Multi-Unit Franchisee Magazine Issue III, 2011 | Page 78
FranchiseMarketUpdate
By Darrell Johnson
Ten-Year Bets
The opportunity is to successfully execute on the 1970s Burger
King ads with the tagline, “Have it your way.” It’s doable—it
just needs to be a major focus.
Two major demographic changes are coming in the next
decade. Asian and Hispanic minorities are the fastest-growing
orecasting is a tricky business, involving equal race categories in the U.S. Hispanics are now the largest miamounts of data crunching, interpreting economic nority, not only nationwide but also in 191 metropolitan areas,
and general news events, common sense, and guess- up from 159 in 2000.
ing. Like the weather, the shorter term the economic
Further, we now have a barbell-shaped age demographic, with
forecast, the more likely it will be close to reality.
the fastest-growing concentrations in the over-55 and under-19
Unfortunately, multi-unit operators must make investment categories. While this represents a more difficult challenge for
decisions that have consequences for the next decade or more. marketers of products that span generations (because the mesWe are only modestly affected by near-term economic events, saging needs to be so different for each), it creates significant
so I will put greater emphasis on the last two forecasting fac- opportunities for brands focusing on one side of the barbell
tors—common sense and guessing—to see what some of the because the two age extremes are very large.
most influential trends might be for the next decade.
The trends noted here are influencing how franchising is
Let’s start with the cost of capital. We have been in a cycli- being conducted. Here are some of the changes I’ve observed
cal 30-year decline. While access to capital is perhaps the big- during the past decade:
1) a greater emphasis on specialty sectors for both food and
gest issue confronting unit expansion and acquisition today, the
cost of capital is a relatively minor factor in budgeting and ROI non-food, likely anticipating the previously described demodecisions. Simply put, capital is cheap and has been for some graphic trends;
time. I wouldn’t count on that being the case for much longer
2) the number of new franchise brands has dramatically inbecause of globalization.
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