Fast Food Franchise

radharc · 28-08-2010 4:43pm #1

I am currently exploring the idea of taking out a fast food franchise, just wondering if anyone has any expertise in this area?

Considering the state of the industry at the minute I'd prefer a McDonald's franchise or possible Burger King/Supermacs as, although I'm sure they are more expensive, they offer more certainty and a better "name" to attract customers.

Does anyone know how difficult it is to secure a franchise from the above companies and how much of your own cash you would be expected to provide?

Any other advice welcome also!

bigneacy · 28-08-2010 4:53pm

Ask them! They are the best people to find out the costs from...

http://www.mcdonalds.ie/About-Us/Franchising.aspx

It would be a tough business to get into. I know its a hell of a brand name to trade under but if it was easy peasy everyone would be doing it.

Best of luck with it!

aspasp1 · 29-08-2010 1:34am

radharc wrote: »

I am currently exploring the idea of taking out a fast food franchise, just wondering if anyone has any expertise in this area?

Considering the state of the industry at the minute I'd prefer a McDonald's franchise or possible Burger King/Supermacs as, although I'm sure they are more expensive, they offer more certainty and a better "name" to attract customers.

Does anyone know how difficult it is to secure a franchise from the above companies and how much of your own cash you would be expected to provide?

Any other advice welcome also!

would not know the exact costs involved but for sure you are talking about some serious money. The new one you are expecting about over half a million and be ready to put in your own 200k. and the returns are not that great what you might be expecting!

DubTony · 29-08-2010 1:40am

Here's some eye opening information

http://franchises.about.com/od/mostpopularfranchises/a/mcdonaldscosts.htm

bigneacy · 29-08-2010 11:38am

DubTony wrote: »

Here's some eye opening information

http://franchises.about.com/od/mostpopularfranchises/a/mcdonaldscosts.htm

eye opening to say the least.. €300,000 of what is essentially cash on hand. :eek:

radharc · 29-08-2010 5:49pm

Cheers lads, I had a fair idea the amount would be substantial but didn't think it would be in the 300k region! I have contacted McDonald's and am due to meet them next week so trying to do as much research as possible.

There was a brilliant thread on here a few weeks ago about the difficulties being experienced by convenience store owners with loads of helpful information for anyone interested in entering that industry so if anyone has similar experience in the fast food industry I'd be grateful to hear all opinions.

Bandara · 29-08-2010 10:41pm

Be aware that they will most likely ask where you are thinking of opening/what area you have identified for a new restaurant.

They will have a list of the locations that they have an interest in opening in, outside of them areas they will most likely have no interest whatsoever.

Your getting into an extremely mature sector and new opportunities are mostly kept within the current circle. The ones they are prepared to discuss outside of the established operators that are quite often huge risk, low potential locations that there is no real interest in.

Think long and hard, remember they are salespeople at the end of the day. They don't particulary care if you lose a fortune, don't assume a truthfulness.

bigneacy · 30-08-2010 8:01am

Why not just open McRadharcs or SuperRads or Burger Arcs or something instead?

I.e. An Irish alternative to one of the above (yes, I know supermacs is irish)

It would be cheaper in the short, medium & long term

If you do it well, in a good location and with a very sharp, very professional image then you could be in to make a fortune. You could even do a mickeyD's job with the prefab building and the drive thru and the works.

Franchise possibility's if it goes well. If you are able to do the food for as cheap as them then you'll be just as popular. And remember. A lot of people don't like McDonalds, Burger King or KFC just on principle, that would be a good customer base to win.

Gloomtastic! · 30-08-2010 8:43am

bigneacy wrote: »

A lot of people don't like McDonalds, Burger King or KFC just on principle, that would be a good customer base to win.

Why not look into one of those posh burger franchises - like Eddie Rockets or Gourmet Burger? They are a growing market and always delivered the goods every time we've been in one. (Chocolate Malts...hmmmm...

)

bigneacy · 30-08-2010 8:53am

Gloomtastic! wrote: »

Why not look into one of those posh burger franchises - like Eddie Rockets or Gourmet Burger? They are a growing market and always delivered the goods every time we've been in one. (Chocolate Malts...hmmmm... )

Eddie Rockets is so, so expensive though... Economically its probably not the best business to open right now, imho.

Fries-With-That · 30-08-2010 9:29am

radharc wrote: »

I am currently exploring the idea of taking out a fast food franchise, just wondering if anyone has any expertise in this area?

Considering the state of the industry at the minute I'd prefer a McDonald's franchise or possible Burger King/Supermacs as, although I'm sure they are more expensive, they offer more certainty and a better "name" to attract customers.

Does anyone know how difficult it is to secure a franchise from the above companies and how much of your own cash you would be expected to provide?

