Immigration to NZ, Brexit and the Trump Factor
posted on 9th November 2016Simon Lord talks to Bill Milnes of Laurent Law and Andy Chang of Westpac about immigration trends and their impact on franchising
McDonald's US ditches 'Create Your Taste', franchisees say brand in deep depression
posted on 4th November 2016
McDonald's has put a halt to its Create Your Taste made-to-order programme in the US and replaced it with a simpler version which offers fewer options. A Business Insider report says that many franchisees in the US had invested around NZ$170,000 per location with plans to install the 'Create Your Taste' kiosks in up to 2,000 restaurants across the US. Create Your Taste is in around half of all outlets in New Zealand, where service time is arguably less of an issue than in the US.
An October survey by a Nomura analyst suggested that many McDonald's franchisees in the US believe the brand is in a 'deep depression' and could be facing its 'final days', with one suggesting, 'Probably 30 percent of operators are insolvent.' However, the survey represented only 29 US franchisees with 226 restaurants out of more than 14,000 in the US. Nomura maintained a Neutral rating on McDonald's stock.
Business Insider's Hollis Johnson tested the programme at a New York City McDonald's and paid US$10 for a burger with bacon, tomato, onions, cheddar cheese, guacamole, and two sauces, along with sides of fries and a drink. That's about twice the cost of a Big Mac meal. His meal took eight minutes to prepare.
Some franchisees also complained about the cost of the programme, and said it slowed down kitchen operations and targeted an upscale customer that McDonald's shouldn't be going after.
McDonald's decision to get rid of the full Create Your Taste menu and replace it with Signature Crafted Recipes should help solve some of these issues.
Signature Crafted Recipes has fewer options for customisation than Create Your Taste with bundled toppings that should make it easier for kitchens to handle. The company started testing it earlier this year.
High-earning US brands seek local partners
posted on 31st October 2016A top US franchise executive is visiting NZ this summer to look for partners for some of America’s top-earning franchises
A top US franchise executive is visiting NZ this summer to look for partners for some of America’s top-earning franchises
growing or not?
posted on 28th October 201611 October 2016 - Initial results from the Franchising Australia 2016 survey show that sales and employment within franchising are up slightly since 2014 but numbers are static. Is it out-performing the general economy?
Australian Franchise Awards
posted on 28th October 2016Updated 13 October 2016 - Poolwerx won the top title at the Australian Franchise Awards last night, with franchisee awards being spread over four different brands
Making it easy to share information
posted on 27th October 2016October 2016 – Lauren Taylor brings fresh energy to providing franchisors and franchisees with the information they need to build better businesses
Restaurant Brands says 'Aloha'
posted on 26th October 2016
Restaurant Brands is looking outside NZ to Hawaii for further expansion. The company, which has the master licences for several of the Yum! Brands stable, plans to buy Pacific Islands Restaurants which is the franchisee for 82 Taco Bell and Pizza Hut stores in Hawaii, Saipan and Guam. Restaurant Brands previously acquired 42 KFC stores in Australia in April 2016. The company's agreement with Starbucks expires in 2018.
Restaurant Brands, New Zealand's largest fast-food operator with 173 stores, is expanding into new markets to drive future earnings growth, opening new burger chain Carl's Jr in New Zealand and expanding into KFC in Australia where it has 42 stores. To improve profitability in its legacy businesses, the company has been refurbishing and adding to its local KFC outlets, exiting low-performing Pizza Hut stores and closing its worst performing Starbucks Coffee outlets.
"A while ago we looked at the growth potential for Restaurant Brands in New Zealand and it was in our view limited to a steady 'business as usual' growth of one or two KFCs per year, maybe one or two Pizza Huts per year, that sort of pace. The ability to grow rapidly with new brands as we have seen with Carl's Jr is a very slow path, and there's not many other brands that we could purchase or would be interested in purchasing to add step change," chief executive Russel Creedy told NBR's BusinessDesk.
NZ overtakes Singapore as best place to start a business
posted on 26th October 2016
New Zealand has been named by The World Bank as the best country in which to start a new business. It also ranked first in registering property, getting credit, dealing with construction permits and protecting minority investors. The news follows the recent World Economic Forum Global Competitiveness Report which showed New Zealand outranked Australia, China and Canada in competitiveness, but suggested infrastructure, government bureaucracy and innovation are holding us back.
World Bank chief economist Paul Romer said simple rules for doing business were a sign that a government treated its people with respect.
'They yield direct economic benefits: more entrepreneurship, more market opportunities for women, more adherence to the rule of law.'
However, in a separate article a Wellington academic has warned that 'ease of doing business does not always equate to more business.'
Women mean business
-Awards Preview 2016
posted on 22nd October 201622 October 2016 - We’re just three weeks away from the Westpac New Zealand Franchise Awards. Who will come out on top for 2016?
Stats show which regions growing fastest as immigration drives population growth
posted on 22nd October 201621 October 2016 – Just four regional council areas accounted for over 75 percent of New Zealand’s population growth last year, Statistics New Zealand said today. Some of that growth comes from a record level of migration to New Zealand.
Franchise confidence goes on growing
posted on 20th October 201620 October 2016 - The franchise sector is increasingly positive about the outlook for the next 12 months, especially for franchisees, with 54 percent of franchisors expecting improved profitability for franchisees and a further 40 percent expecting them to maintain current levels.
