How Do Chain Brands Formulate Annual Plans? These 5 Steps Are Indispensable

Franchisees are most concerned about two things in their annual planning, next year’s expansion plan, and store survival rate. This is the big goal and big plan of many F&B companies, and almost all budgets are decomposed around these two things. Let’s review together now, how did you determine the annual expansion plan and store survival rate in the past? Did you come up with your mind only, or is it backed by basic data? Today, we will share some ideas for sorting out and determining the annual plan.

1. Toorefined annual planning may make the brand unbearable

When international chain brands make annual planning, there will always be an important role—the network planning department.
The network planning department first makes an overall plan for the target market based on the brand’s own target user group, product pricing, and other multi-dimensional factors. Generally, the planning is based on the national area or the area to be developed in the next three years, and first, determine the area and location that meet the requirements of the brand investment return cycle.
Then, the expansion department will carry out the store expansion plan according to the weight ranking of these planned locations provided by the network planning department, and arrange the work plan according to the company’s goals for the next year.
It is difficult for most franchise brands to have such detailed planning and of course, it is not necessary. This is not only very costly but also has high requirements on the overall process and staffing of the brand, otherwise, your planning will fail. Undoubtedly, the talents in the follow-up planning will not be able to gain a sense of achievement and value, and may soon leave the team.
Therefore, if the brand founder does not have high-latitude awareness and good profitability or capital capacity, the refined approach of international chain brands may make the brand unbearable.

2. Five steps to determine a feasible store expansion plan

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We often see many chain bosses shouting, “We will add 800 stores next year”! Where does the basis come from? Open 800 stores, what support is needed? Are you ready? As soon as you ask him these questions, he may be speechless.
These basic data are necessary, you need to be responsible for the brand, and the team.
Today, chain brands have completely entered an era of team fighting, where the underlying origin is the confidence of team members, and this confidence comes more from the various successful battles they have experienced in the process of brand development. Even if the team barely accomplishes the unreasonable annual goal you set, it may not benefit the development of the team and the company.
Therefore, you must not make decisions with your mind only when making annual planning. You must have a basic awareness of using data as the basis for judgment.
Let’s take a look at how to determine the new store expansion target for the next year through basic data. The specific steps are as follows:
First, you need to prepare the following basic data.
How many stores have you opened over the years?
Which are the top 20% of stores that contribute the most profit?
Which of the top 20% of stores have the shortest payback period?
How many stores have closed in the last three years and last year?
What are the reasons for the closure?
What are the reasons for the top three closures?
Among them, “the top 20% in sales revenue”, “the top 20% with the highest profit”, and “the top 20% with the shortest return on investment cycle”, and the stores that meet these three data indicators at the same time are the best stores model for your brand at present. Among them, “the top 20% in sales revenue”, “the top 20% with the highest profit”, and “the top 20% with the shortest return on investment cycle”, and the stores that meet these three data indicators at the same time are the best stores model for your brand at present.
Sort out these stores that meet the three data indicators at the same time, and then analyze where these single stores are located. What level of the city are they in(city population, GDP)? What type of business district? What is the product sales ranking? In the cities and business districts under these features, how many places do not have stores within the coverage of your brand operation?
Based on these data and questions, do the first round of planning, and you can get new basic data, that is, the first round of store expansion plans.
It should be noted in this step that you can freely adjust the ratio of 20% of the above data indicators according to the actual situation of your own brand, 30% or 60% can be, however, the indicator of the return on investment cycle must be set at your target within the expected range of the investment.
The next step is to analyze the data on the number of expansion personnel and the actual number of stores expanded in the last three years and one year respectively and combine the previous closing rate and closing reasons to analyze the number of expansion stores per capita and company costs.
The third step is to see how long the current franchisee takes from signing a contract to opening a store. What problems are often encountered in this cycle? How much manpower do these problems require to solve? Through these, you will get the average manpower time and personnel requirements for opening a store.
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At the same time, you need to calculate how many stores can be served by two operations on average (the overall trend of the industry is that one online operation and one offline supervision become a group to serve the stores together, which is the best service model). It is good to be able to disassemble all the actions and disassemble the time-consuming and capacity requirements, so that gives the number of stores that the average two people can serve and what the cost for these two people is, and what the profit that these stores they serve provide the company. The input-output ratio of one operation is probably clear.
The fourth step is to analyze the current actual situation of the supply chain end. Do you mainly produce the required materials with your own business or purchase from external suppliers?
If it is mainly self-production, then compare the existing production capacity with the actual supply situation, and calculate the supply chain situation of each store, identifying additional surplus production data in your own supply chain. If you purchase from external suppliers, you also need to sort out relevant content. Only this time to negotiate new requirements and new contracts with suppliers.
Through this analysis, see how many stores the supply chain can serve under the largest production capacity next year. Note that it is necessary to ensure that the quality is strictly guaranteed. The faster the store expansion, the higher the requirements for the supply chain. Many founding teams did not pay attention to this detail. Often the previous store expanded, but the supply chain did not keep up, resulting in different opinions or complaints from consumers and franchisees of the store. On the supply chain side, there should be enough additional storage as much as possible to ensure that the additional storage of raw materials can be used when the supply of commodities is insufficient.
The fifth step, according to the number of stores you plan to expand and all the basic support elements you need, starts to calculate the requirements of back-end personnel, the investment in marketing, and the investment in the supply chain, so as to obtain the most basic budget data.
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If the number of newly added personnel in each position here exceeds the current number of teams, you need to deeply examine the time and cost of screening personnel, training personnel, assessing personnel, and personnel starting to work independently.
Based on the above five steps, after repeated reviews, you can finally sort out a goal that is challenging but executable, and then make a budget based on this goal. All budget determinations must also be supported by clear data. Even if you think some parts of the experiment are trial-and-error experiments, you must let the team know that this is an experiment, and let them get back the result data and process methodology during the experiment.
The above is the idea of setting the store expansion target. After these steps, your store expansion goals and basic budget can come out, and there is a clear basis.

3. Determine store retention rate indicators, the core is to analyze operational data

Another indicator is the store retention rate. Through in-depth analysis of the current store closing rate, all the reasons for the closing of the store can be clearly identified, and through exclusion, you can see what are the brand problems (location selection, the operation can not keep up, products are not suitable… ), which are the external problems (franchisees do not care about stores, malicious competition of competing products, urban construction…), let everyone in your development, construction, operation, and supervision teams know clearly, and come up with specific countermeasures together.
In addition to these elements, the rest of the core is your operation. Now, the way of operating a small team composed of two people online and offline has begun to become the best practice, then you need to sort out the data for this combination, including actual output, ability requirements, work specifications, Incentive methods, input-output ratio, etc., on this basis, achieve your target store retention rate.
After sorting out these basic data, conduct in-depth communication with the operation manager to determine the store retention rate and new store opening indicators for the next year, and let them start planning and budgeting. In this way, it will be easier for both parties to reach an agreement, working together for store expansion


Since you know how to determine a feasible store expansion plan, you will know how to operate it step by step. But still, remember the importance of data manipulation. calculate everything carefully and eventually, you will fulfill your goals.

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