Franchise Lawyer Blog

Franchise Expansion – “Dayparts”

Franchisor growth plans frequently focus on developing new geographic markets and increasing the number of units. However, a growing trend for restaurant brands is to expand operations into other dayparts. (The term daypart has been borrowed from radio and television broadcasting by the quick service industry to refer to segments of a day; 6am to 10am could be referred to as the breakfast daypart or morning drive daypart.) For example, Taco Bell introduced a breakfast menu in March. According to The NPD Group, a consumer market firm, which tracks sales in various industries, breakfast is the fastest growing daypart.

As recently discussed in an article on QSR Magazine, daypart expansion has its opportunities and challenges. Daypart expansion may prove to be an important piece to a system’s success because it allows the franchisor and the system of franchisees to offer additional products and services to consumers without having to spend time, energy and resources locating, developing and building-out new units. However, franchisors must be conscious of its challenges (some of which are not glaring), develop solutions to address those challenges and pay careful attention as to how they implement daypart expansion. Challenges include, but are certainly not limited to, (i) developing a marketing campaign that creates genuine excitement over new menu items (those served during the new daypart) but does not shift focus from the brand’s core products; and dayparts; and (ii) managing supply chain logistics so that supplies are delivered at suitable times (rather than during the morning breakfast rush, for example). Additionally, franchisees and company owned units will have to address staffing issues (adjusting employee schedules and/or hiring additional employees) as well as updating point of sale systems, cleaning schedules, menuboards and other aspects of day to day operations.

Franchisors who are considering daypart expansion or expansion through the offer and sale of additional products and services would be well served to review their existing franchise agreements to make sure that those agreements cover that issue as well as other related issues.

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