So, you’ve invested your life savings (or got some amazing financing) into a brand and franchise that you believe in. You’ve committed to working potentially 90+ hours a week, running a team of hourly workers, and establishing a new place that serves a local community that you want to give back to. Congratulations, you’re now running a Quick-Service Restaurant (QSR) franchise business.
Or maybe, not quite yet.
Let’s wait to uncork that champagne in case you’re just in the planning stages. Maybe you’ve heard from other franchisees how wonderful it is to be your own boss, yet have the help and support of a large corporation being the wind in your sails. Maybe you’ve seen various franchises around your area, Domino’s, Chick-fil-A, McDonald’s, Subway, or Carl’s Jr., outlast other small businesses, and even expand into new, nearby locations. In 2019, there were close to 800,000 franchise establishments and operators in America, which had been on an upward trend for years, so you’re not wrong: franchises are thriving.
But what does it take to succeed as a QSR franchisee and entrepreneur? Is opening a franchise as turn-key as you think it is? What exactly goes into running a franchise location, not just to barely survive but to thrive and be profitable? Over the years, I have sat down with dozens of QSR franchise owners and have learned the tips and tricks from some of the best operators in the country. I’ve spoken with franchisees who own hundreds of QSR locations, as well as those who own just two or three highly profitable stores.
I’ve put together this ultimate guide to be a one-stop-shop to understanding what it takes to succeed in QSR franchising, summing up years of research and conversations with the top QSR franchisees in America. The aim of this guide is to help those who are serious about embarking on their own QSR franchise journey crystalize what they will have to do, and the considerations that they will have to make, to become a success in this industry.
Finding a great location for a QSR is key to success, and so is negotiating the lease so it works in your favor. Signing a badly negotiated lease can make it nearly impossible to keep your business afloat. Let’s discuss some strategies to put your new business in an advantageous position.
One of the most important pillars of a successful QSR comes long before spending a single dollar: where your restaurant will go. As you carefully select the location of your QSR, there are a few factors to keep in mind.
Does the location you have in mind have great foot traffic? Don’t guess on this important factor. You should physically survey the spot and measure just how much foot traffic the area gets. How about on weekdays? Or weekends? What time of day does foot traffic peak? Ask surrounding businesses what their experience has been over the last year or two. Have they seen foot traffic increase or decrease during this time?
Does this location serve people looking for a quick lunch during office rush hours, or families out with their children? Depending on your specific franchise brand, you’ll want to target more of one group than another. Are you looking to serve as a grab-and-go hub, or more of a sit-down location? Understanding the type of people in your chosen area can help you either formulate a plan of attack, or quickly make you decide to choose another location.
Does your location do seasonal business? QSRs near schools understand that there is a huge difference in traffic between the fall and summer seasons. Or if you are in a part of the country where winters are cold, how will your smoothie shack perform when it’s below freezing? Can the summer traffic cover your costs during leaner winter months?
Does this location have easy access to public transportation? What is the parking situation like? What will the drive-thru situation look like if there is a long line of cars? The easier the area is to get to, the better the business will do. Research whether there are any plans to bring a train or bus stop to the area. This is often a good sign of a good investment for future growth.
Sometimes, the franchise corporate team can help connect you with a real estate agent that can help you make the right decisions. Otherwise, asking for referrals from other QSR operators in your area or within your brand can be a good source for finding a trustworthy agent.
There are many factors that contribute to signing a commercial lease. How many years are you planning to sign for? Are you signing a lease during a recession or when the economy is booming? Is the area you want a brand new shopping mall or at a property that has been around for decades?
Generally, if you are confident in your chosen location, it makes sense to sign for a longer period of time as it will often help you get better pricing. Likewise, signing during a recession can help you get better deals.
Now that you’ve chosen the location for your QSR, it’s time to gather the funds to establish your business. Raising capital is a constant area of concern for prospective entrepreneurs and I hear from franchisees that there is a surprising lack of information on this topic online. So let’s dive into the top places to secure funding to finance your QSR.
Often, the entrepreneur’s own savings is the main source of seed money to start their QSR business. This obviously comes with a huge risk of potentially losing your savings in a bad business venture. So how can one mitigate the cost and risk a bit more?
