Over the years I repeatedly see people who are looking to get into business for themselves who spend considerable time and effort doing due diligence and research but in the end simply do not move forward. Some, I come across a few years later still looking at opportunities but still unable to make the final commitment. They are looking for a business that has no risk. Such a business does not exist.
The economy is at best, unpredictable. You may be faced with an economic slowdown that could seriously impede your business success. There is the risk of the market and possible saturation of competitors, making it hard to win over and keep customers. There is the uncertainty of getting involved in an industry that you are not familiar with and dealing with a potentially steep learning curve. During this learning you will inevitably make mistakes that could be costly. There are the challenges of dealing with managing employees while still learning a new business. Finally, there is the financial risk. As a new business owner you must have sufficient funds to carry your personal living costs, the business start-up costs and initial working capital needs until the new venture begins to turn a regular profit. A miscalculation in your financial projections could leave you substantially short and in possible financial ruin.
It is for these very reasons why you should own a restaurant franchise. With a restaurant franchise you can minimize your risks. According to a report by Restaurants Canada, Canada’s restaurant industry is projected to have its 25th consecutive year of growth in 2016. President and CEO of Restaurants Canada, Donna Dooher, puts the importance of the restaurant industry into perspective,
“Restaurants are a catalyst for the Canadian economy. They’re an important part of every community, they account for more than one million jobs, and they generate billions of dollars in spin-off spending from agriculture to technology.” (https://www.restaurantscanada.org/en/restaurant-industry-25-years-in-2016)
It is clear that the Canadian restaurant industry is consistently growing with sales expected to reach $62 billion in 2016. With so much competition already out there, it can be intimidating to open a restaurant independently. That’s why many people have chosen to open their own restaurant through a franchise. Franchising offers the following benefits not available to an independent owner.
Becoming a part of a brand. You can open your restaurant with a customer base already established. Today’s consumer is brand driven. They want to go where they know what to expect. If they see a name over and over again they begin to have comfort with that restaurant and will frequently chose to eat there over alternatives. It results in disproportionate market share. This market share is often taken from the independent. Brands help to attract customers.
Having access to systems. All successful restaurant franchises are based on systems. Clearly defined procedures that are duplicated will produce consistent, reliable results and experiences for the customer. Systems include operating standards which define quality. Rather than spending time learning through expensive trial and error you can capitalize on the experience of the franchise system and all of the franchisees that have come before you.
Ability to work with a proven business model. There is an old philosophy that if you want to be successful then watch and copy successful people. Imitate them. Likewise, watch what unsuccessful people and don’t follow their example. This eliminates you learning the business through trial and error. Working with a proven business model can save a start-up operation a considerable amount of money and frustration. Costly mistakes like choosing the wrong equipment or suppliers are avoided.
Working on the business rather than in the business. Business involves a lot of details. For example, an independent restaurant owner will spend a considerable amount of time developing menus and keeping the menu fresh, implementing marketing strategies, monitoring the competition, making sure the business is in compliance with all the laws and food safe procedures. With a franchise you have the support of a franchisor that will often do these functions, thus freeing up your time. Rather than doing research and development you can spend your time implementing and building relationships with the customer. You are able to focus your energies where they can have the biggest impact to your immediate bottom line.
Mass purchasing power. In the restaurant business one needs to be managing costs carefully. A franchise allows one to take advantage of volume buying of food, inventory and supplies by pooling the purchases of multiple locations. This often results in stronger bottom lines. Advertising on radio and/or television would not be practical or cost effective for an independent, yet is easily attainable when belonging to a franchise where franchisees pool their financial resources together.
Support – on your own but not alone. When you are the owner of your own restaurant it can be lonely at the top. If you have a challenge or operations issue, you simply can’t pick up the phone and call your competitors to see how they would deal with the situation. Within a franchise there is the opportunity to talk to others that have had the same challenges and get open feedback and ideas. The franchisor has a vested interest in your restaurant and brand and they will be more than glad to help. You have access to support that you would not have otherwise.
All of these advantages combined contribute to reducing the risks of getting into the restaurant business. Many failed businesses could have been avoided if they had not had to learn through trial and error. You stack the probability of success in your favor with a recognized brand, buying power and a proven business model. Having the programs, systems and tools to be successful will not give you guarantees, but sure go a long way in providing comfort and minimizing the risks.
A restaurant franchise may provide you with the needed confidence to finally take action on your dream of becoming an entrepreneur and having your own business.
Written by Wayne Maillet, president of Franchise Specialists. Wayne is a leading Canadian franchise management consultant and published author of the book Franchising Demystified. You can order the book at http://www.franchisingdemystified.com/
Wayne Maillet can be reached at 604-941-4361