Ghost Kitchens Vs. Virtual Restaurants
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Ghost Kitchens Vs. Virtual Restaurants

Scroll through any major food delivery app and you’re likely to come across restaurants that seem to only exist online. Chances are, they’re ghost kitchens — virtual brands that use delivery platforms like Grubhub to reach hungry diners. Flexible and cost-effective, this business model is an ever-growing trend in the restaurant industry.

Developing a virtual brand is a great way to capture the growing delivery industry. Restaurateurs, chefs, and entrepreneurs will typically launch their virtual brands either through a ghost kitchen or as a virtual restaurant that operates in tandem with their brick-and-mortar concept.

How we talk about virtual brands and delivery-only restaurant concepts can be a bit confusing. The restaurant industry uses terms like ghost kitchen, cloud kitchen, dark kitchen and virtual restaurants when talking about delivery-only restaurant concepts, and all these different terms can make it difficult to understand which model is best for launching your virtual brand.

In this article, you’ll learn the differences between ghost kitchens and virtual restaurants so that you can decide which model will work best for launching your virtual brand.

What’s a ghost kitchen?

A ghost kitchen is a commercial kitchen that makes meals for delivery only. These operations don’t have visible physical presences. Instead, they operate in the digital space. You’ll find their “ghost menus” — menus that are only available for delivery — on food delivery apps. Some even have full-fledged online ordering websites to bring in more business.

Ghost kitchens can operate out of any commercial kitchen. Some use the kitchens in existing restaurants. Others pay for time in standalone commercial kitchens, often sharing the space with caterers and virtual restaurants.

As food delivery has become more popular, so have ghost kitchens. The delivery market in the United States doubled during the pandemic, and it continues to grow even as the restaurant industry returns to normal. Customers have embraced the convenience of apps like Grubhub, creating the perfect environment for virtual restaurants to thrive.

Ghost restaurants vs. traditional establishments

Ghost kitchens and traditional restaurants both create menus and prepare food for individual customers. However, a ghost kitchen lacks the familiar trappings of a typical brick-and-mortar restaurant brand. It doesn’t have a storefront, signs or dining area; there are no front-of-house staff members, and customers can’t stop by to pick up takeout.

If you already operate a restaurant or you’ve always wanted to start one, the ghost kitchen concept is worth considering. The barriers to entry are lower, which means you can get up and running in less time. In fact, many traditional restaurants run ghost kitchens as a way to reach new audiences, try out new dishes or test new dishes.

Before you open a ghost kitchen or add a virtual brand to your restaurant, it’s important to understand what’s involved. You’ll still need to secure funding, find suppliers and obtain permits and licenses. This process might be faster if you already own a restaurant, but it still takes time. Your local health department and business development office can help you understand the rules.

Because ghost kitchen brands don’t have the advantage of a storefront to build awareness, marketing is critical. You can take advantage of your delivery partner’s promotions and loyalty tools to reach new audiences and gain customer reviews. Check out our guide on how to make your virtual restaurant brand irresistible.

Download the Virtual Restaurants guide

Pros and cons of operating a ghost kitchen

Given the costs and risks associated with opening a traditional restaurant, many entrepreneurs consider alternatives such as ghost kitchens and food trucks. As you consider whether a virtual food-service business is right for you, it’s important to take an honest look at the pros and cons.

Pros of operating a ghost kitchen

Some of the reasons people choose to start ghost kitchens rather than physical restaurants include:

  • Lower startup costs. With a ghost kitchen, you don’t need to buy property and equipment. Instead, you can lease the space and equipment in an existing licensed commercial kitchen.
  • Low operating costs. A ghost kitchen doesn’t require servers, bussers, hosts or bartenders, so you can dramatically reduce labor, hiring, and training costs. Plus, you don’t need to worry about washing customer dishes, maintaining furniture, paying decorators and cleaning a dining area.
  • Lower risk. Lower startup costs also mean less risk; if the ghost kitchen doesn’t work out as expected, you’re less invested.
  • Maximizes resources. For existing restaurants, a virtual restaurant is a way to get more value from staff and equipment. It helps you increase revenue without investing in additional space.
  • Easy experimentation. A ghost kitchen removes the limitations of your current restaurant brand. It’s a safe space to experiment with new food items and cuisines to see what customers respond to. Because the entire operation is digital, you can change up your offerings without reprinting menus.
  • Convenient delivery. Food delivery apps are optimized for ghost kitchens, so you can get your food to customers without hiring or managing delivery drivers.
  • Low-contact meals. Since the COVID-19 pandemic, diners have been increasingly interested in low-contact food operations. It’s one of the reasons ghost kitchens are so popular — fewer people come into contact with the food.