Loop in your personal network into your business. Be it friends or family, raising a small round of capital from people you personally know is a solid way to start gathering funds. If it was good enough for Jeff Bezos who got his parents to chip in to his strange “Amazon” idea, it might work for you too. Maybe don’t promise that you’ll be the next Amazon, but rather that you have a great plan in place to run a successful QSR location.
No matter who invests from your personal network, write down an agreement defining the terms and details of their investment and what repayment will look like. Your friends and family may trust you inherently, but it’s necessary to get everything in writing so everyone has a reference to the terms.
If you can pitch your business proposal to private investors, often referred to as angel investors, you might be able to raise your initial seed money very quickly. A popular approach especially in Silicon Valley, is to connect with angel investors via platforms such as Angelist, Republic, and you can also connect with them on LinkedIn, local networking groups, and at conferences.
I have personally raised capital from angel investors several times, and I find that the best way to do so is to build long-term relationships with mentors and advisors that you trust. These relationships may be for many months or several years, because at the end of they day, they are investing into you more than they are the business. Earning their trust is everything.
A popular financial option for franchisees are institutional funds focused on the QSR industry: The Kitchen Fund, Joe Montana’s Liquid 2 Ventures, FransMart, Rock Capital, FOCUS Group, Apollo Group, and more.
Typically, these private equity funds tend to invest at a point when there is already some traction. For example, they're interested when you have been able to prove your growth to at least 2-5 locations in your business. They want to know that you have experience and a proven track record before they invest in you.
These days, many entrepreneurs have used platforms like Indiegogo and Kickstarter to raise capital for their business venture. They can even go viral on social media to spur interest from the community.
Of course, it helps if you have a great story behind why you want to launch a business in a particular location. If a large part of your QSR goal is to contribute to a specific town or area, this can be a great opportunity to tell your unique story and gain interest from locals who want to invest into their own neighborhood.
Craft a video telling your vision and story and publish it to your online networks. Even small contributions can quickly add up as your crowdfunding page is shared.
Building a great team and culture is the number one priority for any QSR franchise operator. From preparing the food, to maintaining the location, to customer interactions, and everything else in between; your team is the lifeblood of your business.
The average franchise location can have anywhere from 10 employees (think Subway, for example) to over 80 (think Chick-fil-A). No matter the number, it’s not a simple matter managing a team, and it’s even harder when they may be far away in multiple locations across town. This is why it’s so important to hire great people, train them up well, and treat them with respect.
Building a great team and establishing a solid culture starts from the top.
It is crucial for a QSR operator to lay out the culture and values for your business, or even for your location. From conversations with the top QSR operators, I have learned that they clearly define the values that motivate them internally, beyond a pure bottom line point of view. They want to empower the community, give back to people, and become a driving force in providing high-quality food to their customers in an efficient way.
It is important for a QSR operator to actually write down the culture and values and to share it often with your employees. Make it shareable and easily accessible, and include it as part of the onboarding process for new hires.
Here is a sample of Workstream’s company values:
Humble and hungry: Be scrappy. Focus on getting things done. We measure by things done and less by facetime. Stay humble, stay hungry.
Everyone does customer success: We are obsessed with customer success. We work vigorously to earn and keep customer trust and make them succeed in their work.
Don’t lose the human touch: We are solving an important problem and believe in teamwork and putting people first. We focus on helping others, and are fanatical about keeping the human connection. We are the people.
Direct feedback is a gift: Feedback helps us to improve and move forward. We believe in honesty, transparency, and helping each other to improve and become better.
The average employee churn at QSR locations can be up to 150% annually. Many operators have to hire a new person every week for a single location. At this turnover rate, you may think it would be easier to hire whoever you can, no matter their skill or aptitude. Some QSR owners have even propagated the idea that who you hire doesn’t really matter. This couldn’t be further from the truth.
It’s crucial to hire great talent, not only to mitigate churn, but to grow the business as well. Great hourly workers become great managers, and that’s the path to expanding or even running another franchise location. Invest in the right resources to hire well, provide proper training, and reap the benefits of good workers who help you accomplish more than you ever thought you could.
