Franchise Restaurant Reality

So, you want to move from your corner office and wearing a suit every day to owning a restaurant and managing high school kids.  Here is what you need to consider so that you maximize your odds for success.

The restaurant business looks like an easy business where you make sandwiches, burgers or some other awesome menu item and everyone is happy and lined up out the door.  Where that impression tends to come from are the consumer experiences we have in those restaurants and the idea that if we open a restaurant all our friends will show up like they do for the neighborhood BBQ’s.  We love the food so it must be the perfect business, right?

Well it could be but there is a catch, it isn’t for everyone.  Food franchises are somewhat complicated business models, are open long hours seven days a week, have coolers full of perishable inventory and a staff made up of hourly employees.  To succeed they need the right owners opening units and growing their brand.

As with any franchise selection getting the “model” right between the candidate and the brand is critical.  Figuring out you like (or don’t like) their product is a quick process.  Figuring out if you are the kind of person that can be successful in their system, and that you want the lifestyle seen in their owners, is a longer process.

The role of a restaurant franchise owner can vary a bit brand to brand.

Some brands are looking for owner operators that will be in the restaurants and greeting customers day to day.  Owner operators will want to be capable in every role of running that restaurant from management to food prep and even mopping the floors from time to time.

This owner operator role lets you be present in your business and a pillar of the community.  If the business thrives by building loyal customer bases through neighborhood involvement the owner operator can build a stronger business than a hands off operator.

Another approach to ownership that other brands may look for is the small multi-unit operator.  These systems seek owners that can open 3-5 locations pretty consistently.  This allows for operators that may be seeking higher incomes as they come to the brand from a high salary level or another business where they did well.  These owners tend to be very involved in opening the first unit and getting their team in place then turning a good percentage of their focus on getting the second unit open getting that team in place, and so on.

To be successful in this role the franchisee will have to come to the table with the financial ability to open multiple units via cash reserves or financing.  The owner will also have to be comfortable managing teams in each location without being there every day.  This is typically not a role for micro managers.

If you are looking for an opportunity that can be your launching pad to that next investor level, then this 3-5 unit approach could be the beginning of that foundation.  At 3-5 units you would have unit level managers, multi-unit managers and in all likelihood a corporate office.  From there the restaurant world may be your oyster!

As we see bigger players and investment funds approaching franchising for growth options the idea of large multi-unit portfolios is gaining ground.  This is a tempting option for franchisors, especially in the early days of their growth, but it has a number of potential drawbacks for the brand.  In one contract they could have tens or hundreds of locations in the control of one entity.  If they grow slow, don’t open units or run into financial/funding problems then the growth of the brand could be severely impacted.

That said brands like Burger King, Pizza Hut, Taco Bell and others have used it to their advantage over the years.  Even McDonalds, which historically seemed to prefer owner operators or small multi-unit owners, seems to be allowing for larger ownership groups that have the financial resources to absorb some of the technology updates and unit renovations that can run upwards of $2M per location in some cases.

There are restaurant brands that are representing their opportunities as “semi-absentee”, meaning that you can own it and have it run by a manager so that you can keep your job or focus on another business.  While I feel that there are a few semi-absentee food operations I can’t agree that all fit into that category. 

Go back to what kind of operation this is with countless moving pieces, cash handling, hourly employees, perishable inventory and hundreds of customer interactions per day.  You will have invested a lot of money into this business and you will either want to be very involved or circumstances could demand that you become involved for the benefit of your investment.

If you are looking at a particular opportunity and you get the offer to go into an operation and shadow a successful owner, don’t hesitate to take it.  Spending a day, week or month in the shoes of an owner could be very valuable to making your decision.  Not all systems can get their franchisees to volunteer to do this but a few do see their owners wanting to get involved in the candidate selection process in an effort to build a better brand for all.

And about those friends… You may find people coming in the door looking for free meals or fund raising donations.  Proceed wisely!  Sometimes giving away food is smart business and sometimes it is just giving away your income.  Successful owners learn which is which fast.

Yes, the food is important but don’t take your eye off of the role of the owner.  We help candidates find their perfect franchise every day and know that the years we have put into understanding ownership roles in individual brands is incredibly valuable to our candidates.

What is your success story?  Let’s go find it!

George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contact the Franchising USA Expert George’s Hotline 703-424-2980.

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