Cons of operating a ghost kitchen

No business model is perfect, and ghost kitchens also have some drawbacks:

  • Limited plating creativity. Because you’re packaging food for delivery, there are several ways to present it beautifully. Instead, you must focus on packaging that keeps the food in good condition while in transit.
  • environmental impacts. While ghost kitchens use less energy and materials, they use a higher volume of packaging. If you want to control your environmental impact, you’ll need to find sustainable packaging options.
  • tight margins. Restaurants almost always have tight profit margins. With ghost kitchens, you must factor in additional costs for packaging and food delivery fees.
  • Challenging brand building. Building brand awareness for a virtual restaurant is often more difficult than it is for traditional restaurants. Because you don’t have a storefront or sign, you have to work harder to reach customers.

If the benefits of ghost kitchens outweigh the cons for your operation, it’s an option worth pursuing. The Grubhub virtual restaurant checklist can help you get started.

Are ghost kitchens the future of the restaurant industry?

Ghost kitchens are likely to be an important part of the restaurant industry in the coming years. While these virtual operations are unlikely to overtake brick-and-mortar restaurants — customers still enjoy the community and connection of in-person dining — they’re gaining a bigger market share.

It’s easy to see why: Virtual restaurants speak directly to the needs and preferences of modern consumers. They’re inherently convenient, allowing diners to use tech trends such as contactless payments, third-party food delivery apps and digital loyalty programs. With the right infrastructure, ghost kitchens can develop sustainable operations that satisfy customers’ desire for eco-friendly dining solutions. Ghost kitchens are here to stay, and if you’re interested in joining the virtual charge it can help to have a partner like Grubhub by your side. Listing your virtual restaurant on Grubhub Marketplace can give your brand instant exposure. As you consider how to expand your existing restaurant or start a new ghost kitchen, explore the ways Grubhub can help you get started.

Reach even more hungry customers with us by your side. Join Grubhub.
How to Recruit New Restaurant Staff
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How to Recruit New Restaurant Staff

Delicious food is only half the battle in building a successful restaurant — you also need exceptional employees. Restaurant staff are responsible for providing high-quality service, humanizing the business and embodying the values ​​and personality of the brand. With a finely honed recruiting and hiring process, you can build a high-performing team.

What restaurant positions do you need to fill?

Every restaurant has different hiring requirements; your staffing needs will depend on the size of the restaurant, the type of service, and the average number of customers. Counter-service restaurants typically require fewer employees than traditional eaters, for example. An average casual restaurant might need 1 server per 5-7 tables, 4 kitchen workers and 2 support workers for each shift.

Some of the restaurant staff positions you may need to fill include:

  • restaurant manager. The manager ensures the restaurant runs smoothly. They hire staff, manage finances and maintain the staff schedule. In many cases, they interact with customers and handle complaints.
  • Food and beverage manager. In some restaurants, this manager oversees the ordering process for food and drinks. They typically collaborate with bartenders and chefs to ensure a careful inventory balance.
  • executivechef. This chef is in charge of the kitchen. They oversee the menu, manage inventory, supervise kitchen staff and ensure each dish is up to par.
  • Cooks/chefs. These restaurant employees are responsible for making the food. Prep cooks prepare the ingredients and workstations, while head chefs, sous chefs and line cooks handle most of the cooking.
  • Bartenders. Bartenders make and pour drinks, clean glassware and ensure the bar is stocked.
  • hosts. Hosts greet customers and guide them to their seats. They also take reservations, answer phone calls and maintain a waiting list.
  • servers. Servers take orders and educate customers about menu items. In many restaurants, they also handle payments. They may also serve food and refill water, although some businesses hire food runners or expediters for those tasks. Servers typically make a special minimum wage that’s supplemented with tips.
  • Busser. A busser is an employee who clears tables and brings dishes to the kitchen.
  • Cashier. Cashiers handle money. At fast-food restaurants, they may also be responsible for food preparation.
  • Dishwashers. These workers run dishes and utensils through industrial cleaners as they come into the kitchen, ensuring cooks and front-of-house staff have a supply of clean options.

Fine-dining restaurants usually have more staff members working at any given time. That’s because each person has a specialized and limited role. In addition to the general restaurant staff, you might also need a sommelier, a maître d’ and a pastry chef. High-end restaurants often have a larger hierarchy of chefs, each with distinct roles.

