After a period of rapid growth, the franchised quick service and family restaurant industry has undergone some consolidation. Susan Reynard examines the issues and players.

The figures bandied about on the size of the franchised fastfood and quick service restaurant market vary considerably, but a conservative estimate is between R12 and R14-billion, or a quarter of the retail sales through franchising.

Franchise consultancy firm Franchize Directions indicates real growth in franchise turnover during the 1999/2000 time period as being 10%, with the number of franchise systems in total having increased threefold since 1994. This rapid growth has slowed over the last few years and systems are now going through a period of consolidation, says the company's Bendeta Gordon.

Transparency regarding costs, both initial and monthly, shows an industry that is intent on proving it has nothing to hide. The Internet is widely used to provide comprehensive details on the brand to customers as well as prospective franchisees. Franchisors are increasingly using more scientific means, such as psychometric evaluation, to test franchisee suitability.

Once in the system, the importance of training and support of franchisees is emphasised and is becoming sophisticated in some areas, with NQ certificates being awarded by some franchisors, and business skills playing an increasingly important part.

While new franchisees continue to enter the system, a number of franchisors said their first line of development is via existing franchisees. Building up a number of outlets within a specific area, thus creating mini systems within the overall system, allows franchisees to still effectively manage all their outlets while enjoying greater economies of scale.

Service is a key element in gaining and retaining customer loyalty, say the franchisors canvassed. "Quick service restaurants (QSRs) must compete on service levels in the same way as upmarket restaurants," says FASA Personality of the Year award winner and CEO of Pleasure Foods, Christo Calitz. He adds that "there has been a major improvement over the last few years and South Africa is at international standards".

"Being in business for yourself, but not by yourself" is the mantra of franchising in general, and the fast food and restaurant sector in particular. While franchisors build brand awareness, "a committed, motivated franchisee has an incredibly positive impact on consumers' perception of that brand and is the best form of advertising," maintains Calitz.

With the numbers of eating out population expanding, consumers lower down the LSMs are also opting for fastfood, thereby widening the target market. It appears that growth in fast food consumption, as with the rise of home meal replacements in supermarkets, can be associated with the time pressures of modern living.

Menus have slowly been adapted to include what consumers perceive as healthier options and brands are increasingly highlighting the healthy eating properties of their products, removing some of the stigma of fastfood as "junk" food. However, this trend towards healthier fast food options does not seem to have affected sales of the so-called "unhealthy" options.

Revamps of outlets to maintain a competitive edge are a constant focus by all groups and refurbishments, generally every six years, are a cost that franchisees are encouraged to factor in. "It is essentially the cost of staying in business," says David Aronson of Whistle Stop, "although franchisors do look to limit costs."

Pressure on rentals means that space is maximised for profit, with most space dedicated to turnover generating seating and a tight yet sufficient back of house. Distribution cycles have changed resulting in stock holding greatly reduced, with deliveries sometimes taking place every day. The need to constantly update technology is also seen as a priority. Improving speed of service and collection of vital data on the business are two reasons for this.

Eric Parker of Franchise World lists coffee programmes and home meal replacements (HMR) as the two big developments to watch out for in future.