The 2022 Year in Review: The Good, The Bad, The Ugly, and its LessonsDec 29, 2022
What a year it has been! Yes, the last three years were significantly difficult for the industry, but 2022 definitely earned its name as “a comeback kid”.
- While there were lots of challenges, it also taught us that the franchising world can overcome a lot. And that, when the opportunities are right and available, we can really maximize those possibilities.
Let’s review the aspects that marked this past year, between the positive things, the most impactful, and the learnings that all these events taught us to prepare ourselves and our organizations for 2023.
The last 12 months were amazing for the growth of many brands across industries, especially those that had the systems and the infrastructure ready to combat the problems and take advantage of the opportunities.
A lot of this explosive growth in 2022 was fueled by the fact that, early in the year, there was a low cost of capital for franchise developers. The scenario changed in the second half of the year, especially in the last quarter when this became quite a challenge, something that will resonate in 2023 (more on that in the next blog!).
Some of the big winners for 2022 were:
- QSR (quick-service restaurants), fast food, and casual dining.
- Home improvement and home services, because people are still investing in their homes, especially those that work remotely.
- Personal services. After taking a break in 2020 and even part of 2021, they came strong this year.
- Education, particularly those brands focused on kids' entertainment, education, and development.
- Pet-related brands. We love our pets and we're willing to spend money on them.
The bad and the ugly…
A lot of challenges in 2022 were about the global supply chain. Not only did the cost of goods go up significantly across the world, but even access to some of the products was a challenge this year.
- Some brands struggled to supply some of their key products, resulting in menu and service adjustments simply because they didn't have the supplies to provide them.
Did you hear about the shortage of cars? The chip crisis affected more than buying cars; it also impacted the electronics industry, the gamer market, and the manufacturing industry, since all the components that were missing made a lot of products change the way they were produced.
Another big challenge came with staffing. Although it started to turn around by the second half, too many business owners are still struggling, trying to find the right people to run their operations and maximize the access to money that is happening in the market.
This situation made labor costs increase beyond expectations because employers are paying more money to attract the people they need to serve their customers.
All of this is a triple whammy because inflation, as we all know, is off the roof. And franchisees are feeling it more than ever. Some have been able to compensate for that with pricing, but in the long term, this may affect and erode the transaction or customer count significantly.
The lessons learned…
What have we learned this year? What worked in the franchise businesses? If you have implemented one of the following tactics in your business, you are one of the winners that came out at the end of this year better than your peers:
1. Quickly react to inflationary challenges
Franchisees that started to take a close look at their costs every month to monitor what happened with inflation, and made quick adjustments to compensate for it, did not see their bottom line eroding.
They won because they were taking fewer price increases every time, which allow their customers to adjust and continue to attend their businesses.
2. Focus on retention of employees
Franchisees that reacted to the staffing crisis with retention initiatives and creating a positive business culture also won this year. Designing a career path within the organization and offering growth opportunities for their teams, not only to scale positions but also salaries, has been one of the winning combinations this year.
It's not an easy thing, but if you have that going for you, you're more likely to retain the people that are working for you. If you're not, you ought to think of that for 2023. (Again, more of that next blog!).
3. Have a new hiring paradigm
The “hire slow, fire fast” paradigm has completely changed. Business owners are turning into a “hire fast, fire slow” mentality to take advantage of whatever employees they can find. But quick hiring does not necessarily mean you hire anyone.
Ideally, you should have a fast hiring process but still, make sure you hire the right people. That means that when somebody applies for a position, you've got to address it immediately because, if you wait two or three days to respond, the candidates might get a job somewhere else.
The “fire slow” part doesn't mean tolerating poor performance or settling with someone that is not a good fit for your organization. It means making sure that if somebody can be redirected in their behavior, do it so you don't lose another person.
4. Customer relations and customer experience are critical
The franchisees that concentrated on knowing their customers and understood the impact of customer experience to have their clients come back to their businesses were big winners in 2022.
Although 2022 it's been quite a challenge, most franchisees and business owners learned a lot from this year, especially on how to be better owners, better leaders, and better financial managers. I think that is going to be of great benefit in 2023. But again, more about 2023 next blog!
Thanks for a great 2022!
Here at The American Franchise Academy, we are very excited about this year. These are some of the highlights we had in 2022:
- We celebrated our sixth anniversary, something that makes us very happy and very proud of.
- We have expanded the team and added some world-class instructors. The team that we are putting together to serve franchisees is amazing and we're very excited about that!
- We closed the second year of our Multi-Unit Leadership Certification Program, a best-in-class district manager training that has helped hundreds of district managers be successful in this key role within the multi-unit franchise model.
We are preparing for an amazing 2023! Our purpose at The American Franchise Academy is to protect the American dream of business ownership through franchising. All of our programs are focused on that to help you be successful in your business.
That’s why we are happy to launch an amazing new program for franchisees in the first quarter of 2023, which I'm sure you are going to be excited about. If you want to know more, don’t miss our social media (Facebook, Instagram, LinkedIn) and subscribe to our YouTube Channel where we’ll be sharing all the details.
In the meantime, I hope you have a Happy New Year, and a successful and financially profitable 2023! And I hope you think of us, The American Franchise Academy, as the partner to help you make that happen.
- What were your 2022 achievements?
- What did you learn from your downfalls?
- How can you improve yourself and your organization next year?
- What opportunities can you offer your team to attract new talent and retain your existing employees?
WATCH THIS VBLOG on YouTube HERE.