Know the Tipping Points of Growing a Successful Brand
The term “tipping point” comes from the medical field of epidemiology (the study of causes and transmission of disease). It refers to the moment in time when an infectious disease reaches a point beyond any local ability to control it from spreading more widely. The tipping point is a turning point; the critical time in an evolving situation that leads to a new and often, irreversible, development. A tipping point can tilt in either a good or bad direction. Like when an emerging new foodservice brand grows with gusto to a certain level and then collapses into ignominy because of outside forces, inside ineptitude, or maybe both. Sometimes, when brands die, it’s beyond the concept creator’s control. But most times it is not. This month, let’s examine predictive tipping points in brand growth and detail five questions that can help steer a growing foodservice company from infancy to maturity, successfully navigating the peaks and valleys of growing pains and market forces along the way.
Having worked both with and for brands that have grown to more than 1000 units or generated annual sales in excess of $1 Billion, I’ve studied the fault lines of successful multiunit growth keenly. Why do some brands outperform others doing the exact same work in the exact same markets? At which unit number do brands commonly stumble, or fail? And why? While it’s impossible to identify exactly where infrastructure stress fractures commonly occur as foodservice brands grow, the following ballpark metrics are reliable gauges for unit-growth tipping points. Concept or process breakdown is most likely to occur at the following junctures: between 4-8 Units, then 19-24 Units, then 48-53 Units, then 99-104 Units, then 150-160 Units, then 490-501 Units, and finally, between 990-1001 Units.
That’s not to say that everything is smooth-sailing in between those increments, but these unit numbers reinforce the importance of periodically assessing your strengths, weaknesses, opportunities and threats as you near each milestone. Improve the strengths and opportunities in systems and process, and mitigate the weaknesses and threats.
The figures are based on discussions I’ve had over the last three years with successful concept developers, foodservice investors and the consultants that guide them. It’s not difficult to surmise that early brand expansion (between units 1 and 53) is actually more challenging than opening units 150 to 290. The reason is that menus, systems, processes, scalability, teams, leadership, vendors and franchisees (if recruited) are more rigorously tested, strained and stretched during the initial stages of any enterprise. You’re laying track while the train is rolling. Finding balance, focus and resource in that early-stage whirlwind is a rare but critical skill for concept founders. (Units 500 and 1000 are more psychologically-impairing than systems-dependent.)
We routinely advise emerging brands on smart growth strategy to avoid those potential negative tipping points. Here are the five key questions we suggest they ask themselves as they prepare to launch their brands:
1. Are the concept founders the right people to take the brand to successive levels? Many owners manage to grow the business through a couple of tipping points, but then collapse under the weight of their own success, limitations, or hubris. You’ve got to first be smart enough to know what you don’t know that you know. Then study industry success stories, which show you what to do. Now study the train wrecks, which show you what not to do. One thing you’ll likely learn is that while the early bird may catch the worm, it’s the second mouse that gets the cheese.
2. Is the brand competing with itself or the industry? It used to be that successful brands could measure their growth in terms of how well they bested their own performance in Key Result Areas (same store sales, QSC, marketing, food safety, turnover, etc.) But since you’re competing against the industry’s best, shouldn’t you also be comparing yourself against the industry’s best too? Benchmark industry best practices, not just company best.
3. Do you have a talent pipeline and a talent scaffold built in to each unit and each market? If you have dreams of building a 1000-unit brand but have never worked for one, you’d best start by hiring smart. Are you promoting and developing the best people in your company and simultaneously enriching the talent pool with outside performers who bring along expertise you haven’t learned yet? Are you retaining your best people? Why did once-iconic foodservice brands rise and then fall? Brain-Drain, pure and simple, time after time after time. We don’t build “brands,” we build people. People build brands.
4. Are you judicious in choosing and vetting your franchise partners, or greedy to collect and amass franchise fees? Are franchisees your most valuable asset? No. But the right franchisees are. Ask any failed—or even successful–concept creator what their biggest regret is, and “Choosing the wrong franchisees” is the most common refrain. The rush to collect a franchise fee from the wrong partner is the worst transaction you’ll ever make. What you earned in fees will be wasted ad infinitum in time and money spent arguing over sites, standards, quality, marketing, contracts, vendors, licensing, etcetera. Franchising your concept in order to expedite quick growth and broad market-presence is a smart strategy when done right. And that means choosing well-capitalized partners who clearly share your values and vision.
5. Do you have the right vendors and support partners in place? Almost as important as the franchisees you choose are the vendors you use. Are your current suppliers able to both help you grow and grow along with you? Do they integrate your company’s objectives in to every contract? Roughly half of your company’s revenue goes to vendors, so roughly half of your strategies should go to actions that make those vendors more efficient and better partners.
Jim Sullivan is a popular speaker at foodservice leadership conferences worldwide. His newest book Fundamentals is used in over 90,000 restaurants. You can get his product catalog and additional insight at Sullivision.com and follow him on YouTube and Twitter @Sullivision.