Any other advice welcome also!

Hi Radharc

Been there done that so maybe I can offer you a little bit of advice.

How much will it cost you, that depends on how deep your pockets are or how much of your current lifestyle you are prepared to part with.

You will end up spending 500000euro if you want to have one of the major players behind you.

If you have found a location that you think is suitable for a decent Fast Food outlet, keep it to yourself for as long as you can.

Don't go to any meeting with your cards on the table, use it as a fact finding exercise.

Basic running costs are very expensive, so unlessyou have a location with a high turnover you're not going to get a quick return on your investment.

If I was in your situation again I'd think long and hard before I went into the franchise business, if you know what you're doing and have experience in the trade consider going it alone.

Just to give you a quick example of outgoings, I had to pay the franchise 14.5% Gross on my turnover.

Thats not a bad deal you might think, you then have to pay them the rent, the licence fee and buy all your stock, everything from a toothpick to your furniture has to be paid for seperatly.All maintainence is performed by their service teams, which usually costs you more.

You are responsible for staff training (you cover the time they spend in a sister operation for training or for any training organised by the company)

You have to pay rates,refuse,water charges,public liability etc etc.

The costs are huge, if the turnover is high the benefits are huge too, if turnover is low you will find yourself working 80 to 100 hours per week to keep staff costs down.

Its not an easy get rich quick lifestyle there are operations where you can make very good money (I did), there are also operations where you will be left wondering, what has happened to my 300000K

The Irish companies are far much more reasonable to deal with, when it comes to upfront finance.

Regards,

Fries.

Fergal C · 30-08-2010 12:41pm

Hammertime wrote: »

...remember they are salespeople at the end of the day. They don't particulary care if you lose a fortune....

Is that true of the major chains? I don't have experience of the industry, but would have thought that they would want to avoid damage to their brands, that might result from an outlet closing down.

mikemac · 30-08-2010 12:45pm

Fergal C wrote: »

Is that true of the major chains? I don't have experience of the industry, but would have thought that they would want to avoid damage to their brands, that might result from an outlet closing down.

I know about Subway.
If you open a store with Subway they will happily let another franchise open across the road from you or a few doors down.

I don't know if McDonalds or Supermacs give area limits but that doesn't exist in Subway.

bigneacy · 30-08-2010 1:36pm

feelingstressed wrote: »

I know about Subway.
If you open a store with Subway they will happily let another franchise open across the road from you or a few doors down.

I don't know if McDonalds or Supermacs give area limits but that doesn't exist in Subway.

That's true actually. I know in Newry there are two Subways within a short distance of one another. Relatively small city to have two so close...

radharc · 30-08-2010 2:04pm

bigneacy wrote: »

Why not just open McRadharcs or SuperRads or Burger Arcs or something instead?

I.e. An Irish alternative to one of the above (yes, I know supermacs is irish)

It would be cheaper in the short, medium & long term

If you do it well, in a good location and with a very sharp, very professional image then you could be in to make a fortune. You could even do a mickeyD's job with the prefab building and the drive thru and the works.

Franchise possibility's if it goes well. If you are able to do the food for as cheap as them then you'll be just as popular. And remember. A lot of people don't like McDonalds, Burger King or KFC just on principle, that would be a good customer base to win.

Speaking for myself if I had a choice between going to a well known fast food store or a mcradharc's or other unknown, I'd alway choose the former (maybe that says something about me though!). Franchises are more expensive but it's really their system and brand you're paying for, and it is well worth paying for imo, especially at the minute.

radharc · 30-08-2010 2:09pm

Fries-With-That wrote: »

Hi Radharc

Been there done that so maybe I can offer you a little bit of advice.

Regards,

Fries.

Thanks a lot for the advice Fries, I agree with a lot of what you're saying and am under no illusions it will be easy money.

The costs do look onerous but I'd imagine the turnover from a franchised store would dwarf anything that could be turned over by going independent? Without getting into too much detail would gross profit also be a lot higher considering purchasing power and systems in place?

Fries-With-That · 30-08-2010 2:52pm

radharc wrote: »

Thanks a lot for the advice Fries, I agree with a lot of what you're saying and am under no illusions it will be easy money.

The costs do look onerous but I'd imagine the turnover from a franchised store would dwarf anything that could be turned over by going independent? Without getting into too much detail would gross profit also be a lot higher considering purchasing power and systems in place?

You and other readers may find the following statement a little bit weird.

Forget about making a profit, if you become a franchisee, you will be running a business for someone else.

If they care about their brand they will do everything to ensure your operation makes a profit for them, if they make a profit you should make a profit.

You will be paying yourself a store managers salary so make sure you pay yourself what you're worth.

Regards

Fries.