Importance of a Skilled Restaurant Staff

A skilled restaurant staff is the element that takes a restaurant from good to great. After all, your employees play a big role in the customer experience. Every employee, from the manager to the dishwasher, plays a part — hosts ensure guests are seated efficiently, the chef provides excellent food and the bussers keep the tables free of empty dishes. Servers are particularly important; they set the tone for the meal, making diners feel welcome and anticipating their needs. If something goes awry in the kitchen, an experienced server knows how to communicate the situation and maintain a positive vibe.

Capable restaurant employees also contribute to the back-end functionality of your business, keeping operations running smoothly. Tables are flipped quickly between guests, the dining area stays clean and food quality stays consistent.

If you focus on hiring and training skilled workers, it can create ripple effects that extend through the business. When everyone is pulling their weight, employees can focus on their own responsibilities instead of covering for others. The resulting positive atmosphere can help reduce employee turnover. In fact, the National Restaurant Association has found that 17% of employees quit because of workplace culture.

Tips for Recruiting New Restaurant Staff

When you’re hiring restaurant workers, it’s helpful to develop a set of best practices. An established set of standards creates a more consistent experience for the hiring manager and the new employees. A few practices to adopt are:

  • Write job descriptions that are detailed but not overwhelming.
  • Use a realistic job preview to communicate positive and negative aspects of each position.
  • Be transparent about the pay up front.
  • Design an onboarding practice that integrates each new restaurant employee into the company culture.
  • Train restaurant staff thoroughly before they start working.

Once your hiring practice is set, use these tips to refine your recruitment and hiring strategies:

  • Expand your reach. Ask the HR team to post job openings in more places. Include a mix of popular hiring methods, such as digital job boards and print publications. Don’t be afraid to post job flyers on community bulletin boards — it’s an effective way to reach job seekers when they’re visiting the local coffee shop or grocery store.
  • Consider soft skills. Look for workers who have strong soft skills, such as personal communication and conflict resolution. Then, you can train them in the necessary hard skills.
  • Move quickly. Keep the hiring process short and sweet; it demonstrates respect for candidates’ time and reduces the risk that applicants will take other job offers while they wait.
  • Anticipate hiring needs. Ensure your restaurant is fully staffed by starting the hiring process as early as possible. This is particularly important if you hire seasonal workers, since competition for talent is higher during the busy season.
  • Ask for referrals. Chances are your employees know other people in the restaurant industry. Ask them to refer strong candidates, and provide a bonus if you hire a referral. It’s a great way to find talented workers and recognize your employees’ contributions.

Challenges of Hiring Restaurant Workers

If you run a restaurant, hiring challenges are inevitable. Employee churn is one of the biggest issues; the restaurant industry is notorious for high turnover. In fast-food restaurants, the monthly turnover rate is 144%.

Every time an employee leaves, your management team must spend time and money hiring replacement staff. That’s not always easy in 2023; the ongoing global labor shortage is making it harder to find qualified restaurant workers.

Once you hire restaurant employees, your next challenge becomes retention. If you can find ways to keep workers longer, it cuts costs, saves time and creates a consistent experience for customers.

One way to boost job satisfaction and retention is to build an order-management process that makes employees’ lives easier. That’s where Grubhub can help — the platform integrates with your POS system, empowering workers to do their jobs more efficiently. When they’re spending less time on technology, your team can focus on preparing delicious food and providing top-notch service.

If you’re curious about how Grubhub can support your restaurant’s hiring and retention, as well as the customer experience, get started today.

American Hotel Income Properties REIT (OTCMKTS:AHOTF) Price Target Raised to C.00 at National Bank Financial
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American Hotel Income Properties REIT (OTCMKTS:AHOTF) Price Target Raised to C$3.00 at National Bank Financial

American Hotel Income Properties REIT (OTCMKTS:AHOTF – Get Rating) had its price objective hoisted by National Bank Financial to C$3.00 in a research report released on Monday morning, The Fly reports.

Separately, Scotiabank dropped their price objective on American Hotel Income Properties REIT from C$3.75 to C$3.50 in a report on Tuesday, March 7th.

American Hotel Income Properties REIT Stock Performance

AHOTF opened at $1.90 on Monday. American Hotel Income Properties REIT has a one year low of $1.69 and a one year high of $3.06. The business’s 50-day simple moving average is $1.84 and its 200-day simple moving average is $1.97.

