The most popular question that we often get from aspiring restaurateurs or even current restaurant owners is choosing between franchise restaurants vs. an independent restaurant. Even for experienced restaurant owners, choosing between chain restaurants and standalone restaurants as a viable method of expansion is confusing. For first-time restaurant owners, it can get even more tricky. Thus, it is beneficial to know which format is more comfortable to operate, will give better returns and has minimal risk. This article will tell you all you need to know about opening a restaurant business.
In this article, we will draw a comparison between ‘Chain’ and ‘Independent Restaurants’ to understand what they are, how they work and what are the risks involved in each.
Franchise Restaurants v/s Independent Restaurant: A Detailed Comparison
Now, we will discuss what chain or franchise restaurants are, what standalone independent restaurants are what are the pros and cons of each format.
What Is A Franchise Restaurant
A franchised restaurant is a restaurant brand that you as the owner would have bought the right to use for a royalty fee. The company that permits to use their brand name is called the ‘Franchisor’ while you who has bought the rights to use the brand name in a particular location are known as ‘Franchisee.’ The restaurant is known as a ‘Franchise.’ This format though not new has recently gained a lot of traction. The franchise industry in India is growing at a rate of 30-35% per annum, and the sales turnover of the sector was recently valued at over US$7 billion.
Running Franchise Restaurants
In Franchise restaurants, you are running someone else’s brand. Everything is pre-decided, and you have to stick to the Brand rules. A Franchise Outlet is highly controlled, and most of the decisions are already made. You get a lot of help from the Franchisor when it comes to employee training, supplies, etc. However, make no mistakes. Running Franchise restaurants also require a lot of effort and management skills. There is a lot of demand from the main Brand to deliver consistent results. Regular audits are conducted to ensure that all the standards are met by the Outlet to keep up with the Brand image. Also, running a franchise restaurant would require the presence of a restaurant management software to streamline operations for all the outlets.
- Franchise restaurants are easier to run for new and inexperienced restaurateurs as well.
- Fewer risks are involved as the concept has already been tried and tested.
- The Franchisor usually provides help to the Franchisee in terms of staff training, supplies, equipment, marketing, etc.
- The cost of acquiring the Franchise is high, and there is also a weekly or monthly Royalty fee.
- The owner has little control over Franchise restaurants. Lack of creative freedom and decision-making power can be frustrating.
What Is An Independent Restaurant
An independent restaurant is one that is not associated by any corporate chain and is run by the owner. The owner of the restaurant has the decision making authority over all the restaurant operations.
Running An Independent Restaurant
In an independent or standalone restaurant, you have the liberty of doing everything. You can choose a location that you like, decide the concept by yourself, serve what you want. You can implement any changes in your menu or theme all by yourself without any restrictions. However, responsibility is exponential.
- The entire control is in the hands of the owner.
- Low investments are needed.
- A steep learning curve, especially for new restaurateurs.
- The owner pockets all profits.
- There is a high risk of failure, especially for first-time restaurateurs.
- Business and operations can be consuming in terms of time and effort.
- There is usually operational inefficiency due to the lack of standard rules and policies.
Difference Between Chain And Independent Restaurants
Now focusing on the differences between chain and independent restaurants, the two can be broadly classified on the basis of:-
- Investment Needed.
- Manpower, kitchen equipment, and raw materials needed.
- The menu, marketing, and brand support.
- Licensing, and returns.
Investment comparison between independent restaurants and Franchise restaurants.
The Manpower, Kitchen Equipment, and Raw Material Supplies needed for independent restaurants and Franchise restaurants.
The Menu, Marketing, and Brand Support received in the case of independent restaurants and Franchise Restaurants.
The licenses and returns of independent restaurants versus that of Franchise restaurants.
Many experts believe that people who are from the Hospitality background such as the Chefs, Restaurant Managers, Hotel Management students, etc. are more suited for running their independent venture, while first-time restaurant owners should go for the Franchise way. However, there are several examples of people from different backgrounds running their restaurants pretty well.
Ultimately it boils to the question of why you want to open a restaurant. If you are a great cook or have always dreamed of opening your restaurant, then Franchise is probably not the way to go for you. If you consider running a restaurant as an investment and treat it like just any other business, then running Franchise restaurants is a great idea.