Why Have Some Chain Stores Haven't Gotten Makeovers Yet and What Lies Ahead for Them!"

[FrankMoore99]

After learning about the closure of a few fast food restaurants that still kept their 80s or 90s facade intact (https://www.google.com/maps/place/McDon ... ?entry=ttu), Or learning about the closure of a Carl's Jr location that continued to still have the outdoor playground while most of the area's locations had their playgrounds removed while the restaurant stayed open. It makes me sad to think that keeping the playground was a sign of that location's struggles, because there are pretty cool and there aren't many left in that generation: (https://www.google.com/maps/place/Carl' ... ?entry=ttu), I am wondering about the existence of Non-remodeled chain store locations years later after their sister locations have received remodels. It seems sad that it doesn't seem like there is much hope that old school store locations or restaurants can continue to remain, whether it be a remodel (which is the much better option) or they close them down. I enjoy newly remodeled stores and restaurants, but I would like to see these places preserve a piece of their history and it makes me sad that they might not.
Then again, I am wondering how these locations have managed to stay open, or manage to hold off on closing until recently when these locations look like they could've closed years ago.
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https://haydenbusinessblog.blogspot.com ... emain.html

[ClownLoach]

Franchise agreements. Easy answer. It's between the company and the franchisee. Eventually their contract will either require the remodeling investment or they'll keep negotiating for an exception. Usually these exceptions are in marginal areas.

Say you're the franchisee of the Wendy's in Smallville, USA, population 1,000. Your Wendy's makes a small annual profit after you are compensated, a few thousand bucks. Wendy's contract requires you to spend a million dollars on a remodel of your 1985 dining room by the end of this year. There is no option to pay for this remodel that will not result in the restaurant becoming unprofitable for years, maybe a decade or more. So you negotiate with Wendy's to delay the remodel or exempt you from it. Eventually one of three things happens: the company provides partial or full funding that allows it to happen, the company grants an exception to the remodel, or the company stands their ground and says either you remodel or close the restaurant by the end of the year.

It seems some companies are more lenient than others. Burger King has many restaurants stuck in the 90s decor. Carl's Jr. Seems to be all remodeled in the last decade. Wendy's is a hodgepodge of old, new, cheap and deluxe restaurants. McDonald's seems to have decided to stand their ground and keeps hunting the classic Mansard roofed buildings to extinction, more recently even ordering the destruction of 2000-era retro "arch" restaurants that match the original and demanding their replacement with a boring McBox as I call it. The companies have to find a balance between profitable franchisees and brand image. When you let it go too long you wind up with a Burger King mess, dismal old restaurants by the thousands that now cost too much to clean up. But McDonald's is already remodeling McBox style buildings and fully demolishing stores less than 20 years old, which is too much in my opinion. Seems Carl's and Jack in the Box, Del Taco, and Taco Bell have the best balance of current branding and relatively contemporary looking stores out West. McDonald's has gone too far and their new stores are sterile and hostile in design so I refuse to acknowledge their newness, brand new remodels are so unpleasant they require a complete redo again.

[storewanderer]

Franchise agreements. Easy answer. It's between the company and the franchisee. Eventually their contract will either require the remodeling investment or they'll keep negotiating for an exception. Usually these exceptions are in marginal areas.

Say you're the franchisee of the Wendy's in Smallville, USA, population 1,000. Your Wendy's makes a small annual profit after you are compensated, a few thousand bucks. Wendy's contract requires you to spend a million dollars on a remodel of your 1985 dining room by the end of this year. There is no option to pay for this remodel that will not result in the restaurant becoming unprofitable for years, maybe a decade or more. So you negotiate with Wendy's to delay the remodel or exempt you from it. Eventually one of three things happens: the company provides partial or full funding that allows it to happen, the company grants an exception to the remodel, or the company stands their ground and says either you remodel or close the restaurant by the end of the year.

