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
Email this story Email this story
Printer-friendly versionPrinter-friendly version

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.”

Rule #4: Communicate early and often

By 2010, Texas-based Wingstop, now a chain with more than 500 units, had not undergone a restaurant remodel since its 1994 founding. But with ambitious plans for future development, Wingstop leaders knew a more united and consistent brand identity was critical.

Wingstop unveiled its remodeling plans to franchisees at the Wingstop National Convention in April 2010. By that time, vice president of construction John McDonald says, the company had already remodeled a handful of corporate locations and opened new locations with the updated look. The new design simplified the overall décor package and embraced the aviation theme prevalent in Wingstop’s branding efforts.

“When guests walk in the door, they immediately recognize the changes,” McDonald says. “With the removal of the old corrugated awning, the menuboard is much more visible and the entire restaurant is brighter.”

By the end of 2012, more than 80 Wingstop outlets will have transitioned to the company’s new décor package, a process invigorated by corporate openness and accessibility.

In any chain remodel, McDonald says, it’s imperative that the corporate office communicates with the franchise network, answers inquiries seriously and swiftly, and invites franchisees to convey challenges.

“If franchisees don't ask for our assistance, we don't know to offer it, so we try to keep the lines of communication open,” he says.

Rule #5: Offer options and flexibility

In presenting its remodeling plans to franchisees, Wingstop offered three different remodeling packages.

“We designed three packages so the brand partner could start with the basic upgrade, but then add on features a la carte.”

The basic upgrade, aimed at making a cost-effective change, included a complete repainting of the store, punctuated by an airplane wall mural. It also featured new menuboards, merchandising boards, and exterior signage, as well as upgraded seating, tables, and lighting. The mid-level upgrade added modifications to the sales counter and other cosmetic fixes and branding elements, while the top-level upgrade incorporated an exhibition kitchen and new restroom finishes.

“We designed three packages so the brand partner could start with the basic upgrade, but then add on features a la carte. That gives them the option to pick and choose aspects of the remodel package,” McDonald says.

Togo’s also adopted the three-tiered approach. The basic $20,000 remodeling package included a complete “reskimming” of the store’s interior, as well as wall art that shares the brand’s story and new exterior signage. The middle plan added construction around the front counter, while the $90,000 top-tier plan covered cosmetic, construction, and equipment upgrades.

Scott says the remodeling initiative was and remains a “joint effort” among Togo’s operations and marketing teams and individual franchisees to decide which of the three remodeling packages a store will tackle.

“We’re sensitive to what our franchisees have been going through in recent years, so we sit with all of them to review both their financial ability and their current need,” Scott says.

Rule #6: Be a partner, not a pest

In Cinnabon’s franchise agreements, franchisees are required to remodel every 10 years. A year before a remodel is due, Montepare and her team contact franchisees to begin preparations.

Describing franchisees as the “project manager,” Montepare says Cinnabon works with individual operators to develop a budget, construction plan, and timeline. Cinnabon also lines up construction partners who understand Cinnabon’s particular specs and can offer national pricing.

“Rather than dealing with 200 different contractors, we found construction partners in the four corners of the U.S. and the Midwest who knew how things should look,” Montepare says.

Being a helpful ally also extends into the financial arena. As Togo’s began the remodeling process, company leaders quickly recognized the challenges franchisees faced in securing renovation capital. So the company partnered with a third-party lender to offer franchisees a direct line to funding.

“It is our job as the franchisor to make this process as easy as possible,”

Cinnabon’s Montepare says.

Rule #7: Invest in support

Togo’s hopes to have all 250 of its restaurants on board with its new look by 2014. Such an ambitious plan prompted Togo’s to hire a construction manager and add others to its internal staff to both streamline the process and ensure that franchisees encountered support at every turn.

“Because we had not initiated a remodeling program in many years, we had to build our internal infrastructure for such a plan,” Scott says. “Plus, many of our franchisees needed hand-holding because few of them had ever gone through a remodel.”

Rule #8: Minimize stress and interruptions

Already sensitive to the money franchisees were investing in renovations, both Cinnabon and Wingstop worked to make efficient use of capital and ensure continued operations.

Cinnabon, for instance, designed its renovations to be accomplished over three to four nights, which meant stores could remain open.

Likewise, Wingstop remained open during its remodels, designing changes so that they could be completed at night, after hours, and within a few weeks’ timeframe.

Wingstop also created a spec guidebook outlining the paint colors, floor sealer, tile colors, lighting, and other elements necessary to complete the process with preapproved contractors. This not only helped the remodeled unit stay within the new look’s specifications, but helped minimize costly errors.

“Our main objective with the Wingstop reimage program is to keep the restaurant open without any interruptions in the quality of food, service, and the overall guest experience,” McDonald says