Latest / Franchise Conversations with Fexingo: Buying, Running, and Scaling Franchise Businesses / How Franchisees Use Digital Twins to Test Store Layouts
Transcript
- Lucas: So you're a franchisee with a ten-year-old store that needs a remodel. New counters, new lighting, maybe a different drive-thru configuration. You've got a contractor's estimate for $300,000. But you're not sure if moving the beverage station six feet to the left will actually speed up the lunch rush — or just confuse your regulars. Luna: And the old way is to just guess, or maybe tape a cardboard box on the floor and watch people walk around it for a day. Lucas: Right. But a growing number of franchisees are skipping that guesswork. They're using something called a digital twin — a full 3D simulation of their store, populated with virtual customers whose behavior is modeled on real traffic data. You can test a new layout, watch where bottlenecks form, and iterate before you spend a dollar on drywall. Luna: Where is this actually happening? Give me a real example. Lucas: I talked to a franchisee in the Midwest who runs seven units for a well-known quick-service burger chain. He was planning a full remodel on one of his older locations — the one near a college campus. The corporate design package recommended a specific counter layout, but he had a hunch that the flow was going to jam up during the 11:45 to 1:15 window. Luna: So he built a digital twin of that store. Lucas: He used a platform called SimWell — there are a few others like FlexSim and AnyLogic — but the process is similar. He imported his floor plan, added the equipment dimensions, and then fed in his actual transaction data from the past twelve months. The simulation then populated the store with virtual customers who behaved like his real ones: average order time, peak arrival patterns, even the tendency to stand and stare at the menu board for twelve seconds before ordering. Luna: And what did the simulation tell him? Lucas: That the corporate layout would create a four-person-deep queue at the register during peak times, with the bottleneck right where the new self-serve kiosk was supposed to go. He tried six different layouts in the simulation. The one that worked best moved the kiosk to the other side of the entrance and shifted the pickup counter two feet to the right. The total queue time dropped by 38 percent in the simulation. Luna: And he didn't have to tear down any walls to find that out. Lucas: Exactly. He spent about $8,000 on the simulation and the consulting time to set it up. The remodel itself came in at $285,000 — actually $15,000 under the original estimate because he didn't have to move any plumbing for the kiosk. So the simulation paid for itself on day one. And he's now planning to do digital twins for all his future remodels. Luna: Is this only for quick-service? What about retail franchises — clothing, service-based? Lucas: It's spreading. I've seen examples in auto repair shops, where they simulate the flow of cars through the service bays. And in fitness franchises, where they model member traffic through the locker rooms and equipment zones. The common thread is that you have a physical space where people move in predictable patterns, and you want to optimize that movement without disrupting your actual operations. Luna: What about the cost barrier? Eight thousand dollars is not nothing for a single-unit franchisee. Lucas: It's coming down. There are now SaaS platforms that offer a basic digital twin for a monthly subscription — around $500 to $1,000 a month — and you can run it yourself after a day of training. The big consulting firms still charge $15,000 to $30,000 for a full simulation project, but the self-service options are getting good. And some franchisors are starting to offer digital twin templates as part of their support package. Luna: That makes sense — if the franchisor has a standard store design, they can build one simulation and let franchisees tweak it for their specific dimensions. Lucas: Exactly. And that's where the real leverage is. A franchise system with 200 locations could spend $50,000 to build a master digital twin that accounts for different store sizes — inline, end-cap, freestanding with drive-thru — and then franchisees pay a small fee to access their variant. The franchisee I mentioned, the one with seven stores, he's actually working with his franchisor to develop that exact model for the whole system. Luna: So the technology is moving from a niche tool for industrial engineers to something a multi-unit franchisee can use on a laptop. Lucas: Exactly. And the data you get back is incredibly specific. One thing the simulation revealed for the burger franchisee was that his staff were walking an extra 47 feet per transaction with the corporate layout. That adds up to over 11 miles of unnecessary walking per day for his crew. By moving the drink station, he cut that by 60 percent. His labor cost per transaction dropped because the same staff could handle more orders in the same time. Luna: That's the kind of number that makes a CFO sit up. Eleven miles a day in extra steps — that's wasted payroll. Lucas: And it's not just labor. The simulation also let him test different shelf placements for his high-margin add-ons. He found that moving the cookie display from the counter to a small rack near the register exit increased impulse buys by 22 percent in the simulation. He confirmed it in the real store after the remodel — actual lift was 18 percent. So the digital twin didn't just prevent a mistake; it uncovered an opportunity. Luna: I want to push back a little. A simulation is only as good as the data you put