There are many different types of business format franchises, but when most people think of a franchise business; their first thought is of food. The success and growth of the many big brand-name fast-food franchises makes this a logical first stop in the thinking process.
At present there are total of 175 food franchisors in India. To cater to the needs of the growing customers, belonging to various cultures and statuses, the franchisors have come up with a wide array of formats. These are fine dine, quick services, ice creams and beverages.
When evaluating restaurant franchises, you must focus on the characteristics of the business from a franchisee’s perspective to determine whether this industry is the right one for you. There are some wonderful advantages to having a food business, but there are also some challenges you need to be aware of before proceeding in this industry.
In assessing a food business, the main advantages are typically considered to be:
€ Built-in Demand. Consumers have been trained to look for franchise food outlets, which can represent a big advantage for a startup. You need to make sure the product offering of the food franchise has “staying power” in the marketplace rather than being a fad or fringe product.
€ Ease in Financing. Traditional lending sources are very familiar with the real estate and equipment needs of a prepared food operation, which may ease the challenge of obtaining startup financing. These sources also like the relatively high revenue production of a typical food franchise.
€ Track Record of Success. Many food franchises have multiple units and have been operating for a while, making it fairly simple to determine and verify their track record of success. That can help you make an informed decision about the business prior to getting involved.
€ Prestige. Whether valid or not, many people associate a high degree of glamour with a person who owns a food franchise business. The fairly high degree of status associated with this occupation is important to many prospective franchisees.
Restaurant franchise business has numerous gains. When investors search for a business that is simple to open and draws instant business, a restaurant franchise is the best pick. However, you need to look into various pros and cons of this franchise business model before actually entering into such type of venture.
One should first analyze the ROI of owning a food franchise as this is a serious investment choice. Prior to making a buying decision, investors should discuss with a franchise consultant who has knowledge in promoting restaurants franchises.
Established players: Established players consisted of franchisors that have been into franchising for a long time and have already made their mark as prominent players in the industry. Sagar Ratna, a quick service restaurant is included in the category followed by Amul, a food retailing company and Kwality Wall’s, an ice-cream brand.
Emerging players: Franchisors with less experience than the established players but have undoubtedly tasted success in franchising is included in the list of emerging players. They are not the leaders but are on the way to become, in the coming times. The emerging companies of F&B sector include Slice of Italy, under the format of quick service food restaurants with its variety in pizzas etc and Dosa Plaza, a chain of vegetarian south Indian fast food restaurants. Coffee Day Xpress, coffee outlet, also falls in this category due to its range of coffees and ever-increasing franchisees.
Debutant players: These are the franchisors that have recently forayed into the field of franchising but have a promising future are the debutant players. Kaati Zone, a fast food restaurant with a specialty in kaati rolls initiated franchising in 2009 and currently occupies a position in the debutant brands. Similarly Khyber, a fine dine restaurant which started operation in 1958 but forayed into franchising in 2010 is included in this section. Daily Bread, a chain of bakery stores entered franchising in 2009 is also included in this category.
International players: This category includes the foreign franchisors that have entered the country through master franchisees and other franchisees. These franchisors have succeeded in establishing their brands in India. F&B players are dominating in this sector with 12 brands. The fast food sector includes Pizza Hut, Subway, Pizza Company, MarryBrown and Chicking. The beverage brands include Gloria Jeans Coffees, The Coffee Club, Caf© Jubilee and Jus Booster Juice while the Ice-cream brands include Baskin Robbins and Swensen’s.
For any food franchise, the marketing efforts along with the interior decoration involve lots of money, human resources and time. For independent restaurant franchises, procuring such things is a daunting task in their first year of operation. However, if someone takes up a franchise of an already established brand such as McDonalds, KFC, then they get help from their corporate offices regarding marketing materials and even some cases the cooking materials. Among franchising benefits and drawbacks, access to selected marketing materials is one of the top advantages. Franchises command a high sale price, one that often attracts seasoned investors due to their consistent income, well-defined customer base, and access to corporate support. Restaurant franchises command good value. The values of restaurant franchisees are dependent on their goodwill, customer service.
Restaurants usually cost more than independent establishments that have corporate backing and high revenue potential. The price for a single location could reach a high seven-figure mark in the case of elite franchises such as McDonalds. Nevertheless, such franchises provide consistently high income thereby making them an excellent long-term investment. Most franchises for non-skilled workers offer a low hourly wage in keeping with national pay averages. Consequently, in restaurant franchises, the workers don’t take up their jobs seriously and always want to cheat on number of working hours. For franchise managers the hiring process never concludes and experiences temporary hindrance due to labour shortfall. In India, food franchises are on a rise and one of the most capital intensive businesses. The returns are handsome provided that you manage your human resource properly.
Give some serious thought to the franchisee role in terms of the tasks required in a typical day or week, the hours worked the investment and the possible returns. Make sure you know what it takes to succeed and that you possess those qualities. Then you’ll know whether being a restaurateur is right for you.