Complex supply chains, high costs, and a lack of available workers all contribute to a hostile environment for restaurant franchises in the present day. While opulent dining rooms and fully stocked kitchens may impress guests, the finances simply can’t support them. Remembering that they are in the royalty business is important for franchisors because increased royalties depend on franchisees opening new locations.
Franchises that are more profitable because they can serve more customers with less staff and fewer square feet of space typically have lower startup costs and greater flexibility in location. Only these brands can hope to maintain their growth. Only by streamlining inefficient franchise models and focusing on what actually generates profit will franchisors be able to attract the kind of savvy franchisees and investors they need to grow their business.
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1. Better utilisation of existing quarters
Smaller, more space-efficient kitchens and dining areas should be designed for food franchises as takeout and delivery continue to rise in popularity. Revenue can be increased by collaborating with off-site companies like Olo or Uber Eats. Using a co-packer will free up space for more efficient locations, cut down on the number of cooks you need to hire, and eliminate the need for some of the equipment you currently employ.
The public has already made its decision regarding off-premises dining, so rather than spending money on unnecessary capacity, put that money toward improving your technology infrastructure. Franchisors need to find ways to actively engage with and market to their customers, and this includes improving delivery and carryout services. Customers nowadays expect to be able to dine whenever, wherever, and however they please. Someone else will take care of the customer if you can’t accommodate their preferred method of contact.
2. Money-making Menu
Remember the 80-20 rule, franchisors: 20% of your offerings generate 80% of your revenue. Your margins are being eaten away, and your business processes are becoming more convoluted, by the other 80% of your menu. Don’t bother with them because they aren’t popular with your customer base. Eliminating food and labour costs, waste, and mistakes that diminish your brand is possible with menu discipline and menu engineering.
This rule applies even to the service sector. Build your menu around the products and services that drive revenue, are simple to provide, and increase brand recognition. Do not proceed with any further actions.
3. Do not delay in automating, or risk failure.
Remove as much manual work and human error as you can through engineering. Automated ordering systems, such as kiosks, are saving time and money for both customers and businesses by eliminating the need for servers. Those who refuse to adapt to new circumstances will eventually be left behind.
By reducing overhead with technology, businesses can better take care of their current staff. Don’t take your best employees for granted; it’s much more difficult to find new help than it is to keep the ones you already have happy and productive.
The fast-growing franchise that is the Rise Southern Biscuits has decided to no longer offer dinner service at its restaurants. Automated ordering kiosks and machines were also integrated. Despite always shutting down shop at 2 in the afternoon, business has increased by over 20% in that time, and profits have more than doubled. Staff members, especially those in positions of leadership, can expect competitive pay. Employee turnover is extremely low. That’s how you create a company that will last for decades.
4. Rather than hiring more people, you should focus on hiring better people.
Honeygrow’s CEO, Justin Rosenberg, was recently a guest on Sam Oches’ podcast, Take-Away. Rosenberg admitted to Oches that he botched Honeygrow’s expansion at first, but that after paring down his business strategy, he was able to turn things around. In particular, he emphasised the value of investing in the right people as opposed to expanding the size of the administrative structure.
Expenses related to general and administrative expenses tend to mount quickly. Choosing your employees wisely can prevent your company’s finances from becoming unmanageable. Applying Rosenberg’s advice, if your food franchise is faltering, you should examine how it is managed in great detail.
5. A larger variety of housing options is achieved through simplification.
It’s not easy to get your hands on prime property. Achieving success in the real estate market can mean the difference between stagnation and rapid expansion. Having a straightforward business model makes it easier to deploy your company in various settings.
Potential for growth can be boosted by exploring avenues for expansion into non-traditional settings. Airports, cruise ships, truck stops, and stadiums are high-profile, potentially lucrative locations but also present their own set of challenges. Preparing a basic business plan will help you seize these chances as they arise.
Opportunities to convert customers should not be disregarded. Rising interest rates have resulted in a proliferation of empty storefronts and restaurants. If you can make your business work in one of these locations, you can save money on construction costs and speed up the expansion of your franchise. Saving money in the beginning allows you to start making money sooner.