Franchising: Getting the Systems Right...
Franchising is operating a business following strict operational processes and procedures from a business model that...
The food franchise industry is a mighty beast where many large and small franchises have made a great deal of success for themselves. The strength of this industry is that they sell food, a necessity of life, so there will always be customers, however it is an incredibly competitive market.
The UK Food Franchise market fairs similarly to the whole food industry, as it comprises many of the businesses that make it up.
According to the National Statistics Food Statistics in your pocket 2017 & 2016.
The contribution to the national Gross Value Added in 2016 for the Agri-food sector was a staggering £112bn, this is £2bn more than the previous year. This demonstrates a relatively healthy market in the sense the customers are willing to pay more than before for their food, however more variables might be the reason for this increase.
As the number of employed people in the sector stayed roughly the same at 3.9m and population and food prices both increased in the UK, it is likely that this is the reason for the slight increase in contribution mentioned earlier. This isn’t something that should discredit the health of the industry as many industries have been affected by Brexit, this includes the food industry, so the fact that we haven’t seen a decline is healthy.
The worrying statistic for the outlook of the food franchise industry in the UK is that 30% of the food consumed in the UK in 2016 came from Europe. If the Brexit deal imposes tariffs to this import, it will increase the cost for UK businesses, thus either increasing prices and therefor lowing units sold or their profit margins will decrease, thus affecting the franchises likely profit.
An interesting trend has been observed in the food franchise industry over a number of years now and it doesn’t look to be stopping. Organic food is becoming a very large industry and according to Euromonitor, the global sales of healthy food products is expected to reach $1 trillion by the end of 2017.
If your considering opening a food franchise in the UK, then you might consider one that appeals to those seeking organic food, as this trend isn’t expected to slow down in the near future. The survivability of this trend is because it isn’t a new product, or something that has a finite time before its replaced by something superior, it’s a way of life that humans are keen to adopt. As it is generally considered a healthier way of living, more and more people are jumping on the band wagon and demand for this type of food keeps increasing.
One of the main aspects of food franchising and franchising itself, is that you aren’t creating anything new, you are adopting their products/services and the operational method. This produces an advantage for the food franchise market as what they are selling is food and drink. This is because the UK population can sometimes be fussy when it comes to eating and they will only buy food which they have had before and might not be to adventurous.
This is perfect for franchising, as if you consider a food franchise like Veeno, when somebody sees this franchise, they might have been in one somewhere else, and then automatically trust your store, purely based on the brand.
This can be seen by the big brands in the industry, if you live near a city in the UK I bet you know where one or more McDonalds are, even if you don’t like the food. This sort of brand reputation is exactly what a franchise wants, where no matter which franchise store a customer comes into, they will trust that product/service.