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 story is about the change of people’s eating habits to eating out or what is termed the quick service restaurant (QSR). For a long time, most people did not eat out and there were only a few chain stores, but society changed and if you ask around, a relatively high percentage will have eaten outside their homes this week. A 2000s figure of  77% of chains fail after 5 years means not all franchises are even close to being equal, which means investing in a franchise is not a sure thing. The old adage about location, location, location  is very important element.  How a restaurant goes from a struggling idea to an iconic way of life and maintains the ability to earn profits is a very interesting story.

Linking to dividend producing stocks, there are stocks which own restaurants which provide a dividend, if you eat at them you can technically get paid to eat there. You pay for your meal as well as many others, only you receive a dividend from the shares. It can be a good way to pick one of your stocks, but remember the restaurants have to appeal to many people not just you. The high failure rate for food franchises means most restaurants are not going to be chain stores but are independent and carve out their niche of the business. We need both types to ensure the chain stores continually change or be open to change of their businesses. If you look closely at your favorite chain food store – you should see changes over the years.

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