All posts by The Retail Strategy

Featured Client: LemonShark Poke

LemonShark Poke is a fast-casual, Hawaiian restaurant concept serving quality-crafted and sustainably sourced Poke and more! The California-based brand was founded in 2016 by Wallflowers’ guitarist Tobi Miller and ex-racecar driver Richard Gottlieb.

LemonShark Poke is expanding nationally and seeking sites throughout the country.

Real Estate Requirements:

  • 1,500 – 2,500 square feet
  • Daytime & evening traffic
  • Upscale co-tenancy
  • Patio preferred

 

Featured Client: 85°C Bakery Cafe

85°C Bakery Cafe is a cafe and bakery specializing in espresso coffee, flavored beverages, decorative cakes, and freshly baked breads. Founded in 2004, the chain quickly branched out overseas to China and Australia before establishing a foothold in the United States.

85°C Bakery Cafe is currently seeking sites throughout the Austin area.

Real Estate Requirements:

  • 2,500 – 3,000 sf
  • High density
  • Strong visibility
  • Preferably near other Asian co-tenants but can also go in traditional shopping centers

Featured Client: Waxxpot

Waxxpot is a head-to-toe waxing salon that offers services to both men and women in a comfortable, modern atmosphere.

Waxxpot has salons in both Columbus and Atlanta (coming soon) and is currently seeking sites in Austin and Denver.

Real Estate Requirements:

  • Approximately 1,500 – 2,000 sf
  • Trendy neighborhoods
  • Good visibility
  • Strong daytime & evening populations

So You Say You’ll Have 100 Units in a Year or Two?

If I had a dollar for every young franchisor that says they’ll get to 100 units in a couple of years and surely 500 units in three to five, I’d have a whole lot of dollars. In fact, I edit such predictions out of the stories we publish in Franchise Times because they almost never come true.

A new report by FranchiseGrade backs me up: Only one out of five start-up franchises, or 20 percent, reached 100+ locations and that was after their eighth year of franchising. Twenty-three percent had 26 to 50 locations after six years in business, and 29 percent of franchises had only one to 10 locations after six years.

After two years in business, 65 percent of franchises had no locations; 27 percent had one to 10; and only 1 percent had more than 100.

What that means to new or young franchises: Plan for a lot more capital and time to get the business to a sustainable level, which FranchiseGrade pegs at 26 or more locations after five years. That’s an “acceptable rate of growth and provides a foundation to continue their franchise development,” writes Ed Texeira, COO of FranchiseGrade, in the report.

“Undercapitalization is the biggest challenge for start-up businesses and emerging franchisors are no different,” points out Lori Kiser, CEO of The Decide Group, in the report.

She advises would-be franchisors to first work out the bugs by operating three to 10 profitable locations in multiple markets; expand locally then regionally, building a strong presence in markets “close to headquarters where you have more support” in place; and understand “when you become a franchisor, you are operating two businesses—the actual operating business and then a franchise system.”

Other advice in the report: Be willing to adjust the franchise program. “Too often, a floundering franchise is unwilling or incapable of making changes to their franchise. The result is wasting resources trying to sell a flawed franchise,” Texeira wrote.

As for industry breakdowns, personal services, quick-serve restaurants and commercial/residential services accounted for 61 percent of the emerging franchises in FranchiseGrade’s study. Personal services represented the largest sector at 27 percent.

On the flip side, lodging, real estate, automotive and retail food totaled 12 percent of the emerging franchises in the study. “These low numbers are most likely the result of the investment these franchises require and the competitive challenges from comparable non-franchised businesses,” said the report.

By Beth Ewen

Original article published 1.5.2018 by Franchise Times

2018’s Retail Outlook Can Be Summed Up In 3 Words — Reduce, Reuse, Recycle

Though retail real estate has suffered greatly from the massive closures of major brick-and-mortar retailers in the past year, there are still ample investment opportunities in the sector. Tenants, owners and investors could find opportunities in the sector as retailers strategically transform their business models and physical locations to embrace e-commerce and become more experiential.

TH Real Estate said in a 2018 outlook report that there are three ways the retail sector will be transformed this year. The firm called it the three R’s of retail: reduce, reuse and recycle. 

Reduce

Rather than ditching all of their space, a number of retail tenants are opting to decrease square footage in order to hone their focus on the stores that are performing well. Others are choosing to get rid of the brick-and-mortar locations altogether in favor of e-commerce. 

Reuse

Some landlords are getting creative in their attempts to keep pace with the shift in consumers shopping preferences, and are repurposing spaces instead of getting rid of them. Malls are adding tenants like grocers, gyms and medical offices, while retailers are turning spaces previously used for shopping into pickup-and-order counters where consumers can easily collect items purchased online. 

Recycle

While many retail spaces can be revived with an update, others have met their end. This has presented an opportunity for investors and developers who are turning these previous retail spaces into multifamily, residential, office, healthcare, self-storage and industrial properties.

