robotics and drones, but also cloud kitchens. However, in the current climate, the success of a franchise business also depends on future-proofing the franchise business model. These are models that are and will be adaptable enough to meet the needs and requirements of future lockdowns and restrictions, so the franchise owner will be safe in the knowledge that if any restrictions are imposed, they will be agile enough to react.

Many restaurant franchises have created lower-cost franchise models which target venues such as hotels, pubs and restaurants that were forced to close due to lockdown measures, but which have professional cooking facilities that could be converted into cloud or dark kitchens for home delivery, even while they remain closed. The new franchise program enabled hotel, restaurant and pub owners to maximize their kitchen space and bring new options to market, increasing revenue almost immediately with easy-to-prepare items designed for delivery.

Driven by the pandemic, cloud or dark kitchens have been shaking up the restaurant franchise category. This new restaurant industry trend is attractive as it lowers so many overheads and helps deliver a concept that is high profit and comparatively low risk. More and more existing restaurants and QSR chains are now venturing into cloud kitchens because of its operational efficiency and low start-up costs.

A rise in consumer demand for food delivery concepts

The total foodservice delivery market in the U.K, for instance, was worth around £8.5bn in 2019, largely thanks to the rise of online delivery concepts. Although phone orders still account for a large share, deliveries ordered online or via an app have increased dramatically. Revenue in the online food delivery segment is projected to reach £4,649m by the end of 2020. Revenue is expected to show an annual growth rate (CAGR 2020-2024) of 6.5 per cent, resulting in a projected market volume of £5,974m by 2024. The market’s largest segment is restaurant-to-consumer delivery with a projected market volume of £3,195m by year end.

With the rise of food-tech start-ups and technological advancements such as high internet penetration across the entire U.K. (by 2025, a penetration of 97.5 per cent of the total population is forecasted), the online food delivery market shows no signs of slowing down. The booming online food delivery market is yet another growth deterrent of the dark kitchen industry, which is one of the biggest reasons why big brands are going forward with the concept of a dark kitchen.

Food franchise opportunities and food franchise concepts are widely available, and there are a myriad of options, from fast food, to healthy options, sandwich shops, smoothie and juice bars – the list is endless.

All over Europe, the demand for healthier delivery food options however is definitely on the rise. Healthy living will be a huge megatrend in 2021. Spending so much time in lockdown with a focus on creature comforts has led to reports of rising obesity. Once restrictions are lessened with the vaccine roll-out, the need to get back in shape will drive consumers to healthier alternatives.

How can I capitalize on this trend?

Generally speaking, the operational cost of a restaurant or pub is very high because of various factors such as start-up costs, real estate or rental fees, interior design, IT, inventory, manpower, salaries, material cost, and other miscellaneous expenses. In a dark or cloud kitchen many of these expenses get cut down. Prospective franchisees don’t need to worry about investment in real-estate and interior costs.

Moreover, according to a recent poll, permanent closures continue to increase across all industries, with the restaurant industry now reflecting the highest total business closures. Seven out of 10 U.K. pubs and restaurants fear they will become financially unviable and forced to close next year as a result of damaging COVID-19 restrictions. The main trade bodies representing the sector said the new findings revealed that 72 per cent of members expected to operate at a loss and to be unable to survive because of the collapse in trade.

Furthermore, despite delivery costs, a dark or cloud kitchen is still a more affordable model than a brick-and-mortar restaurant where infrastructure, business operations and operational costs do not allow you to make high margins. If you have higher margins, you have the ability to offer more competitive prices in terms of food quality and service. Further, overheads are less as dark or cloud kitchens do not have to be in a prime location, as customers will never visit the venue.

Finally, another benefit of operating a dark or cloud kitchen is the opportunity for automation. These days, everything can be automated, from pre-preparation activities to packaging. Dark or cloud kitchens are also exploring more technologies to allow them to automate the entire operation. There are plenty of affordable options that you can start with, with opportunities ranging from multi-unit franchising to single-unit business ownership.

