Catering | Franchises, a still profitable business model

Inflation is difficult for all restaurateurs to manage, but for franchisees, the challenge is twofold: they have to weather the storm without having all the tools in hand. But those that The Press a questioned are unanimous: this business model is profitable and makes it easier to deal with crises.

Among the crucial decisions that may escape the control of franchisees: the price of menus, the choice of suppliers or opening hours. Just a few weeks ago, the parent company of Tim Hortons published financial data indicating that franchised restaurants were less profitable than four years ago, i.e. before the pandemic, which has also raised the discontent of some d ‘between them.

For their part, restaurateurs affiliated with chains surveyed by The Press ensure that business is doing quite well, even in an inflationary context where the price of foodstuffs is constantly rising. Remember that they cannot negotiate directly with suppliers. This task falls rather to the head office of the various chains.

“Yes, it is profitable. I wouldn’t have bought in March last year if it hadn’t been profitable,” notes Martin Pagé, who acquired the St-Hubert restaurant in Rimouski in the spring of 2022. He also owns a rotisserie owned to the same group in Montmagny since 2012.

Same story in Montérégie, where Sue Muraca, co-owner of three Küto – Counter tartare establishments, assures us that the business model allows her to break even. She was also at the helm of a Cora restaurant for 25 years.

Times are still difficult and you have to be ready to work hard, nevertheless underlines a franchisee, owner of many Tim Hortons, who prefers to conceal his identity for fear of reprisals.

“Of course it’s more difficult with the increase in food, with the increase in everything,” he admits. But you have to be in his restaurants, you have to be present. We can’t handle it with both feet on the ottoman in Florida anymore. »

Less control

Moreover, by the very admission of restaurateurs – and franchisors – freedom in decision-making is much less for them than for an independent owner. It is the franchisors – therefore the head offices – who control the supply chain from A to Z. “Even if you know someone in your area who sells fruits and vegetables cheaper, you cannot do business with him”, illustrates Sue Muraca.

“We have no control. It comes with the deal, says the Tim Hortons franchisee resolutely. Are we free? Of course, I don’t have my name written on the building. But if that were the case, I would probably sell fewer coffees in the morning. Are we free? he repeats. Yes and no. »

“There is a price to pay for that. But it’s still much easier for a franchise. We are the ones who negotiate the prices, the purchases,” he adds.

“The advantage of being part of a brand is that we are part of a group that has 40 Küto, so we have better prices in general,” says M^me Muraca.

“One of the strengths is the volume, also adds Martin Pagé. When St-Hubert calls to negotiate for yellow cardboard boxes, for example, it has more impact than if it’s me who calls. »

The costs

Another element that franchisees do not always control: the prices listed on the menu. At Tim Hortons and St-Hubert, for example, they are uniform. The price of a coffee or a plate consisting of a chicken thigh and fries combo is the same in Montreal or in Saguenay.

On the other hand, in other brands, we show a certain flexibility. This is the case of Pacini where, for example, the Rimouski restaurant displays its six chicken parmigiana wings at $16.75 compared to $15 at the Brossard restaurant.

“With us, in the franchise contract, it is indicated that each restaurateur can decide with regard to the fixing of prices”, mentions Pierre-Marc Tremblay.

“These are always discussions between the franchisor and the franchisee,” says Éric Lefebvre, president and CEO of MTY, which has 7,100 restaurants in North America, including chains like Bâton Rouge, Mikes and Sushi Shop. .

“Of course the franchisor will make a recommendation to its franchisees, he admits. We try to avoid imposing something at any price. The one size fits all is often harmful because there are places where we have a more competitive context, where we have to be more sensitive to certain items on the menu. »

“It’s difficult to oblige, to force franchisees to do something. It’s never necessarily good for relationships,” adds Mr. Lefebvre.