Coming out of what they agree was a tough year impacted by economic headwinds and shifting consumer spending, three franchisor executives said they are looking forward to a new start in 2024 and doubling down on new initiatives.
Savory Restaurant Fund CEO Shauna Smith, Dogtopia CEO Neil Gill and Culver’s CEO Rick Silva shared their priorities for the new year in the CEO Perspectives: 2024 Outlook webinar series hosted by Franchises Times. The trio also dove into how they’re balancing the needs of their companies with those of franchisees and offered their general thoughts about the future of franchising.
Rick Silva, Culver’s
“We were very fortunate at Culver’s that some of the investments we made starting in ’22 started to show up for us in 2023,” said Silva. The company invested in its conversion to a new POS and back-office system, which he said helped drive digital growth. Thanks to a new app rolled out in Q4 last year, Silva said Culvers finished the year strong.
The burger franchise ranked No. 37 on the Franchise Times Top 400 with $2.8 billion in systemwide sales in 2022 at 893 units nationwide. Culvers increased profit margins at its stores by 2 percent, said Silva, who plans to see that continue by focusing on cost savings while improving efficiencies at the system level.
“Over the last three years, we’ve really been actively working with our existing supplier partners to capture, I would say, millions and millions of dollars in savings without never reducing quality,” said Silva, adding, “The other piece is when you look at the top of the funnel, we’ve been focused on higher margin revenues and we’ve been able to drive that growth through digital sales.”
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Silver, formerly CEO at Checkers and Rally’s, said he’s excited to see how launching a new loyalty program later this year will impact sales.
“We’re constantly pushing for new ways to encourage folks to visit our restaurants,” he said.
Neil Gill, Dogtopia
Gill said Dogtopia opened 43 new units in 2023, or two shy of its goal and well short of the 114 stores it sold in 2022 to land the company at 268th on the Top 400 with $165.5 million in systemwide sales. Dogtopia is rethinking its overall strategy following a shift in consumer spending in pet care that followed a spike in sales during the pandemic, he said.
“2023 was a tough year, there’s no doubt about that,” Gill said. “I haven’t ever seen a consumer shift as rapidly as we saw last year. It was really quite fascinating.”
Gill, who has led Dogtopia’s growth from 28 to 266 locations since 2015, said the brand is moving away from being primarily a dog kennel service to more of a pet wellness center. He said Dogtopia started selling a series of products online—including shampoos, conditioners, ear cleaners and teeth whiteners for dogs—to move in that direction.
“We’re now in the next phase of what I’m calling this transformational and execution proposition in a year of the new normal,” he said. “The value-added pet wellness proposition is going to become a big component of our business.”
Gill said signing lease agreements is now the biggest challenge and, as a result, Dogtopia is reducing the footprints of its new locations, minimizing operating expenses and fine tuning most aspects of the business model to help attract new investors.
Shauna Smith, Savory Restaurant Fund
Smith said 2023 was a tough year for Savory and its portfolio of emerging fast-casual restaurant brands. Savory closed one significant deal with a new brand last year when it acquired Las Vegas-based fast casual Houston TX Hot Chicken and its 11 locations in November. Smith said the goal was to close two deals last year.
“2023 was exceptional hard,” Smith said. “At times I felt there were moments where this last year it felt like we were walking in place, maybe even that we were swimming backwards at times.”
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Still, Savory opened 33 stores. As Smith noted, “We still created jobs, we still created profits and margins and we still had some positive impact in our brand.”
She said Savory’s restaurants, like a lot of brands in the fast casual segment, are still struggling to keep up with consumer’s changing expectations of good service and decent value, which she said probably slipped across the board in franchising since the pandemic.
“What matters is taking care of our employees first,” Smith said, “so they can take care of our guests so they can ultimately take care of the business.”