It’s no secret that initial costs are high when it comes to opening a restaurant franchise. Getting the answers to these questions can help determine additional costs.
A good amount of research should go into every financial decision you make. That could be anything from buying a house, booking a vacation, visiting the dentist and so much more. Granted, you’ve made these decisions before, but every experience can present specific obstacles. Every business decision can raise specific questions to ask before following through.
Deciding to open a restaurant franchise is no different. Even if you’ve done it before!
It’s no secret that initial costs are fairly high when it comes to opening a restaurant franchise. However, getting the answers to these questions can help you determine what additional costs come with owning a location. The key is to get as much information as possible to minimize your investment risk. After all, who likes to lose money?
What’s the revenue model?
Granted, it would be much more simpler to ask, “Is this franchise profitable?” I can almost guarantee that every single response will be, “Yes, it’s extremely profitable.” Heck, the person is trying to sell you something!
That’s why asking about the revenue model is more effective. How does the restaurant position itself? Do they make money by offering cheap meals and quick service? Or do their high quality offerings warrant the higher cost? Understanding how the restaurant pitches itself will help you determine short-term and long-term success.
You should also find out how employees are compensated. Is minimum wage the way to go in order to save as much as possible? Or does the franchise pay more to ensure employee satisfaction to increase productivity? This will also give you critical insight to employee morale, which plays a huge role in any business.
Is this franchise set up for long-term success?
Again, this may be a question that requires outside-the-box thinking and logical research on your end, simply than asking a current franchisee.
Stop and think before purchasing that restaurant that only serves nachos. True, you may love the idea, but does the general public? Is there an audience large enough to be profitable? Finding established brands and restaurants that have shown success over the years is a good strategy. Taking a shot on the next McDonald’s because it had one good year could pay huge dividends, but it could also lead to devastating losses.
Look into how the world is evolving. Ask yourself, “will people still care about this food in 20 years?” Although it’s impossible to tell the future, answering that question will help you determine if a franchise is truly an ongoing trend or simply a fad.
What’s support like after purchase?
It’s highly unlikely for you to open a franchise and never hear from corporate again. However, it is important to understand the amount of support they provide. This support could include anything from technology, customer service, employee training and more.
Will you be required to experience a lot of “on-the-go” learning (sometimes called “winging it”)? A franchise owner must be able to portray a confident front for his/her employees. Winging it from day to day is not the way to achieve that goal.
Your workforce will also help determine how much support you need. Tying it back to employee compensation; if you pay minimum wage, you can expect minimum wage productivity and skills. Is the technology like POS software, cash registers, baking/cooking equipment and even food-making processes easy to use and follow? Will your employees require additional training?
What’s the technology infrastructure?
Speaking of that POS software, what is it? Can it do everything you want to do? Does the franchise require you to use a certain point of sale system or brand? Once you get that answer, you can look into the different features and benefits your POS software will have.
We really hope you don’t plan on opening a franchise that only takes cash as payment. Accepting credit and debit cards may not even be enough as online ordering and mobile payments become more and more popular. Does this franchise give you the ability to process those payments?
It’s important to research the safety and security of your point of sale solution. Don’t risk losing important sales numbers, customer data or other useful information due to a security breach.
What’s the target audience?
We saved the best (and maybe most important) for last. Who will be coming to your restaurant? What are their tendencies? Answering this question can actually lead you to the answers of the questions above.
If you know your audience, you know what price they are looking to pay and how they want to pay. You know how often they’ll visit and what they expect from a customer experience standpoint.
Since 1978, PAR has been helping restaurant and retail customers put technology to work to improve operations, enhance customer experience, and better manage data and information. With POS systems in more than 75,000 restaurants in 112 countries, PAR is redefining point of sale to bring technological innovation to all corners of the enterprise. PAR offers POS software Brink and PixelPoint, and POS hardware EverServ. To learn more about PAR, click below!