Seven Ways to Avoid Fast Food Franchise Failure
Are fast food franchisees aware of the fast food franchise failure rate? From 1991-2010, 17 percent of franchise loans made through the Small Business Administration ended in failure. This is according to a report by the Service Employees International Union (SEIU). The SEIU also said that the franchise failure rate rose to 19.3 percent between 2006-2010. Franchisors will do their best to convince you that investing in their system is a “sure thing.” The SEIU’s numbers show that fast food franchises are a risk like any other business.
Reasons Fast Food Franchises Fail
There are plenty of fast food restaurant franchise opportunities. There also are plenty of reasons why some of these businesses fail. Some of these include funds, poor people skills, and poor management. There are solutions for each of these problems as long as the franchisee implements them in time. Signal Connect takes a look some typical problems that fast food franchisee experience, and offers a solution to each.
1. Problem – Choosing the Wrong Location: Some new fast food franchisees choose the wrong location for their restaurants. For example, some might locate outside the city limits to save some money. This might make your restaurant too remote for people to reach. Same thing goes for college campuses. They run the risk of the long, slow grind of the summer when students are long gone. While they can always change locations, it’s always better to get these things right the first time.
Solution: Franchisors use geographic software to track consumer-trend data for every road in the country. See if your franchisor offers help in choosing ideal locations. If you prefer the do-it-yourself approach, there are programs that analyze zip code demographics. It provides income levels, lifestyle trends, and traffic patterns for each potential location. You should look for are high-traffic areas with plenty of people who live in a two-mile radius. It also helps if there are retail locations nearby.
2. Problem – Poor Customer Service: Fast food franchisees live or die by the customer service they provide customers. Businesses that have rude counter and drive-through staff won’t stay in business for long. Neither will restaurants with staff members who can’t seem to fill orders on time, or get them right. (Nothing is more annoying than getting home to find out the drive-through got your order wrong.) On the other hand, fast food businesses with friendly, attentive staff are the ones that continue to be successful.
Solution: There are a few ways to make sure your restaurant offers good customer service. It starts with you, the owner. If you’re treat customers with dignity and respect, staff will follow your example. Hiring is another way you get good customer service. Interviewees who seem friendly, upbeat, and outgoing are often this way with customers. Look for these qualities when interviewing candidates. Also, try hiring people with previous customer service experience if you can. You can also have your staff take training to sharpen their customer service skills.
3. Problem – Not Enough Marketing: Some fast food franchisees believe that if they build a restaurant, people will come. This is usually the attitude of a business owner who doesn’t want to spend money on marketing. They think that being part of one of a popular fast food franchises will guarantee their success. That’s utter balderdash. Their restaurant won’t be top of mind with people because the owner did nothing to promote it.
Solution: Successful fast food franchisees do a lot of marketing to attract customers. This includes coupons, free samples, direct-mail ads, and email blasts. Many also use social media campaigns to help raise awareness. Bottom line: you have to always be marketing and promoting your business. If you’re not sure what to do, reach out to your franchisor. Most fast food corporations have marketing tools to share with franchisees.
4. Problem – No Managers: Some fast food franchisees think they can do it all. Unfortunately, they might not have the skills they need to lead their crews. Owners who put in 10-, 12-, and even 16-hour days still don’t develop these skills. There too busy doing everything else needed to run their business. They just end up feeling burned out. This illustrates the difference between spending a lot of time, and time that is well spent.
Solution: It’s always a good idea to hire at least one or two managers. This will help lighten your load and allow you to have more balance between your work and home life. The addition of a manager(s) improves how you run your business. You can also trust that your business is in good hands while you’re away. To get the best managerial candidates, try offering medical, dental, and retirement benefits. Look for those with previous fast food management experience. These people will do a good job representing your business when you can’t be there.
5. Problem – Not Following Franchise Rules: Believe it or not, some franchisees got wild idea to go off and do their own thing. This is a colossal one! Franchisors have certain rules and guidelines for you to follow, and you have to follow them. Like it or not, it’s exactly what you signed up for. These rules are there for a reason. The franchisor knows their system works. They want franchisees to be successful using this business plan. Deviation from these systems usually ends up in disaster.
Solution: This should be easy to figure out. Follow the rules, silly! The franchise system is a successful one. That’s the reason why you decided to become a part of it. Remember? Going off on your own at this point would be ridiculous. Instead of these flighty notions, it’s time to buckle down and work the system that you’re a part of. When you do, you will likely enjoy the same success as the thousands of other franchisees in the system.
6. Problem – Absentee Owners: Have you ever heard this term? It refers to owners who barely spend any time at their businesses. They dump their responsibilities onto managers and employees, then simply check out. Of all the fast food franchise problems listed here, this one is probably the worst. Owners who neglect their businesses set a bad example for their staff. In turn, employees began to slack off, theft increases, and customer service plummets. Worst of all, these owners have no idea what’s going on in their businesses because they’re not there.
Solution: Take a hands-on approach to your business. Considering how much you have invested in it, this should be a no-brainer. While it’s okay to get some help from your manager(s), there’s no excuse for you not to be involved in your business. Make it a priority to get back behind the counter and interact with your customers. This should help you get centered and allow you mind to focus on what really matters: your success.
7. Problem – Slow Dine-In Business: Some fast food restaurants have a busy drive-through window but slow dine-in service. This problem occurs when franchise owners neglect dine-in customers. Word of the poor inside service gets out and soon, less and less people are eating at the restaurant. These folks go to other fast food franchises that meet their dining expectations. This results in a huge loss of revenue for the neglected franchisee.
Solution: Get DIRECTV for your fast food franchise. Satellite TV in your lobby can have a huge impact on your dine-in business. People stay longer if their favorite news, sports, or entertainment programming is on. When they stay longer, they tend to order more food, drinks, and desserts. This is how DIRECTV in your lobby benefits your business. Even some drive-through customers choose to dine inside when you have DIRECTV. You and your employees can also enjoy your favorite shows when taking breaks.
Signal Connect is Your DIRECTV Source
Signal Connect is an AT&T Preferred Dealer that provides DIRECTV for fast food restaurants. We know that adding satellite TV to your restaurant’s lobby is a big decision. You probably have questions about DIRECTV. Our representatives are happy to answer these so you’re more informed. You might learn more about DIRECTV than you might have thought was possible! If you’re want to know more about DIRECTV, call us at 866-726-4182.