The Rise of Chicken, the Decline of Pizza Hut, and Other Franchising Trends
Every year, roughly 300 new franchising concepts enter the market. That’s a lot of brands with big ideas seeking to become the next Taco Bell or McDonald’s
“One of the things I love about franchising is innovation and how new brands keep on coming,” says Ab Igram MBA’96, executive director of Babson’s Tariq Farid Franchise Institute.
From his perch at the institute, Igram has a front-row seat to an industry that is always evolving. Ask him about the state of franchising, a sector projected to earn more than $900 billion in sales this year, and he’ll discuss how established brands are adapting (or failing) to stay relevant, and how a strong specific focus can often (but not always) lead to success.
Any conversation about franchising is sure to include talk of pizza, chicken, and sandwiches—the industry remains dominated by food brands—but Igram also points to the emergence of many non-food concepts, involving health care, home services, and, of all things, pet waste scooping.
“It feels like a tale of two worlds,” he says. “On the one side are legacy bands. Then you also have a lot of emerging concepts that are expanding and growing.”
From the familiar names to the up-and-coming enterprises, here are some of the franchising trends that Igram is watching.
Brand Life Cycles
Like anything in business, franchising brands experience cycles. On the way down, at the moment, is Pizza Hut. The owner of the iconic red roof restaurant, Yum Brands, is exploring a sale. Yum also owns KFC and Taco Bell.
Pizza Hut has been losing money, and many of its locations need work. A new owner, bringing more capital and a renewed focus, could help. “They are old and tired,” Igram says. “Yum will focus on the brands that are doing well.”
On the way up, on the other hand, are casual dining brands such as Chili’s and Texas Roadhouse. Once seen as in decline, these types of restaurants have been helped unexpectedly by the economy, specifically lingering inflation.
As prices at fast food restaurants have risen, those eateries now look like less attractive dining options. As a result, consumers may pass on spending money at McDonald’s or Chipotle and instead, for only a little bit more, have a sit-down meal at Chili’s instead. “It’s a remarkable revival,” Igram says.
The Sub Plot
In the realm of sandwiches, one franchisor reigns as the undisputed king in terms of locations and longevity: Subway. Founded in 1965, it has a whopping 37,000 locations around the world.
Upstart Jersey Mike’s is rapidly expanding, with more than 3,000 locations. Igram says the brand has found a way, through its operations and media, to differentiate itself from its larger bread-and-meat competitor. “Jersey Mike’s is a fascinating phenomenon,” Igram says. “They show the slicing of the meat. That really resonated. And, they had the ad campaign with Danny Devito.”
Throw in other things that define Jersey Mike’s, such as its reward program and Mike’s Way toppings and seasonings, and it creates a perception that the chain does things differently. “Is what they’re doing really that different than Subway?” Igram asks. “It feels different.”
The Rise of Chicken
Drive around town in search of somewhere to eat, and you may wonder why there are so many chicken chains nowadays. Zaxby’s, El Pollo Loco, Dave’s Hot Chicken. Those are just a few of the many growing chicken joints, in addition to the granddaddies of the category, KFC, Popeyes, and Chick-fil-A.
“One of the things I love about franchising is innovation and how new brands keep on coming.”
Ab Igram MBA’96, executive director of Babson’s Tariq Farid Franchise Institute
Part of this chicken renaissance may be part of a movement away from red meat by consumers, Igram says. But the rise of chicken franchises is also a testament to having a focused and well-executed product offering. “That’s the power of doing one thing well,” Igram says.
Take the highly popular Raising Cane’s, which this year overtook KFC to become the third most popular chicken chain in the U.S., after Popeyes and Chick-fil-A. Its simple menu is dominated by one particular item. “They’re just chicken fingers,” Igram says, “and they have 800 units.”
Due Diligence
This hyper focus on one stellar item can be seen outside chicken as well. Igram is intrigued, for instance, by Scenthound, a hygiene and wellness brand singularly focused on dogs. It has about 150 locations (and counting).
Such specialization, though, can’t always be replicated at scale. Some ideas may prove to be too niche or, the opposite, too simple or broad.
As an example, he points to the pet waste removal franchises that have popped up, typically with cutesy monikers. While they provide a needed service, Igram wonders about their staying power. “Just because it works once doesn’t mean it can work as a franchise,” he says.
Of course, many nontraditional franchises far from the business of food, from health and wellness (urgent care, hydrotherapy) to home services (gutter cleaning, pest control) are now increasingly common. For those seeking to invest in any novel franchise concepts, Igram expresses caution.
“Do your due diligence. Does the brand have the ability to last?” he says. “I don’t say it doesn’t work as a business, but the big question is will people decide to use it.”
LISTEN: In the Stars of Franchising podcast, Ab Igram MBA’96 and Vini Onyemah, professor of marketing at Babson, discuss stories of inspiration and entrepreneurial grit in the franchising industry.
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