How to find the ‘secret sauce’ for building a great restaurant franchise

After 45 years in business and more than 20 years in the franchise restaurant space, let me assure you: the important things have not changed. People want quality food at a good value, served with great service in an appealing environment.

In the “secret sauce” of success, those will always be the main ingredients. However, as the restaurant industry changes, franchises must calibrate this recipe with new, often subtle ingredients that make the difference between success and failure.

All leading franchises have solid infrastructure. They have a rigorous business model, strong management team, and sound financial strategy. They select, train, and support the right franchisees. Because they run such consistent operations, consumers understand the business and what it stands for.

Infrastructure differentiates the top 20 percent of franchises from the bottom 80, but it does not distinguish the top 1 percent from the top 20. Top franchises have three rare ingredients.

Understanding change

First, they have a deep understanding of generational, cultural and technological change. For example, they have begun to decode the millennial generation, which approaches dining and franchising with different expectations.

Franchises used to attract franchisees with the “sweat equity” model: invest money and hard work (sweat) to earn a substantial return on investment. But, millennials place less value on financial reward and more value on the social purpose and lifestyle of their careers. The top 1 percent of franchises are adapting their value proposition and model accordingly.

Second, top franchises create a culture founded on growth because the human psyche needs it. No one wants to work for a stagnating, rusting business. From the C-level to the frontline crew, everyone wants a culture fueled by opportunity and originality.

Culture manifests itself in the habits of communication, accountability and learning that your team practices. Cultural institutions flow top to bottom, leaders to franchisees, franchisees to employees. Great franchises create their culture by living it.

Balancing act

Third, competitive franchises balance the priorities of first-time and loyal customers. First-time guests have unforgiving standards. From the emotions triggered as they enter the store, to the ordering experience, to the first bite, there is no room for error.

It takes one or two strikes to lose a customer permanently, but it takes hundreds of hits to win a second chance. Thanks to social media, tens of thousands of people will find out if you strike out. Competitors will eat your lunch if you drop it. In that regard, the franchise business is one of the best expressions of American entrepreneurship and capitalism.

Beware though: you cannot court new customers at the expense of your loyal base. If you change too quickly, or too dramatically, you will upset the people who pay your bills. Once you’ve spurned their trust, they are difficult to win back. A franchise cannot be all things to all people.

So, great franchises understand how change will affect the brand essence that made them successful in the first place. Adding wraps to a sandwich menu is one thing. Adding sushi to a pizza menu is another. Loyalty is fragile and depends on consistency.

‘Secret sauce’

I could make the “secret sauce” complicated, but that doesn’t work. Big data and number crunching can help you achieve specific goals, but they do not change the fact that people want exceptional food, service, value, and ambiance. Data does not change the fact that passion and work-life balance are, in truth, the most important ingredients we bring to the kitchen.

At no point does a competitive franchise say, “We have it figured out.” We experiment and calibrate the secret sauce continuously. That goes for business and life.

Tony Gioia has more than 30 years of business-building achivements within the grocery, restaurant, packaged foods, and beverage and consumer products industries. HIs track record of formulating brand development and consumer focused initiatives has been successful with Fortune 100, high growth, turn-around, public, and startup companies.