How do emerging chains allocate human capital for growth?

Aug. 23, 2010 | by Matthew Loney

If you have ever grown a young franchise concept from approximately 20 locations to over 100 locations, you would probably agree that this initial growth is much more difficult than say growing from 100 to 200 locations or from 500 to 750 locations, and one of the main reasons for this is “proper resource allocation.”  Whether you are referring to tangible resources (i.e. fixed revenue), intangible resources, or human resources, the proper allocation of these resources for a young system is probably the most difficult strategic decision that a CEO must make.  Over the next few months I am going to address many different areas where the proper allocation of resources can alleviate problems faced by young franchise systems. Today I thought it best to begin with human resource allocation, and more specifically the allocation of resources in the Operations Department.

Naturally one of the most efficient ways to increase franchisee top line sales and profitability is to provide unsurpassed operational and business support.  Unfortunately, however, providing such support can be a time consuming proposition that often conflicts with necessary resources for new store openings, research and development, and a host of other responsibilities assigned to the operations department of a young brand.  Furthermore, as the brand continues to grow, not only does the need for such support grow for existing units, but the manpower time necessary for new store openings increases.

In response to this issue, I have found that two decisions have provided breathing room for our corporate team and have also had positive ancillary benefits that initially were not expected:

  1. Smart Growth: Do not be driven by the one-offs. One of the toughest things that an executive at a young emerging brand must do is decide not to sign a franchise agreement for a single unit because geographically the new store would present a hurdle for the operations team and potentially the franchisee themselves.  Nevertheless, when working with fixed human resource capabilities with only a limited number of hours in which to complete their job, inevitably this decision must be made.  Obviously considerations must be given for multi-unit propositions where a certain mass of stores will be opened within a specific time period, however when evaluating single store deals geographically located away from the corporate base, it is often better for both the system and the prospective franchisee that the executive decline the business. 
  2. Use of Corporate Store Staff/Using your best minds efficiently: One of the most time consuming activities that an Operations Team is asked to complete are new store openings.  New store openings often involve numerous hours of travel time, weeks of hotel stays, and long grueling hours training the new store’s staff.  However, these new store openings can also be a great opportunity for young employees in the corporate stores to gain valuable experience and additional revenue, while also building loyalty to the brand and the corporate operations team.  Therefore, rather than staffing each new store opening with all corporate operations team members, begin training and building multiple Grand Opening Teams consisting of one operations team member and three (or however many necessary for your system) corporate store team members.  As a young corporate store team member, the opportunity to travel to other cities and to work with a member of the corporate team and fellow colleagues, is an exciting experience and is often viewed as a perk and a break from the day-to-day grind of the restaurant business.  Additionally, this will allow each of your operations team members to rotate new store opening assignments, thereby providing them with additional time to provide ongoing franchisee support and to complete other necessary projects.

Emerging brands in their “infant” stage of growth have limited manpower within their operations team. They are often being pulled in various directions as the operational support of a young brand is vital to its survival. By establishing priorities within the operations team of proper resource allocation, you are setting your system up for success and creating building blocks for future growth.

Topics: Franchising & Growth , Hiring and Retention , Human Resources

Matthew Loney / As president of Stevi B's Pizza, Matthew V. Loney is taking a small pizza buffet concept from a promising regional brand to a leading national franchised system.
www View Matthew Loney's profile on LinkedIn

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