About American Hotel Income Properties REIT

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American Hotel Income Properties REIT LP engages in investing in hotel real estate properties. Its long-term objectives are to: increase the value of its hotel properties through operating excellence, active asset management and invest in value-added capital expenditures, expand its hotel portfolio through acquisitions on an accretive basis, and increase unitholder value and distributions to unitholders .

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Social Media Holidays Your Restaurant Marketing Can’t Miss
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Social Media Holidays Your Restaurant Marketing Can’t Miss

There are thousands of restaurants in the United States serving up dishes from juicy hamburgers to steamy ramen and everything in between. Depending on the specific area, consumers may have dozens or even hundreds of restaurants to choose from. So how are diners deciding where they’ll ultimately eat?

It turns out there are lots of reasons consumers might choose a particular restaurant. About one-third of people consider guest reviews, and some 90% check out restaurants online before dining there. It’s hard to pinpoint what exactly each potential guest is looking for, but it’s likely a combination of these factors:

  • Does the food seem appealing?
  • Do the menus, ingredients, and overall aesthetics reflect seasonality?
  • What promotions are in place that make the restaurant seem especially enticing?

When all three of those factors are in play, you hopefully have an important aspect to convey to consumers: excitement. Luckily, incorporating social media holidays into your marketing strategy helps you do just that.

Creative marketing promotions are one of the keys to attracting guests to your restaurant. This same inspiration can be used to fuel seasonal menus, the look and feel of your restaurant’s social media presence, and so much more.

Here’s a look at social media holidays that you can use to get diners hyped up enough to either make a reservation or order delivery all summer long.

Why are social media calendars important?

As a restaurant owner, you have a lot on your plate. With plenty going on, you shouldn’t be spending hours every day trying to figure out what kind of post should go on your social media and how promotions can shape your menu. This is why having a marketing calendar is so important.

Having a social media calendar to follow, similar to our 2023 National Food Holiday calendar, gives you a road map. By using a calendar, you’ll have all your promotions laid out so you can batch content (AKA, create a bunch of collateral at one time so you can schedule posts in advance).

This way, you’ll streamline your marketing operations and free up both time and money so you’re not rushing around figuring out what to promote next and how you should do it.

Use these affordable marketing tools to help with everything from content creation to email marketing to commission-free online ordering.

“Micro holidays” Random and weird days worth celebrating

Micro holidays are those not-quite-real holidays like World Emoji Day (July 17) and National Pizza Party Day (May 19) that may not get you a day off school, but are still fun to observe.

Many people call these micro holidays “social media holidays” because they’re so popular on platforms like Facebook, Instagram, TikTok and Twitter. Companies use micro holidays in their marketing campaigns as a way to connect with consumers and encourage engagement.

Restaurants can do the exact same thing. By harnessing the power of social media holidays and national food holidays, restaurants can drum up positive interest and engagement.

How to incorporate 2023 social media holidays in your restaurant promotions

While many social media holidays involve non-food people, places or things — Talk Like a Pirate Day, anyone? — there are also a ton of National Food Holidays that are tailor-made for restaurants.

Download our Guide to National Food Holidays to learn how to level up your promotional marketing as well as to spruce up your social media food grams. Don’t miss out on holidays that give your customers an excuse to celebrate food and gift themselves or a loved one with some delicious restaurant delivery.

Take National Ice Cream Day, for example. Bloomberg research shows that 391,000 posts were made with the hashtag #NationalIceCreamDay in 2022, and there were more than 6.6 million YouTube videos made on the same topic. Major traction. And that translates into sales too, with ice cream sellers seeing a sales spice of 15-20% on average.

Pick a holiday that resonates with your restaurant or one you think will resonate with guests. Then create fun graphics to promote the holiday itself, with additional content ready to highlight any deals you’re running, such as a special menu item or a limited-time discount.

When you sign up for Direct, you also get access to customer data you can use to spread the word, including powering your own branded email campaigns. With your own free ordering website and zero marketing fees, your restaurant can invest in the promotions your diners deserve.

Visit our blog post for even more ideas on how to use the top National Food Holidays of 2022 for your restaurant marketing strategy.

Download Grubhub's food delivery calendar.

What 2023 social media holidays are coming up next?

Once you’ve downloaded the National Food Holiday calendar, be sure to check out and incorporate a few non-food related social media holidays, too. These holidays may not be solely food-focused, but that doesn’t mean you can’t incorporate ingredients, dishes, and drinks that are on theme.

