Have you ever found yourself asking why certain franchises of restaurants deliver and others find it difficult to stay afloat? What is it that makes the difference between the successful franchise owners and those that close shop within the first few years? More to the point, how do you ensure that your restaurant franchise does not fall into the same pitfalls that have taken so many other franchises by surprise?
At the outset, it may appear easy to operate a restaurant management consulting. And it would be a proven business model, a well-known brand and an organisation behind you, anyway. However, there is one more point about this as franchise management is much more complex than merely a recipe. It demands a special combination of leadership capabilities, financial expertise, and a capability to adjust the corporate standards to local market requirements.
This paper is going to discuss the top pitfalls that restaurant management consulting owners can avoid and, more to the point, how you can avoid them. Still, whether it is financial missteps or staff management mistakes, we will tell you all the information that you need to know to have your franchise on its course to success over the long-term. These lessons will make your future venture into franchising successful whether you are about to purchase your first franchise or you are already in the midst of operations.
What Are the Most Famous Restaurant management mistakes?
Undervaluing the Significance of Site Selection.
The rush to comet to a location without proper research is one of the largest mistakes new franchisees make. It is so easy to take the first availed place, when you are ready to get down to business. However, the place where you are located can be the determining factor of your business even before you open the door.
Consider the level of pedestrian traffic, parking space, accessibility through major roads, and the population of the immediate environment. A franchise based in a family-friendly setting will not do well on a business district that have low traffic in the evening. Slow down, do proper business research, and do not hesitate to pass out of the location that is not all-checking.
Failure to adhere to the Franchisor Proven Systems.
This is one of the pitfalls: the new franchisees believe that they are more knowledgeable than the system. They begin to tweak recipes, alter service processes or disregard operational instructions. Although creativity is desirable, the franchise system has been there since it is effective.
Your franchisor has taken years as part of perfecting their systems. These are not rules of thumb, they are tried and proven approaches that are behind consistency and profitability. Breaking out of these systems is not only suicidal to your own business, but can find you in violation of your franchise agreement.
Failure to Pay attention to Proper Staff Training and Development.
Your business is represented through your team. When you look the other side of the road when it comes to staff training, quality of service gets compromised, there are more complaints by customers, and your image gets a blow. It is not a luxury to invest in extensive regular training, but the only way to hold the standards to which your customers are accustomed.
What is the Best Way to Successfully operate as a Restaurant Franchise?
Developing Good Relationships with Your Franchisor.
The difference between success and failure in franchising depends on how well you relate with the franchisor. Communication channels should be kept open, franchise meetings should be attended and no one should be afraid to contact when he/she wants to be guided. Your franchisor has probably experienced all the difficulties you are going to and may be able to give you priceless advice.
Frequent visits also enable you to be aware of new things, new menu and new advertising campaigns. You will never be caught unawares by corporate decisions that will impact on your operations because you are in the loop.
Adopting Unifying Quality Management.
Quality control is not one time process but a continuous process. Implement periodic quality, hygiene, and service inspection procedures of food. Checklists can ensure uniformity and responsibility to your team to deliver as expected.
Customers who walk in your franchise want to experience what they would have gotten at another place. Providing that reliability creates loyalty and will have individuals returning.
Striking a Balance between Brand Standards and Local Market Requirement.
Although it is quite important to adhere to the system of the franchisor, it is also important to know your market. The preferences of the Australian customers may be different than in other markets. Operate within the brand specifications and seek ways of relating to your local community.
The Financial Traps Killing Restaurant Franchises.
Weak Cash Flow Management and Budgeting mistakes.
One of the major reasons of failure of a franchise is the cash flow. Most proprietors are after profits and do not pay attention to when to receive and make payments. You may be making a lot of money on paper, yet you may not be able to make ends meet, unless your cash flow is well controlled.
Prepare budgets, track your budgets on a weekly basis and develop a cash buffer in case of unforeseen costs. This is a proactive measure that does not allow minor financial glitches to escalate into a great crisis.
When establishing cost estimates, Ongoing Operational Costs and Startup are underestimated.
The first franchising cost is not the only one. Include fit-out expenses, equipment, starting inventory, marketing, employee training and operating capital to get the initial months of operation. Lots of franchisees are left in a scrumble of trying to raise more funds due to lack of proper planning.
