How to start a restaurant: why franchising is the key to success
Let’s say you want to know how to start a restaurant but can’t decide if you want to buy a franchise or launch a concept from scratch. While it is true you can be your own boss in either route, franchising provides a unique opportunity for entrepreneurs to receive independent owner benefits without going at it alone. It presents a lower risk of failure when making an investment, and franchises are systems that have been tested and refined, and in turn, this grants them a higher probability of success.
For many businesspeople, buying a franchise is the preferred method since there’s a greater chance to operate a thriving business. The franchise model allows you to buy into a business that already has national, international, or regional brand recognition, and an existing customer base.
Owning and operating a restaurant is both a challenging and rewarding endeavor. The style, food, and environment must all work in lockstep to contribute to the overall experience in hopes of bringing lifelong loyalty after just one meal.
When deciding whether to open a restaurant independently or invest in a franchise, it can be a difficult decision that requires research, understanding, and networking with others for guidance. Below, we compare the competing routes of starting a restaurant and why franchising cracks the egg… err code.
How much does it cost to open a restaurant?
Starting a restaurant on your own versus franchising is different for many reasons, but cost is a dominant variation. The average startup costs vary on the size and location of the restaurant. Sometimes, an owner will test their concept as a pop-up to see if their restaurant will be well-received by the community. Before committing to an investment, it’s best to break down the costs between one-time and recurring expenses. It is imperative to set a clear budget between your one-time and repeat costs to see if starting a restaurant on your own is something you can afford to pursue.
On average, restaurant startups for independent owners begin at close to $300,000, but that number doesn’t quite scratch the surface. Let’s dive into the details. Few people will have enough money to finance a restaurant out of pocket, so they will likely have to sell most of their assets, but also secure their own investors and business partners. Both of those options can be incredibly daunting, especially if you have never started your own business before.
If you choose to independently own a restaurant and need to secure financing, it’s best to be prepared and know exactly what you’ll be requesting. Your total funding will need to cover the following at minimum:
|Loan Fee||Amount guaranteed to be paid if unable to fully repay loan|
|Loan Repayment Plus Interest||Money paid regularly for use of loan|
|Commercial Lease||Cost to rent space per month|
|Restaurant Insurance||Coverage for unforeseen tragedies|
|License Fees||Food Service Establishment permits, liquor licenses, and general business licenses|
|Staff Wages||Wages are at the discretion of owner|
|Kitchen Equipment||Cost will vary on size of kitchen and restaurant|
|Stock/Inventory||Sample menu/food/dishes, furniture, linens, etc.|
|Working Capital||Amount of money for daily restaurant operations|
There are several different types of loans available, and you’ll need to meet specific requirements to obtain approval, so it’s important to have a detailed business plan in place. In summary, owning and operating a restaurant on your own is costly, risky, and can be quite exhausting — which is why many elect to go the franchising route.
When you buy a restaurant franchise, you automatically enter a system that already has the cost and expenditures built out. You will be guided on the level of inventory to buy to satisfy your market and what equipment is needed for your location. Better prices are also available to franchise owners due to the franchisor’s ability to purchase in bulk, and the pricing arrangements have already been secured with preferred vendor partners.
There are many lucrative restaurant franchises to choose from, but breakfast and brunch restaurants are on the rise. Breakfast restaurants have an increased potential for success over the average all-day restaurants while also not being as costly.
As a growing franchise daypart, breakfast and brunch concepts are finding their place in people’s everyday routine — and Scramblers can attest to this as they are meeting this demand. In fact, a new study shows Americans have been eating more breakfast foods since the onset of the pandemic. With many individuals now working from home, finding a go-to breakfast place is becoming a must.
How hard is it to start a restuarant
There’s no simple answer to how hard it is to start a restaurant — but franchising makes this process less difficult. Like any new opportunity, it takes hard work, money, skill, and networking with experienced individuals. While there are many pieces to getting the concept off the ground, most of it boils down to research. If you decide to take on owning a restaurant independently, one wrong decision can drive your concept into the ground before a customer sets foot in the door.
According to the U.S. Bureau of Labor Statistics, 17% of independent restaurant owners close their doors in the first year of operation. Reasons for closure can include not enough financing, misjudging the local market trends, and building/renovating in the wrong location.
It’s also important to note experience level should be taken into consideration. While having previous restaurant experience does help, those with less experience may find greater comfort in owning and operating a franchise concept. Since franchises provide you with the structure, resources, and training needed to thrive, you’re not left still asking, “how to start a restaurant.”
how does franchising help getting started in the industry
There are a multitude of reasons why franchising can give you a head start when learning how to start a restaurant business. When you enter a franchise system, you’re immediately connected to a network of franchise owners. This allows you to lean on their experiences and receive guidance and support as you both operate your sites. It’s especially beneficial for those who are restauranteurs for the first time.
With any business, franchising allows you to start a business with the groundwork already laid out for you. It’s an opportunity to build off something you’re passionate about, combined with the necessary support and tools to succeed.
In the restaurant industry, franchising is a proven method for achieving growth and expansion. According to recent data published by the U.S Census Bureau, franchises represent over 54% of fast-food and fast-casual restaurants in America.
Consider scrambelrs as your key to success
When it comes to learning how to start a restaurant successfully, look no further than Scramblers. Dating back to 1989, we have cracked the code for staying on top of the market and keeping things fresh, all while allowing you to still make time for the things you love, courtesy of the breakfast and brunch only approach. Known as the “best breakfast in town,” we place family at the center of everything we do.
Thirty years later Scramblers is still thriving. We have recently launched our national franchise expansion, after growing to over 25 restaurants serving guests in Southeast Michigan and all over Ohio. To learn more about franchising opportunities with Scramblers, check out our page and discover what makes us an “eggcellent” opportunity.