FREE SUBSCRIPTION Includes: The Advisor Daily eBlast + Exclusive Content + Professional Network Membership: JOIN NOW LOGIN
Skip Navigation LinksHome / Articles / Read Article


Financing: The Essential Ingredient for Quick-Service Restaurant Success

Date: Apr 01, 2014 @ 07:00 AM
Filed Under: Franchise Finance

The quick-service restaurant (QSR) industry in the United States is growing and highly competitive. In 2014, there are close to 160,000 QSR establishments nationwide that account for more than $220 billion in annual revenue. The improving economy and increase in consumer spending and optimism will help drive QSR sales in the months to come. With so many QSR concepts and locations in big cities and small towns alike, capturing market share can be a challenge for franchise owners.

So, just what does it take to bring success to a QSR franchise? Obviously, it must have a sound business plan, a good location, excellent employees, and adequate financial resources. Without them, no QSR franchise can grow and prosper. This article focuses on QSR financing, which is an essential ingredient for short- and long-term growth and success.

Cash is King for QSR Franchisees

It is very important for QSR franchise owners to realize how important it is to maintain an adequate amount of capital at all times. A franchise simply cannot stay in business without having enough capital to pay for the myriad operating expenses such as inventory, employee salaries, rent, business taxes, accounting fees and insurance, to name just a few.

Today’s most successful QSR franchisees have strong business acumen; they take the time to plan their budgets and sales goals and allocate the necessary amount of capital for their operational needs. A good rule of thumb for QSR franchise operators is to consult with their business accountants or financial advisors to determine how much working capital they should make available at all times. Every franchise owner has their own unique situation, and professional consultation is the best way to map out a sound financial strategy.

Knowledge is Key

Is the franchisee extremely detailed about the foods its QSR establishment prepares and serves, but relaxed when it comes to financing? Are they aware of how much revenue their restaurant needs each month in order to cover expenses? For some franchisees, money management can be a real obstacle to running a business. Many of them have an entrepreneurial spirit and personal and professional passion for the food service industry, but lack the ability to properly manage finances.

If this applies to your franchisee, don’t worry, as it is quite common among business owners in every industry. As mentioned above, it is a good idea for your franchisee to meet with their accountant to get their books in order and obtain real-world financial advice. Doing so will lessen their burden of dealing with the financial end of running a QSR franchise. In addition, it will allow the franchisee to focus their time and energy on the day-to-day responsibilities of running the franchise.

Financing a New QSR Franchise

There is a lot a potential franchisee needs to understand prior to getting started. The potential franchisee needs to become very familiar with the franchisor, their initial startup costs and franchise fees, and their basic overhead. Also they need to thoroughly review the franchisor’s business policies and guidelines. After putting pen to paper and becoming a franchisee, the franchisee must provide the capital necessary to start.

Continued on Page 2...

Comments From Our Members

You must be an Equipment Finance Advisor member to post comments. Login or Join Now.