in. If a franchisee doesn't have clean transaction data or accurate foot traffic counts, the model could lead them astray. Lucas: That's a fair point. Garbage in, garbage out. The burger franchisee had point of sale data going back twelve months, plus manual headcounts from a few busy periods. That was enough. But if you're a new franchisee with only three months of data, or if your traffic patterns are seasonal, you might need to supplement with industry benchmarks or run the simulation with conservative assumptions. Luna: And then validate with a smaller real-world test. Lucas: Right. The simulation doesn't replace testing — it makes your testing more targeted. You can take the winning layout from the simulation and then do a two-week pilot with temporary signage and movable fixtures before committing to the full build-out. Luna: What about franchisees who are already in a lease and can't change the footprint? Can a digital twin still help? Lucas: Absolutely. You can simulate changes that don't involve construction — like rearranging shelving, changing the direction of a queue, or altering the position of a self-service station. One franchisee I know used a digital twin to figure out the optimal layout for a pop-up kiosk inside a larger store. The simulation showed that putting the kiosk at a 45-degree angle to the entrance, rather than parallel to the wall, increased visibility and foot traffic by 15 percent. Luna: That's clever. Little tweaks that don't require permits or contractors. Lucas: And the simulation can also help with staffing. Because it models customer flow, you can see exactly how many staff you need at each station to keep wait times under a certain threshold. One of the outputs from the burger franchisee's simulation was a recommended staffing schedule that reduced overstaffing by 12 percent during slow periods while keeping service times consistent during rushes. Luna: So it's not just a layout tool — it's an operations tool. Lucas: Exactly. And I think that's where the value compounds. You pay for the simulation once, but you can keep using it as you change your menu, your equipment, or your hours. The model is dynamic. If you add a new drive-thru lane, you update the model and see what happens to your throughput. Luna: Before we go further — and I know this is a bit of a pivot — but hearing you talk about the franchisee who saved $15,000 on his remodel and then boosted impulse sales by 18 percent, it reminds me why these conversations are so useful. A lot of business podcasts are either too theoretical or just vendor pitches. This one actually gives you a tool you could use. Lucas: I appreciate that. And honestly, that's the goal. These episodes take real time to research and produce — the interview with the burger franchisee alone was a two-hour call. And they stay ad-free so you don't have to skip past a mattress commercial to get to the point. A couple of dollars a month from listeners who find value in them is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if the show has helped you think differently about your business. Luna: Yeah, and it's not a subscription model or a patreon with tiers. It's just a simple way to say 'this is worth my time.' And it makes a real difference in keeping the lights on here. Lucas: So back to digital twins. One question that comes up is: how long does it take to build one? For a single store, with existing floor plans and data, you're looking at one to two weeks. The burger franchisee's initial model took ten days, including two rounds of validation where he walked through the virtual store and compared it to his actual operations. Luna: That's faster than I expected. I assumed months. Lucas: The platforms have gotten more intuitive. You can drag and drop equipment from a library, set parameters like service time or customer arrival rate, and then run the simulation in minutes. The hard part is getting good data and knowing what questions to ask. If you just run the simulation with default settings, you'll get a pretty animation but not much insight. Luna: So what's the first question a franchisee should ask before building a digital twin? Lucas: I'd say: what is the most expensive uncertainty in your store right now? Is it the remodel cost? Labor efficiency? Customer wait times? The simulation is a tool to reduce that uncertainty. If your biggest problem is that you don't know why your drive-thru times are slipping, then model the drive-thru. Don't try to simulate the whole store at once. Luna: Start narrow, prove the concept, then expand. Lucas: Exactly. And the ROI is usually visible in the first project. The burger franchisee's $8,000 investment saved him $15,000 on the remodel and likely $20,000 a year in labor efficiency. That's a payback period of a few months. And he now has a model he can reuse for his other six stores. Luna: Are there any franchise systems that are mandating digital twins for new store designs? Lucas: Not yet, but I've heard that a couple of the larger fast-casual chains are piloting it. If the data shows that stores designed with digital twins outperform those designed the old way by a measurable margin — say, 5 percent higher sales per square foot — then it becomes a standard. It's early, but it's moving fast. Luna: I think we'll look back in five years and wonder why we ever built a store without simulating it first. Lucas: That's probably right. The same way we wouldn't launch a website without A/B testing the checkout flow, we shouldn't build a physical space without testing the customer flow. The tools are here, the cost is dropping, and the franchisees who adopt them early are going to have a real edge.