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QSR Franchises and Multi-unit Ownership: A Match Made in Heaven

  • March 30, 2017

Quick-service restaurant (QSR) franchises have performed amazingly over the last few decades because they are convenient and cater to customers’ tastes. A QSR franchise capitalizes on instant brand recognition among customers and fills a need in the market at the same time.

Customers love the convenience of getting exactly what they’re craving from a well-known, established brand.

The National Restaurant Association found that 10% of the U.S. workforce (14.7 million employees nationwide) is in the restaurant industry and that the restaurant industry produces $799 billion in annual sales that stimulate franchised businesses, employees, and the overall economy.

When you invest in a QSR franchise and sign your franchise agreement, you’re getting all of the branding rights and operational best practices.

This means that as an investor and future franchisee, you immediately benefit from decades of trial and error at finding the most effective advertising, hiring, training, and operational practices.

shaking hands

A Tasty Pairing: QSR Franchise and Multi-unit Ownership

The majority of franchised restaurant locations are operated by multi-unit franchise owners. One of the reasons is that banks love dealing with established franchises and franchisees who understand the industry.

Other reasons for the recent popularity of multi-unit ownership in the QSR industry are distributing risk, gaining multiple income streams and the advantages of economies of scale, and the convenience of owning more than one QSR location in the same area.

Multiple Income Streams 

Owning more than one QSR franchise location distributes your risk and broadens your revenue streams because if one of your locations underperforms or has an issue, you can offset that underperformance with overperformance at another location.

This advantage gives you time to figure out what’s going on while continuing to draw reliable revenue from your other locations.

When you distribute your possible risk among multiple franchise locations, you lower the chances of having an issue. The more QSR locations you have, the less risk you potentially take on.

Economies of Scale Advantages 

In addition to having better relationships with lenders, owning more than one franchise location paves the way for better deals when it comes to space leasing and equipment rentals.

Buying goods in larger quantities alone reduces your costs. You might also be able to run five franchise locations without any additional administrative staff or managers.

You’ve done this before, and everyone from lenders to rental companies understands that you’re in this for the long haul and are a serious player in the industry.

On top of that, QSR franchise locations are low overhead in general, so even with only two or three locations you can expect to retain more of what you earn.

Convenience of Going Multi-unit

Part of the reason that QSR franchises are low overhead is that the site requirements for a Hot Dog on a Stick franchise location are generous. You only need 600 square feet, a high-traffic location, and a few other factors in place to set up your first, second, or third location!

Because hiring, training, and operational practices are geared around efficiently delivering a time-tested method and giving you a business model with very low overhead, it often makes sense to open multiple locations in the same indoor mall or shopping center.