QSR May 2022

FRANCHI SE PERSPECT IVES

Flynn Restaurant Group gathers intimate knowledge about ideas coming down the pipe, and in turn, the giant franchisee leverages valuable insight from multiple food segments. “We respect confidentiality, but there’s a lot of general learn ings we get from being very deeply inside multiple systems,” Flynn says. “And sometimes we have a broader view than our franchisors because of what we see.” Flynn Restaurant Group participates in all of the notable franchise councils for each brand and remains signif icantly active in development. Flynn says growth conversations between franchisee and franchisor go exactly as one may think—drive top-line sales, maximize operating prof it margins, and determine where to go with futuristic, low-cost prototypes. Flynn says the company is proactive when it comes to pilot ing new designs, equipment, and processes. “We love to be a test partner because it’s helpful to the sys tem, but also so that we can ourselves gain conviction around it through our own experience,” Flynn says. “And often, when we do that and we’re on board, it really helps bring other franchi sees in the system along with us because as a large franchisee, we’re very diligent.” “We have a whole data analytics team and then we have our own consumer insights team, as well,” he adds. “And so we do our homework very, very carefully on anything we look at. And so, once we’re on board, franchisors often find that helps get the whole system on board.” The franchisee has a front-row seat to some of the most inno vative brands in the restaurant industry. For instance, a Taco Bell operator in Minnesota is building a “Defy” concept—a 3,000-square-foot, two-story prototype with four drive-thru lanes (three for mobile orders). There will also be a digital check-in screen where mobile order customers can scan their order via QR code and pick up their food via a “bell-evator” lift system. Additionally, in November, Panera opened its first NextGen bakery-café, featuring a double drive-thru, automatic loyalty identification, digital menuboards, and a reorganized interior where the baking process is put on full display. Flynn Restaurant Group voluntarily completed 10 Panera remodels to test new ideas. Some changes were good, some weren’t, but the important part is everyone learned from it. “We were happy to be the one to try those things,” Flynn says. “We have enough scale that we can try 10 remodels and if it doesn’t work, OK. I mean, call it that, right? So I think, in all of our brands, everyone’s leaning more into digital, every one’s leaning more into off-premise and convenience, and the physical assets will evolve to advance those goals.” WHAT LIES AHEAD Although the NPC acquisition completed a 10-year quest toward becoming a multi-platform powerhouse, it by no means closed the door on future acquisitions. The company will continue to be opportunistic by applying the same guidelines it used to obtain its quick-service and fast

casual portfolio. However, Flynn says, the organization will be mindful of competitive restrictions and prioritizing expansion within its existing footprint. In the future, it could potentially mean growth outside the U.S. “There are not many U.S.-based franchise operators that have any international presence, but there are franchise operators internationally that span multiple countries very suc cessfully, and so I can see that being an evolution,” Flynn says. “I can see that being an opportunity for us that we start taking our experience, our platform, our capital, and take advantage of international opportunities.” The organization would consider becoming the proprietary owner of a brand, but Flynn recognizes that takes a much dif ferent skillset. Over the years, he’s seen successful franchisees become con cept owners, but fail at taking the restaurant to the next level. “There’s a certain hubris that sometimes franchise opera tors can fall victim to thinking—I’m very successful, and that success is me and so I can do anything,” Flynn says. “I can go buy a brand, and I’ll run that just as well. What they’re maybe not giving enough appreciation to is the fact that it’s not just us. We’re part of a system, and the system is successful, and you may be a great franchise operator, but that doesn’t mean nec essarily you’re going to be great at running a brand.” In some cases, larger operators—like Burger King franchisee Carrols Restaurant Group—go public and trade on the stock market. For Flynn, reasons to go public include needing capital that can’t be accessed in other ways and seeing a big valuation difference between serving as a public company and as a pri vate one. Neither are close to true for Flynn Restaurant Group. Flynn also notes that being public provides currency that can be used for acquisitions and allows a company to share equity with employees. He sees those as legitimate reasons, but not enough for him to make that move. “I actually love being a private business,” Flynn says. “It helps us keep a very long-term perspective and not worry about quarter-to-quarter results nearly as much as what’s the outcome in five or 10 years. Then there are restrictions we have in our franchise documents. I mean, it’s conceivable, I could get all of our franchisors on board to go public, but it would be a heavy lift. And, frankly, given that I don’t want to anyway, I think it’s highly unlikely we will ever be public.” In terms of the industry as a whole, Flynn foresees more con solidation among franchisees, and for good reason. In 2021, Flynn Restaurant Group was named Franchisee of the Year for Applebee’s and Arby’s because of its ability to invest in people and assets at a level smaller operators can’t replicate. Flynn says franchisors have come to realize that big doesn’t mean bad. In fact, big could mean good, or in the case of Flynn Restaurant Group, extremely good. “I’d like to think we are close to being the best partner for our franchisors, and our scale is part of that, it helps with that, it doesn’t hurt that,” Flynn says. q

Ben Coley is Food News Media’s content editor. He can be reached at ben@QSRmagazine.com .

48

MAY 2022 | QSR | www.qsrmagazine.com