January 07, 2018 – Lara O’Keefe

Original article published on Bisnow.com

7 Things You Need to Know Before Becoming a Franchise Owner

Recently, I was sitting, drinking an iced latte macchiato at a well-known chain, when my wife said to me, “We spend so much time in here that maybe we should think of starting one ourselves.”

Which she promptly followed up with, “I’ve always wanted to run my own business, and let’s face it: How hard can making lattes be? Everywhere we go, [this chain is] opening a new franchise. So, it’s got to be an easier option than starting my own business right?”

Well, not exactly.

My wife is not the only one to think the way she does, given that franchise-growth rates in 2016 again exceeded non-franchise business growth rates and continue to increase by 2.6 percent per year. There’s reason for this, specifically the 300 franchise business lines that already cover ten distinct business areas (automotive, business services, commercial and residential services, lodging, personal services, quick service restaurants, real estate, retail food, retail products and services and table/full-service restaurants.

So, not only are there a lot of franchise categories and companies to choose among, but there are advantages to opening a franchise as opposed to starting your own business from scratch.

Still, those choices and advantages don’t mean a franchise is a guaranteed success. To get to that point, you still need to do your due diligence to increase your chances of making it work.

To better grasp the challenges of running a franchise, I met with Tom Portesy, CEO of MVF Expositions, which runs franchise expositions around the world. I asked Portesy his thoughts on what a new entrepreneur should know before taking on this challenge.

Here are the seven things he said to be aware of before you dive into that franchise opportunity.

1. How much will it cost?

The first thing to know is the total investment to get your franchise up and running. This should include the purchase costs, your opening inventory and the amount of working capital you are going to need before you break even. Understanding these costs is crucial, as you don’t want to run out of money when you are on the verge of success.

In addition, you also need to know how you are going to finance the business, as many people can actually afford a bigger franchise opportunity than they think.

2. What are you good at, and what are you passionate about?

You don’t have to love coffee to open your own franchise coffee shop. Nor do you have to do all the work.

When it comes to running that shop, you’re actually the business owner and can hire people to deliver the service or sell the products; you don’t have to do all of that yourself. Success is dependent on how well you work on the business, not just in the business. 

Still, not everyone is cut out to be a franchisee, to thrive within someone else’s system. “Before buying a franchise,” Portesy told me, “one of the most important questions to ask yourself is, “Do I have the right personality to be a franchisee? People are all different, and so are franchises.

“As a result, one of the worst mistakes you can make is buying a franchise when you are not suited to be a franchisee, or compatible with the business.”

3. How much time do you need to invest?

While starting a franchise is different from starting your own business, it is still a business, and you won’t be the first person who’s traded a 10-hour-a-day job he (or she) hated for a 16-hour-a-day job he hates.

So, make sure you understand what’s involved. There are seasonal franchises that require you to work especially hard at certain times of the year; but it’s still your business that you’re going to be running, and you need to be clear about how much time you will need to invest to make it a success.

4. What is the franchisor like?

Not all franchisors are the same, so you need to do your research and get to know everything you can about the franchisor. This includes things such as how long has this company been in business, what is its average success rate and how long do franchisees stay on average.

Just because a franchisor is new doesn’t mean it’s not a great opportunity, but the more you know, the better informed your decision can be.

5. What does it take to run a successful franchise?

When you do your due diligence, make sure that you speak to other franchisees and not just the most successful ones. Ask them:

  • What were the key success factors they found?  
  • What were some of the challenges, and how’d they overcome then?
  • If they were starting today, knowing what they now know, what would they do differently?
  • For those that failed, what were the factors that caused that to happen, e.g. poor location, weak marketing, etc? 
  • How long did it take for them to start to make a profit?

It’s great to learn from your mistakes. It’s even better if you can learn from those of others so that you don’t repeat them.

6. What kind of help does the franchisor provide?

When you take on a franchise, unlike starting your own business, you’re not alone, and that can be a great comfort. Just make sure you know how much support you will get from the franchisor, what other people’s experiences were and how much help the company offered those people when the going got tough. How much support did those other franchisees receive, or were they left to their own devices?

One of the hardest things is asking for help when things are going wrong. But if you know that the support will be there and that the franchisor is willing to help, the process will be a little easier.

7. What’s your end game?

I am a big fan of Stephen Covey’s “second habit” of highly successful people:  Start with the end in mind. 

plies to franchising. Before you take up your franchise, know and understand what your exit strategy is going to be. Are you planning to leave the franchise to your children, are you looking sell it or do you plan to just run it for a couple of years and then get out?

The better you know and understand your end game, the easier time you’ll have selecting the right kind of franchise opportunity, which fits you in the short term, and supports your long-term objectives.

Running a franchise can be a great way to start running your own business, but you need to understand why you are getting into it, what you are getting into, whom you’re getting into it with and of course how you plan to get out of it. The better you understand the answers to these questions, the better your probability of selecting the franchise segment and company with the best potential for you.

By Gordon Tredgold

Original article from Entrepreneur.com, November 22, 2017