Franchise Trends For 2001
While Y2K didn't bring calamity, as many people thought, it did bring monumental changes. We're entering the new year having survived a time of great economic gain and eventual losses, a seemingly never-ending presidential election, all-time low unemployment, and an all-time high rate of home ownership. So what awaits us as we transition into 2001?
More change, at least in the realm of Entrepreneur's Franchise 500®. 2001 was the year Subway reclaimed the top spot and new categories were added to the list. Here are a few other major trends we noticed while compiling our 22nd annual Franchise 500®.
- Chicken Wing Restaurants
- Computer/Technology Businesses
- Family-Style Restaurants
- Home Decorators
- Printing And Postal Services
- Renamed Staffing Firms
- Decline Of Juice Bars
Chicken Wing Restaurants
If you haven't already had a party or get-together catered by a chicken wing restaurant, chances are you will. These takeout-and-delivery joints that cater mostly to college students and armchair quarterbacks are growing in popularity and marked 2001 by earning their own category in this year's Franchise 500®.
What makes wings one of the great businesses to run in the 21st century? "It has a simplified menu," explains Jerry Wilkerson, president of Franchise Recruiters Ltd., a Chicago-based franchise management executive search firm. The affordability of the product is also a plus, Wilkerson says, "[as it reduces] the overhead, the labor requirements and the space needed to conduct your business."
Some companies taking advantage of this segment's success are Buffalo Wild Wings, which added 22 restaurants to its chain in 2000, and Wing Zone Franchise Corp., which doubled its number of locations to 15.
There's no doubt computers are here to stay. They're in our homes and businesses, carried in purses and even installed in cars.
With the ubiquity of computers, it comes as no surprise that an entire segment of franchises are serving both business and consumer computer users. In 2001, we recognized the growth of these companies by giving them their own category, divided into Internet Businesses, Tech Training and Miscellaneous Tech Businesses.
"It's obvious we're being forced as a society to get educated on the computer," says Wilkerson. "That's only going to increase."
With that increasing demand, companies like The Fourth R and Computertots/Computer Explorers are teaching everyone from children to businesspeople how to get the most out of computers. For people who are already computer and Web savvy, companies like GlobeNetix provide Internet services, while franchises such as Computer Doctor handle maintenance.
According to the Census Bureau, the nearly 71 million families living in the United States in 1998 marked an increase of almost 6 million families in 10 years. All these clans have to eat somewhere, so get ready for a boom in family-style restaurants.
"The segment serves an important niche-families with children-whereas theme restaurants are aimed more toward social events for adults," says Bill Pierquet, vice president of development for Friendly's Restaurants Franchise Inc.
Couple the growing number of families with a steadily increasing teen population (almost 16 million 14- to 17-year-olds in 1998, according to the Census), and you'll find parents in the market for kid-friendly environments and healthy alternatives to fast food.
Franchises eating up the market include Denny's Inc., International House of Pancakes Inc., Friendly's and Huddle House.
In 1999, 67 percent of American households owned their homes, according to the U.S. Department of Housing and Urban Development. That percentage, the highest in U.S. history, accounts for about 70.1 million families owning homes.
All these homes need paint, draperies, carpeting, furnishings and other décor, but with family members working 40-plus-hour weeks, they don't have the time to be checking out rug samples. Enter the home decorator.
Wilkerson believes this industry is popular primarily because it serves to reduce stress. "A husband and wife are working 60-hour weeks, and, when they come home, they're running the kids hither and yon," says Wilkerson. "If someone provides a service to them that offers convenience and a broad selection, they grab it."
Most of today's home décor businesses are mobile, bringing samples and options into their customers' homes. Some franchises offering this service are Decorating Den Interiors, Decor & You and DOTI (Designs of the Interior).
Printing And Postal Services
If you're reading this, you probably already know about the explosion in the number of small and homebased businesses taking place nationwide. According to homebased business gurus Paul and Sarah Edwards, there are between 8 million and 9 million homebased businesses in the United States.
While running a business from home has many advantages, one of its disadvantages is a lack of resources for things like printing and postal services. It's a need that hasn't escaped the more than 20 franchises listed in this year's Franchise 500® Postal & Business Services and Printing Services categories. Companies like Mail Boxes Etc., Postal Annex+ and Pak Mail provide postal, packaging and shipping services to the market. Minuteman Press International Inc., Sir Speedy Inc., Kwik Kopy Corp. and other franchises in their segment handle printing, copying and design jobs.
"These franchises continue to grow due to the demands of small businesses," Wilkerson says. "That's where the core of growth in America is."
Renamed Staffing Firms
In just the past few years, four staffing firms changed their names, including one that changed its name back after being renamed six years ago.
"Everybody is getting to be niche-oriented, and this industry is absolutely moving in that direction," says Wilkerson. "In today's marketplace, you want to be one step ahead of the trend. [These franchises] are basically making sure their consumer understands what business they're in."
Two companies making the change are IT staffing firm Consultis Inc., formerly Computemp Inc., and temp firm Tandem, Staffing for Industry, which is Outsource Franchising Inc.'s new brand name used instead of Labor World. Another is full-time and flexible talent provider Spherion Corp., formerlyInterim Services Inc
"The name Interim described a temporary staffing company," explains Ray Marcy, CEO of Spherion. "Over the past two years, the size of our company has doubled, and our focus has changed from a staffing company to a human capital management company. The newly coined brand Spherion represents our human capital management model and our unique consultative approach."
In December 2000, Initial Staffing Services Inc. changed its name to Talent Tree Inc. after being sold last summer. The company was founded in 1976 as Talent Tree but was renamed Initial Staffing Services when it was purchased in 1995. Explains president Vincent Cook, "We found through extensive research that the name Talent Tree continues to hold a tremendous amount of recognition and still conveys credibility and quality within the staffing industry."
Decline Of Juice Bars
Though the exact reasons aren't clear, juice bars began to waver in this year's Franchise 500®, just as cinnamon roll bakeries are starting to make a comeback.
In 2000, only 24 percent of U.S. adults surveyed were dieting, according to the Calorie Control Council. That number was down from 27 percent in 1998 and 37 percent in 1986.
But Wilkerson says the drop in juice bars may be due to economic, rather than gastronomic, reasons. "Some of the problem is just the price of products," he explains. "The juice products have really gone up in price, which puts a squeeze on margins."