Running Franchise Restaurants Does anybody have any experience with owning or operating a franchise restaurant or fast-food joint? I'm thinking about stepping into the market in the next 10 years and am wondering about potential pitfalls.
I know a few people that own franchises. The main thing is it takes alot of money upfront. Over a million generally and alot of it has to be your money not borrowed. Plus return is not that high. The advantage is that is alot lower risk than any other type of restaurant My friends dad looked into mcdonalds and they turned him down because he made too much money(200-400K/yr) and he would'nt be happy with the return considering how much time he would have to put into it.
1. Look into the training program and how thourough your staff will be trained 2. See how protected you are (can the franchisor put another store near you) 3. Biggest financial aspects to look at is food cost and people costs. In general you want your food costs and people (salary, wages, payroll taxes, benefits) to each be under 30%. From there you have 20% to cover "other expenses" like franchise fees, rent, paper products, etc. Bottom line is you want to take 20% (before depreciation) to the bottom line. 4. Look at your payback time. How much is the franchise fee, how much to set up the restaraunt. Personally I would no get into anything that I could pay off in a year and a half. Basically takes your up front costs (like a $25,000 francvhise fee and $250,00 in startup costs to remodel, etc) divided by your cash flow. Number (IMO) needs to be less than 1.5. 5. Look at similar store sales from the franchisor. It is tough to get that information because in some states (like Ohio) thye won't make it available until you pay the franchise fee, but visit one of their stores and talk to the manager to get a feel on their sales. 6. Location - A perfect location has a busy lunch and dinner crowd. Too many places fail because it is one or the other (big lunch, no dinner or visa-versa). Look at nearby competitors, traffic flow, etc.
They don't franchise, but I sure would love to open a Freebirds in Humble. Hell, I wish there was a Freebirds in Humble regardless of who owned it. It would kill in that location.
I don't know how many places you would find like this, but here is my tip to make you even more money. Hire some company to do research for you. Tell them you want to know any university or college campus with X amount of people that has a decent number living within a close radius of the campus that doesn't have a Taco Bell within 2 miles. Then put one near every campus that you find and keep the drive thru open until 2 or 3 every night.
yea i contacted freebirds becuase i wanted one on the northside of houston instead of having to drive to shepherd plaza
this is almost exactly what i told my old man when he told me he was investing in a franchise. the restaurant is popular in mexico but hasn't really hit the US, except for maybe a few in el paso. there's a corner here in san marcos smack dab in the middle of a huge student population, w/ nay a fast food joint in at least a 4 or 5 mile radius. i straight up told him to throw one up on that corner, keep it open til at least 2 on weekdays and 3 or 4 on weekends, wait a few months, and then take a few laps through his money pool a-la Scrooge McDuck. i'm a genius.
Am I the only one who, at first glance, thought this said "ruining franchise restaurants?" I thought this was some underground movement to ruin McDonald's or something.
thats exactly what i've been doing! I've read this thread title like 12 times and i keep saying to myself 'ruining' i can't help it! someone should change it to 'running'
Best song ever in sig. I wish Houston could get an In and Out burger. Everyone says that they are the best.
Thanks for all of the tips. I hadn't thought about the late-night munchies factor.... One of the franchises I'm looking at recommends a net worth of $300K with $100K of that being liquid. I'm a couple of years away from that, but I can certainly see myself getting there.
Cool deal. I actually never went to one when I was living in EP, but they built one here in Lewisville not too long ago and the Dallas Chapter of the UTEP Alumni Association had a meeting there a while back. Pretty good food, and the salsa bar was killer...
yeah, it's more Mexican, not really Tex-Mex. I've only been there once, but i loved it. of course i'm half Mexican so i'm used to more traditional Mexican style tacos and what not. hopefully it will do really well. they have real Mexican style salsa, which in my book is a huge plus.
