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Franchise Restaurants Can Overcome Challenging Economic Times
Keeping a growth mindset requires thoughtful, collaborative financial planning.
Franchise Restaurants Can Overcome Challenging Economic Times
Keeping a growth mindset requires thoughtful, collaborative financial planning.
It’s no secret that margins are running tight. According to the National Restaurant Association, average food costs are still topping pre-pandemic levels by over 26%. This is significant, especially when you consider the added burdens of rising prime costs and increased labor wage rates. As a restaurant franchisee, you might be feeling stretched.
As these calculations add up, you’re faced with some tough decisions: Do we downsize our staff? Adjust menu prices? Renegotiate our lease? Higher costs of food, labor, and supplies are just a few of the many challenges that franchisees like you are confronting when it comes to operating their business.
“Maintaining a high-quality service while balancing increased costs of operation should always be top of mind,” stated Sandra McCraren, senior managing director of Wintrust Franchise Finance.
Rising costs and interest rates may have you questioning how to plan, revamp, or even expand your footprint. Keep calm — that vision can still be a reality! Having a trusted financial partner can help ease the burden of navigating this new economic environment, which is not expected to end anytime soon.
Growing your business requires thoughtful, strategic collaboration. And let’s face it, cookie-cutter plans simply miss the mark. Here are a few key ingredients to identify safer solutions that set your restaurant franchise up for success.
Get In Early
Whether you’re considering a remodel, new development, acquisition, or even passing your business down to the next generation, early financial planning can be a game-changer when it comes to executing your goals. This isn’t something to take lightly. Laying out your business objectives early is crucial for determining the best path forward! Don’t wait until after you’ve made a decision to start the process. It’s imperative that you partner with an industry expert who can better understand your goals, provide tailored solutions, and develop long-term strategies for your success.
Communicate and Collaborate
Bring everyone to the table! Seriously, it’ll pay off in the long run. Proactively engaging with stakeholders allows you to see the big picture and avoid sudden surprises. Your deal team should remain the same throughout the process, and the more you communicate, the better off you can execute on your plans. Surround yourself with individuals who are responsive and receptive to the needs of your business. This may include your attorney, accountant, franchisor, or lender. Getting everyone on the same page ensures that you have the support and guidance necessary to keep on track with your goals.
“In this niche market, industry expertise is mission critical. Gather a solid team who will partner with you every step of the way and equip your business with the tools needed to navigate through the evolving variables,” said McCraren. “Consistent communication is key.”
Personalized Lending Solutions
One size does not fit all in the restaurant franchise industry, and it certainly doesn’t apply when you’re building a financial strategy. It’s important to work with a franchise lender that will lay out a specific roadmap that is realistic and tailor a financing structure to meet your organization’s needs. This process is multifaceted, requiring a detailed, transparent risk analysis that will build a comprehensive solution to fit your business objectives. Whether you’re acquiring or developing a restaurant, it is imperative to have early discussions with your lender so they can develop solutions that will ensure a smooth transaction experience with speed, execution, and certainty to close.