Special Report | November 2012 | By Daniel P. Smith

8 Simple Rules for Renovation

Remodeling restaurants in a franchised system is a tough sell and even tougher to execute, but the challenges are minimized for those who follow these guidelines.

Cinnabon revamped its store model to modernize its business offering.
Cinnabon revamped its store model to modernize its business offering. Cinnabon
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In many respects, Cinnabon isn’t the brand it was just one decade ago. From the company’s growing beverage line to menu introductions like Center of the Roll and Cinnabon Stix, life within a Cinnabon’s four walls has shifted in the 21st century.

But executives realized a few years ago that the look of Cinnabon’s stores hadn’t similarly changed with the times. The brand’s so-called “heritage” look—a tile-dominated space outlined in blonde wood—had become dated and uninspired, lacking pop and contemporary charisma.

The look also failed to showcase Cinnabon’s modern evolution; margin-friendly beverages slipped into the background and scattered menuboards struggled to showcase the brand’s culinary inventiveness.

“Our look wasn’t hip … and our units weren’t operationally efficient,” says Katria Montepare, senior manager of bakery design at Cinnabon.

The disconnect sparked Cinnabon’s leadership to reimage and rebrand more than 900 units across the globe, including 500 domestic stores, beginning in 2009.

Cinnabon’s bakeries, Montepare says, needed to catch eyes and promote efficiency.

With its new look, Cinnabon decluttered the store and positioned its beverage program front and center beside fresh-made rolls. Storefronts now employ cream-colored walls with dark chocolate wood, replicating the signature Cinnabon product, while new LED lighting illuminates the products.

Today, about 25 percent of Cinnabon’s U.S. stores boast the revised look, and some franchisees have reported sales increases as high as 35 percent following the remodel.

“We wanted to make sure we were doing the right thing: investing our money and resources before asking franchisees to do so.”

Cinnabon isn’t alone in the renovation game. Largely in an effort to keep stores fresh and relevant in an era of heated competition, brands big and small—from McDonald’s and Wendy’s to Togo’s and TCBY—are rolling out remodeled restaurants. Alongside menu, value, customer service, and convenience, store environment has gained increased traction as a critical business element.

In May, Sbarro CEO James J. Greco hired an architectural design firm to develop “The Sbarro of Tomorrow.” The brand’s executive team selected one concept from three different designs and presented the plan to focus groups. It’s now hoping to build five prototypes this January.

“Our goal at Sbarro is to change consumer perceptions about us,” Greco says, adding that a new design communicates change to customers.

The environment, Greco and other quick-service leaders say, cannot be shortchanged. But brands can struggle to get franchise partners motivated to remodel; these projects demand time, capital, and energy.

Companies intent on executing a systemwide remodel can follow eight guidelines to enhance franchisee cooperation, excite operators, and ultimately be successful.

Rule #1: Put your money where your mouth is

Before requiring even one franchisee to remodel, Cinnabon renovated its corporate stores and ran all of its plans through the brand’s Franchise Advisory Council.

“We wanted to make sure we were doing the right thing: investing our money and resources before asking franchisees to do so,” Montepare says. “After all, this has to be a wise move for them.”

Renae Scott is vice president of marketing for Togo’s, a nearly 100 percent franchised–system of more than 200 stores based in the western U.S. She says the corporate office funded 30–50 percent of the remodeling costs for its “early adopters,” Togo’s franchisees who assumed the new look before systemwide implementation.

“Putting our own money in the game up front showed good faith and that we wanted to be successful partners in this effort,” Scott says.

Rule #2: Create franchisee advocates

Scott says Togo’s, a 40-year-old brand that had languished under previous owners, needed a fresh, consistent look.

“Among our stores, we had five to six different interior designs and various exterior signage,” she says. “We had to unify the brand and deliver an environment on par with our competitors.”

At its annual convention in the summer of 2011, Togo’s introduced its remodeling plan to franchisees, unveiling a life-sized mock-up of the prototype alongside consumer research and public comments from its early adopters.

“We were able to share improved consumer ratings around cleanliness, atmosphere, and ‘a place for me,’ … as well as improvements in product-related attributes, such as food quality and value,” Scott says.

More importantly, franchisees heard from fellow operators, all of whom relayed stories of positive sales and experience shifts. “Our early adopters became the advocates for our system and made the process of moving forward with franchisee cooperation much easier,” she says.

Rule #3: Make a compelling case to the system

At Michigan-based pizza chain Hungry Howie’s, some stores had been around for more than 20 years without ever having changed. While launching a refreshed look might have seemed a “slam dunk” proposition, the corporate office knew it needed to persuade operators that a systemwide renovation was needed to enhance the brand.

“We wanted to make sure our franchisees didn’t renovate just because they had to, but instead understood the importance and value of the new model,” says George Schlickenmayer, Hungry Howie’s director of construction.

The company began remodeling its units in 2010. To produce a more contemporary, inviting environment, store lobbies were outfitted with stainless steel, yellow glass tile, pear wood tones, and an easy-to-read menuboard. The $25,000–$35,000 remodel also included the installation of money-saving, energy-efficient equipment, led by a state-of-the-art holding unit that allows restaurants to deliver a more consistent product at a higher temperature.

“The new design successfully improves speed and efficiency to increase output and reduce labor,” Schlickenmayer says, noting that sales increases at remodeled locations generated excitement throughout the system and spurred franchisee buy-in.

“After a few franchisees made the renovations,” Schlickenmayer continues, “we were able to use their results and feedback to convince others in the system … the worth of the change.”

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