The restaurant industry is competitive. From coffee shops to corner cafes, restauranteurs do battle every day to drive sales and surpass break even. Some establishments are more profitable than others, but profits usually boil down to how many customers walk through the doors each day.
A nationally branded restaurant may be more likely to draw customers simply because customers may feel that a franchise has a corporate structure so quality and price is standardized across the country.
While you have to front the money to pay for the franchise fee and corporate will continue to collect money from you throughout the duration of your franchise agreement, there are lots of good reasons to buy into a restaurant franchise.
1. Buying power.
The biggest operational expense that a restaurant incurs is inventory. Both perishable and non-perishable items can be costly, but if you own a franchise your corporate office can negotiate prices that can be considerably cheaper than if you were to buy products outside the franchise infrastructure. The quality of food that you can get might also be better than it is for restaurants that do no operate within a franchise.
2. Proven business model.
If you want a proven business model, a franchise is the way to go. There are lots of variables that exist when a business owner starts a new venture, but buying into a plan that has a proven track record can help provide the assurance that you can beat the one in two business failure odds that exist the first year you would be open for business.
3. Corporate training.
In addition to getting a business model that shows you exactly how to operate your business, you would also receive training for directors, officers, and restaurant managers. The training sessions are vital to the success of your business, and so they should be taken seriously. Any opportunity to increase your knowledge of the way your industry works, particularly when your franchise makes process improvements should be taken advantage of. The initial corporate training usually takes place at a training site which may be out of your home state. Don’t let the travel and lodging expenses prohibit your attendance. It’s important to take place in the training process, and most franchisors would not let you open for business without participating in training.
4. Brand recognition.
It’s true. It costs money in order to get national recognition, but often consumers want it before they are willing to venture into a restaurant. From a consumer perspective, a restaurant that has gained local, state, or national recognition equates to an establishment that serves good food at an affordable price. It can also lead consumers to believe that the restaurant is clean and that the food is handled with care.
5. Operational standards.
The corporate office can mandate quarterly surprise inspections to ensure franchisees are operating in accordance to corporate standards. This can be a time for franchisees to prove that they are doing everything they can to run their restaurant in accordance to the plan specified by the corporate office. It also means that they are staying focused on the business plan they buy into.
6. Vendor management.
Vendors compete aggressively in order to be awarded contracts with franchisors. If a contract was awarded it could mean thousands of accounts would be added to a vendor. In order to maintain those accounts, however, the vendor would have to maintain high quality standards and competitive pricing. A franchisee benefits from all of this because he gets exceptional products and services at exceptional prices. Everything from credit card processing companies to security systems can be provided to franchisees at a discount when they use corporate approved vendors.
7. Ongoing corporate support and training.
As the visionaries on the corporate level tweak the menu and change operations you would still benefit from support. Training would be available for franchisees and their staff members at no additional fee. Having the continued support of corporate folks can help keep your restaurant vibrant and operating smoothly.
There are lots of local restaurants that do well, but it can take years in order for them to realize success. Buying into a franchise, however, can offer quicker success with less effort than a local establishment. Operating a restaurant with a proven business model can be less stressful than starting one from scratch. The buying power, corporate support, vendor management, and brand recognition are all strong points in favor of restaurant franchises.
Lauren Hill writes for Menu Shoppe, a company offering leather bound menu covers, table top flip menus and server pad holders.