The 7 Benefits of Owning a Restaurant Franchise
/Entrepreneurs who have thought about starting their own business but are unsure of where to start often turn to opening a franchise. Through franchising, separate business owners can open iterations of the same business model, all over the country. Typically, they invest their own money to start, go through a training and/or orientation program with the parent brand, then start collecting revenue from the operation of the business.
Among franchises, restaurant brands tend to be some of the most popular, due to their accessibility, recognition, and profitability.
So should you consider owning your own restaurant franchise?
Benefits of Owning a Restaurant Franchise
These are some of the best benefits of owning a restaurant franchise:
A reliable revenue stream (and sometimes multiple). First, restaurants are a proven business model in a popular industry, with a stable, predictable line of revenue. Restaurant performance isn’t inherently dependent on economic conditions or the whims of the populace; everyone needs to eat. As long as you implement proper strategy, you should be able to generate a reliable stream of revenue. In many cases, you can even generate multiple streams of revenue; for example, you might be able to provide both dine-in and delivery services, as well as retail items, and even catering.
Flexibility. The amount of flexibility you have will depend on the specific brand you’re working with. However, most restaurant brands will afford a great deal of flexibility to their franchise owners. You may be required to use the brand in certain ways (and avoid using it in others), such as using the right types of furniture and the right colors in the context of the business. However, you’ll be able to choose who you hire, set specific policies for your store, and choose how you manage and control expenses.
Independence. For many entrepreneurs, owning a business is all about independence. They don’t want to be dependent on an employer or a typical 9-to-5 job for their income. As a franchise owner, you are ultimately responsible for running your business. Your franchisor is more a partnership rather than a direct report, so in a franchise business you have autonomy to build your success.
Brand recognition. One of the advantages that restaurant brands have over other types of franchise brands is near-instant recognizability. Restaurant franchises are common all over the world, and most fast food, fast casual, and dine-in brands have become household names. If you elect to use this highly familiar branding, you’ll get instant trust and support from the local population. By contrast, if you try to start a brand of your own from scratch or opt to go with a start-up brand, you may need to spend months, or even years, building trust with an initial group of potential clients—and even then, there’s no real guarantee of success.
Easy financing. Depending on the type of franchise you’re opening and what the requirements of the brand are, you’ll need to put down somewhere between hundreds of thousands and millions of dollars. Fortunately, restaurant brands do well here; it’s generally easy for aspiring restauranteurs to get loans from banks, assuming you have experience and a decent business plan in place. Banks understand the restaurant industry and recognize major restaurant brands, so they’re more open to loaning to aspiring restaurateurs.
Training and support. Restaurant brands like Dickey’s Barbecue Pit want their franchise owners to be successful, no matter what. When you open a new franchise location, they’ll guide you through a few weeks to a few months of training, explaining not only the rules and restrictions for using the brand, but also the best practices that have led other franchise owners to succeed. After that, you’ll get more support and ongoing training to ensure you’re on the best possible path. My advice when looking for a franchise opportunity is to take into account the franchising experience of the franchisor and their longevity as a brand. While it might be exciting to get in on the ground floor of a new concept, if you’re a first time franchisee then you’ll want to look for a brand that has a deep history of industry experience and established resources to help you navigate the new waters of being a business owner.
Future opportunities. Opening a single restaurant franchise isn’t necessarily the end of the line. If you enjoy the work and you’re making a decent profit, you can open another location—and do it faster and more efficiently, since you already have direct experience. This way, you can quickly multiply your revenue stream.
Things to Keep in Mind
Of course, owning a restaurant franchise isn’t a guarantee of wealth. If you want to maximize your chances of success in the industry, you need to be 100 percent engaged in your business. A few things to keep in mind:
Employee turnover. Employee turnover in the restaurant industry is something like 60 percent. Losing employees (and needing to replace them) can make your restaurant more difficult to manage and eat into your bottom line. You’ll need a plan to keep your workforce stable and consistent.
Profit margins. In the restaurant industry, individual profit margins are relatively low. You’ll need to keep expenses in check and ensure you’re generating enough volume - even a small margin at large scale can turn an enormous profit.
Location dependence. Location is everything. Your volume and popularity are going to depend on your geographic positioning, even if you’re opening a franchise with an instantly recognizable name. Be sure and do your homework and make sure you pick a location that will attract plenty of guests.
As long as you’re prepared for these challenges, you can come up with a strategy to overcome them.
If you’re interested in owning a restaurant franchise of your own, consider opening a Dickey’s Barbecue Pit. We are currently the nation’s largest barbecue franchise and we offer 6 different revenue streams—a business model that has kept us going for nearly 80 years.