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Focus Brands’ CEO Predicts Large-Scale Consolidation of Foodservice Brands
Jim Holthouser told Franchise Times that the current field of restaurant brands looks a lot like what the hotel industry looked like 20 years ago.
If you’re a sub-200-unit restaurant franchise, your days as an independent franchisor may be numbered, at least according to Focus Brands’ new CEO, Jim Holthouser.
In an interview with Franchise Times published this week, Holthouser detailed the umbrella company’s plans to double its unit count over the next decade. To accomplish that feat, Focus Brands is ramping up its acquisitions.
“We need a great burger brand. We need a chicken brand. Yes, we have Moe’s, but that’s about burritos; tacos are incredibly popular with consumers,” he said, referring to Moe’s Southwest Grill and then ticking off other wish-list buys. “Pizza has done incredibly well. A coffee brand. For the health-conscious, there are interesting Mediterranean and salad brands.”
Holthouser contends that mass consolidation is not just the most lucrative path forward for Focus Brands, but the direction that the entire industry is heading regardless. The former Hilton executive pointed to consolidation among hotel brands over the past 20 years as a sign of what’s to come for restaurant brands.
“I see this industry as ripe for very rapid consolidation,” he said. “Where the foodservice industry is today, it’s almost like looking in a rearview mirror of what the hotel industry was 20 years ago. It’s eerily similar.”
Two decades ago, the hotel business was fragmented and today there are four or five major players, he said, also noting “a rush to digital and rapidly going toward third parties,” similar to foodservice, accelerated by the pandemic.
If Holthouser’s prediction — one his team is actively working to bring to fruition — proves correct, the restaurant industry won’t be better off for it. Variety is not only important for consumers, it’s critical to franchise entrepreneurs, who rely on a diverse field of brands to find a model that aligns with their goals and lifestyles. If in ten years the restaurant industry is dominated by a handful of mega-corporations, it will be much harder for prospective franchisees to find an opportunity tailored closely to their interests.
