Restaurant franchises: 14 realities every campus leader should know
Partnerships between colleges and quick-serve restaurant franchises are natural—so it’s very common to see restaurants on college campuses. Higher ed institutions have hundreds of hungry students with busy schedules and shallow pockets, while national franchises sell quick, familiar and reasonably priced food.
National franchises often work in smaller spaces, making them an ideal fit for a campus restaurant. Seasoned teams are prepared to handle installation and business management, and can anticipate concerns that may arise, from food production necessities to customer flow.
Before adding a new national brand to campus, consider that:
- Tastes vary. Finding an effective dining concept for campus can be a challenge, as tastes vary. Currently, franchises that have an emphasis on healthy, wholesome food are increasing on campuses as wraps, salads and bowls gain popularity over burgers.
- Students prefer fast-casual eateries. The experience is more upscale than traditional fast food on college campuses. Orders are still placed at a counter, but the quality of the meals and service is higher.
- An existing buffet-style student dining hall may present significant competition to a franchise. For example: If a student can get pizza in the dining hall as part of the meal plan, why would they spend extra to get it from somewhere else? A franchise’s menu offerings, price points and convenience all factor into the determination.
- It’s not a quick process. When it comes to actual vetting, it can take months before all analysis and discussion is complete. Some institutions seek input from students via town hall-style meetings, discussions with campus organizations, and even one-on-one interviews.
- National brands often approach institutions first. Subway, for example, has development agents with territories in which they look to open franchises. In addition to marketing and mailings, franchises may approach college representatives at trade shows and conferences, and reach out directly to school administrators about getting their restaurants on college campuses.
- Food quality, sourcing practices and employee relations vary. If approached by a national brand, institutions should research that company to make sure that all of these areas pass muster with students.
- Matching available space on campus to the right brand is key. Restaurants on college campuses that offer sandwiches, salads or other meals requiring less preparation or cooking can usually fit in smaller footprints. Foods needing more preparation need more complex spaces.
- There must be space to properly accommodate student flow at meal times—national brands became well-known chains because they are popular.
Cooking up the deal
Once a college and restaurant agree to become partners, attention turns to working out contract terms. Three important facts about such deals:
- An institution could be the franchisee itself, or have its food service provider or another franchisee operate the restaurant. In some situations, a school can negotiate a special arrangement. For example, Au Bon Pain operates its location in Carnegie Mellon’s Skibo Café, and the Pennsylvania university owns the space. Carnegie Mellon did not enter into a traditional franchise deal, which would have meant paying royalty and marketing fees. Instead, the agreement includes a revenue-sharing clause. The university provides the infrastructure and equipment, and purchases smallwares, such as cooking utensils, pots and other food preparation tools. Au Bon Pain provides its own menus, food boards and labor.
- Franchise fees that institutions pay vary, and often include ongoing royalty and marketing fees. Franchisees usually incur the cost of the build-out, which varies based on location, size and other construction parameters.
- Length of a revenue agreement is typically at the core of negotiations, although other terms and nuts-and-bolts issues—such as food safety, sanitation and secure networks for transactions—play a role.
Building in time
Undertaking construction projects between semesters often means allowing just eight to 12 weeks for completion. This means tight scheduling, and demands extensive planning and open communication. Four tips:
- To keep everyone on the same page, hold regular meetings and calls among franchise construction managers, school administrators and franchise personnel. Additionally, a general contractor can share images of construction progress.
- Be aware that franchises have common design elements and processes, which remove many of the pitfalls and issues that may arise with independent vendors.
- Know that issues can still arise, despite the best planning. For example, standardized equipment may not fit through doors, so it may need to be disassembled, brought in modular pieces and then put back together.
- National franchises have usually experienced every scenario when constructing their restaurants on college campuses, so they are prepared for almost anything.