Anyone who has every gone to a mall food court can recognize most of the restaurants as well as the other stores in the mall. Many of the stores are chain stores or franchises and if the mall is successful, the stores should be to. People come to the mall and go to the stores and all is good in the world of retail. How those chains started and achieved sucess are interesting stories. In the book Double Double, HarperCollins, 2012, Douglas Hunter writes about the Tim Hortons’ story. The theme that was taken from the book is the Quick Service Restaurant (QSR) is a very competitive business and a chain that achieves success today, may not be successful in a few years. The problem will become the expectations of existing customers and the need to continually attract people to the chain. Some will want very little change – they like the QSR as it is, some will want more change and some will try other places. When the routine of going to the QSR changes, people will reasonably quickly adapt to something else. Management besides attracting and maintaining people to work in the restaurant business must also do the balance act of their customers. For the chains that are successful, congratulations, but things change.

Linking to dividend paying stocks, there are methods to play the QSR field for their are companies which have made and continually make money such as McDonald’s, however there are many chains that are not as profitable – Burger King. Very talented people work for the chains and try to offer good products. There will be many reasons why a store or small chain did not become national and that can be a very good thing – a profitable regional chain is very good thing to own. When investing in QSRs see the long term profitability first, not the possible growth of expansions, then how does the chain make money? selling franchise fees – then it needs high growth or is it in the sale of products and advertising? are the franchisees reasonably happy with the franchise or are there lawsuits outstanding? do you like the franchise? the food business is a very competitive one, but there is opportunity to be found.

There are more questions than answers, till the next time – to raising questions