Inflation is no joke, but that doesn’t mean the business world grinds to a halt when it gets too high. While it does present an economic challenge for would-be entrepreneurs, there’s still room to invest in new business opportunities such as opening a restaurant franchise, provided you plan ahead. While it might be tempting to wait until the rate of inflation cools down, the truth is that there are many factors at play that make it impossible to gauge when that might occur.
If you think you’ve got what it takes to open a restaurant franchise during a period of high inflation, then you’re one step closer to tackling the challenge head on. Make sure to arm yourself with the following tips so that you can avoid any pitfalls, and open a restaurant franchise location that will attract patrons no matter how difficult the economic period might be.
DO YOUR MARKET RESEARCH
The first step in opening a successful restaurant franchise location is to conduct some comprehensive market research to identify particular franchises that have a strong track record, and are likely to thrive in the current economic climate. These franchises offer products or services with consistent demand and have a history of performing well during economic downturns. Seek information on whether a particular restaurant franchise managed to expand and open up new locations, despite the economic downturn. This is strong evidence that the franchise in question has an excellent reputation, not to mention a business model that can survive and thrive even in the most difficult of times.
EVALUATE FRANCHISE FEES AND COSTS
Before making your final decision, make sure to take a close look at the franchisor’s fees, royalties, and ongoing costs tied to their business model. If possible, try to factor in the potential impact of inflation on these costs, and assess whether the franchise’s business model can withstand the current economic conditions. The best restaurant franchises have already put safeguards in place to deal with turbulent economic periods, such as product sourcing, proper training and more. While these franchises do plan for the worst, their model is designed to bring out the best.
NEGOTIATE
During periods of abnormally high inflation, you can benefit greatly by negotiating favorable terms with the franchisor in question. Rest assured, the best franchisors understand the difficulty of trying to open up new locations when things are particularly rough, which is why you should try to negotiate lower franchise fees, reduced royalty rates, or extended payment terms to help mitigate the impact of inflation on your expenses. Some franchisors may opt for temporary agreements until such a time as inflation cools down to acceptable levels, at which point you may revisit your agreement accordingly. Flexibility is key.
ANALYZE THE LOCAL MARKET
Before signing on the dotted line, do your homework regarding the local market where you plan to open your restaurant franchise. Consider factors such as consumer spending habits, local competition, and the impact of inflation on customer purchasing power. Work with your franchisor to identify excellent locations to cut ground on a new franchise location, and rely on them for advice whenever possible. And, of course, make sure to adjust your pricing strategy and menu offerings to incentivize patrons to visit. Families are feeling the brunt of high inflation most of all, and making things easier on them is sure to create a healthy relationship between you both.
PROACTIVE COST MANAGEMENT
Implementing efficient cost management strategies to mitigate the impact of inflation is fine, but in reality, you should be pushing for this approach even when business is excellent. A penny saved is a penny earned, and that can have drastic effects on your plans to expand your franchise portfolio in the future. Make sure to keep your supply chain optimized at all times, while negotiating better deals with suppliers, and closely monitoring your operating expenses. This will help you maintain profitability despite rising costs.
SELL YOUR VALUE
One of the best ways to attract patrons during a high inflationary period is by offering them high-quality menu items and excellent customer service. The less far each dollar goes, the more customers will be conscious of their spending habits. Providing value and a positive experience can help you attract and retain loyal customers, while setting yourself apart from the competition at the same time. After all, when times are tough, patrons and their families will have to make a decision about which restaurant franchise to visit. Make sure they choose yours!
REACH OUT TO THE PROS
When in doubt, consider consulting with financial advisors, franchise consultants, or industry experts who can provide valuable insight and guidance that is specific to your situation. They may have some ideas at the ready that you haven’t thought of, so be sure to hear what they have to say, instead of assuming you know it all. And, of course, reach out to your franchisor. Remember that they have a vested interest in the success of your franchise location, and they will gladly help out if you need advice or assistance.
FRANCHISE WITH ST. LOUIS BAR & GRILL
Why are we so confident in sharing these tips with you? It’s simple – St. Louis Bar & Grill not only managed to survive the Covid-19 economic shutdown, but we also expanded outwards into new districts and territories. In fact, our franchise model is so successful that we show absolutely no signs of slowing down, and we are constantly looking for new franchisees to join our family.
Interested in opening a restaurant franchise with a long and storied track record of success? It’s time we heard from you, so you can take your first steps towards joining our franchising family. The opportunities are endless, despite the nastiness of inflation! For some, it’s a nightmare. For us, it’s just another challenge we’re ready to face with confidence.
