The Role of Competition in the Restaurant Franchise Space

Competition is often celebrated as a driving force for innovation and improvement in countless industries, and the restaurant space is no different. While competition can be seen as inconvenient or even harmful at times, in the long run, it makes everyone in the space better. For restaurant franchises, competition can drive innovation, menu development and better pricing, ultimately resulting in benefits to both the business itself and its customers.

The primary universal benefit of competition is the push to improve quality and service. When franchisees know they are working to capture the attention and loyalty of potential customers, they are more likely to provide a better experience. 

Scott Henderson, CEO and co-founder of Salad Station, explained that this was a key driver for him when he began conceptualizing the brand.

“We founded Salad Station because we literally wanted a guest to walk in and think, ‘Wow! We’ve never seen any restaurant or salad concept with this many ingredients,’” he said. “It’s everything you could imagine to put on a salad and build your own meal. Our concept offers the ultimate flexibility and freedom to really ‘build your own.’”

While competition drives innovation and customization, it also encourages businesses to pursue truly meaningful innovation rather than hectic promotions and limited-time offers that neither resonate with nor bring real value to the consumer.

“I don’t want to put anything on the menu that, when you eat it, feels like we were just going through the motions just to advertise something new. It needs to be really, really good,” Henderson said. “It needs to be a really premium product that makes guests want to come back the next day. So far this year, we’ve had a really good trend with our proteins being really craveable … This is a really good culinary experience. That’s our approach. We don’t want to do something just to do it; we want to have an impact.”

In addition to a great customer experience, competition tends to result in better pricing structures for consumers. Whether it’s a franchisor honing operations to decrease overall costs and passing those savings along to the customer or a brand launching an occasional promotional discount, brands are forced to maximize the value associated with their offering to ensure consumers remain engaged.

“I think this is unique with our concept. We’re focused on the value of the meal,” Henderson said. “I don’t think anybody else does this, but our salads are weighed by the pound, like at a Whole Foods hot bar. You can’t order a Big Mac and ask for just half of it because you can’t afford the $10 Big Mac anymore. But with us, you can come in and make a $5 salad or a $20 salad. If the economy is affecting [the guest], they have full control over not only how they’re building their meal but also the cost of it.”

When the impacts of competition compound, the choices available to the customer and the experience they ultimately have are significantly enhanced. In a busy restaurant market, competition increases variety for customers and allows them to select the option that best fits their specific needs, from menu items and pricing to dining atmosphere level of service. 

Given that a range of consumers will have a range of demands, the competitive landscape encourages each type of model to improve its unique value propositions, ultimately adjusting the baseline for concepts like it. With this, key competitors innovate in new ways, pushing others in the space to follow suit, creating a better experience for the customer and a stronger, often more profitable, model for the business owner — a positive feedback loop benefiting everyone involved.

For more info on restaurant innovation, check out these related 1851 Franchise articles:

• Franchise Innovation in 2024: Embracing Technology Trends
• Technology in Restaurant Franchises: How Tech is Changing the Dining Landscape
• 10 Emerging Trends in the Restaurant Franchise Industry