RATM · 31-08-2010 1:48am

I'd agree with others and think about going it alone. Look at the success of Supermacs, it can be emulated if you're willing to put in at least fifteen years hardwork. The McDonalds model is already there- most of your costs will go on marketing tbh. Stuff like finding a Kiddie cartoon character, branding, etc.

Luckily for you there is a big food science and tasting industry in Ireland where you can do your research.

I believe there is a gap in the market in this sector. On the one hand we have McDs, Burger King, etc all of from where we can get a Big Mac/Whopper meal for 6-7.50 euro, but many people see these as low quality meat. Then there is the likes of Eddie Rockets, Gourmet Burger, etc where a burger, fries and a drink are very tasty indeed but will set you back the best part of 15-18 quid, more like full restaurant prices than burger shop prices tbh.

If you can hit the market using the McDs formula of fast food-fast service, large, quick turnover of tables but in a price range of 10-12 euro for burger, fries, drink then I think you could be onto a winner, I know I'd be a customer. This is simply because I believe McDs is crap and rarely eat there. But I do like burgers, however I view Eddie Shockers and Gourmet Burger too dear for what they are.

There's a midpoint to be exploited there for anyone willing to take it on. If you can get a product to the market than is cheaper than Eddie Rockets yet not too far away from it on quality then I think you could have a goer.

Gloomtastic! · 31-08-2010 8:00am

RATM wrote: »

I'd agree with others and think about going it alone. Look at the success of Supermacs, it can be emulated if you're willing to put in at least fifteen years hardwork. The McDonalds model is already there- most of your costs will go on marketing tbh. Stuff like finding a Kiddie cartoon character, branding, etc.

Luckily for you there is a big food science and tasting industry in Ireland where you can do your research.

I believe there is a gap in the market in this sector. On the one hand we have McDs, Burger King, etc all of from where we can get a Big Mac/Whopper meal for 6-7.50 euro, but many people see these as low quality meat. Then there is the likes of Eddie Rockets, Gourmet Burger, etc where a burger, fries and a drink are very tasty indeed but will set you back the best part of 15-18 quid, more like full restaurant prices than burger shop prices tbh.

If you can hit the market using the McDs formula of fast food-fast service, large, quick turnover of tables but in a price range of 10-12 euro for burger, fries, drink then I think you could be onto a winner, I know I'd be a customer. This is simply because I believe McDs is crap and rarely eat there. But I do like burgers, however I view Eddie Shockers and Gourmet Burger too dear for what they are.

There's a midpoint to be exploited there for anyone willing to take it on. If you can get a product to the market than is cheaper than Eddie Rockets yet not too far away from it on quality then I think you could have a goer.

And of course you have to have the toy for the kiddies meal! My kids just leave the food and play with the bloody toy (for five minutes then move on to the next 'want'!) :rolleyes:

I-Shot-Jr · 31-08-2010 8:16am

This thread has just made me hungry. OP I like the independent idea more than opening a franchise, I'd imagine being independent would allow you to have more flexible prices giving you an edge in terms of special deals such as student offers and meal deals. Believe me if an independent food outlet with decent quality food (i.e. better than McD's) were to open near enough my place or college and offer some sort of student deals or offers they would be assured of my business. And students rarely eat alone!

bigneacy · 31-08-2010 11:09am

RATM wrote: »

There's a midpoint to be exploited there for anyone willing to take it on. If you can get a product to the market than is cheaper than Eddie Rockets yet not too far away from it on quality then I think you could have a goer.

I agree absolutely with RATM. There is a definite market in there and it one that is ready to be tapped.

So long as you are not too far off McD prices and you can project a very professional and very clean image- and one of an international corporation (even if you're a one horse operation) you will do very well. Yeah McD's has a customer base but they are the customer base for three reasons; quick, cheap, clean.

You can do that too. McDonalds customers hold no loyalties and lets face it, everyone who goes to McDonalds does so in spite of all the bad publicity the company has. I know everytime I go in, I feel a bit guilty!

To sum up, I think go independent- do exactly what McDonalds are doing- take their systems, their floor plans, their drive thru and their kiddies toys and stick up your own name over the front door. You'll make just as much money and you won't have to surrender 10-15% of that profit to them.

bigneacy · 31-08-2010 11:12am

Fries-With-That wrote: »

You and other readers may find the following statement a little bit weird.

Forget about making a profit, if you become a franchisee, you will be running a business for someone else.

If they care about their brand they will do everything to ensure your operation makes a profit for them, if they make a profit you should make a profit.

You will be paying yourself a store managers salary so make sure you pay yourself what you're worth.

Regards

Fries.

Futher to my above post... Do you really want to run someone elses company?
If thats what you want to do, just take a management role including profit share is someone elses idea.

