Past Inspiration for Future Franchise Success

May 23, 2011 - PRLog -- Scottish businesses have been urged to take inspiration from the country's rich entrepreneurial history and beat the recession which has closed around 25 shops a day and forced numerous other firms to the wall in the last six months.
In an address to more than 300 bosses of the country's leading franchise businesses Thomas Kelly, Vice President Franchising of McDonald’s Restaurant, spelled out the company's improvement plans north of the border and said that in the face of one of the toughest economic times in history firms must give customers what they want.
“Scotland has an incredibly rich tradition of enterprise and self starters,” Mr Kelly told business leaders at a breakfast at the Hilton Hotel, Glasgow to mark Scottish Franchise Week.
“Over the centuries we have exported entrepreneurs all around the world but there are still plenty at home who we have seen strengthen the franchise industry right here in Scotland.
“Our Scottish franchisees play a pivotal role in the continued success of McDonald’s in the UK.”
Despite tough economic times McDonald's now has at least 92 restaurants in Scotland, of which 38 are franchised, and together they generate around £100million a year in revenue.
“We are operating in one of the toughest trading environments we have ever encountered, customer confidence is low and with the economy still suffering and pay freezes for many that will not change for sometime,” said Mr Kelly.
“As a consequence 25 shops a day have closed in the last six months. Traditional outlets and institutions have disappeared as people go looking for value for money brands.
“However, McDonald’s has not only weathered the storm but has been able to sail confidently through it and has recorded 20 consecutive quarters of business growth.”
The Scots-born businessman from Kirkintilloch who rose through the ranks of McDonald's, from a graduate trainee to a seat on the board, said the restaurant chain had achieved its continued success by listening closely to the needs of customers.
“Customers don’t want to take a risk on the unknown when there is already so much uncertainty in their own lives,” said Mr Kelly.
“They want brand with strong reputations for delivering quality at affordable prices. With the partnership of our franchisees we have turned McDonald’s around and won the confidence of the public, which in the early 2000s was low because we had taken our eye off the ball.”
A long term programme of modernisation was put in place including the refurbishment of restaurants. McDonald’s got rid of the plastic, refreshed their menu by adding things like salad and porridge and provided free Wi Fi to keep customers for longer.
“The franchising strategy has been critical to our success,” Mr Kelly told delegates to the event organised by the British Franchise Association to celebrate the growing sector in Scotland.
“We have continued to franchise more restaurants than other organisations who were tempted to play it safe and stall their plans. In the last six months we have opened two new restaurants in East Kilbride and Robroyston which created 150 new jobs.”
Both are owned by local franchisees. Across the UK around 65 per cent of all McDonald’s restaurants are franchised. In Scotland it has grown to the same proportion. Thirty franchisees operate 52 of McDonald’s 92 restaurants in Scotland.
“We hope to raise this figure later in the year,” said Mr Kelly.
“It’s because we believe franchising results in strong sales, more customers and significant improvements in customer service standards every time a restaurant enters the ownership of franchisees.
“Our franchisees own, run and make decisions about their own businesses while we provide the strategic framework to put the decisions into practice.”
During McDonald’s refurbishment programme a combined investment of £15million was made.
“We put our money where our mouth is and supported franchisees financially while helping them to come up with designs and obtain planning permissions,” said Mr Kelly.
“Our franchisees in Scotland have already invested in 30 refurbishments and another 10 are planned for 2011. It has paid dividends because the new look restaurants have seen an increase of 6 per cent on average.”
Investing in people has been key to McDonald’s success in Scotland.
“We continue to challenge ourselves and our franchisees to deliver unparalleled skills and training,” said Mr Kelly.
“We offer a career development package which make us employer of choice in the hospitality sector. Our focus on skills and training means we have over 500 staff in Scotland completing their apprenticeship in hospitality while another 630 are currently working towards City and Guild recognised qualifications.
“Our franchisees have embraced our training programme because they know it makes sound business sense.”
McDonald’s put great store in choosing the right person to be a franchisee.
“Last year over 300,000 people requested more information about becoming a McDonald’s franchisee but only two people were offered restaurants,” said Mr Kelly
“From initial application to being offered a restaurant can take up to 18 months which includes a nine month unpaid training programme.”

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