A Case Study: The Effect Of COVID-19 On The Franchise Industry, And How To Cope

During the Great Depression, Henry Ford pulled out all the stops to prevent his company from going under, which meant rallying shareholders (40% of which were made up of family) to a common banner. He was able to use the Ford name as collateral for an economic aid package to keep Ford’s engine running long enough to make it out of the tunnel. The rest is history.

 

Similarly, today’s franchises share a similar challenge as the Coronavirus pandemic continues to batter markets around the world. Crisis tends to breed innovation, a fact all-too obvious in an age where more employees are working from home, and practicing social distancing methods to stem the flow of the virus’s reach. In order for franchises to survive, they’ve had to adapt to the pains of a sickened economy, while innovating in new ways. Thankfully, advancements in digital technologies have helped give many franchises a life line when it comes to keeping operations moving forward.

 

Restaurant franchises have had it toughest of all. In an industry dependent on customers walking through the front door and filling up tables, they’ve had to adapt to full-scale closures without a single soul in a chair. The creation of digital apps has allowed many restaurants to shift their business model to deliveries, where customers can order take-out sent to their home. While a far cry from having customers in chairs which can be upsold on drinks and desserts, it’s still an excellent avenue for franchises to maintain operation.

 

The practice isn’t perfect, however. In an age when restaurants are struggling to keep cash coming in, delivery apps like Uber Eats aren’t exactly making it easy. In April of 2020, the company decided to waive delivery fees in an attempt to help out restaurant clients who were paying upwards of 30% in fees. Many restaurant franchises were incensed that Uber Eats was taking such a huge percentage of each order, calling for a temporary reduction to 15%, in order to weather the crisis. This brings up an interesting point – namely, whether digital delivery services like Uber Eats will experience a backlash in a post-Coronavirus world.

 

As of May 14th, 2020, many parts of the world have reopened for business. This is the first step in a recovery phase that may have to endure a small (and wholly unique) recession, before the economy manages to return to normalcy. The next step will be to open restaurants for business all over again, perhaps with stipulations in mind (such as 50% capacity and adequate spacing to abide by social distancing guidelines). That still leaves half of customers without the ability to dine out with their families. While they could theoretically springboard to different restaurants, it’s far more likely many will simply stay in and take advantage of digital delivery services. As restaurants gain more traction and independence, they may begin looking to competing digital delivery apps to do business with.

 

Naturally, digital marketing will play a huge role during the COVID-19 recovery period, and franchises will definitely need to ramp up their advertising budget in order to bring people back into the fold. It’s not enough to maintain a physical standing at your old address. Franchises will need to reach out to their customers and entice them back, without scaring them off. This means letting them know that social distancing guidelines will remain in effect (if operating at reduced capacity), that enhanced cleaning of a franchise location is top priority, and the well-being of customers is the most important focus. Temper that with some cheer and optimism that things are (and will be) slowly going back to normal, and they’ve got a recipe for success. Many franchises have taken advantage of the lockdown period to reassess their operations, expenditures and workflow in order to trim any fat that may have lingered around the belt before COVID-19 hit. Expect many to come out of this tribulation with a hot new game plan in effect, designed to increase revenue and make up for lost sales.

 

Social media, PPC and an optimized, informative website are all key players when it comes to communicating with customers, and it’s never been more important for franchise owners to utilize all three. Many have made the mistake of assuming an economic shutdown is a hiatus, when in fact it’s a time of bustling activity. Silence will have a detrimental effect on a franchise’s bottom line. Open, constant communication with customers is what will truly make or break many franchise owners. This goes double for the economic recovery period. In the coming weeks, more portions of the economy will reopen, sending people back to work, and stimulating local economies everywhere. The more people out and about, the more will take advantage of what franchises have to offer. After such a long period of lockdown, they’re eager to spend, and get back to normal. This goes double for the arrival of the summer months.

 

For more information on how digital marketing can play a vital role in stimulating your franchise during the COVID-19 pandemic (and recovery phase), contact us today. We’re experts when it comes to maintaining brand reputation, customer interactions and franchise growth.