Top trends in franchise recruitment marketing

The ability to clearly communicate a franchise opportunity to prospects becomes even more important when you consider how inundated by digital messaging most people are today. But marketing is a broad category and it can be confusing for busy and ambitious franchisors to know where to allocate resources. Let’s take a look at three of the top digital marketing trends taking the 2020s by storm and see how they can be used to drive leads and support your existing franchise network.

Live video is a booming digital trend

Video itself is not a trend – it’s now a norm and is quickly becoming the most influential form of digital content for businesses today. Franchises, too, are utilizing the strength of video across their franchise and consumer-facing websites and social media pages. While consumer attention spans are continually decreasing, franchise prospect attention spans are decreasing as well – this means that now, more than ever, video messaging needs to be short, punchy and focused. Marketers are adapting to this trend as well, especially on Facebook Live.

A darling with viewers, Facebook Live gives them the opportunity to get ‘behind the scenes’ with a franchise brand in a more personal – and less polished – way than written content. In fact, 80 per cent of users said they prefer watching a live video over reading a blog post, while according to Facebook itself, live video gets three times more views.

Resolve to set a real strategy in place for using Facebook Live to promote your franchise opportunity, as this is a great untapped area to target millennials and the Generation Z demographics specifically.

This is as inexpensive as it can get when it comes to innovative content generation – Facebook Live can be streamed and filmed on your smartphone, and just a few add-ons can take the experience over the top in terms of quality. Invest in an inexpensive tripod to keep your phone steady as well as a set of clip-on lapel microphones to ensure decent sound quality. Put your subject in good lighting and you’re ready to go.

In terms of content, Facebook Live serves as an innovative way to take prospects directly to the franchise opportunity, either behind the scenes in one of your locations or in a short, dynamic interview with a figurehead at your company. Get your CEO on camera to talk for 30 seconds about who makes a great franchisee. Interview top-performing franchisees or multi-unit franchisees about why they like working within your system. Showcase a new product or service that’s changing the game and driving profits for your company.

Investing in content marketing and email

Again, content marketing is not a trend. But it’s growing – in a big way. Nearly 70 per cent of people said they prefer to learn about a business through an article rather than an ad. Combine that data with the fact that content marketing is cheaper than many other forms of marketing – plus, it has the ability to create exponentially more franchise leads. Content marketing takes many forms, so give equal time to pursuing blog posts, videos, infographics and email marketing campaigns.

When it comes to content, think about your brand’s top franchisee performers. What have you heard them say about your franchise opportunity and why it appealed to them? These are the qualities that you want to highlight in your content. Write or film profiles of your franchisees describing why they enjoy being a part of your company. Post a Q&A with your CEO and franchise development director about qualities of ideal franchisees. Showcase earned media to demonstrate brand momentum. Celebrate new openings, signed agreements and other milestones that shout your growth message.

Content, whether text, video or an email campaign, is worth your time more than ever in the 2020s.

Going hyperlocal for franchisees

Our robust digital landscape is allowing local businesses to interact directly with consumers in an easier way than ever before. This is incredibly important for franchisors with dozens – even hundreds – of locations across the country and world, as it helps individual locations harness their autonomy as local businesses serving their communities directly.

In 2021, we’ll see even more hyperlocal focus, from Google Posts (a feature of Google that allows people and businesses to create content directly on Google which appears highly ranked in Google search results) and Google My Business (the Google feature that showcases individual businesses on Google Maps search results and also allows for consumer reviews) to Facebook Local (a review and search function of Facebook) and more.

Individual franchise locations all have the opportunity to reach their consumers in a more direct way. According to Google trend research, 50 per cent of consumers who conducted a local search on their smartphone visited a store within a day, and 34 per cent who searched on computer/tablet did the same. This means ranking in local search has a direct impact on in-store traffic, which is huge for franchisees who are looking for more business.

As the franchisor, it’s important that your marketing team communicate the importance of these free or low-cost services to franchisees and provide them with brand standards and guidelines to keep pages consistent and updated. Hyperlocal pages are the ideal opportunity for third-party validation to take a front and center focus for your business – better page rankings equal more business and an even stronger brand identity in your markets served.

Take these three digital marketing trends into consideration when allocating marketing dollars for 2021 – the importance of live video, strong content and a consistent presence on hyperlocal pages cannot be overstated as the market becomes more saturated than ever.

