Why We Skipped Our Annual Conference to Focus on Franchisee Performance
The reason we skipped holding the East Coast Wings + Grill conference, which would have featured presentations, guest speakers and camaraderie, is simple: We are passionate about seeing our franchisees succeed.
In lieu of the conference in 2017, we chose to focus on improving the way each franchisee operates his or her restaurant to make sure they’re seeing a return on their investment and making a profit. We did this by conducting a gap analysis, or a franchise business review, for every franchisee in two groupings to help them determine which areas they could improve. Moving forward, we will conduct a gap analysis every year for each franchise location before the annual conference.
“We really wanted to dive into the business,” said Mark Lyso, executive vice president of operations at East Coast Wings + Grill.
Settling the Score
We used a three-part scorecard to determine where the operational efficiency gaps were.
- 50 percent of the score was focused on increases in sales, guest count and EBITDA
- 30 percent was based on training – we measured compliance on our training platform and guest complaints per 1,000 guests. Guest complaints were measured on calls and review websites, such as Yelp and Trip Advisor.
- 10 percent of score was based on marketing looking at our loyalty system and online ordering. We looked at rewards registration and penetration, and measured how much that lifted sales.
- 10 percent on operations we measured health department, Net Promoter Score and restaurant operations reports.
“By identifying the gaps in their business, we were able to develop an action plan for change,” Mark said, “and set a standard for them to be able to measure themselves on a yearly basis.”
A Closer Look at Marketing and Operations
Some of the shortcomings we found in the gap analysis were simple fixes. One of those was in the marketing area:
We know a loyalty rewards check can be $4 – $5 higher than a normal check. But in our gap analysis, we found while some of the registrations may have been high, the penetration was low. Servers were not asking guests if they had a rewards card or if they wanted to use their rewards points. We were able to extrapolate the losses in sales that the restaurant owner and staff left on the table.
“When servers don’t ask about customers’ loyalty cards, they’re essentially leaving money on the table,” Mark said.
The Outcomes of the 2017 Gap Analysis
There were three immediate outcomes of conducting the gap analysis instead of holding the conference, which will be useful for subsequent business reviews and conferences.
- We created a scorecard that works as a framework across the network of franchsiees.
- Franchisees put together a three-year run rate on profits and losses (P&L) so we can look at trends and help them identify gaps in their P&L. For example, we found one franchisee had spent $22,000 on local store marketing but had comp negative sales for the year. It didn’t make sense, so we looked closer. We found there was a data entry error – the amount should have been $2,200, not $22,000.
- Franchisee had to write goals for their restaurant. Each one had to provide a goal for:
- Sales
- Guest count
- Food cost
- Labor
- EBITDA
“Now we have their 2017 gap analysis scorecard, P&L run rate and goals for the business,” Mark said. “So I can have a conversation with each franchisee now and manage the process. Now the discussions can be relevant on how to run your business.”
Ready to Grow
We felt it was prudent to set this stage for each franchisee’s growth in lieu of a conference. We will conduct a gap analysis next year for each franchisee before the conference. This will allow us to hold a more fruitful meeting because we will have talking points with more depth that will be more relevant for everyone – and ultimately help each franchisee succeed.
East Coast Wings + Grill works tirelessly to ensure the financial success of each franchisee, and our top-notch, in-demand product helps propel us toward that goal.
