McDonald’s, Panda Express, Chipotle – people all across the nation and around the world are familiar with these prominent food-based franchises. They have thousands, even tens of thousands of locations, and collectively pull in annual revenues of billions of dollars. Expecting guaranteed success, many aspiring businessmen and women buy their own food-based franchises, only to fail or earn disappointing profits. Maximizing profits in this industry is not as easy as it may appear.
Although food-based franchises offer the biggest returns, they also have some of the highest startup costs. They are tough businesses with lots of moving parts and typically smaller margins. According to a recent report, more than half of food franchises earn less than $50,000 a year, with the average coming in at $82,033. This may not sound like a bad deal, until you consider the initial investment. Many established brands require $500,000 in startup costs while full-service restaurants can cost up to a million dollars or more.
However, even with sky high overhead expenses, a well-operated restaurant can be a cash cow. But what are the elements of a successful food-based franchise? If you’re considering buying one yourself, keep the following tips in mind:
- Keep rent reasonable. Be resolute during negotiations with the landlord and don’t be afraid to walk away from unsatisfactory offers.
- Keep close tabs on labor and food costs on a daily basis. If you keep track of the numbers, you will become deeply familiar with sales patterns and make your business that much more effective.
Are you ready to start your own successful franchise? Enroll in the 90 Day Franchise Launch Program offered by The Internicola Law Firm, P.C. and get the knowledge you need to bring your business to the next level. For more information, call us today at (718) 979-8688 or submit an online contact form and we’ll get back to you shortly.