What’s trending in HR

The world of business is constantly changing and HR is a prime example. At one time, HR was known as the ‘personnel department’, which more recently became HR. Now HR has entered a new decade, and is gearing up to become the ‘talent function’.

Over the last 10 years, our roles have shifted considerably in line with changes in the workplace. It’s essential for us to have the flexibility to adapt, undertake some trend analysis and have an ever-changing mindset to cope with ongoing transformation.

Focus on your internal brand

No longer are we number crunchers in a working environment where information is primarily shared on paper. Put simply, HR provides support for contracts, employee relations issues and terminations of contract. These functions all play an essential part in the franchise industry.

Clients want to rest assured, knowing that their business is safe. However, everything’s changing. For example, employees are no longer on the lookout for just a job, they want a career. What’s more, they want to be inspired and empowered. Without doubt, we can all think of a situation where we’ve received poor customer service. But that’s usually not because someone hasn’t received the right training, or wasn’t given a clear job description to perform their role. The real reason you received poor customer service is usually because the person’s heart wasn’t in it. That’s what happens when someone considers their role as “just a job”.

These days, organizational wellbeing and empowering individual employees so they can provide constructive feedback is critical to the overall productivity and success of a business. Leading from the top is a concept that no longer resonates. In HR thought leadership, there’s often mention of a culture of compassion or emotional intelligence that allows employees to thrive and contribute. We no longer operate in strict hierarchies but look at our businesses as truly living organisms, allowing creativity and innovation to thrive.

So, if you’re still considering your HR function to be all about paperwork, it’s time to take your thinking to the next level. Industry leaders have been using advances in technology such as artificial intelligence (AI), robotic process automation (RPA) and chatbots for a while now. Even the automated voices we hear when we phone our banks are being taught and programmed to become more intelligent. McDonald’s is interviewing candidates using the same technology used by Amazon’s Alexa, while recruitment organizations are automating their first line processes with pre-recorded video interviews. The important thing is, we can’t stop progress.

Adapting to new technologies and the human touch

Franchises are on the verge of embracing advanced AI technologies to support their businesses in areas such as brand adherence, training and employee wellbeing. There’s certainly scope for franchisors to use this technology to enable natural efficiencies to take place, remain competitive and maintain strong ethics and brands.

But what about the people? As we replace first-line customer services with chatbots, for example, what do we do with our humans? And this is exactly where the HR function comes in. There are significant opportunities for HR teams to bring more humanity into our businesses. It’s all about accelerating productivity, efficiency and general wellbeing from within. So, we must step up to focus on the human side of human resources in the workplace. For instance, we need to understand that the idea of a five-day working week in the office is a thing of the past. The same applies to the concept of work-life balance. By giving employees the ability to work and live as they please, and including them more actively in the running of the organization, we can add value to our businesses.

At the same time, a business that cannot evolve will be swallowed up by the next competitor. HR not only focuses on general human wellbeing, but it can also contribute to the organizational development front, breaking down silos, holding those critical conversations that will transform your business.

The HR function also advocates ethical practices within an organization’s culture. The #MeToo and WikiLeaks phenomenon of this last decade highlight the fact that it’s essential for everyone to have a voice. This will require a major shift in mind-set for many organizations, and it’s not without its challenges. For instance, how do you manage the free-flow of information within your business?

Empowering individuals within the organization

How do you recognize and empower everyone? You may think that annual bonuses and merit reviews are the way to proceed. But this isn’t strictly true. You’ll always have the disgruntled employee who was expecting more, which in turn creates noise and even more disappointment.

Don’t dismiss the idea of merit reviews, or market reviews, as they do add value. However, people want more. They want to believe that the work they do actively contributes to the organization and has purpose. People need to know that their work is worth something, regardless of where they stand in the organization. From supermarket sales assistants to vice presidents, no-one wants to be ignored. The good news is that training, retraining and other exercises designed to make people more skilled, also make people feel more valued by the company investing in them.

At the end of the day, HR’s mission is to make people feel more valued by any means necessary. As Richard Branson said: “Train people well enough so they can leave, treat them well enough so they don’t want to”.

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