Independent Restaurant vs. Franchise Restaurant — Are you looking to open a restaurant and trying to decide what would be the best route to take? Should you open a restaurant on your own or buy a franchise? What if I told you each route is best taken when you understand the pros and cons of each? I was the chief operating officer of a franchise before I became a restaurant coach for independent operators in 2003, so stick around and I’ll share with you my insight into independent restaurants vs franchise restaurants for ownership.
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Welcome to my YouTube Channel. I am David Scott Peters, a restaurant coach and speaker who teaches restaurant operators how to cut costs and increase profits with my trademark Restaurant Prosperity Formula. Known as THE expert in the restaurant industry, I apply my no-BS style to teach and motivate restaurant owners to take control of their businesses and finally realize their full potential. Thousands of restaurants have used my formula to transform their businesses. To learn more about me and my coaching program, visit http://www.davidscottpeters.com.
Pros and cons of franchise restaurant ownership
Pros #1: They have proven business systems.
Pro #2: You’re buying into a known brand that has a known/familiar identity coming out of the gate.
Pro #3: You have group buying power. Often chain restaurants are paying anywhere from 5–14 percent less than an independent operator for the same food. Why? Because there’s tonnage.
Pro #4: You have a corporate office to help you. You’re not alone. The franchise’s corporate office is going to train you on the restaurant industry. They’re going to train and support you to get open. They’re going to continue to train and support you as you’re operating. They’re going to come in and make sure you’re operating properly. They’re going to answer your questions.
Con #1: You can’t invent a new way. You must follow the corporate office’s way.
Con #2: You must make renovations when they say so. If they say you need to change the whole interior, move walls, change colors, buy all brand-new furniture because the concept is changing what it’s looking like, then you’re contractually obligated to get that done.
Con #3: You must pay into a marketing fee, whether it’s local or national or both, and you may not have any control how that money is used.
Con #4: You must pay 5–7 percent, on average, as a royalty fee.
Pros and cons of independent restaurant ownership
Pro #1: You have the freedom to create the concept of your dreams, whatever you want it to look like. You can set your own operating hours, your own menu, your own atmosphere, your own music. You have freedom to make every decision from flatware to uniforms. It’s yours to do whatever you want.
Pro #2: You get to keep 100 percent of what you make. There’s nobody to share the money with (except for the government, of course). You’re not paying for support from that franchisor that you might never need.
Pro #3: You can create the life you want. No one tells you how to staff the restaurant or how many hours you have to be there.
Con #1: Your food cost is going to be more than anybody else if they’re a part of a chain, because there’s not group or bulk buying.
Con #2: You might feel like you’re flying blind at times with no corporate office.
Con #3: Every mistake you make is going to cost you your money. Remember one of the pros of owning a franchise is they’ve made all the mistakes and found the processes that make running their brand smooth. When you open up your own place, you’ve got to step in it. You’re the responsible person.
Con #4: You’ve got nobody to blame for your mistakes. There is no corporate office to blame.
If you decide to go the independent route, you must learn and use all the right systems to have a life and make the money you deserve. I know this for a fact based on the countless numbers of restaurant owners I’ve worked with, and I’ve seen them absolutely change their lives when they go all in with the systems and follow them to a T.
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