Running a quick-service restaurant is a team sport. It’s not possible for a single employee or operator to run a Chick-fil-A or Pieology location, and it is crucial for you as the franchise owner to understand it yourself (too many owners try to do it all on their own). You need to foster a strong team culture of placing the team before yourself and working towards a common shared goal: running a successful QSR franchise.
I am a huge fan of Netflix’s Culture Deck, which outlines their philosophy and methods to creating a strong culture for your team. One of the key points that leads to great teamwork is feedback on actions. Not all feedback is created equal. You can overly sugarcoat feedback, making it too subtle for any point to be made. At the same time, you don’t want to make it a personal attack. That always causes employees to become defensive and resistant. Therefore, the feedback should always be about the action, not the person.
A great treatise on creating a teamwork-based culture is one by Bill Walsh, the former coach of San Francisco 49ers, called “The Score Takes Care of Itself”. Bill took a group of players who were struggling to solidify into an actual team and transformed them in a couple of seasons from being last in the league to champions.
Coaches used to rely on screaming and shouting, and Bill created Standards of Performance (SOPs) for everything from answering the phone to training top players. The SOPs were lists of how to do certain things so everyone on Bill’s team was consistent. They include:
Being a former professional basketball athlete myself, I could relate to and identify many of the similar values and pointers of how running a quick-service restaurant is similar to building and leading a sports team.
Each QSR brand, from Jamba Juice to Burger King, has their own unique initiatives and corporate structure. As a QSR operator, you’ll need to work closely with corporate HQ to align with their vision and brand direction. While some may consider this to be stifling, most understand that working with the franchise team is the best way to be trained and onboarded property, setting yourself up for the best chance of success.
In most QSR corporate teams, there will be a mix of key players that you will be in contact with as you start your business. Understanding who these leads are and what they do, and can do for you, will help you navigate your first few steps.
Typically, during your first three months after signing on as a franchisee, you will be asked to spend one to three weeks at one of the franchise’s corporate locations to train with these team leads.
While there will be literature to read and observations to make, the best training will be actual work on the floor of locations in operation. Be prepared to get your hands dirty as you cook food, serve customers, and really get to know how the business works on a daily basis.
It’s crucial to use this time to ask as many questions as you can about the process of running your own store, as you’ll not only have access to the team leads, but the owners of successful locations. Establishing good relationships at this stage can help you build allies for the future, so be attentive and as friendly as you can!
Nothing stays the same forever, even brands that have been around for decades. As the franchise evolves, the corporate team will provide updates to vision and procedure via emails, quarterly calls, and meet-ups. You’ll also have access to internal resources and guides that are updated regularly as well.
Read as much as you can. Pay attention to updates and highlights. They want your franchise to succeed and gleaning tips from other successful locations, adopting the newest menu items quickly, or utilizing corporate’s new assistance initiatives (ie. marketing blitzes) can help your store perform better. Corporate also appreciates your feedback and honest communication, so don’t hesitate to ask questions or for assistance.
Putting together a talented, well-trained team is one of the most important things you can do as a franchisee to set yourself up for success. Every hourly worker is a touch point between your business and your customer, which will define the experience your guests have when they come into your location.
Poor employees mean poor customer experiences, and your business will be over before it really even starts. So put in the time and effort to source the right talent and train them up properly. Going further, you’ll want to establish an efficient process for hiring that will provide you with the talent pipeline you’ll need as you scale.
Remember, hiring for QSR is a never-ending task. With turnover rates as high as 150% each year, your process can’t be ad hoc; rather, the successful franchisee will develop a strategy to keep that hiring pipeline full and flowing.
Have an efficient way to source the best talent. We are in modern times with modern solutions for many hiring bottlenecks. Especially in the QSR industry, speed wins. Take too long to hire for your positions, and your candidates will go elsewhere.
Depending on your location, applicants may have many options when looking for hourly work. To stay competitive with other local businesses, be speedy with your responses in order to keep the candidate’s interest.
Text messaging has a 95% open rate compared to email, which only has a 25% open rate. You’re also 3x more likely to get a response using texts than email. Hence, modern hiring leans toward SMS when engaging with candidates, especially if they are younger. Millennials and Gen-Z have largely grown up with smartphones and texting, and are more comfortable engaging on that platform.
