In an effort to increase sales, a small but growing number of food chains are adding mobile food trucks as distribution channels. In contrast to local food-truck businesses which usually only operate as mobile units, some national chain eateries have added mobile units to supplement their brick-and-mortar locations. These chains are often using franchising as their expansion strategy for these mobile units. The mobile units may be franchised as stand-alone operations or used to supplement sales of franchised brick-and-mortar stores. The mobile units can serve as marketing tools for existing locations or to promote new locations. In addition to the risks inherent in franchising a business model, mobile units face unique risks such as the potential for damage as a result of traffic accidents and difficulties accessing the prime parking spots for attracting walk-by consumer traffic. Sales of mobile units may be particularly sensitive to inclement weather.
QUESTIONS FOR DISCUSSION:
- Franchising is a common entry mode strategy used for rapid, low-cost expansion. Discuss the advantages and disadvantages of using franchising for expansion in the restaurant industry.
- Discuss the unique advantages and the special concerns created by using franchised mobile food trucks as distribution channels.
- Evaluate the extent to which some of the national chains profiled in the article would be able to use mobile units to pursue international expansion beyond the United States. To what extent would their business models have cross-cultural acceptance?
SOURCE: Needleman, S. E. (2010, October 28). Restaurant franchises try truckin’ as a way to grow. Wall Street Journal, pp. B1, B7. (Retrievable online at http://online.wsj.com/article/SB10001424052702303341904575576760919368160.html)
Related video clip available at: http://online.wsj.com/video/new-york-food-trunk-frenzy/F9829868-B9EE-4B05-BE01-55A36B4A9F65.html