It seems some companies are more lenient than others. Burger King has many restaurants stuck in the 90s decor. Carl's Jr. Seems to be all remodeled in the last decade. Wendy's is a hodgepodge of old, new, cheap and deluxe restaurants. McDonald's seems to have decided to stand their ground and keeps hunting the classic Mansard roofed buildings to extinction, more recently even ordering the destruction of 2000-era retro "arch" restaurants that match the original and demanding their replacement with a boring McBox as I call it. The companies have to find a balance between profitable franchisees and brand image. When you let it go too long you wind up with a Burger King mess, dismal old restaurants by the thousands that now cost too much to clean up. But McDonald's is already remodeling McBox style buildings and fully demolishing stores less than 20 years old, which is too much in my opinion. Seems Carl's and Jack in the Box, Del Taco, and Taco Bell have the best balance of current branding and relatively contemporary looking stores out West. McDonald's has gone too far and their new stores are sterile and hostile in design so I refuse to acknowledge their newness, brand new remodels are so unpleasant they require a complete redo again.

This is very market by market depending on chain. Burger King is 100% updated in my market in Reno area.

Carls Jr. is not at updated in the slightest in my market. There are 3 units that are late 90's/early 00's builds that got some updated paint on the walls but have original flooring, tables, and everything. There are 3 other units that are late 70's/early 80's builds and these got remodels in the late 90's/early 00's that recarpeted and put in new tables... then in the early 10's they put tile floors into the dining rooms (got rid of carpet). But the units at this point today look and feel the 40 years old that they are. Outsides are dire. Bathrooms are horrendous- they have old brown tile walls and floors which are original and they just painted them all white (you can imagine how this looks).

McDonalds was making some relatively nice looking restaurants with what I'd call pleasant looking tile work, walls, lighting... but the recent remodels un-do all of that. I am hearing the franchisees favor these recent remodels as they are cheaper to maintain. It is even cheaper to maintain things when you have no customers...

[Romr123]

Exactly right. Franchisors have the power to mandate anything and everything they want....at the risk of pissing off their franchisees (and the neighboring franchisees). It is a balancing act, done initially at a very local level by the local zone reps but ultimately decided at the corporate level. Fast food boxes, though, do have a lifespan (both functional obsolescence and just worn out). As they move preparation out of the stores, less space for kitchens is required. In the nearly 40 years I've been aware of KFC, they have pulled a huge amount of prep out of the stores (no longer do the stores shred cabbage/mix biscuits/etc etc). Really all the prep they're left with is breading chicken and sandwich assembly and dropping stuff into deep fat fryers. Pretty much everything else is reheating/baking and steamtabling.

You can see similar things with auto dealerships....I was with GM when they started mandating the current designs (which they have adapted for small, medium and large dealers and all combinations of Chevy/Buick/GMC/Cadillac.

There are actually some landmarked dealers (Casa de Cadillac in California) who receive exemptions from these types of architecture rules.

[ClownLoach]

Franchise agreements. Easy answer. It's between the company and the franchisee. Eventually their contract will either require the remodeling investment or they'll keep negotiating for an exception. Usually these exceptions are in marginal areas.

Say you're the franchisee of the Wendy's in Smallville, USA, population 1,000. Your Wendy's makes a small annual profit after you are compensated, a few thousand bucks. Wendy's contract requires you to spend a million dollars on a remodel of your 1985 dining room by the end of this year. There is no option to pay for this remodel that will not result in the restaurant becoming unprofitable for years, maybe a decade or more. So you negotiate with Wendy's to delay the remodel or exempt you from it. Eventually one of three things happens: the company provides partial or full funding that allows it to happen, the company grants an exception to the remodel, or the company stands their ground and says either you remodel or close the restaurant by the end of the year.

It seems some companies are more lenient than others. Burger King has many restaurants stuck in the 90s decor. Carl's Jr. Seems to be all remodeled in the last decade. Wendy's is a hodgepodge of old, new, cheap and deluxe restaurants. McDonald's seems to have decided to stand their ground and keeps hunting the classic Mansard roofed buildings to extinction, more recently even ordering the destruction of 2000-era retro "arch" restaurants that match the original and demanding their replacement with a boring McBox as I call it. The companies have to find a balance between profitable franchisees and brand image. When you let it go too long you wind up with a Burger King mess, dismal old restaurants by the thousands that now cost too much to clean up. But McDonald's is already remodeling McBox style buildings and fully demolishing stores less than 20 years old, which is too much in my opinion. Seems Carl's and Jack in the Box, Del Taco, and Taco Bell have the best balance of current branding and relatively contemporary looking stores out West. McDonald's has gone too far and their new stores are sterile and hostile in design so I refuse to acknowledge their newness, brand new remodels are so unpleasant they require a complete redo again.

