Multi-concept restaurant franchising has taken off in recent years, riding the wave of companies adding multiple chains under one corporate umbrella. The trend appeals to growth-minded operators who hit the saturation point with one brand in their market. For franchisors, it can mean dealing with fewer franchisees to sell more units.

That’s an advantage Jack in the Box unlocked after acquiring Del Taco two years ago. It inked around 130 new commitments for the Mexican chain in 2023. A sizable share of those were sold to existing franchisees looking to expand and take on a second brand. 

“We also had a Del Taco franchisee enter the Jack in the Box system, so it’s been going both ways,” says VP of development Van Ingram. “The biggest benefit so far has been for Jack in the Box operators that don’t have additional development opportunities available to them in their core markets. There’s a huge benefit when you have territory constraints on one brand and the ability to develop additional units of a second brand.”

Opportunities also exist to sell more than one brand at once to prospective operators. That comes with a couple of caveats. Franchisors typically find those deals are best suited for operators that already have a diverse portfolio and the infrastructure in place to manage additional concepts. The trade area in question also needs to make sense for both brands. 

Signing operators for more than one brand at the same time may not make sense for everyone. Take Next Brands as an example. The platform brand manager has invested its capital in growing the legacy sandwich chain Beef-A-Roo as well as the emerging smoothie chain Blenderz. Chief development officer Megan Rosen says there isn’t much overlap when it comes to franchise development because the concepts appeal to different demographics and target different types of markets. Beef-A-Roo resonates with an older cohort and does well in tertiary markets that have traditionally been overlooked by quick-service chains. Blenderz appeals to a younger audience and is looking to grow in larger metro areas. 

“Beef-A-Roo also has over 50 years of brand recognition to build on, while we’re still doing a lot of work on Blenderz to get its name and its product out there,” Rosen says. “It’d be detrimental to start putting them together right now. A lot of people are looking for that multi-brand investment, so there’s been some challenges around navigating the messaging and communicating that they’re separate brands and we’re not doing that yet.”

Ingram says there are plenty of cases where the dual-brand opportunity doesn’t work for Jack in the Box. Consumers don’t go to Mexican concepts as consistently as they go to burger concepts, so the company typically lists more opportunities for Jack in the Box than it does for Del Taco to ensure it’s maximizing each brand’s potential in a particular market. 

“It can be tempting to break your strategy to try and chase that two-brand opportunity, especially when franchisees are asking about it, but you have to stick to the strategic market plan for each brand independently,” he says. “Use your mapping and use your territory development to determine the areas where you want to grow with your brands individually. If there are opportunities where they crossover, capitalize on those, but don’t just try and cram one brand into another one’s market plan.” 

More operators are embracing the idea of taking down a larger property for co-development when the stars align on multi-concept deals. Instead of half an acre to three-quarters of an acre, they can take down an acre and a quarter and do both brands as freestanding concepts on the same piece of land. 

“It’s about enabling our franchisees to really capitalize on a larger, better piece of property, and perhaps afford a piece of property that they couldn’t afford with just a single brand opportunity,” Ingram says. 

Locating two or more brands in a single location is becoming an increasingly popular strategy amid the uptick in the number of franchisors offering multiple concepts. GoTo Foods has long pioneered the concept of co-branding, predominantly in malls and other nontraditional locations with specialty concepts like Auntie Anne’s and Cinnabon. Now, it’s putting a bigger focus on pitching co-branded streetside opportunities to prospective operators to accelerate franchise growth. 

Chief development officer Brian Krause points to the Jamba and Auntie Anne’s combination as an example. The smoothie chain is heavily distributed on the West Coast, so its brand awareness isn’t as high out East, and the pretzel chain isn’t accustomed to being in more traditional spaces with drive-thrus. Putting them together allows both brands to benefit from each other as Jamba pushes eastward and Auntie Anne’s pushes beyond captive audience venues. 

The company has seen strong demand from existing and prospective operators for that dual-branded concept and has several dozen locations in the pipeline for 2024. 

“We’ve seen some really great developers of other concepts come forward that love the idea of getting the efficiencies that go along with operating two businesses as one under the same roof,” Krause says. “The pipeline has grown exponentially for Jamba and Auntie Anne’s and for our other co-branded pairings, probably better than we’d admit to ourselves that we expected.” 

Similar to Jack in the Box’s co-development strategy, GoTo Foods is using its ability to sell multiple brands at the same time to mitigate heightened development costs through what Krause calls “cohabitation.”

“It’s basically just a building with a demising wall,” he says. “I’m putting a Moe’s Southwest Grill and a McAlister’s Deli in there, but I’m not sharing space other than those big four outside walls. It’s really more of a real estate play than an efficiency and operations play.” 

Krause expects more companies will start experimenting with similar strategies, especially as the market for mergers and acquisitions gains momentum in 2024.

“With the market continuing to be as dynamic as it is, development costs being what they are, real estate being what it is, and financing being as expensive as it is, we’re all trying to find creative and flexible ways to continue to develop where it’s still a good investment for franchisees,” he says. “I think we’re going to see continued innovation throughout the industry on this.”