If your hiring platform can capture the responses from these quizzes, you’ll be able to sift through hundreds of resumes much faster without accidentally skipping a great candidate.
Most recently, businesses have been screening candidates by asking them to upload short videos that helps hiring managers gauge their personalities. Carl’s Jr. asks candidates to record a 30 second video answering “Why do you want to work for Carl’s Jr. and this specific position?” to see how the applicant communicates and how they present their thoughts. It’s been a great way to pre-screen candidates before the one-on-one interview and makes sure the pipeline is full of great candidates.
Hiring isn’t enough to ensure the candidate becomes a good employee. Proper training in the first few weeks is crucial in shaping them to be successful at your location. A well-designed onboarding process is key to this process.
The employee's main take-away should be the Key Performance Indicators (KPIs) they'll need to excel.
As a former QSR manager, I used to pride myself on efficiency by using a mix of paper, books, pens, and emails. As a fairly organized person, I was able to run my business decently, but looking back, I realize I should have utilized much more of the technology I had available to me to find real efficiency.
Almost a year into running that business, I became much more open to trying out new software and realized much too late how much time and energy I could have been saving. Perhaps I was too cost-conscious at the time, not understanding how much time actually costs busy owners of a QSR.
These days, there are a host of affordable tech available for managers that can boost efficiency. Ranging from hiring and onboarding tools, POS solutions, CRM platforms, and more; it’s worth taking some time to test out and evaluate these options to see what might work best for your business.
Here’s how to go about finding the right technology for your location:
Stay connected to your team as they are the eyes and ears of the business and will usually know what issues are the biggest problems that take up the most time in their day. Either as a team or in 1-on-1 meetings, find out the pain points in their daily, weekly, and monthly tasks.
It’s important to iterate that their job is safe and that you’re not trying to replace them. Rather, you are a team trying to figure out how to make the work easier and faster for everyone involved.
Some QSR owners conduct a team-wide survey every so often, keeping it anonymous, to get feedback on the challenges they face. This way they are more free to communicate candidly about different issues.
However you do it, distill the common problems and try to rank them by how much time each of them costs your team.
Now that you have a good idea on the main problems to tackle, find the tools that can help. One of the best ways to do this is to utilize your QSR network. There’s rarely anything new under the sun when it comes to managing a QSR; meaning, your franchisee peers may have already tackled your issue. See what software or technology they use and evaluate their opinions on the pros and cons. If it worked for one location, there’s a good chance it’ll work for yours.
Reach out to your corporate contacts and see what tools they may recommend. Franchise groups may have agreements with companies that offer solutions at a bulk discount. Even if they don’t, having the clout of the brand behind your request can get you discounts on a solution you’ve found or that corporate suggests. On the flip side of what I wrote above, if you’re having a specific efficiency problem then there’s a good chance others are having it as well.
Check out software review sites for solutions that may solve your team’s bottleneck to see how others have rated the technology. Usually there is a free trial for a few days or weeks to evaluate the product. Use this time! Thoroughly vet the software during the free trial to see how it may work with your team. Pro tip: if you contact the company, often they will extend the free trial for you to get a better sense of its use cases.
It’s best to designate a lead on your team to test the solution. For example, if you are testing out Workstream, get your hiring manager or COO to thoroughly use the product to make sure that it can work for them. It’s often hard for you, the CEO, to make time to test all the details of a product. Unless you’ll be using the software directly each day, assign this task to the team member who will be using it the most.
If I could do it all over again, I wouldn’t be as reluctant to use technology to help by restaurant business. Now that I am on the other side of this equation building the right software for busy owners to use, I know that the cost of the software itself almost always pales in comparison to the time savings for you and your team, let alone the increased business due to better efficiency.
The best way to get the best talent on your team is to train your current team. By keeping them engaged and motivated, you can help them learn more in their role and get more out of them.
Due to the high turnover rate of the QSR industry, it’s a convenient myth to think there is no point in training employees any more than you have to since they’ll just leave in a few weeks or months. The reality is that one of the main reasons they leave is they don’t feel like there is any room for improvement and growth! Most workers want more training. They want to learn new skills. Teaching them won’t chase them away; it will in fact make them more loyal.
