Franchise restaurants chains growing more popular in Poland

2010-03-02

In 2009, as many as 300 new franchise restaurant establishments, worth PLN 90m (€22.5m), appeared on the Polish market, according to the Franchising Systems Development Academy (ARSS). The most rapidly developing through the franchise scheme include pizza chains Gruby Benek, which opened 40 bars in 2009, Biesiadowo, which opened 30, and the Da Grasso pizza chain, which launched around 30. Among the fast food networks, New York Hot Dog, Subway and McDonald’s had most substantial number of new establishments: 34, 19 and 17 new bars, respectively.
In 2010, the franchise restaurant chains in Poland are expected to expand by 350 franchise establishments. Biesiadowo and Gruby Benek will be responsible for the most substantial number of launches, with 30 new establishments each, while McDonald’s is planning to set up around 20 new bars.
In turn, the value of other market segments such as casual dining restaurants and coffee chain establishments declined in 2009. By way of example, Sphinx closed 17 restaurants, and the Coffeeshop Company three cafes. Those segments are characterised by relatively high investment costs – over PLN 200,000 (€50,000) for opening one unit - and are already quite saturated, also by chains that do not develop through franchising (e.g. Coffeeheaven), as Adam Wroczynski, project director of ARSS told Retail Update Poland. He also noted that a change of the financing method for these concepts (the high investment costs rarely provide return on investment within 24 months) would help in the expansion of restaurants and coffee shops franchise chains.

Only 10 of the more than 90 franchise restaurant chains operating in Poland are expanding dynamically, i.e. adding 15-30 new outlets a year. The growth of many other chains has been stalled by the crisis or by lack of interest from franchisees. It should be noted that although the number of chains with a franchising offer exceeds 90, only 60 actually have at least one franchisee. Traditionally Poles invest mainly in pizzerias and fast-food restaurants, and these two formats are expected to enjoy buoyant growth in 2010.
Yet on the other hand, a growing number of new, highly diverse food concepts are appearing on the Polish market focused on offering quick and cheap meals. Examples of such new concepts include Multifood STP (where customers can compose meals to their liking out of any number of available dishes, with the price based on weight; the menu is usually Polish cuisine) or Salad Story (the salad is prepared before the customer’s eyes as the order is being made). The new concepts will above all try to penetrate into the biggest cities, as they are the most attractive locations. At the same time, well-known chains will be moving into medium-sized cities, where competition is significantly smaller and it is easier to establish a presence, but where the potential customer base is not as large as in big cities, especially during the crisis.

Joanna Cabaj-Bonicka
The author of the ARSS Report on franchising systems in the restaurant sector in 2009 and prospects for 2010