[Opinion Piece] Big City Franchising Versus Small Town Franchising
Bronwyn Oliveira, Brand Manager of Maxi’s, a family restaurant chain that forms part of the Taste Holdings group, gives some input on the differences between big city and small town franchising.
Franchising has become an alluring business venture for many entrepreneurs, with the main attraction being a proven business model, an operational support basis, a known brand name, and importantly, an existing customer following. While the franchisor’s brand and established name is what attracts customers through the door, it is important to note that location also plays a very big and important role in the success of a business as a poorly selected site would most likely mean less feet though the door and could result in failure – even if the concept is great!
However, before making the big decision of finding the right location, it is critical that demographics are taken into consideration. If you live in a big city, consider the following advantages and disadvantages:
- The hustle and bustle of a large city seems to transfer its energy to the businesses and residents.
- A big city has more available and trained employees than a small city or town.
- Public transportation is more regularly available, meaning it is easier and less costly for employees to get to work as well as for customers to get to your restaurant.
- Big cities often have a diverse cultural base. Franchises that do not target a certain segment of customers will do better in a big city as it has more cultural diversity than small towns.
- More feet through the door, resulting in more profits.
- There is a lot more direct competition in big cities.
- Lower numbers of customer loyalty as they have a vast variety of choices.
- More marketing is needed to get your brand on to the street.
- One bad customer experience can destroy your reputation as there is such a big selection of choices for customers.
- Bigger cities feel that it is okay for them to charge more, so your costs may be higher in big cities rather than in small towns.
Tim Apostolides, the proud owner of the Mall@Carnival Maxi’s, states that he is happiest in a big city and that his business thrives here. “Having my franchise being in a big city, I find that the pros outweigh the cons as I have a fantastic turnover each month, I have more buying power, although it may be a little more costly, and I feel that my brand gets more exposure. I am a big city boy and always will be.”
If you live in a small town, consider the following advantages and disadvantages:
- You have a higher rate of customer loyalty as the customer has a limited amount of choices.
- There is less competition in the labour market, resulting in less employee poaching.
- You will be off to a faster start and become more profitable quicker, as good news travels faster in a small town.
- In small towns the rental fees as well as costs are a lot lower than in big cities.
- As small towns are limited with restaurants, you will benefit from that if your restaurant is run correctly.
- As the word spreads like wild fire in small towns, one bad experience may have a huge effect on your customer base and turnover.
- Your turnover will not be as high as in a big city due to reduced business volumes.
- You may run into difficulties in getting stock and supplies on time if you don’t order in advance.
- If your franchise does not open with a ‘boom’ it may be difficult to ever get it ‘booming’, sometimes resulting in you having to close doors.
- It may be hard for you to ‘overtake’ the town’s local favourite restaurant.
Lynette Truter, the proud owner of the Maxi’s Riversdale, states that she is a small town girl and always will be. “One of the benefits of being based in a small town, is that my restaurant has the most loyal customers imaginable and I am so thankful to have them! Moving my franchise to a big city may bring in more profits, but why change a good thing? I am more than pleased with my franchise and my little town’s commitment to my brand.”
Regardless of where your business is situated, it is the franchisee, its management and employees of the store that determine the success, not the size or capacity of your town or city.
With over 65 trendy quick-service sit down restaurants in operation across all nine provinces in South Africa, Maxi’s is rapidly becoming the number one family restaurant of choice.