This is very market by market depending on chain. Burger King is 100% updated in my market in Reno area.

Carls Jr. is not at updated in the slightest in my market.

And the market by market aspect probably depends on the saturation of the brand within that market. Carl's Jr. longtime home was SoCal, so it's expected that their restaurants here are more updated than remote areas. Most SoCal Carl's got full gut remodels torn out to the studs or demolished and rebuilt so they probably average 10 years old inside. It is well known Carl's has struggled to expand over the years outside of SoCal yet they've kept trying with stores that would sit and do nothing all over the country. I remember seeing Carl's Jr. in Oklahoma at dinnertime about twenty years ago, drove past several and they were empty.

Burger King has struggled for decades in SoCal, probably half their stores have closed over the last twenty years and very few are updated because the business performance doesn't warrant the expense (it would probably be unprofitable to remodel). But if I travel to other areas where Carl's, Jack and others aren't present then I notice Burger King is updated and remodeled with a contemporary look that appears to be very recent. I can think of several I saw in Portland area that had obviously been fully renovated unlike any I've seen in SoCal.

So there is a regional nature to this question as well. If the chain is already strong in an area then it is likely to warrant further investment and the restaurants will be kept current. If they under perform or the population base isn't enough to support the restaurant volume then it is likely to be left old. What does seem to be unusual about fast food is that they don't seem to be interested in investing money in remodels to see if they can grow a market up, they only seem to invest when the business is already there. Retail is different, for example it has been observed Walmart is more likely to remodel a struggling location in a last ditch effort to increase sales. When it doesn't work you see a beautiful fully remodeled store liquidate. Burger King and such aren't going to make the same kind of investment, if it doesn't work now they won't invest more to fix it.

[ClownLoach]

Exactly right. Franchisors have the power to mandate anything and everything they want....at the risk of pissing off their franchisees (and the neighboring franchisees). It is a balancing act, done initially at a very local level by the local zone reps but ultimately decided at the corporate level. Fast food boxes, though, do have a lifespan (both functional obsolescence and just worn out). As they move preparation out of the stores, less space for kitchens is required. In the nearly 40 years I've been aware of KFC, they have pulled a huge amount of prep out of the stores (no longer do the stores shred cabbage/mix biscuits/etc etc). Really all the prep they're left with is breading chicken and sandwich assembly and dropping stuff into deep fat fryers. Pretty much everything else is reheating/baking and steamtabling.

You can see similar things with auto dealerships....I was with GM when they started mandating the current designs (which they have adapted for small, medium and large dealers and all combinations of Chevy/Buick/GMC/Cadillac.

There are actually some landmarked dealers (Casa de Cadillac in California) who receive exemptions from these types of architecture rules.

With the car dealers, sometimes they give special treatment to top performers. The Lexus dealer I go to had not remodeled and still had the classic architecture from the late 80s, beveled exterior walls and such. They were finally forced to remodel to the current brand design last year. Other less successful dealers in the area had remodeled multiple times already. Basically Lexus finally realized that they needed to upgrade the appearance of the dealerships because of the intense competition from others, add comforts like fancy customer lounges for the service department etc. as the facilities are key to the brand experience. Nothing like having to wait on a metal chair at the local Chevy dealer where the waiting room smells like a combination of old grease and tires, and there is a coffee vending machine that looks like a biohazard zone. Heaven forbid you need to use the restroom.

[storewanderer]

And the market by market aspect probably depends on the saturation of the brand within that market. Carl's Jr. longtime home was SoCal, so it's expected that their restaurants here are more updated than remote areas. Most SoCal Carl's got full gut remodels torn out to the studs or demolished and rebuilt so they probably average 10 years old inside. It is well known Carl's has struggled to expand over the years outside of SoCal yet they've kept trying with stores that would sit and do nothing all over the country. I remember seeing Carl's Jr. in Oklahoma at dinnertime about twenty years ago, drove past several and they were empty.

