5 minute read
Pandemic Consequences Complicate Development Decisions
Entrepreneurs are perceived to be risk-takers at their core – people willing to step forward where others fear to tread and gamble on themselves and their plans for new ventures.
There’s some truth to that. Entrepreneurs don’t fear mistakes or failure, and they don’t back away from the road less travelled. They will take risks, but not foolish ones. Most are very well versed in their fields, take what they do seriously and learn as much as they can about the journeys they are taking to be prepared for the twists and turns of the road ahead. Few jump into a venture without first understanding not only where they want it to go, but also where it could go wrong.
That’s what makes the current environment such a tricky one for entrepreneurs, including Buffalo Wild Wings® franchisees. The coronavirus pandemic, now stretching toward completion of its second year, injected a great deal of uncertainty into the environment. The pandemic is a root cause of the ongoing labor shortage and supply chain crisis that continue to roil the economic waters and make planning for existing restaurant operations and development difficult. Continued on page 22
by Sean Ireland
Today, many franchisees and their managers find their time and attention focused on the day-to-day challenges of operating their existing sports bars. From trying to hire and retain employees to looking for secondary sources for products and supplies when they run short, doing the things necessary to ensure that guests have a good experience at every BWW® location has been especially challenging throughout 2020 and 2021.
Though many entrepreneurs still want to grow their businesses through expansion or acquisition, those daily hurdles are also leading to long-term economic uncertainty, making the projections on future growth plans more difficult.
“The COVID-19 recovery issues are causing obvious challenges and frustrations not only for current operations, but also for decisions on timing for remodels and potential new store growth,” said Roz Mallet, owner and CEO of PhaseNext Hospitality, which has four Buffalo Wild Wings locations. “Inflated costs and availability issues with people, materials and equipment have caused many of us to delay investing capital at this time.”
Mallet is also a former board member and chair of the National Restaurant Association, the largest food-service trade association in the world. As well as anyone, she understands what hurdles to development there are as 2022 looms. “Accurately projecting return on capital investments is virtually impossible,” she said. “Effectively staffing at all levels is a daily challenge. Re-establishing an updated status quo/baseline for revenue, cash flow and profit margin is a necessary first step to growing again.”
As Mallet noted, clearer financial projections and a more stable labor outlook are only the first steps toward business development in this environment. Franchisees will also need to make calculations about which sales channels and formats will be most important to success for any new growth and make the appropriate choices.
A survey by Restaurant Development + Design (rd+d), an online resource for restaurant professionals charged with building new locations and remodeling existing units, indicates there is a variety of opinion in the restaurant industry about development opportunities. Nearly 45% responding to an October installment of an ongoing 2021 survey said that nontraditional locations, with a mix of on- and off-premise dining, will drive new development in 2022. But 32% indicated traditional restaurant occasions will be the focus of growth. Twenty percent answered that off-premises dining establishments, including takeout-only units, ghost kitchens and virtual brands, will be the biggest source of growth.
Whatever shape it takes, any new construction will be affected by price, supply and labor challenges. The same rd+d survey found that 87% of those building new units in 2021 found that construction and materials costs were somewhat or substantially higher than before. Meanwhile, some BWW owners have found that kitchen equipment must be ordered months in advance, and finding enough workers is just as much a problem in the construction industry as it is in hospitality, leading to longer build times. It’s even taking longer to get building permits and plans approved – 62% of those surveyed in June indicated that it was an issue.
For those who are ready to take on the challenges, Mallet noted that the current financial health of the restaurants already in operation: sales, EBITDA and profit margin trends also must be considered. Additionally the health of the brand, the relationship between BWW owner Inspire Brands and franchisees, and Inspire Brands’ business and marketing strategies for Buffalo Wild Wings in the next one to three years are important factors.
For the entrepreneurs who find that the numbers add up and that they are ready for growth in the current unsettled environment, there’s an additional consideration: how to maintain the culture that is the foundation of an organization’s success and opportunity to expand.
As organizations grow, particularly across separate physical locations, it can be difficult to maintain the focus and foundational values that led to success. Keeping those in place to establish and sustain them in new places requires constant communication and training.
“Every shift, every leader, every team member has to have an awareness of their impact on each other and the guest,” Mallet said. “Regular conversations at all levels about what the desired culture is, and what it looks and sounds like, are more critical today than ever. Our business vision is ‘Exceptional people delivering exceptional brands.’”
As Mallet suggests, communicating what your company’s mission and vision are about to everyone – from managers to team members – is critically important, and teaching those messages takes concerted effort and emphasis over the long term. It should be demonstrated from the top down, explained to every new hire, and recognized and rewarded when it is put into action by someone on the team.
The unsettled economic environment makes decisions on business growth more difficult but may also mean that there is opportunity for those who are prepared with the right numbers, planning and processes in place. While some may need to wait until they’re more opportunely situated, in the short term, that presents more opportunity for those who are ready.
– Roz Mallet, owner and CEO of PhaseNext Hospitality
SEAN IRELAND is the FBS director of communications. You may reach Ireland at 678-797-5165 or seani@myfbsonline.org.
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