New Year Growth Blueprint for Franchise Industry Leaders

At a glance

• The main takeaway: A well-crafted growth strategy sets a clear path forward and keeps your business agile, ready to navigate market shifts, labor challenges, and operational demands.
• Impact on your business: Well-defined growth strategies build the foundation which keep your team grounded yet focused on the right directions.
• Next steps: Contact Aprio’s Restaurant, Franchise & Hospitality team to discuss importance of growth planning and how to leverage them to maximize profitability and long-term value.

Schedule a consultation

The full story:

With the new year on the horizon, growth planning is essential to position your restaurant or franchise for sustained success. A well-crafted growth strategy sets a clear path forward and keeps your business agile, ready to navigate market shifts, labor challenges, and operational demands. Below, we dive into the core elements of growth planning, why they are critical, and how to leverage them to maximize profitability and long-term value.

The essential role of strategic growth planning

Growth planning goes beyond the traditional annual budgeting; the energy lies in highlighting actionable steps that align with your long-term business vision. Proper planning enables better resource allocation, helps mitigate risks, and sets realistic, measurable goals. With clear strategies, you can improve your operations, expand your market presence, and ultimately drive financial success.

Key components of a comprehensive growth strategy

1. Revenue diversification: is your revenue stream adequately diversified?

Covid-19 taught us many lessons but especially the importance of diversifying revenue streams. Think about opportunities in delivery, catering, or retail options that complement your current offerings and show a clear understanding of how to reach your guest. A diversified revenue stream also supports smoother cash flow, which is essential during market downturns.

• Rethinking pricing strategies: moving beyond taking price

Franchises can no longer solely rely on price increases to drive revenue, as consumers are becoming more price-sensitive, especially in a competitive market. Instead, focus on enhancing value through improved customer experiences, loyalty programs, menu innovations, and operational efficiencies. Long-term growth requires creating a balanced pricing strategy that aligns with customer expectations while managing costs effectively.

• Pricing strategy and third-party delivery impact

Continue to evaluate how third-party delivery platforms affect pricing decisions and overall revenue. Adjust pricing models to account for delivery fees, commissions, and customer expectations, ensuring profitability while remaining competitive in the delivery-driven market.

2. Navigating Cost of Goods Sold (COGS) for sustainable growth

• Enhancing profit margins: Effectively managing COGS is significant to sustaining healthy profit margins, which directly impact long-term growth strategies.
• Balancing pricing and cost control: Aligning pricing strategies with COGS assures you can remain competitive while maintaining profitability.
• Forecasting and budgeting: Use COGS data to forecast future costs, track trends, and refine growth projections.
• Improving operational efficiency: Streamline supply chains, enhance procurement processes, and find efficiencies to reduce COGS without compromising quality.
• Scalability considerations: When planning for growth, confirm that COGS can scale effectively with increased unit volumes and product diversity.
• Data-driven decisions: Leverage data on COGS to inform decisions on menu offerings, supplier relationships, and labor management.
• Cost control as a growth lever: Keeping COGS under control frees up resources that can be reinvested into critical growth areas like marketing, technology, and workforce development.
• Monitoring COGS variability: Regularly monitor COGS fluctuations due to market changes and adapt growth plans accordingly to remain profitable.

3. Be intentional about your manpower and expansion plans

• Do you have your manpower planned out? Labor is a top challenge in the restaurant industry. Make sure you are not only staffed adequately for current demands but have contingency plans for seasonal needs, employee turnover, and talent acquisition.
• Are you adding stores or brands this year? Expansion requires careful planning and forecasting. When considering new locations or brands, evaluate their alignment with your existing customer base, operational strengths, and resource capacity while also considering trends in the marketplace and your demographics.

4. Build a proactive approach to maintaining your locations

• Allocating funds for equipment repairs, facility maintenance, reinvestment, or a refresh of stores can reduce costly disruptions.
• Proactive planning not only saves money but also improves customer satisfaction and reduces the risk of unexpected closures.

5. Be innovative with your technology initiatives for the upcoming year

• From upgrading POS systems to implementing customer loyalty programs, technology can streamline operations and enhance customer experiences.
• Identify which tech investments align best with your goals, whether that is improving order accuracy, reducing wait times, or enhancing digital marketing efforts.

Strategic growth planning: budget vs. forecasting

When preparing for growth, understanding the differences between budgeting and forecasting is important:

• Budget: Budgets provide a financial framework for the year, detailing expected revenues, expenses, and profits. However, they are generally static, serving as a benchmark rather than an adaptable tool. Think of this as a once-per-year strategic initiative. A baseline.
• Rolling forecasts: Rolling forecasts, in contrast, are dynamic. By updating projections quarterly or even monthly, rolling forecasts reflect real-time data and provide better insights for adjusting strategies mid-year. This flexibility is invaluable in an industry as volatile as hospitality, where factors like food costs, staffing levels, and guest count traffic can shift quickly.

Why is a rolling forecast best for growth strategy?

Rolling forecasts give you the advantage of agility. They enable realignment in response to market trends, enabling proactive adjustments that can lead to stronger profitability.

Goal setting and cash flow forecasting

• Refocus goals: Reevaluate your growth objectives to make sure they align with current market trends and long-term vision. Refocusing your goals helps identify key priorities and enables better resource allocation for sustainable growth.
• Leverage cash flow forecasting: Cash flow forecasting provides a clear picture of your financial runway, highlighting peak revenue periods and potential slowdowns. This tool is invaluable for setting achievable goals, identifying cash flow gaps, and ensuring sufficient funds for growth initiatives like marketing and expansion.

The bottom line

Strategic growth planning is about setting a clear direction for your restaurant or franchise in the new year. By focusing on staffing, revenue diversification, alignment of operational strategy, embracing technology, and leveraging rolling forecasts, you can stay ahead in a competitive industry.

Partner with Aprio’s Restaurant, Franchise & Hospitality team and be Passionate about What’s Next: set the foundation for a profitable and scalable future in the new year.