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I’ve always been very interested in co-branding. It seems to just make sense to combine operations and leverage resources. An early co-branding franchisee of KFC and A&W speaks about his co-branding experience.
“I think the real lesson is, you’ve got to spend the money and do it first class,” he says. “If you try to go in and nickel and dime it, not buy all the equipment, not buy all the seating, not buy all the signage, not train all your people, not have a great manager—it’s just all the same things that we know will work in any restaurant. If we want to be successful, we’ve got to do it right.”
White’s results are exactly the same as what Tricon franchisees discovered when co-branding KFCs and Taco Bells. “When we started introducing Taco Bells into KFC in the multi-brand program,” says Gary Masterson, senior director of franchise development for KFC, “we referred to the early program as ‘lick and stick,’ where we just took a KFC and put a Taco Bell sign over the drive thru, changed the pylons from KFC to Taco Bell, and maybe a couple of minor changes to the decor elements, but nothing major. It was just an investment of maybe less than $50,000.
“The impact on sales was nowhere near as great as the current program,” says Masterson. “Today, if you want to build a Taco Bell in a KFC, you have to reskin it. You have to tear off the outside of the building and introduce the Series 6000 multibrand look, which is an equal mixture of Taco Bell and KFC. Those restaurants are performing at much higher levels of sales performance than the early ones.”
It would be nice if the story could end here, but co-branding isn’t just about real estate. There’s also the human angle. Combining two brands under one roof is more than simply putting up some appealing signage and attracting a lot more customers to your restaurant. Once those customers arrive, the folks behind the counter have to be able to service the increased demand.
The article then goes on to discuss the labor issues.
For both Tricon and Yorkshire, operational simplification will not only make a difference from a management perspective, but also at the bottom line. “Intuitively, you would think that if your sales go up 50 percent, your labor percentage ought to really drop dramatically,” says Feltenstein. “But it doesn’t. That is a challenge for us and many others with whom I’ve spoken, to get the labor percentage to drop so you can flow through even more. The fact is you’re flowing through a lot of incremental profits because the sales are so much higher—but it could be even better if we find more efficient ways to manage it so as to take more labor dollars out of the store.”