Fast-food restaurants are always popular. Whether economic conditions are good or bad, these businesses draw customers in and manage to stay afloat and even earn profits to sustain their operations.
Because of this, fast food is one of the largest and most sought-after categories in franchising.
But even if buying a quick-service food franchise is typically profitable, you will have to work hard to make it successful. It is not a risk-free investment as well. As such, you have to be fully prepared to take on a lot of challenges when you become a franchisee.
Knowing the usual mistakes that can cause fast-food franchises to fail is one way of minimizing the risks of owning one. Avoiding these will also give you a bigger chance of owning a successful business.
A well-known restaurant POS system company in Saudi Arabia that works with various fast-food franchises share below the usual mistakes franchisees make, which you have to avoid:
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Failing to research your options
Buying a franchise from one of the biggest fast-food chains is usually the go-to solution of interested franchisees. Although there are many benefits to doing so, don’t immediately close a deal with the first franchiser that talks to you, and sign the offered agreement.
If you do, you will only set up your business for failure even before you start running it.
Before proceeding to the next stages of franchising, read up on all the best options. Make sure the fast-food chain is a good fit for you and your interests. Additionally, find out if you can meet its requirements and demands, and the needed initial outlay.
When doing your research, learn about the franchisor’s business model, its history, and the amount and quality of support it provides to franchisees. Aside from getting these details from the brand’s website, try to talk to other franchisees and visit those sites that share unbiased reviews about different franchises.
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Immediately dismissing the chance to be the first franchisee
If a restaurant offers you the opportunity to be the first franchisee, don’t be too quick to reject it. Don’t assume that this will be a risky move simply because you will be the first to set up an additional branch.
Before you dismiss this offer straight away, again, read up on the business. Meet with the franchisor several times as well.
If the restaurant owner has plenty of experience in the food industry, an interesting concept, a superb menu, and consistently high-profit margins, consider this option well.
Bear in mind that first franchisees often get a lot of benefits. They are usually charged lower start-up fees and royalties, especially when compared to popular brands.
When you buy the first franchise, you will also get a lot of attention and support from the franchiser. They will want your business to succeed since its performance is linked to their brand. As such, you will get all the help you need in running your fast-food restaurant.
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Being financially unprepared
Creating a budget is one of the first steps you will take when you are thinking of buying a fast-food franchise. You have to prepare enough funds to cover the initial franchise fee, rent for the premises, and renovation and interior design works in the restaurant.
However, the expenses do not stop once you start running your restaurant. You still have to contend with the inventory, overhead costs, business insurance, and monthly payroll. You have to be financially prepared to deal with some emergencies as well.
Since there is no 100 percent guarantee that you will make a profit immediately, it is crucial that you have enough funds to manage all of these.
To avoid facing several money-related problems, set a budget that does not only cover the initial investment. It should also include all expenses that will come with running a restaurant for the next several months.
It would be best to discuss your finances with a business advisor as well so that you will know your options when you need additional funds.
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Failing to analyze the market sufficiently
In most cases, the franchisor will help the franchisee find the best location for your restaurant. However, you don’t have to accept their recommendations immediately.
Take some time to research the area. Look at the other businesses around the recommended location and assess if they will help or hinder your success. Check if there is a good amount of foot traffic that will draw people to your establishment.
In case you think the location is not the most suitable one, before asking the franchisor for another recommendation, ask them what their proposed marketing strategy is for the area.
If you think the strategy is good and has shown excellent results in the other franchises, setting up in the recommended location may be a wise decision. You can also add your own methods to make the marketing plan stronger and more effective.
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Skimping on fast-food restaurant essentials
Many first-time franchisees make the mistake of not hiring enough employees, getting more equipment, furniture, and necessary tech, such as a POS system, in an effort to save money or avoid spending more.
Ignoring the need to invest more in your restaurant to streamline operations and provide better service to your customers is something that you should never do. When you don’t have enough employees and persist in using traditional, ineffective order-taking and bookkeeping methods, you will end up losing more money.
Your restaurant’s reputation and that of the franchiser will be affected as well.
When you feel that you need additional staff, or that your restaurant will benefit from a new piece of technology or equipment, look for ways to get the funds you need.
Focus on the advantages the extra employees or technology will give your restaurant. A POS system, for instance, will make order-taking more efficient. Receiving payments, inventory, bookkeeping, and timekeeping will be easier, too.
Buying a fast-food franchise is a fantastic idea to own your first business. By working well with your franchisor, you can ensure the success of your restaurant and face fewer challenges in running it.
AUTHOR BIO
Ahmad Alzaini is the co-founder and CEO of Foodics, a fast-growing foodtech startup. A businessman by nature, Alzaini is an app aficionado, developing businesses in Saudi Arabia within several industries. Today, Foodics has extended to new markets across the MENA region, processing over 1 billion transactions, and offering the latest technology in POS and restaurant management.