Think of each holiday as an opportunity. You’ll want to grab some with both hands, peppering your social media with hilarious memes giving a nod to National Selfie Day, while piggybacking on popular associated hashtags to help consumers discover your restaurant.

You can also celebrate holidays that align with your restaurant’s values, like posting a screenshot of a donation your restaurant made in honor of #EndangeredSpeciesDay (May 19).

Or, kick off a cross-promotional campaign to deal with other restaurants by sharing a picture of your staff eating a neighboring eatery’s signature donuts for #NationalDonutDay (June 2).

A few quick tips:

  • Use hashtags to take advantage of algorithms and become more discoverable for consumers interested in that particular social media holiday
  • Avoid going overboard — pick a few holidays to concentrate on rather than posting about every single one of them
  • Always aim for authenticity. Go all out for the holidays that make the most sense for your restaurant and underlying mission, then add just a few extra fun ones to keep up with the trends

Luckily, we’ve done the work for you and gathered all the major summer social media holidays. Add these opportunities to your social media calendar and get to work on some fun promotional posts!

May 2023 Social Media Holidays

May is a major month for food holidays, including celebrations like Cinco de Mayo that aren’t necessarily about food but certainly contain a lot of it. This is also a big month for alcohol delivery. Be sure to read up on alcohol to-go trends of 2023 to make sure you have the right systems in place to succeed.

May is also Asian Heritage Month, Skin Cancer Awareness Month and Mental Health Awareness Month.

  • May 1: International Workers Day #IntWorkersDay
  • May 3: National Teacher Appreciation Day #ThankATeacher
  • May 4: Star Wars Day #StarWarsDay and #Maythe4thBeWithYou
  • May 5: Cinco de Mayo #CincoDeMayo
  • May 6: National Nurses Day #NursesDay
  • May 9: Europe Day #EuropeDay
  • May 10: National Receptionist Day #NationalReceptionistDay
  • May 14: Mother’s Day #MothersDay
  • May 15: International Day of Families #FamilyDay
  • May 16: Love a Tree Day #LoveATreeDay
  • May 17: International Day Against Homophobia and Transphobia #IDAHOT2023 and World Baking Day #MakingDay
  • May 18: Global Accessibility Awareness Day #GAAD
  • May 19: National Bike to Work Day #BTWD
  • May 21: World Meditation Day #WorldMeditationDay
  • May 29: Memorial Day #MemorialDay

June 2023 Social Media Holidays

June brings us food holiday winners like National Rotisserie Chicken Day, National Cheese Day and National Smoothie Day. You’ve also got Father’s Day on the way – perhaps a great day to advertise picnic baskets or BBQ? June is also Pride Month, Great Outdoors Month and National Adopt a Cat Month.

  • June 1: Global Day of Parents #GlobalDayOfParents
  • June 4: National Donut Day #NationalDonutDay
  • June 5: World Environment Day #EnvironmentDay
  • June 6: National Higher Education Day #HigherEducationDay
  • June 7: Global Running Day #GlobalRunningDay
  • June 8: National Best Friends Day #BestFriendsDay and World Oceans Day #WorldOceansDay
  • June 11: International Children’s Day #ChildrensDay
  • June 12: Superman Day #SupermanDay
  • June 14: World Blood Donor Day #GiveBlood and Flag Day #FlagDay
  • June 18: International Picnic Day #Picnic Day, Autistic Pride Day #AutisticPride and Father’s Day #HappyFathersDay
  • June 19: Juneteenth (Freedom Day) #Juneteenth
  • June 20: World Refugee Day #WithRefugees
  • June 21: National Selfie Day #NationalSelfieDay and World Music Day #WorldMusicDay
  • June 23: Take Your to Work Day #TakeYourDogToWorkDay
  • June 30: Social Media Day #SMDay #SocialMediaDay

July 2023 Social Media Holidays

Bring on the ballpark snacks and summer treats! July is a foodie’s dream, with National Food Holidays like Blueberry Muffin Day, National Drive-Thru Day and National Hot Fudge Sundae Day all on the calendar.

The month offers lots of opportunities for creativity, as July is National Disability Pride Month, National Ice Cream Month and National Make a Difference to Children Month, too.

