Budding fast food franchisees are set to be in increased demand after Domino’s became the latest retailer to announce expansion plans in Australia.
Domino’s is planning to fast-track its new store-building program, with 35 stores currently in the works and set to open this year.
At Domino’s 2011 half year results in February, the company announced same store sales growth of 10.9% across its Australian market; the strongest result in the last eight years.
Pat McMichael, Domino’s chief development and franchising offer, says the company has new and existing franchisees ready to operate these stores as soon as they are built.
“Our appearance on Undercover Boss Australia late last year opened up our business to a whole new audience of prospective franchisees and small business owners,” McMichael says.
“Strong sales success in the first half of the 2011 financial year has also given our business greater appeal over other franchise businesses.”
Rival Eagle Boys Pizza – which recently overtook Pizza Hut as the second-largest pizza chain after Domino’s – recently unveiled its own expansion strategy, namely its plan to open more than one new store each week during the first six months of 2011.
Simon McNamara, co-founder of franchise investment fund Inkuberra, says that the major pizza franchises operate at different ends of the market and are squeezing out the independent stores rather than each other.
“The ones with brand recognition appear to be the ones that are busier. Brands, chains and franchising models are performing stronger than the independents because of the brand awareness and the associated marketing they do around those brands,” McNamara says.
However, McNamara says fast food franchises should look at developing or expanding their healthier options, even if they’re not the biggest sellers.
“A lot of the people don’t look at the detail – if it’s perceived to be healthier, they feel good about eating it,” he says.
McNamara cites sandwich chain Subway as an example, which made its mark on the Australian market with the phrase: “Seven subs with six grams of fat or less”.
However, Subway’s calculations fail to factor in fattier items such as condiments and cheese. Subway has also come under fire in the past for its high salt content.
Despite this, Subway recently surpassed burger chain McDonald’s in total outlet stores, making it the world’s largest fast food chain. McNamara says this is no mistake.
“It’s about how you feel when you go to the place, which is the halo effect – it’s perceived to be healthier, even though a lot of the products aren’t. It’s therefore good to have some healthier options,” he says.