Why Food Franchises Has A Greater Chance of Success Compared to Non-Franchise Restaurants

Posted on May 12, 2008 by Ginger Watford

I’ve heard it said that modern scientists “stand on the shoulders of giants,” meaning that every new generation of scientific research and knowledge builds upon the work of all the generations before it.  That makes sense: how far would we really be able to get in society if we literally had to reinvent the wheel every time the last inventor of the wheel died?  I don’t think I have to answer that.

This same principle applies to business, and particularly to restaurants.  Though there are people who succeed at reinventing the wheel—or spaghetti, or tacos, or panini—not everyone has to.  And in fact, the vast majority of restaurant owners who try to, fail.  That’s right—those who have done the research to buy a restaurant franchise probably already know this—somewhere in the realm of 70-90% of new restaurants that start up die within the first year of business.  And most of the rest of them will die in the next three—sit-down establishments, burger joints, smoothie shops: no one’s safe.

Something Strange

The odds of success for the new restaurant owner are very clearly not good, which seems odd when we live in a country that so cherishes both food and novelty.  It seems logical that new restaurants—barring the bad ones, of course—would be more likely to last than they are.  But they don’t, and as I look around, I’d have to be blind to not recognize that instead of increasing restaurant variety, I tend to see a lot of the same signs not only staying around, but increasing in number, like the Carl’s Junior stars glowing bright yellow all the way up I-5, from San Diego, CA to Tacoma, WA.

So, we ask, why this seeming contradiction?

What makes Carl’s Junior, its east-coast twin Hardee’s, and the like different than the lists of restaurants that go up and come down in that first year is the fact that they are franchises.

What Makes the Difference

There are a number of things about running a franchise instead of an independent restaurant that make its survival so much easier.  The first, and probably most important, is brand recognition.  While a brand new southern sandwich shop down the street may have the know-how of a seasoned cook who makes far superior-tasting food at competitive prices, the local Kentucky Friend Chicken is likely to have hundreds more bodies coming through the door—and drive-through—simply because people recognize Colonel Sanders and know that no matter which KFC fast-food franchise they go to, they’re going to get the exact same thing.  A lot of us are willingly stuck in our favorite fast-food rut, and recognizable brands bank on that.

Food franchises also have the advantage over new start-ups because they’ve already got their systems down.  This actually is one of the great benefits of all franchise business opportunities: instead of developing business models, financial systems, operation plans, menus, and advertising schemes from scratch, the food franchise falls into the franchisee’s hands with those things already in place after years of previous testing and refinement.  Unlike the toddler stumbling around as he slowly learns to walk, the new owner of a tried and tested Papa Murphy’s Pizza operation is hardwired to break immediately into a sprint without fear of his methodology falling apart.

Finally, one of the most important traits of a restaurant franchise is that it comes with a support structure to counterbalance all the eternal and internal factors that weigh against the success of any new business.  When a franchisee opens a new Taco Del Mar, he is not the only person interested in its success.  Instead, everyone associated with the name Taco Del Mar, from the franchisor to other franchisees, is pulling for each franchise location to do well in the market, and they make themselves available to insure the new owner’s achievement in every way possible, because the success of an individual location bolsters the success of the whole company.

What We’re Getting At

Don’t take all this the wrong way, there is no sure-fire way to guarantee the success of a food franchise, or any other kind of business—nothing in this life is guaranteed.  But when considering getting into a market as seldom-rewarding and downright abusive as food, it’s good to take as many precautions as possible.  And the best precaution a person can take is starting out standing on the shoulders of an established food-giant, because nobody wants to be stepped on while trying to re-perfect their wheel.