Fast Food Franchises

Of all the franchise industries, fast food is the one which seems like it will never slow down. there’s still plenty of places left without one of each kind of restaurant, aren’t there? Well, yes, but let’s not get ahead of ourselves. There is such a thing as market saturation.

Take McDonald’s, for instance. Surely, we have enough McDonald’s, but that doesn’t seem to slow down the sales of new franchise licenses a bit. McDonald’s leveraged the franchise model so effectively, that their very name has become synonymous with the spread of capitalism. The Europeans complain about how those Americans have come along building a McDonald’s every ten feet, even though they still line up to eat there.

So it goes to show, saturation is not the same thing as failure. But be warned, the fast food business does have its hazards. Amongst them:

* Fast burnout - A fast food job is the stereotypical first job out of high school, but it’s also the first job everybody can’t seem to get out of fast enough. The environment is high-pressure, the work is a grind, and you’re always getting bawled out by a customer whose bacon cheeseburger wasn’t done just right. Even if you’re the boss, count on a constant cycle of training new hires and watching them leave when a better opportunity comes along.

* Low income - Just try taking the price of your average hamburger, then breaking that down into the price of the components. Yes, fast food restaurant have to buy all that meat, cheese, lettuce, and bread from somewhere, and their profit margin after operating costs amounts to a few cents per meal! True, you sell in volume, but unless you’re located right on Times Square and open 24/7, do not expect to become rich. You can, however, expect a steady income.

* High competition - The restaurant business would be a lot easier if only a few hundred million people hadn’t thought of it first. As it stands, just about any good location to start a fast food restaurant will have several others already there. You end up spending every day looking at direct competition right across the street.

So now that we’ve covered the challenges, here’s a few keys to picking a fast food franchise opportunity that has a better chance of winning:

* Low price, high service - fast food customers look for the best bargain and best service they can get. As a potential franchisee, you should do the same. Don’t be afraid to insist on the best bargain you can find, and if a potential offer isn’t good enough, tell them why you’re turning it down. Comparison shop aggressively - it isn’t as though your options were limited here.

* Be a fantastic boss - As a fast food franchisee, your number one job will be in keeping the best crew of employees you can get. With a good crew, the business will run itself. Otherwise, you’re constantly fixing problems and training new hires. To keep your employees at their best, try to be the coolest boss ever, as long as it doesn’t hurt your bottom line. Since you can’t afford to be generous with wages, figure out other ways in which you can be generous. Since your employees will tend to be younger, small things like being a good listener, allowing a loose dress code, letting them play the radio in the kitchen, or arranging a car pool go a long way.

* Go into a niche - Especially in the United States, it has finally occurred to the restaurant industry that we cannot survive on burgers and fries alone. Fast food restaurants that specialize in a niche, such as coffee (Starbucks!) or bagels (Einstein’s!), have been having unprecedented success. An important lesson in all this is that if your niche is narrow enough, you have less competition. Being the tenth pizza restaurant in town is the pits - but the only Israeli deli in town makes bank!