In my experience, I’ve even found that training employees well also encourages them to return to be reemployed at your store. I’ve worked with young adults who left for school, but came back every summer and winter break to work because they appreciated the training I was able to provide.
So, how can you continue to grow the skillsets of your hourly workers?
We already touched on the initial training phase that lasts for a few weeks to a month, but training should never end there. After the initial “basic training,” there should be advanced sessions designed to specifically target skillsets or higher-level positions.
Training shift workers to become shift leaders is the most straightforward goal to base strategies around. What does the average shift worker need to learn to be able to become a shift leader? How long will they need? Perhaps there is a 3-month long training process that includes on-the-job training that will get an employee to this goal.
A more lateral training opportunity would be to instill new skills such as cooking specific items, operating the drive-thru, dealing with customer service, etc. Target skills that will help them expand their resume. Learning new software and equipment will do that, as well as exposure to more customer-facing roles. Again, have a strategy in place that includes the time allotted to master these new skills. An hourly worker can learn a new skill a month, for example, and quickly expand their usefulness to your location and to their future prospects.
Coming up with an ongoing training plan may be difficult for new entrepreneurs. Luckily there are online tools and resources that can help you enact these training programs at your QSR location.
Massively Open Online Courses (MOOC) are great for self-motivated individuals. Coursera and MITOpenCourseWare are two examples. They have courses and training for skills such as Customer Service, Operations, Marketing, and more. Subscriptions can be a business expense and a worthwhile investment to improve your entire team. Of course, your employees have to feel some sense of self-motivation to do these courses, but you can also incentivize them to learn with bonuses for completing coursework. Great leaders inspire their team in many different ways. And keep in mind that empowering your team and keeping them engaged will only make your business that much better. Happy employees are more productive and can lead to overall growth for your location.
Having a “buddy system” worked well for my own team. I would often pair up a more experienced employee with someone who just started to create a casual mentorship partner system. This always seems to help both sides: the newer employee gets up-to-speed faster, and the seasoned employee learns leadership and accountability skills.
Having them work on specific tasks together during the week, often tasks that are new to them, can help this partnership grow. Two heads really are better than one when it comes to training and motivation. Having a partner tackling new challenges with you is something most workers appreciate.
Being a part of a franchise group means having other owners and operators in the QSR industry to learn from, trade ideas with, and help each other grow. When I was a restaurant owner, I found it invaluable to learn from others who had gone before me. I found that entrepreneurs especially liked to connect with other owners and were willing to help and provide support, because they also had this sort of help as they were coming up.
Most QSR brands have a franchise advisory council (FAC) that helps owners learn, connect, and grow. They meet once every few months, often in person over a meal, and discuss common challenges franchisees are seeing and how they can overcome them together.
Sometimes, you may have to be invited to join an FAC. It’s worth the wait and persistence because these groups are a great resource. As you make your place in your local QSR community, you will befriend FAC members and find your way in soon enough.
Most franchise brands have an annual conference, and some bigger brands may have several regional meetups during the year. These are great opportunities for franchise owners to get together and trade what they have learned. Like the FAC, it’s a great way to learn from other franchisees in the space.
These conferences have lectures on best practices, product showcases, new suppliers, and a host of other things that can help your franchise business grow. Perhaps there’s a new POS that can cut your management time in half, or a new hiring platform to try out. Most likely, as a franchisee, you’ll get a discount to attend these conferences so do take advantage of them when they come around.
Other than brand-specific conferences, there are local and regional trade shows from the National Restaurant Conference, International Franchise Association, and a few others. Read up on what they might have to offer and choose the ones to attend that fit your franchisee the best.
Franchise groups for your brand probably already exist on Facebook or LinkedIn, but if they don’t then consider starting one yourself. Online communities are a great way to quickly ask questions to your peers and get feedback readily. It’s also a great way to keep abreast of the latest news and events affecting your business.
Finally, just because you’re starting out doesn’t mean you don’t have valuable insights to offer. As a newer owner in the space, perhaps you bring with you new operational methods or technologies that others might benefit from. The more you share your own goals and successes and failures, other franchise owners will do the same and open up to you as well. The QSR space can be a very supportive one with a free exchange of ideas, so take advantage of it with a good mix of give and take.
