How long will it take your franchise to become as big as McDonald’s?

Have you ever wondered how long it would take your franchise to reach the size of McDonald’s? This article explains the metrics behind McDonald’s growth and includes several other well recognized brands in the restaurant industry.

Click to see interactive chart.

Different Speeds Lead to Different Sizes

1. Only two brands have been able to grow to national coverage. There is no surprise in this group: McDonald’s and Yum! Brands (Taco Bell, KFC, Pizza Hut, etc.) are the leaders. To achieve their size, you should open around 600 units per year in the case of McDonalds, and around 300 to reach Yum! Brands.

2. There is a group of aspiring franchises that are growing at a lower speed but might be on the track to becoming dominant. Burger King with an average of 250 units per year is followed closely by Domino’s, Dunkin’ Donuts, Subway and Wendy’s with around 200 units open per year each.

3. Next, there is a large group of brands that have been around less than twenty five years. In that group, there are two leading brands: Jimmy John’s and Quizno’s. These franchises are opening around 100 units per year.

4. And finally, the fastest and most recent arrivals are franchisors with less than ten years in the market. Potbelly and Five Guys have been opening an average of 75 units per year.

It is interesting to mention that both brands have been around for a long time before starting to franchise. This is another indication that perfecting your product, marketing and operations before launching is key to achieving big scale.

As you can see from these cases, each brand has been growing at a different speed. A little bit of research on how they do it shows strong focus on understanding locations.

Regardless of their size, they all forecast performance, manage and operate according to location-oriented KPIs and continuously improve or shut-down underperforming locations. That is the difference between only accumulating years and growing over time.

The following are best practices that leaders in the market use to master location-based decision making.

Best Practices That Mean Growth

1. Market optimization: Performance of locations is used to create profiles of the markets where they operate. With these benchmarks, future potential locations are analyzed carefully and only those with high profitability profiles are pursued by the field teams.

2. Close performance monitoring: Every month, every location is analyzed and analyzed again. Stores that underperform are grouped and compared to those that over-perform to find if changes in demographics or competitiveness explain the changes in performance.

3. Increasing segmentation: Combining information from POS systems and loyalty programs with locations and their profiles, companies study each and every segment they serve. They can cross-reference this information with limited-time offers and over time understand the profile of their customer, not only by location, but as detailed as by product.

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I am always interested in hearing what others do to solve business issues associated with data and decision making. What is your franchise going to do to discover the locations that will allow you to be the next McDonald’s? How are you currently tracking performance of your locations? What is painful about your current efforts?