Food Franchising - The dream team?

Don’t serve up second-rate food in your pub — let a franchisee do it.

That might well sum up the dilemma licensees face over whether they should bring in an outside party to run the kitchen. It’s tempting to be free of the costs and responsibilities, but you’re taking a risk by giving away control of what is an increasingly important part of the pub offer.

Franchised food, along with its trendy counterpart, the pop-up kitchen, seem to fit some kinds of businesses perfectly, however. Take InnBrighton — almost every one of the group’s 47 managed pubs has a separate food operation.

“For us, there are two good reasons for franchising,” explains chief executive Gavin George. “One is that we have so many pubs in Brighton and we really want to bring something different to each of them. The other is that the economics work out better, especially in a smaller pub, because the cost of staffing, for instance, is transferred to the franchisee.”

That doesn’t mean InnBrighton loses interest in the success of its pub food. Far from it. Franchise fees are based on a percentage of food turnover and as the food trade grows, so does the wet take.

“So, as a wet-led business, we benefit from that as well,” says George. “On the whole, the people we engage in the kitchens have a commercial background,” he goes on. “It’s an opportunity for them to make a name for themselves without taking a big risk.

“When you’re interviewing a potential franchisee you must question them on their experience of issues such as food hygiene and health and safety. But the pub manager is in overall charge. You have to have someone in control because of all the statutory requirements involved in running a kitchen. The franchisee has to accept that or there won’t be a long-term relationship with them.

“We agree the menu with them, but they have responsibility for setting the GP, and we certainly don’t want to stifle their creativity. The individuality they bring to a venue is a key benefit for us. 

“Our bar staff take the orders and do the running and our managers realise that if they have a good food operation it will bring more wet trade, so they make sure they have a full complement of staff to do that.

“If everyone’s prepared to work together there’s not much that can go wrong.”

Pop-ups and residencies​

Pop-ups, or residencies, are best understood as a short-term version of a franchise. They can work well if you want to keep your food offer fresh and give customers something new relatively frequently — and you can find the right food operator to tie up with.

For that reason they tend to be more viable in big cities, especially London, where there’s plenty of entrepreneurial activity on the casual dining scene.

InnBrighton has pop-ups at the Joker of Penton Street in Islington, where Tongue ’n’ Cheek supplies a burger-based menu, and the Candlemaker in Battersea, where Death by Burrito has taken over the kitchen. Among its Brighton pubs, the World’s End has Bar-B-Q Shack, and the Sidewinder has Big Bang Burrito.

“There are great benefits for us in pop-ups,” according to Gavin George. “They have a big following and a great reputation, so they hit the ground running. Tongue ’n’ Cheek was a finalist in the BBC Food & Farming Awards this year, so that adds kudos.

“Whether a pop-up will work, though, depends on the pub. They wouldn't fit a more traditional business where customers want the usual pub fare — and Sunday roasts are expected wherever you are.”

The Grafton in Kentish Town, an award-winning Enterprise Inns leasehold, has successfully hosted pop-ups for a couple of years, recently introducing Texas Joe’s to serve a southern-style American menu over the summer.

“It’s brought a brilliant rejuvenation for the pub,” reports assistant general manager Aidan Clarke.

“Texas Joe’s has had a lot of exposure, including on Dragons’ Den, and it brings an instant recognition.

“It’s a genre menu but it has lots of options, and it’s noticeable there are more people eating, and more people coming in here for the food. On its first weekend here we doubled our take.

“There are lots of reasons for having a pop-up,” Clarke continues. “They help us to refresh our brand, to keep people interested, otherwise it can lose its edge, and it adds an extra marketing element when the pop-up has already established its own brand.

“On the management side, too, we don’t have to look after the kitchen, and it increases revenue on the wet side quite significantly.

“We charge a rent, currently based on a percentage of food turnover, which is another revenue stream for us, although it really only covers our costs for electricity, gas and so on.

“In the past it’s been a fixed rate. It depends on how busy we expect the kitchen to be and whether they’ll be able to manage a percentage rent. Our first pop-up, the Fat Butcher, was a start-up company like us, and we liked its ethos and its food, so we charged it a flat rent to help it out.”

The pub’s staff have to regard the pop-up kitchen as part of the same business, says Clarke.

“We put great value on giving great customer service and even though the food isn’t our brand it’s important to approach it as if it all belongs to us, that we see it as ours.

“The only downside is that we’re missing out on a big revenue stream,” he adds. “We’re sacrificing 40% or 50% of our turnover, and that’s something we’d obviously like to tap into in future.”

Even for a pub that does it as successfully as the Grafton, it seems, food franchising has its limits.

Case study​

Fuller’s successful Thai​

If there is an archetypal pub food franchise, it’s the Thai kitchen. Fuller’s, the London brewer, has had a Thai franchise at eight of its managed houses for more than 20 years. Una Moir looks after the relationship with the interconnected families who have made a long-term success of the arrangement.

“We’ve kept them going because they’re very popular and they work so well,” she says. “The franchise purchases, cooks and serves the food and puts together the menu. They pay us a rent and keep the money from food sales. We pay for the furniture in the dining areas and the kitchen equipment.

“Although there are two different businesses under the same roof, it’s important they work as one business. A good relationship is essential.

“They’re all local wet-led pubs, but apart from that, they’re all very different,” she continues. “We wouldn’t put a franchise into a food-led pub, though, and it’s unlikely we’d put franchises into new pubs now. Food has become so important for us, and it would be difficult for us to find franchisees of a high enough standard.

“But I’d still say to an independent publican that if they don’t want to focus on food, franchising out the kitchen can be a fantastic opportunity to bring in extra custom.”

Pros and cons of franchises and pop-ups​

FOR​

■ None of the hassle of running a kitchen

■ No wages to pay

■ Drives wet sales

■ Established franchisees bring their own following to the pub

■ Regular income stream from rent

■ Franchisee markets your pub along with their food

■ A fresh menu with each change of franchisee

AGAINST​

■ You’re giving up a potentially lucrative profit stream

■ Who is in charge of statutory food hygiene and health and safety requirements?

■ Who controls the food offer and pricing?

■ Irregular income if rent is based on sales

■ Cost of investment in kitchen

■ Lack of incentive for staff to sell food

■ Poor quality offer reflects on the pub

Why not do it yourself?​

Another alternative is to become a food franchisee yourself. Pieminister has launched a Pie Pub Package that offers licensees a kitchen to cook up the full Pieminister menu.

The deal includes set-up, operations manuals, launch-marketing support, promotional materials and staff training. Menus will be refreshed quarterly and your service standards reviewed regularly.

In return Pieminister will charge a nominal set-up fee and ongoing sales royalties.