First Time For The New Franchisee Merchandising Advisory Council
The new Franchisee Merchandising Advisory Council met for the first time in Dallas on Friday June 16, 2017. This committee was formed based on a request made at the last CEO Roundtable to provide franchisees with more opportunities for input and ideas on merchandising topics.
Franchisees in attendance included:
Nick Bhullar, Vice Chairman, NCASEF
Michael Jorgensen, Treasurer, NCASEF
Jawad Ursani, Franchisee, Southern California FOA
Raj Singh, President, Texas FOA
Jim Bayci, President, Midwest FOA
Luanne Viglione, Franchisee
Kawaljeet Ahuja, Franchisee
Rehan Hashmi, Vice President, Alliance of 7-Eleven Franchisees FOA
Sindy Singh, Franchisee
Alan Harris, Franchisee
SEI management in attendance included:
Jesus Delgado-Jenkins, Executive Vice President and Chief Merchandising Officer
Alan Beach, Senior Vice President, Merchandising
Nancy Smith, Senior Vice President of Fresh foods and Proprietary Beverages
Larry Hughes, Vice President, Franchise Systems
Jeff Schenck, Vice President Franchising
Bruce Maples, Senior Director, Franchise Support Quality Assurance
Kirk Beverwyk, Manager, Franchisee Engagement
Chris Tanco, Executive Vice President and Chief Operating Officer
The intent of the meeting was to:
—Understand and align on issues
—Create a vehicle for dialogue
—Identify critical issues
—Form an action plan to accelerate sales
The group agreed to separate the issues into “buckets” consisting of:
—Cost of goods
—Hot Food Profitability
The conversation was lively and robust and touched on many of the concerns coming from the franchise community. There was broad-ranging input from both sides and an agreement to meet frequently to resolve concerns and provide ideas to move the business forward. The SEI team spent much of the time listening and taking notes, along with providing input when needed.
During a discussion with regard to cost of goods, franchisees showed invoices from outside vendors showing significant cost savings on some of our high velocity items. SEI committed to a response regarding these invoice differences. Franchisees expressed concerns about sharing these invoices due to our past experience where the end result didn’t lower our COG. In this same context we also spoke about the threat from online retailers—Amazon in particular—and showed examples of large cost savings on some of our best selling merchandise.
The hot foods discussion centered around providing higher margin products, the impact of increased labor expenses and the fact that food prep needs to be simplified to reduce the labor involved. We need more grab-and-go type options so that even low volume stores where single coverage is a reality can execute these programs.
The sales plan and promos discussion revolved around the need for SEI to provide verification for these events so franchisees can see the impact of these programs over the short and long term. Did they achieve the intended result of growing unit movement and overall commodity sales and was there a lift that was sustained when the items came off promotion?
Ad spending questions centered around the most effective use of Ad Fund dollars touched on several areas, most notably the effort to build the brand to gain customer trust and loyalty. This is especially important for hot and fresh foods. Much of the discussion centered around the effective use of billboards and whether a test should be done to see if billboards could promote our 10 for $5 chicken wing offer and what impact that has on our sales and our competitors.
Of course franchisees expressed a huge concern for franchisee profitability and the difficulty of surviving the short-term financial impacts of strategies with long-term expected results. Franchisee profitability is the cornerstone for everything we discussed. The franchisees in the room asked SEI to consider franchisees’ ability to “weather the storm” on a store-by-store basis and to help those franchisees at risk or on the bubble financially.
Last but not least, the franchisees involved seemed very optimistic about this initial meeting and the sense of urgency from both sides. The topic of communication seemed interwoven in many of the other “buckets” with the thought that improvements will help resolve many issues. We will keep you updated as this process continues.