Food for Thought: 5 Ways to Maximize Franchise Margins

Profit margins can be tight in fast food franchises, and that’s why efficiency is key.

And efficiency can be found in all areas of the business – helping to drive profitability and growth, while ensuring long-term business success.

With inflation tied to food prices and more fresh produce in fast food franchises than ever before, finding more efficiencies – and maximizing them – is crucial to ensuring your investment pays off to the full extent.

Here are 5 Ways to Maximize Franchise Margins:

1. Negotiate (or renegotiate) the best supplier deals. Ensure your franchise has the best possible deals from local suppliers, by utilizing its purchasing power. How to do this? By opening more franchises in the region, or with partnering with other franchisees to ensure the cost of goods sold is at a highly profitable margin.

2. Optimize all franchise food promotions. Optimize your franchise’s specials and promotions by marking down the lowest-cost options at the highest margins. Some examples of this? Ice cream/smoothies, soft drinks, and simple sandwiches.

3. Choose a franchise with more low-cost, healthy options. The fast food industry is shifting to healthier options, so it’s crucial to stay on board with this trend – and invest in franchises who are doing this in the lowest cost, highest return way. Broth-based soups are a great example of this.

4. Evaluate labor costs and drive greater operational efficiency. This may be the oldest method around, but it works. By ensuring your team is operating as efficiency as possible, you can potentially reduce the number of staff without reducing quality of service, helping to drive your margins higher.

5. Creating greater value through greater prices. Are more people willing to pay higher prices for better quality food? Apparently so. The industry shift is continuing, and fast food franchises are being forced to adapt. Ensure you’re a part of a franchise that charges more for healthier options that don’t just cost more, but also provide greater margins and profits.

To learn more about entrepreneurship through franchising, attend our free monthly webinar, Franchise Ownership as a More Stable Career Path. The webinar is free, but you need to pre-register, which you can do online by clicking on the linked seminar title.

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