Is Restaurant Franchising On the Rise In 2019? - MBB Management

Is Restaurant Franchising On the Rise In 2019?

Have you been considering getting into the restaurant franchise business, but not sure if this is the right time to do it? Is restaurant franchising on the rise in 2019? Are you primed for success?

According to the International Franchise Association’s latest report which was in 2018, the overall franchise industry is expected to continue to do well all throughout 2019. They projected that the number of franchise establishment would increase by 2.6 percent this year. And all signs so far point to a successful year not only for all franchises, but restaurant franchises in particular.

There are several reasons for this continuing trend upward and we will touch upon some of them.

Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act which was passed in 2017 and reduced corporate tax by more than 10 percent as well as helped reduce costs for franchises is one reason.

High Consumer Confidence

A high level of consumer confidence has also helped. In March of this year, almost two hundred thousand new jobs were created and unemployment was low. This means your customers have a lot more discretionary money to spend.

Reduced Real Estate

An emphasis on reduced real estate has also been instrumental in the rise of restaurant franchising. Rent or mortgage for location is never cheap and the more square feet you need, of course the larger your bill.

To reduce their overall overhead, many restaurant franchises are choosing smaller locations and putting more of an emphasis on off-site options like delivery and catering. Food delivery apps for these restaurant franchises are on the rise to facilitate the whole process. Satellite and kiosk locations have also become popular methods to reduce overhead costs.

Focus on Building Customer Base

Concerted campaigns to build customer frequency and overall base are also important ingredients to a restaurant franchise’s success. By creating incentives like customer awards programs to keep loyal customers and new products and services to attract new customers, restaurant franchises are ensuring their viability.

Going Global

When a restaurant franchise is able to successful expand its territory that is a clear sign of its profitability. The more global, the better. A large majority of U.S. franchisors are looking overseas for new territory. Markets to look out for include India, Australia, The Middle East and China.

The Team Approach

Some investors are using the team approach to make investing in a restaurant franchise more doable. If you are not sure about running a franchise on your own, collecting a team of investors might be the better approach.

Multi-Unit Ownership

Multi-unit ownership of restaurant franchises has also led to overall financial growth in the sector. Once a franchisee has a proven business model that works it is easy to expand those principles to new locations as well.

Focus on Restaurant Technology

Technology is everywhere these days and the smart approach to it for any business is to find better ways to enhance how you do business using different types of technology. For example, using tablets to take orders.

Adopting a Business within a Business Approach

Finally, there has been a rise in restaurant franchises using a business within a business approach. What this means is that a restaurant franchise sets up inside another business. With this approach, rent is cheaper and you have access to a whole new set of customers.

If you are sold on the idea of joining the restaurant franchise business, consider also hiring a franchise consulting company to help guide you to success. They can offer you more tips like:

  • The customer is always right. Be open to criticism and make any realistic changes to improve the customer’s experience. To help you with this, try to observe your restaurant from your customer’s point of view.
  • Hire staff who are just as passionate as you are. The backbone of any successful restaurant is an experienced, dedicated staff. Make sure each staff member is aware of what expectations you have for them. Pay your staff well and give them the training they need to do their job well and everyone will benefit. A high turnover rate at your restaurant not only causes staffing problems it also makes it difficult to provide your customers with consistent excellent service.
  • Switch up your menu regularly. They don’t have to be big changes, but it is important that you are constantly fine-tuning your menu. While returning customers might have favorite dishes that they love, they will also enjoy being able to try new things on the menu as well. You never want your menu to feel stale.
  • Keep eye on cash flow. The first year a restaurant is open is very crucial. In the beginning, it is expected that you will be putting out more money then you are making, but you want to make sure you stay on budget and that as soon as possible you are making more money then you are spending. Always keep a close eye on your cash flow so you don’t find yourself buried under debt and unable to dig out.

We at MBB Management, a restaurant consulting and restaurant management company, are dedicated to helping new and established franchisees grow a successful restaurant franchising business. We can also help with hospitality management and restaurant expansion. For more information about restaurant franchising, give us a call today.

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