Burger King has struggled for decades in SoCal, probably half their stores have closed over the last twenty years and very few are updated because the business performance doesn't warrant the expense (it would probably be unprofitable to remodel). But if I travel to other areas where Carl's, Jack and others aren't present then I notice Burger King is updated and remodeled with a contemporary look that appears to be very recent. I can think of several I saw in Portland area that had obviously been fully renovated unlike any I've seen in SoCal.

So there is a regional nature to this question as well. If the chain is already strong in an area then it is likely to warrant further investment and the restaurants will be kept current. If they under perform or the population base isn't enough to support the restaurant volume then it is likely to be left old. What does seem to be unusual about fast food is that they don't seem to be interested in investing money in remodels to see if they can grow a market up, they only seem to invest when the business is already there. Retail is different, for example it has been observed Walmart is more likely to remodel a struggling location in a last ditch effort to increase sales. When it doesn't work you see a beautiful fully remodeled store liquidate. Burger King and such aren't going to make the same kind of investment, if it doesn't work now they won't invest more to fix it.

It is unusual to see a recently remodeled fast food place close. It feels like when one of these closes it runs on fumes for years before it finally closes. Broken equipment, lights not all working, not clean, not staffed, etc. etc.

I think Burger King struggles in my market but the franchisee somehow finds money to do remodels... and build new units...

Carls Jr. in Oklahoma 20 years ago were recent Hardees conversions at that time. Oklahoma was a test market for converting Hardees units to Carls Jr. (they did some of that in Colorado too). That conversion program never expanded beyond OK/CO because it was a flop. Those conversion units however did retain the Hardees breakfast program. Had you gone to that Oklahoma Carls Jr. in the morning it would have been packed because just like Hardees the only time of day they had any significant traffic was breakfast. Hardees was dead all day/night and rebranding to Carls did not change that situation in that market. I am actually sort of surprised they are still open at all in Oklahoma. A lot of units have closed but a handfull of new ones have opened too.

Hardees was in Utah in the early 90's but in the mid 90's the franchisee there flipped the units to Burger Kings.

Carls Jr. organically expanded into Boise and Salt Lake City in the 90's/early 00's via franchisee/new build locations and both markets did very well for them for quite some time. I'm not sure how they are doing at the present time though, but they did well for many years.

Carls Jr. tried to expand into Seattle area in the late 10's and had some problems but I don't think any units actually closed. The initial franchisee they were working with in metro Seattle, something happened, corporate took control of the units and had to do serious work to turn them around. The Spokane units which were older were already corporate units, so they kind of had a structure to take them as corporate. Then eventually refranchised all of them.

[mbz321]

McDonalds was making some relatively nice looking restaurants with what I'd call pleasant looking tile work, walls, lighting... but the recent remodels un-do all of that. I am hearing the franchisees favor these recent remodels as they are cheaper to maintain. It is even cheaper to maintain things when you have no customers...

I have heard the statistic (no idea how true it is, but it seems about right) that only 10% of McDonald's sales are from Dine-In orders, so I don't think they really care too much at this point about aesthetics.

[storewanderer]

McDonalds was making some relatively nice looking restaurants with what I'd call pleasant looking tile work, walls, lighting... but the recent remodels un-do all of that. I am hearing the franchisees favor these recent remodels as they are cheaper to maintain. It is even cheaper to maintain things when you have no customers...

I have heard the statistic (no idea how true it is, but it seems about right) that only 10% of McDonald's sales are from Dine-In orders, so I don't think they really care too much at this point about aesthetics.

I've heard that statistic thrown out there for Burger King and Jack in the Box too...

[Alpha8472]

Recent Burger King remodels have removed a large amount of chairs and tables. The seating capacity is probably only a third of what used to be there. There is a lot of empty floor space.

No more outdoor tables or chairs. Those were removed for a double drive-thru.

Perhaps they think that fewer dine in customers mean less labor.

The entire restaurant still needs to be cleaned. The floors still need to be mopped whether or not they are dirty at the end of the day.