Qdoba Mexican Grill
Since its 1995 opening as a single storefront in Denver, Qdoba’s ascent has been both swift and remarkable, as the company became the first fast-casual Mexican chain to open 500 outlets. In 2008, Qdoba earned an estimated $447 million in sales while AUV surpassed $1 million. Qdoba’s vice president of franchise development Todd Owen credits experienced and consistent leadership for the momentum.
Parent company Jack in the Box Inc. opened 56 Qdoba franchises in 2008 and is looking to accelerate the Mexican chain’s expansion in the coming years given the high cash-on-cash returns Qdoba generates. According to Owens, the high percentage of multiunit Qdoba operators showcases the company’s focus on a franchise system based on stability, integrity, and strength.
Word on the Street: “Qdoba’s advantage is relatively small space, inexpensive build-out cost, a simple menu, low inventory, and they are perceived as fresh,” says Paul Tran, director of franchise development for Fransmart, a U.S.-based franchise-development company. “Unlike drive-thru concepts, they don’t need to open stand-alone locations to do good volume. They can go in-line and their build-out costs can be less.”
While early detractors questioned the viability of a salad-dominated brand, Saladworks’ customers have voted with their wallets. Saladworks created a following for its hip, modern atmosphere as well as its menu, which also includes soups and sandwiches. In 2008, the Pennsylvania company earned more than $64 million in U.S. sales while AUV neared $1 million.
Plans call for the establishment of more than 1,000 outlets across the country in the next decade. Saladworks’ vice president of business development, Jena Feret, says franchisees receive in-depth training, covering everything from management and marketing to food preparation. Other development tools include lease negotiation services, low-cost vendors, and ongoing operational support.
“Saladworks is so confident in our systems and processes that the concept is offering guaranteed financing to qualified individuals,” Feret says.
Word on the Street: “Saladworks is on the trend for healthier food and they are going green, which customers resonate with,” Tran says. “Only problem is that they may niche themselves out. Even if they roll out a bunch of brand-new products, they will always be seen as a salad concept.”
Bolstered by name recognition, a proven business model that bests $3 billion in sales, an evolving product mix (toasted subs have lured lunch diners), and a value-added supply chain, Domino’s franchisees report a healthy mix of franchisor support and consumer response.
Indeed, the Ann Arbor, Michigan–based company takes care of its own, offering significant discounts for successful operators to open subsequent locations, including a $5,000 fee to build a new store and a slim $1,500 fee to purchase an existing store.
“Domino’s Pizza offers some of the lowest franchise fees in the industry and makes franchising and business ownership accessible to qualified team members,” Domino’s Pizza executive vice president of franchise operations Scott Hinshaw says.
Word on the Street: “Domino’s has a powerful reputation for speed of delivery,” Allen says. “This is the core essence of their brand. The more they move away from it, the weaker they become against competitors like Pizza Hut (winning with product innovations) and Papa John’s (winning with a focus on the perception of quality).”
Seattle’s Best Coffee
When Starbucks purchased Seattle’s Best Coffee (sbc) in 2003, the brand’s growth strategy turned toward licensing. As the economy staggered, a renewed emphasis was placed on SBC franchising, with executives betting that the slow economy would bring more credit-worthy candidates and better access to labor.
From coffee carts and kiosks to full cafés, franchisees can enter at a variety of investment levels while still capturing strong volume.
“The various investment levels coupled with our ability to test products and concepts within company-owned cafés to ensure they are market-ready for franchised locations allows Seattle’s Best Coffee to provide franchisees a variety of options and services to help them maximize their investment,” SBC’s director of franchise development, Marie Gill, says.
Franchisees also receive a lot of support, including site selection, store opening assistance, café training, ongoing consultation, and employee training.
Word on the Street: “Seattle’s Best Coffee is a relatively inexpensive brand to build out; people love coffee so there’s no introduction needed; and … there’s also a market for folks who just dislike Starbucks,” Tran says, adding that few consumers recognize the Starbucks-SBC link.
†estimated costs do not include real estate and improvements
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