Determinants of sustainable growth for franchised restaurant brands in South Africa

Abstract

The fast food franchising industry has provided the South African economy with the opportunity of development and empowerment of skills, employment and growth within the business sector at both an entrepreneurial as well as a corporate level. The foundation of the franchising business model has provided substantial wealth creation for the franchisor and franchisee, however within the rapid changing business environment increased competition from both local and international franchises has placed significant pressure on revenue growth. This study focused on two factors that influence revenue growth at a store level within the fast food franchising industry across two franchised restaurant brands, Steers and Debonairs and the impact these two factors have on their long-term sustainability. The factors entail site selection and brand knowledge from a consumer’s point of view and examine how these two variables significantly influence revenue growth. Research data was collected from 141 consumers across eight franchised outlets spread across four retail sites. Descriptive statistics, correlational analysis and stepwise regression technique were applied to determine the factors that influence revenue growth across the two franchised restaurant brands. The findings of this research suggest that factors relating to competition, convenience and central facilities available within the retail site have also shown to have a relationship with that of revenue growth. The importance of understanding how consumers choose a retail location and the brand available within the retail location provides both the franchisor and franchisee with the opportunity to make informed decisions about their business model, at both store and corporate levels. The research provides the foundation for further research into this topic with the inclusion of additional brands and additional variables