Why franchising is much more efficient and profitable than restaurant groups
We did marketing support for several restaurant groups, and also for a few franchised restaurants and café chains, and we can say confidently that franchised restaurants are a much better investment option.
The downfalls of restaurant groups is the enormous weight put on admin staff having to manage five or more separate brands. Employee burnout and toxic work environments due to long hours are inevitable with a high turnover rate. These groups are not wildly profitable or sustainable. The funny thing is that all five different brands had the exact same menus, beverages, features and events. It would have been much more efficient to have one brand.
The different brand standards, interchanging suppliers, inventory, payroll, accounts receivable and payables were unnecessary and expensive. The amount of effort that was put into these five locations could have easily created over 25 locations because of systems and cohesive standards.
A perfect example was having to order takeout stickers for five different companies, we had to order them from the supplier under each brand account for accounts payable, so the price break was only at 3,000. If we could have ordered one type of sticker at 15,000, the bulk savings was significant. Buying power is one of the largest benefits to franchising.
Imagine a successful franchise with 25 locations grossing a minimum of 1.5 million each year versus an unsustainable restaurant group with 5 separate brands grossing $850,000 per year. Lower sales, higher competition, lower buying power, and high staff turnover doesn't make for a profitable company.
Work smarter, not harder. You want to give yourself, your staff, and your franchisees a work/life balance with enough profits to offer bonuses. It's healthy to have time for yourself, your family and your friends because you have created proven systems. When its groups vs franchises, franchising is indeed a superior investment.
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