A successful QSR location is one that people know about and appreciate. As you’re starting out, it’s highly beneficial to engage with local media and even some national outlets specific to the space. There are a ton of journalists that cover the industry and you’ve probably read articles about QSR in Franchise Times, QSR Magazine, Entrepreneur.com, and more.
But how do you get journalists to pay attention to you specifically? I have been fortunate to be featured on ABC News, Bloomberg, The Wall Street Journal, TechCrunch, Business Insider, and more. Here are the strategies that have worked for me in getting my message out across various media outlets.
Behind every entrepreneur is a great story. Jeff Bezos talks about being born to a teenage mother and an immigrant father. Their early family struggles inspired him to empower small businesses.
More close to home, a partner of mine, Daljit Hundal, came to America when he was 18. He started as a dishwasher, but worked tirelessly to improve his situation. Today he owns over 50 franchise stores including Pieology, Jamba, and Carl’s Jr. His determination and pure grit set him apart from the rest in becoming a successful entrepreneur.
I’m always inspired by his story and the story of so many other QSR operators, and these are the stories that can endear you to both the public and the press. What is your personal story? Learning to tell it correctly can give you a leg up when pitching yourself and your business to news outlets looking to tell these stories.
Local journalists always want to cover stories of budding entrepreneurs. Read your local publications both in print and online to see who covers these types of stories (usually in the Business section) and seek them out online via LinkedIn, Twitter, Facebook, or the work email they list.
While you can just pitch your story, it is even better to have written an article about the business aspects of your local community. As a new entrepreneur, you may have an insightful take on what it means to bring a new store to your town. Consider publishing this to your own blog or social platforms and sharing the link with the journalist. If they can see that you have an interesting POV to share, they’ll be more inclined to engage with you to craft a piece for their publication.
Don’t be shy. Journalists welcome news ideas since they’re on the content treadmill. Reach out with your personal story or how your business impacts the community and see what feedback they give.
When you reach out to journalists or online outlets, the best way to get their attention is to write well-crafted emails as your pitch.
Start with a good subject line or title to your email that will grab their attention. For example, if you are a local QSR franchise owner in Palo Alto, a good title may be something like “Palo Alto entrepreneur opens new restaurant to serve the community with meals and jobs.” Especially during this time, that can pique the interest of your target local journalist.
In the body of your email, highlight what your intent is and why you are writing in. Are you looking for advice on how to get your story published? Are you trying to get the journalist to directly publish your article? Did you want to chat with the journalist over the phone or via a video meeting?
Remember to stay friendly and to always pitch your personal story as well. Leverage the brand of your franchise as that can sway interest. After all, if you’re opening a new McDonald’s location, that can be newsworthy in and of itself.
Help a Reporter Out (HARO) is a news marketplace that connects reporters and news stories. There are hundreds of reporters browsing it each day, stating the types of stories they are looking for. You’ll need to sign up, but once you do, it’s a simple way to find someone who may be looking for your exact story.
A QSR’s purpose isn’t just to make you money, but also to serve a local community. Great businesses lift the other businesses and individuals around it, and we count on these businesses to contribute to the community for the lifetime of their existence.
Codifying the idea of giving back to your community is an important part of running a successful business. Engaging with the neighborhood you serve by helping a nearby school, or providing free catering for local events, is an empowering action for you and your team. After all, we all need a sense of purpose to drive us.
QSRs are high stress due to the fast pace and non-stop nature of the business. Having your team do a community project together provides a reason to finally breathe a little and connect in an entirely different way.
Taking on a community project is different from the norm, and can dismantle artificial hierarchies that might stiffen team bonding. You as the owner should lead by example, getting “down and dirty” with your team to do everything together.
Working toward an altruistic goal helps develop a team culture quickly. Often, hourly workers get lost in the day-to-day of the job. Unlike management, they might not see how they truly service the community at large. In other cases, you and other higher-level managers may have lost sight of the neighborhood and your hourly workers can help you reconnect with the people you’re serving.
I have always been a huge fan of giving back to the community, and I feel it’s the duty of any growing business to do so. You take care of your community, and they’ll take care of you. Hopefully, it’s a win-win process for everyone involved, especially since your location may attract some press and more public awareness. But the imperative is beyond that scope and an important moral goal of your new QSR store.