Food and beverage franchising in Italy
During the last years, the food and beverage franchising sector has been one of the most successful in Italy, with an average growth of over 500 points of sale a year, a performance higher than the average in the whole franchising sector.
But the Covid-19 epidemic is having a dramactic impact over the italian economy, including the franchising food&beverage sector. In the last months, many restaurants, bars, coffee shops have been closed by local authorities, for safety reasons; new safety regulations are reducing heavily the room capacities, not to mention the increased costs to comply with such regulations and the decrease in consumption due to a severe economic crisis.
The effects of the epidemic tsunami on franchise food networks in Italy – as well as on many other business activities – are not destined to end soon. Once the first emergency phase is over (the so called “lockdown phase”), there will probably be a “long wave” of economic and financial crisis and a drop in consumption, which the networks will have to face in the coming months and years.
But, as always happens, every crisis is also an opportunity for a change. In fact, the epidemic has forced franchisors to rethink their business model, at least in part, in the awareness that a period of crisis such as the current one, if faced with seriousness and commitment, can be a harbinger of news and positive developments for the future of the network.
First of all, almost all franchise chains have prepared recovery plans and crisis units for the Covid-19 emergency, making available to franchisees detailed information on the safety measures to be adopted in the workplace, on the financial assistance available from government entities and the best way to access this assistance, on what and how to communicate to the media and customers. In addition, many franchisors have come to meet franchisees, with the deferral or reduction of royalties, purchase prices of goods, advertising or marketing contributions.
Secondly, food&beverage retailers are increasing investing on buying food online and home delivery, developing new strategies to emphasize the consumer shopping experience, due to the possibilities of integration with digital technologies. Brands like Old Wild West, Roadhouse, Wiener Haus, Fry Chicken, Rossopomodoro, Mama Burger, Yogurtheria and many others are investing in home delivery and take away technologies, creating new apps for remote food booking and on line orders, improving forms of fast delivery (also through drones and self-driving cars), using contact less sure methods of payment. Of course, social networks are increasingly playing a crucial role in this scenario.
Thirdly, product quality and customization is, more than ever, a key factor for a successful business in the food&beverage franchising sector. In fact, food franchise chains are increasingly using italian ingredients for their products and menu offers that meet the local taste of consumers. Even big foreign brands like Burger King, McDonald’s and Domino’s Pizza have chosen to increase their menu with typical italian dishes, made with typical italian ingredients. This is proving to be a winning strategy in the italian market.
To sum up, the food and beverage sector in Italy is reacting very positively to the Covid-19 crisis, showing extraordinary capacity for innovation. According to the experts, once the most difficult phase of the epidemic will be over, franchising food&beverage industry will start again running, attracting many more foreign investors than before.
Avv. Valerio Pandolfini
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The information contained in this article is of a general nature and is not to be considered an exhaustive examination of the various issues, nor is it intended to express an opinion or provide legal advice. Specific legal advice must be provided with regard to individual cases.