Admin cut as MYOB first to launch digital signatures with IRD
posted on 18th October 201616 October 2016 – MYOB first to launch innovative new way of connecting with Inland Revenue
Number of businesses owned by women skyrockets
posted on 13th October 2016October 2016 - More women than ever are owning and operating businesses in New Zealand, with strong performance results across the country
NZ to cut migrant residency numbers
posted on 11th October 2016
The government has moved to make it tougher for would-be migrants to gain residency under the skilled migrant and family sponsored categories. It plans 5,000 fewer approvals over the next two years (a reduction of just over 5 percent) with the number of points required for residence under the Skilled Migrant Category be raised from 140 to 160 points.
Read our recent review of immigration trends in franchising on page 28 of our digital magazine or send fo a free print copy.
Immigration Minister Michael Woodhouse today announced that there would be fewer residence approvals planned for the next two years to 85,000-95,000, down from 90,000-100,000.
'Increasing the points required to gain residence from 140 to 160 will moderate the growth in applications in the Skilled Migrant Category and enable us to lower the overall number of migrants gaining residence,' Woodhouse said.
'Changes to the Family Category, including temporarily closing the Parent Category to new applications, will also reduce the total number of migrants being granted residence.'
Around half of those approved under the residence programme came through the skilled migrant category.
Restaurant Brands ends zero hours contracts
posted on 11th October 2016
Restaurant Brands has agreed with the Unite Union to end 'zero hours' contracts for workers at its KFC, Pizza Hut, Starbucks and Carl's Jr. outlets. The change will see workers' hours and shifts fixed, meaning that their pay should no longer vary from week to week. The announcement is likely to put pressure on other fast food brands, with Unite specifically mentioning McDonald's and Burger King.
As of April 1, employers have been required to state any agreed hours of work in an employer's contract. They do not have to specify any set hours if both parties agree not to.
The current Restaurant Brands collective had a formula that hours were guaranteed at 80 per cent of the previous three months staff had worked.
Employees will also be offered additional shifts when they become available up to a maximum of 40 hours a week, allowing the opportunity to build up stable, secure full-time employment.
Franchise restraints: case-by-case approach means outcomes vary
posted on 10th October 2016October 2016 – Deirdre Watson shares three lessons on the most recent High Court cases involving restraints of trade and good faith in franchising
Top 10 franchises decline in US as others storm ahead
posted on 7th October 2016
The 10 largest franchise brands in the US collectively lost systemwide sales last year, after 16 straight years of gains. McDonald's was top of the list with a massive $5 billion-plus sales drop, while 7-Eleven, Subway, KFC and Pizza Hut also saw significant drops in y/e 2015 sales. However, many of these companies grew substantially outside the US, suggesting that the brands have reached saturation point at home.
The figures come from Franchise Times' Top 200, an annual report on US franchises. The news wasn't all bad, though - the other 190 franchise brands featured had an excellent year, up nearly 7 percent in what the report calls 'the best show of franchising force in 5 years.'
While year-over-year sales dropped at several leading brands, the picture brightened further down the list as franchised brands reached new heights with record-breaking sales, significant gains in unit counts and an ongoing push into new corners of the globe.
Outside the eye-popping declines posted by the largest brands, our Top 200+ ranking confirms that, unequivocally, franchised brands continue to grab an ever-growing share of the American economy. This year’s top 200 companies produced a combined $596.1 billion in systemwide sales during 2015.
Based on total worldwide system sales, our ranking rewards systems for how much they sell in a given year, rather than how many units they build. With Hertz dropping out of the Top 200+ and replaced by RE/MAX, the five remaining brands in the top 10 all saw healthy increases during 2015. Burger King added $287 million in new sales, Ace Hardware was up $557 million, RE/MAX added $1.18 billion, Wendy’s gained $405 million and Marriott Hotels and Resorts added $400 million to its top line.
Seminars – improving performance for franchisees and franchisors
posted on 27th September 2016
March 2017 - Three seminars being held in Auckland are designed to help franchisors improve the performance of franchisees, and provide a foundation in franchise management for new franchisors and franchise executives. There's also news of a new seminar in May.
'Glimmer of good news' for Mad Butcher owner?
posted on 26th September 2016
A former director of Salvus Strategic Investments, which became Veritas Investments, has criticised the company for its high-risk acquisitions strategy saying there were no clear synergies between them. He welcomes some good news that the group's bankers have continued to support Veritas and suggests shareholders will be happy, but makes no forecast for Mad Butcher or Nosh franchisees.
Veritas' share price has been severely impacted by the disappointing performance of the four acquisitions. It closed the 2014 year at $1.25, the 2015 year at $0.48 and hit a low of $0.15 on Thursday.
It has subsequently recovered to $0.23 but has a sharemarket value of only $10.0m compared with the purchase price of just over $74m for the four purchases.
Ironically, the original Salvus shareholders invested $20.1m in the company and received over 80 per cent of their capital back, while Veritas shareholders have invested $25m but these shares are worth less than 20 per cent of their issued price.
Small businesses predicting bumper year ahead
posted on 23rd September 201622 September - Revenue and optimism are on the increase among small businesses
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