No point in sinking half a mill in a new business to wind up taking orders from someone higher up.

Fries-With-That · 31-08-2010 7:28pm

radharc wrote: »

The costs do look onerous but I'd imagine the turnover from a franchised store would dwarf anything that could be turned over by going independent? Without getting into too much detail would gross profit also be a lot higher considering purchasing power and systems in place?

You seem to be getting a lot of advice from people suggesting you go solo, I don't know you and I don't know your background.

If you have experience in the food business, then going solo, once you are aware of the costs is always an option.

I would suggest that you may want to consider taking a lease on an existing operation ( many now available) for 2-3 years and see how you get on.

This would allow you gain experience by just renting a fully equiped premises and it would also allow you develope a taste for the business.

As for seeking a middle ground market

people are either going to pay top dollar for what they perceive to be good quality fast food (Eddie Rockets) or they go for the lowest price McD's eurosaver menu.

Its extreemly hard to capture middle ground customers for various reasons, in my experience there aren't enough middle ground customers to keep a shop open.

Jesus Wept · 31-08-2010 8:48pm

RATM wrote: »

I'd agree with others and think about going it alone. Look at the success of Supermacs, it can be emulated if you're willing to put in at least fifteen years hardwork. The McDonalds model is already there- most of your costs will go on marketing tbh. Stuff like finding a Kiddie cartoon character, branding, etc.

Luckily for you there is a big food science and tasting industry in Ireland where you can do your research.

I believe there is a gap in the market in this sector. On the one hand we have McDs, Burger King, etc all of from where we can get a Big Mac/Whopper meal for 6-7.50 euro, but many people see these as low quality meat. Then there is the likes of Eddie Rockets, Gourmet Burger, etc where a burger, fries and a drink are very tasty indeed but will set you back the best part of 15-18 quid, more like full restaurant prices than burger shop prices tbh.

Eddie's have lowered their costs.

neris · 06-09-2010 12:29pm

I got involved in a non food franchise a few years back and was a total disaster. Would advise you to really do your research into the company, their products, costs and your location even if this costs you. Better spending a few hundred or thousand flying around researching then spending hundreds of thousands and getting burnt a year later when your locked into contracts.

If the company are more interested in selling you the frnachise Id be suspicious and getting ready to walk away. The guys we went to werent really bothered about our location which turned out to be a disaster or our plan. If they start bombarding you with questions in relation to any aspect of your operation and not to keen to sign a deal qucikly then your probably going to be working with people who are more interested in their brand and reputation then just boosting their bank balance.

Also I heard that companies like O'Briens were taking out the leases on premises and sub letting to the franchisee. When things went bad they couldnt lower the rent and the franchisee was being cripled by lowering prices and high rents so just somthing else to consider

drunkmonkey · 06-09-2010 1:58pm

I think we need more hillbilly's fried chicken outlets, breasts in a bun are the best out there.. There's only 2 in the country I know of, one is in castleyknock and the other cork city center. It's way nicer than KFC and there an Irish Company, might be worth looking into.. Website is terrible but the contact details are

Tel: (021) 4966818

e-mail: Franchising@hillbillysfriedchicken.com

bigneacy · 06-09-2010 2:13pm

Fries-With-That wrote: »

You seem to be getting a lot of advice from people suggesting you go solo, I don't know you and I don't know your background.

If you have experience in the food business, then going solo, once you are aware of the costs is always an option.

I would suggest that you may want to consider taking a lease on an existing operation ( many now available) for 2-3 years and see how you get on.

This would allow you gain experience by just renting a fully equiped premises and it would also allow you develope a taste for the business.

As for seeking a middle ground market people are either going to pay top dollar for what they perceive to be good quality fast food (Eddie Rockets) or they go for the lowest price McD's eurosaver menu.

Its extreemly hard to capture middle ground customers for various reasons, in my experience there aren't enough middle ground customers to keep a shop open.

After reading this post, I can see what fries-with-that means...

The middle ground is hard to do, look at the airline industry. There are no longer middle of the road carriers offering middle of the road service. Its either cheap or luxury.

The idea about getting a lease and seeing how you get on is good too. Even if you don't make a fortune it'd be a good gauge to see how you'll fare out with your more ambitious plans

it'd be shallow waters to test out your ideas without too much financial risk

wellboy76 · 15-09-2010 8:47pm

bigneacy wrote: »

Eddie Rockets is so, so expensive though... Economically its probably not the best business to open right now, imho.

Dont get me wrong, Eddie Rockets is lovely but I was in Kildare outside a branch with the owner and a little local lad with shaved head came up to us and said....."Hey mister, do you own that place". The boss said "Yes" and the little lad came straight out and said......"Eddie Rocketts empties your pockets"

Funny little fecker!!