How Pizza Franchises beat the recession



Most companies have only just started to recover from the economic crisis, but for some food franchises, the downturn meant a growth like never before.

For some reason pizza franchises in particular are experiencing an extremely high number of enquiries, with Eagle Boys Pizza recording an 80% rise in potential franchisees during the first three months of 2010.

The fast food franchise will be opening another 100 stores in Australia, bringing the total up to a whopping 400 franchise units. According to Samantha Gilliland, PR representative of the Australian-owned and operated company, the enquiries were driven primarily by Eagle Boys' solid figures in the period just after the economic downturn. The company confirmed a 24.8 per cent growth in stores during the 2008-09 financial year, a dire one for most businesses, bringing total sales growth during the past three years to 43.2 per cent.

“We've put it down to people looking at financial figures from previous years and then seeing what kinds of businesses have prospered during economic downturns. Eagle Boys have traditionally been resilient, so it's people looking for the safer option in terms of where to invest their money,” Gilliland commented.

Steve Wright, executive director of the Franchise Council of Australia remarked that there has been a “detectable increase in interest” across the entire franchising sector, reflected by a 25% increase in registrations at major expos in Melbourne and Sydney and actual growth of the industry at just under 10 %.

“What was expected to be a very bad year turned out to be a very good year for the franchise sector,” Wright said. “We know historically that after an economic trough consumers tend to gravitate towards known, reliable brands that are offering more at the value end of the spectrum and most franchising models work closer to that end.”

With franchise enquiries increasing by up to 400 percent, Crust Pizza also experienced huge growth in the past 18 months. Managing director Costa Anastasiadis is sure that the current popularity of pizza franchise businesses goes beyond the fallout of the GFC.

“Pizza is a comfort food and that does make it popular in tough times, but we're also seeing franchisees who want a lifestyle change. People from various different backgrounds – solicitors, accountants, motor mechanics, many of them love the security of a franchising model”, he explained. The whole image of the franchising industry has “definitely improved”, according to the managing director.

This new trend in franchisee characteristics was also noticed by Wright: “There's a lot more funky hair and stubble than there used to be.” Franchising was once the domain of middle-aged people wanted to be their own boss but couldn’t take great financial risks. Now it is becoming more and more popular amongst younger, better educated and business savvy people who can see the potential of the business model.

“The sector has undoubtedly been freshened up and as a result we're seeing a different calibre of franchisee. Franchisors are offering different types of things through their brands and they're very conscious of brand equity – they're giving customers some kind of experience, not just a pizza or a burger,” Wright explained. “Crust Pizza is a good example. The 'gourmet pizza' of old is now a staple pizza in the marketplace and popular pizza franchisors have been nimble in shifting with the consumer trends.”

However, Wright cautioned that certainly not all franchises have been enjoying growth these past couple of months: “The downturn has made life more difficult for franchisees who are lacking the mature, well established brands and who don't get the benefit of better deals with suppliers and who don't get to leverage their network strength.”

To be successful nowadays, franchises will have to put more effort into finding potential franchisees: “We're finding that franchisor businesses are reaching out more, they're coming out to where people are instead of requiring people to go to them. V.I.P Home Services now has over 1,000 franchisees and mobile coffee van franchises are also hugely popular."