  • July 1: National Postal Worker Day #NationalPostalWorkerDay
  • July 3: International Plastic Bag Free Day #PlasticBagFree
  • July 4: Independence Day #Happy4th #JulyFourth
  • July 7: World Chocolate Day #WorldChocolateDay
  • July 11: Cheer Up the Lonely Day #CheerUpTheLonelyDay
  • July 12: Simplicity Day #SimplicityDay
  • July 16: National Ice Cream Day #IceCreamDay
  • July 17: World Emoji Day #WorldEmojiDay
  • July 20: Get to Know Your Customers Day #GetToKnowYourCustomersDay
  • July 21: Junk Food Day #JunkFoodDay
  • July 23: Parents’ Day #ParentsDay
  • July 24: International Self-Care Day #SelfCareDay
  • July 30: International Day of Friendship #DayOfFriendship
  • July 31: National Avocado Day #NationalAvocadoDay #AvocadoDay

August 2023 Social Media Holidays

Wind up your summer social media holiday calendar with August’s slate of yummy days, including National Ice Cream Sandwich Day, National Fajita Day and National Chop Suey Day. Yum!

August is also Black Business Month, Back to School Month and National Sandwich Month.

  • August 1: National Girlfriends Day #GirlfriendsDay
  • August 2: National Coloring Book Day #NationalColoringBookDay
  • August 3: National Watermelon Day #NationalWatermelonDay
  • August 4: International Beer Day #InternationalBeerDay
  • August 8: Happiness Happens Day #HappinessHappensDay and International Cat Day #CatDay
  • August 10: National Lazy Day #LazyDay
  • August 11: National Son and Daughter Day #SonsAndDaughtersDay
  • August 12: International Youth Day #YouthDay
  • August 13: Left-Handers Day #LeftHandersDay
  • August 15: Relaxation Day #RelaxationDay
  • August 16: National Tell a Joke Day #NationalTellAJokeDay
  • August 17: National Nonprofit Day #NationalNonprofitDay
  • August 19: World Photography Day #WorldPhotographyDay and World Humanitarian Day #WorldHumanitarianDay
  • August 21: Senior Citizens Day #SeniorCitizensDay
  • August 26: Dog Appreciation Day #DogAppreciationDay #NationalDogDay and National Women’s Equality Day #Women’sEqualityDay

Market your restaurant with Grubhub

It’s crucial that restaurants find ways to reach diners year-round. One of the easiest ways to do this is to leverage holidays — both the official ones and the social media holidays designed with fun and creativity in mind.

Make life easier by creating a strategic marketing plan ahead of time, and use the list above along with our National Food Holidays guide to shape your calendar and choose points of focus. For even more help, make sure you’re a part of the best and fastest-growing third-party delivery app to ensure your promotions and delicious menus are being seen by diners in your area.

Sign up for Grubhub Marketplace today to see how you can build a competitive marketing and promotional strategy using our expertise and tools.

How to franchise a restaurant like a pro
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How to franchise a restaurant like a pro

When you run a successful restaurant, it’s not uncommon to receive franchising requests. The prospect can be attractive — allowing other people to open restaurants under your brand brings in more profit without the work and risk of running other locations yourself. Before you make the decision to franchise a restaurant, be sure to understand the process, the advantages and disadvantages.

What is a franchise?

A franchise is a type of business where a company owner, or franchisor, licenses their company name and brand to other people. These franchisees open their own locations with support from the parent company. In return, they usually pay the franchisor start-up fees and a percentage of the monthly profits.

McDonald’s is an example of a successful restaurant franchise — 95% of the company’s US locations are franchised. Each location has the same decor, branding, menu, and design as other McDonald’s locations, but they’re owned by different franchisees.

Many popular restaurants use a similar model, particularly in the fast-food industry. Auntie Anne’s, Taco Bell, Arby’s, Chick-fil-A and Subway are all franchise businesses.

It’s important to note that a franchise is different from a chain restaurant, such as Starbucks or Chipotle. In a chain, new locations are owned and operated by the parent company. Some businesses use a hybrid model that embraces both franchising and corporate-run branches.

Pros and cons of franchising your restaurant

Like any other type of business, restaurant franchising has both pros and cons. As you decide whether to run a franchise restaurant or an independent restaurant, it’s important to consider both sides.

Pros of franchising restaurants

All restaurants come with a certain amount of risk, but franchises have significant advantages that can help parent companies and individual owners reduce uncertainty.

  • Faster start-up. New restaurant franchise owners typically receive support from the franchisor to streamline the start-up process. Depending on the business, this might include guidance on finding property, choosing or constructing a building, buying equipment, designing the interior, hiring staff and creating a menu. These established practices save a great deal of time and money, which means the location can open and start turning a profit in less time.
  • