Exciting news: Brizo FoodMetrics has been acquired by Datassential! Learn more.
The success of a restaurant data.com/en/solutions/restaurant-chains/’ target=’_blank’>chain is built on creating an experience that customers are looking for and delivering it at scale. Growing a chain is complex and requires careful planning from the very beginning. From the front-of-house operations to the back-end, things need to run efficiently and seamlessly in order to ensure consistent quality and enjoyable experiences for customers.
Once operational, growth and development occur at every level. However, there are both pros and cons to expanding a restaurant chain and franchisors need to be aware of both sides when establishing a business plan. Understanding the foodservice industry while using data-driven insights can help to ensure successful growth.
Pros of Growing Restaurant Chains
1. Increased Valuation
When a food chain grows and expands, it increases the value of the company as a whole. Franchises typically bring in more funding or capital than non-franchise restaurants, and larger chains have the advantage of being able to attract new potential partners and potential investors. Additionally, larger restaurant chains have the ability to access more financing options through increased brand recognition.
2. Consistent Products and Brand
Growing a restaurant chain gives you the ability to maintain consistent products and services to customers that trust your brand. With multiple locations, food and recipes can all be standardized, providing a stable menu. This means that customers can expect the same experience with any location they visit.
3. Greater Market Share
Expanding a restaurant chain creates a larger presence, meaning the chain can capture more market share and possibly outpace competitors. Having a larger share of the market will allow the chain to negotiate better prices from vendors, as well as a greater presence on social media and better placement on delivery services like Grubhub and Doordash.
Cons of Growing Restaurant Chains
1. Increased Overhead
One of the main drawbacks of a larger restaurant chain is the increased overhead. With multiple locations come additional operating and administrative costs. The larger the chain, the greater the administrative costs and the more staff that needs to be trained. Additionally, the cost of equipment and rental/leasing agreements also increase and can become prohibitive at times.
2. Management and Staffing Issues
Scalability of a restaurant chain is an issue that needs to be addressed when expanding. Growing too quickly can create management and staffing issues that can be difficult to resolve. Furthermore, finding the right people is often time-consuming and costly.
3. Quality Control
As a restaurant chain grows, it can lose sight of its initial mission and values, resulting in a decrease in quality. Without proper training and careful monitoring, individual stores can provide inconsistent experiences to customers.
Lastly
Growing a restaurant chain is no easy task, and requires careful planning, foresight and evaluation. In order to ensure that the pros outweigh the cons, a franchisor must consider everything from operational to managerial aspects to maximize success. By using data-driven insights from Brizo, franchisors can minimize risks and part of the roadblocks in their journey to growth.
