Franchise restaurants are notorious for having small margins. Between rising labor costs and seasonal increases in food prices, and any startup cost of a franchise restaurant, it can be tough for owners to increase their margins and make a good return on their investment. Working with an outsourced accountant can help you get there.
Keep reading for five ways you can increase your margins and make your franchise restaurant that much more successful.
Hiring Costs vs. Employee Efficiency
Rising labor costs are straining the majority of the franchise restaurant industry. As minimum wage increases, restaurant owners have to increase wages while also maintaining their margins. One way to increase your margin on hiring costs is to invest in employee training. By increasing employee efficiency, you can increase the number of sales as food comes out faster and employees are able to accommodate more patrons.
Employee training is also a good way to create a better customer service experience at your restaurant. After all, Chick-Fil-A has historically had more patrons due to its superior customer service. An emphasis on employee training can help you get there, too.
Another way you can save on hiring costs is with your accounting department. When it comes to finances, you can either hire an internal bookkeeper or outsource the service. While there are benefits to each, the truth is that hiring an outsourced accountant is cheaper than hiring an internal bookkeeper. When you hire a new staff member, there are onboarding costs such as training, and benefits to pay for as well. Your new staff member will want to take a vacation at some point. What happens if they’re gone and something goes wrong with your finances?
When you hire an outsourced accountant, you’re hiring a team. This team already has a fluid system in place and is able to accommodate the services you need while using cutting-edge technology. You won’t have to worry about paying for health benefits or sick days or getting behind when they go on vacation. An outsourced accountant provides you with cost-savings, reliability, and professional service.
[STOP] Having trouble meeting franchisor requirements due to accounting or finance? -> Let's Talk
Keep Close Tabs on Expenses
How often do you look at your expense report? Daily? Weekly? Monthly? Keeping visibility on expenses is critical. This report tells you exactly where you’re losing money and what you need to do to fix it. You can identify if you’ve hired too many employees, how much food you throw away, and what the costs are for just one sale.
Your expense report also includes fixed expenses such as your rent or loan payments. It can also highlight if one of your vendors or your landlord made a mistake when invoicing you. Too often businesses lose money because of simple mistakes that were never caught. Going through your expense report ensures that you’ll notice sudden differences or red flags.
Don’t Be Afraid to Negotiate
When you decided to rent the space for your franchise restaurant, did you negotiate with your future landlord on the price? Or did you take the first one they offered? Anytime you go into a business transaction, have the mindset that you can walk away if you don’t like the deal. It’s never a good idea to go into a transaction feeling as though you have to sign no matter what.
Negotiation is a great way to lower your rent payment or decrease the price of vendor services. However, you need to do so realistically and carefully. If you’re already getting a great deal, you don’t want to upset your vendors by pushing them to a point that’s unprofitable for them. Here’s where your outsourced accountant can help out.
When you work with an outsourced accountant that’s familiar with your market, they can help you identify areas where you’re being overcharged. They’ll also be able to give you negotiation tips and help you come to a fair agreement for both parties.
Be Smart About the Little Things
Little things add up fast when it comes to expenses. Something as simple as changing out all of your lightbulbs for LEDs and shutting them off when you leave the room can create some wiggle room in your margins. You can also try adjusting the thermostat to automatically change the temperature overnight when no one is in the building. When was the last time you had your HVAC and plumbing systems maintained? You could be throwing money down the drain if your plumbing system is using too much water or your HVAC takes up too much energy.
Hiring an outsourced accountant can help you keep track of every little thing that decreases your profit margin. At Global Shared Services, we focus on clear and proactive communication, offer comprehensive finance and franchise accounting services tailored to your needs, and have deep expertise in the restaurant sector. If you want to make your franchise restaurant a success and increase your margins, get in touch with us today.