How Franchising Has Changed: Key Shifts in the Past Year

Over the past year, the franchising industry has seen significant shifts, particularly within the food and beverage (F&B) sector. With nearly two decades of experience in restaurant franchising, Gong Cha Vice President of Franchise Sales and Development Mark Treptow has seen the industry evolve over time. Treptow spoke with 1851 Franchise about several key changes that have reshaped the landscape in the past year. These changes are driven by evolving consumer behaviors, technological advancements and a focus on operational efficiency.

Shift Toward Simplified Operations 

One of the most notable trends, as Treptow observes, is the shift away from complex operations to simplified, streamlined setups. In the restaurant industry, this looks like a move away from large, full-service kitchens requiring extensive staff. 

“Some of the bigger multi-unit, multi-brand operators aren’t necessarily leaving brands that are already in their portfolio behind, but they’re not as interested in continuing to build big, full cook kitchens that need eight or 10 bodies to operate,” said Treptow. “They’re looking outside of the restaurant space into retail as well as simpler concepts in the F&B industry such as coffee concepts, which doesn’t require as much in the setup, requires simpler operations to run and it’s a lot easier for them to scale.”

Reducing Startup Costs and Operational Complexity

The current emphasis is on reducing startup costs and operational complexity, a trend that has been reinforced by rising labor costs, particularly in states like California where minimum wage has reached $20 an hour.

This shift towards simpler operations is not just a reaction to labor costs but also a response to changing consumer preferences. Treptow points out that everyone’s behaviors changed drastically during the pandemic; however, some of the aftermath is still having an effect on consumer desires and expectations. 

“Because of COVID, many businesses got online ordering lined up and put the tech in place to be able to provide contactless services,” said Treptow. “As a result, we’ve got a generation that is expecting the ability to customize things, as that is an option that typically comes with online and kiosk ordering. At Gong cha, for example, you can choose from 600 different combinations. We’re seeing these behaviors where the younger consumers desire customization and the ability to experiment, rather than ordering the same product every time.” 

Embracing Technology and Customization

With the rising desire for customizable products, kiosks and self-ordering platforms have been on the rise. The broader industry shift towards AI and advanced technology simplifies both operations and customer interactions. While this caters to consumer desires, it also has its perks for franchise owners.

“That customization through kiosk ordering is increasing revenue,” said Treptow. “For us, we’ve seen about a $1 increase in our average ticket. We used to call it upselling. Instead of a person saying, ‘Do you want fries with that,’ now the options are available to them on the screen. It’s more subliminal. It’s a less conscious thought and consumers are just adding things to their order, and we’re seeing our average ticket increase.”

The Role of Social Media

The rise of social media and influencers has also played a pivotal role in shaping franchise marketing strategies. Visually appealing products can drive consumer engagement. This trend underscores the importance of brand image and the role of social media in attracting and retaining customers.

Looking ahead, prospective franchisees are increasingly drawn to concepts that offer simplicity, scalability and robust technological support. 

“The simpler the business, the faster and easier it is to scale,” Treptow said. 

This perspective is crucial in an industry where emerging trends can quickly redefine what it means to be successful. Franchisees are now more discerning, seeking brands that not only lead their category but also offer premium products and strong operational support. The franchising industry has undergone significant changes in the past year; these trends are not just temporary shifts but are likely to shape the future of franchising for years to come.

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