The expenses incurred annually such as royalty fees, marketing fees, insurance fees, and maintenance of equipment are easily accumulated. Know these figures by not taking any signature before signing anything and by making sure that your financial estimates are realistic.
Disregard of Key Performance Indicators and Financial Metrics.
Numbers speak about the health of your business. Measure food expense, labour ratios, average transaction size and number of customers. These signs point out the areas that require consideration before they turn out to be big issues.
You want to know whether it is Profitable to own a restaurant Franchise?
Knowing Reality Profit Margins.
The profit margins in the restaurants are normally low – ranging between 3 to 9 per cent. Realizing this fact will make you set the right expectations and concentrate on cost control. The large volumes of sales do not necessarily translate to good profits in case your expenses are not taken into consideration.
Unnoticed Expenses Every Franchisee ought to be aware of.
In addition to blatant expenses, beware of the latent costs such as the inevitable equipment upgrades, technology fees, necessary renovations and donations to national marketing funds. These may have a huge effect on your bottom line should you not have planned them.
Staff and Leadership Errors Money Wasting.
Turnover of Employees and its effect on the Service Quality.
There is a high rate of turnover in the hospitality industry. Every turnover is associated with money spent on staffing, training, and time wastage. To retain the best employees, provide them with positive working environment, high wages, and growth opportunities.
Inability to Delegate and Micromanaging Operations.
You cannot do everything on your own. Micromanaging wastes you, and irritates your staff. Develop managers who can manage day to day operations and leave the rest to them and concentrate on strategic decisions that can expand the business.
Failure to Invest in Continuous Team Development.
Onboarding should not be the end of training. The frequent skill training of your staff makes them focused, services better, and equips emotions to lead in the future in your organisation.
What Are the Skills You require to be a successful Franchisee?
Critical Leadership and People Management Skills.
Good leadership motivates your team in order to do their best. You should sharpen your communication skills and learn on how to provide constructive feedback and make people feel important and motivated in your environment.
Business Acumen and Financial Literacy.
There is no accounting degree required, but the knowledge of profit and loss statements, balance sheets, and cash flow statements is negotiable. This is financial literacy that can enable you to make informed decisions and uncover problems at an early stage.
Customer Experience Blunders and Marketing.
Depending on the Marketing of the Franchisor Only.
Although the franchisors help in marketing, local marketing makes customers walk in through your doors. Connect with the community by working with local enterprises, sponsoring events and relationships that cannot be replicated by national campaigns.
Not taking into consideration online reviews and Customer Feedback.
Reviews online play a great role in the choice of dining. Track sites such as Google, TripAdvisor, communicate with your critics professionally and use their feedbacks to enhance your operations.
Not Uniting with Your Local Community.
The franchise must not be a cold corporate name, but a member of the society. Give back to the local community by supporting local causes and participating in local events as well as establishing authentic relationships with your neighbours.
Inefficiency in the Operations That Sting Your Bottom Line.
Inadequate Inventory Control and Food Wastes.
Wasted food is wasted money. Have proper inventory systems in place, educate the employees on portion control and analyse the waste patterns on a regular basis to provide areas of improvement.
Uneven Standards of Service Performances in Shifts.
The customer desires no difference in the experience when making a visit during lunch or dinner. Setting standards of service and holding them to be applied by all shift managers.
What Can Franchise owners do not to fail?
Getting to Learn the Experiences of Other Franchisees.
Get in touch with other franchise owners in your network. Their experiences including successes and failures are a great learning to you in your business.
Remaining Flexible in a Dynamic Market.
The restaurant business is dynamic in nature. Be alert to trends, adaptable and adapt changes that may prove good to your business.
Great Franchising: How to Position Your Restaurant Franchise to be a Long-Term Success.
To run a restaurant management consulting successfully, one must follow several moving parts at the same time. Whether it is the choice of an appropriate site or how to deal with your employees, how to spend your money, and your relationship with your community, each decision has a bottom line.
The positive side of it is that the majority of failures in franchises can be avoided. You can be successful by making sure that you learn out of your mistakes, keep in touch with your franchisor and constantly keep on refining your operations. Do not forget that it is a long and slow process to develop a profitable franchise.
These are lessons to remember, make necessary changes, and do not be afraid to ask assistance when faced with problematic issues. The ride to owning a franchise may not be smooth sailing, but with the right attitude, you will have a successful business to serve your community even after many years.