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Independent vs. Franchised: Which is the Best Bet for Your New Restaurant?  

start a restaurant business

Entering the hospitality industry is fraught with risks- especially if you’re considering opening a restaurant. After all, 80% of new restaurants fail within the first five years. To secure a winning location and hit on a type of menu that will resonate with the location takes capital, connections, skill, and luck. In lieu of that, we must take some calculated risks.

But you do have options. You could set up an independent restaurant, or buy into a chain. There can be no guarantee of success either way, but there are certainly positives and negatives to each.

Opening an Independent Restaurant

Whether you buy an existing independent restaurant or open one yourself, there will be some distinct risks and advantages. If you have a creative type personality, this will be the obvious choice for you since you will have creative control over the menu, business model, décor and other important aspects of the business.

Naturally, all the risks will be yours to sustain with an independently owned business. You will be responsible for establishing and maintaining good supply connections, upkeep of the building, sanitation standards, and of course the quality of the food, service, and atmosphere.

If you are taking over the management of an existing successful restaurant, many of these problems may already be solved or can be easily tweaked into an optimal state. However, if you’re starting from scratch, it stands to reason that the risks, and the stakes, are going to be a lot higher.

Buying a Franchised Restaurant

The relative advantages and disadvantages of buying a franchised restaurant are just about diametrically opposed to those of an independent establishment. If you have an industrious/conscientious personality, then the comparative lack of creative freedom in exchange for established systems will be easy for you to appreciate.

Buying an existing franchise gives you the peace of mind that comes with established supply lines, the support of the broader corporation – in some cases – as well as a network of similar branches which you can turn to for advice and occasionally for aid.

Branches within a franchise do not need to compete with each other as fiercely as differentiated independent restaurants do. That means strategic alliances are more readily available. After all, a customer who likes one Pizza Hut restaurant is likely to happily visit any branch in the chain.

So, there is a considerable amount of security that comes with the franchise option. Something to keep in mind, however, even if you are a creative type – buying a franchised branch establishment can give you the growth potential to eventually open an independent restaurant later. If you are patient, and want to create an independent establishment at a later time with greater stability, buying into a franchise can be a very smart choice.

So, which way do you go?

Finally, whether you choose the independence of a single establishment or interdependence of joining a chain, it all depends on your personality, your talents, the capital you must bring to bear, and your connections.

If you have a hand full of aces; a top-notch menu, a winning location, and plenty of capital, then choosing independence seems like a pretty good bet. On the other hand, if you need to build a solid foundation, or just enjoy running a business, choosing a franchise might be the path for you.

 

 

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