The Franchise Owner's most trusted news source


Log In / Register | Apr 28, 2017
Trends

The Upcoming Boomer Boom

Baby boomers about to retireThe first wave of America's 78 million baby boomers is barely 60 days away from hitting the big six-oh. In a little over three years, they'll be over 63 and retiring (see video). The greying of America means more retirees and a shrinking work force. Industry analysts say large-cap pharmaceuticals, hotel-resort chains and home builders have a chance to be big winners in the next five years. According to Forbes, this is what the shift in demographics mean:

Fast-food Restaurants Going Small

Two of the biggest burger chains -- Wendy's and Burger King -- are developing restaurants with smaller kitchens and seating areas , costing less to build and fitting into cheaper parcels of land. Popeye's is looking to follow suit, and even Applebee's, a sit-down restaurant, is looking to reduce square footage in rural area restaurants.

Burger King discovered in a study that the seating areas of their restaurants were way too large. For a franchise, that means one has to pay for more land and more layout space that has no additional revenue. That's bad. It means a longer return on investment because non-producing space drags returns down. Smaller, better utilized restaurants means return on investment for franchise owners go up.

Treasure Map of Franchise Opportunities 2030

Despite any short-term dips in real estate or franchising, the business climate for the long-term is about to pick up steam. America's infrastructure will need to grow by 200 billion square feet to accommodate 70 million more people in the next 25 years. To give a feel for the scale of this, it took 300 years to build our current 300 billion square feet. In other words, there's going to be a lot of development cropping up. So says Business 2.0 magazine. Some large mega-cities have an edge, providing franchise opportunities that will be particularly strong because of strong demographic shifts. The most relevant opportunities in franchising are bulleted below.

Aging Population Wants Fountain of Youth

I've been thinking of what sort of franchise takes advantage of long-term market trends. One can't think of the market without acknowledging that one of the biggest changes in demographics is an aging population. And, the new elderly, the baby boomers who are now beginning to retire in large numbers, are a senior population that wants to continue to look and feel young.

Almost a decade ago, one U.S. demographer said, "If you want to sell things and go where the growth is, about half of your market will be people in their 50s..." In the same report, it states that the "high growth" group is people over age 55. This group is growing at a forty percent growth rate from 1990 to 2000. The baby boom generation is getting older."

Why Can't My Franchisor Innovate Better Returns?

Having system standards rated close to 100%, here I am, a model operation of the franchise network. Doing so was supposed to raise my return on investment, but honestly, it's still low. My money would do better in a bank CD than the returns I get from all the hard sweat that I put into my store. There. I said it. So why should I expand to a second store just because it can be cash positive? Who wants to invest $1.5 million to get $50,000 a year in cash after the bills are paid? I need help from my franchisor in rethinking efficiencies and greater revenue per cost center. With this in mind, here is an interesting story coming down the pipe that I hope my own franchisor will take to heart in rethinking the map on getting better returns for the franchisee.