When I joined Heublein's Food Service and Franchising Group, its number one strategic priority was to drive revenue growth through an aggressive new store development program in all markets and for both company owned and franchised markets. However, the Group's real estate program had been deemed a failure since new stores could not be opened at revenue levels which were both above the system average and at a level which would provide the desired rate of return on invested capital.
The Group's operations included four restaurant concepts, of which Kentucky Fried Chicken was the largest, with over 5,000 stores, retail sales of over $3.3 billion, EBITDA of approximately $750 million and a network of 850 franchisees. In addition, the Group employed over 300,000 people with operation in all 50 states and every type of operating environment.
In my capacity as Group Vice President, Strategic Planning and Development, I was tasked with developing an entirely new approach to real estate site selection for all four restaurant brands with the goal of increasing the number of new store opening from less than 20 per year for the prior 5 years to over 100. I also assumed operational responsibility for the Group's Real Estate Department to ensure that the new site selection strategy would be implemented correctly in the field.
The project involved understanding why the previous site selection models had failed and took a holistic approach to solving the problem uniting several different disciplines including:
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Market Research
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Real Estate
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Retail Field Operations
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Strategic Planning
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Franchising
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Computer Science
The new model used several types of inputs including demographics, site characteristics, competition and local economics plus innovative statistical techniques to build a series of 6 models for different types of retail locations ranging from high-density cities to rural cross-roads. The new approach proved accurate to within 5% of actual store opening results and was particularly useful in targeting potentially high volume locations in urban markets.
Using the new model and integrating it with Real Estate operations, allowed the company to exceed its goal of 100 new stores per year, build a pipeline of new locations in development and drove a new strategy for the repurchase of franchise territories across the country.
I later had the opportunity to use the real estate site selection techniques and knowledge of commercial real estate operations in many other retail investments. I have negotiated and closed on well over 500 commercial real estate transactions encompassing virtually all types of space including:
The knowledge gained from these different retail real estate experiences has provided me with a unique level of insight into different ways to expand almost any type of retail concept.
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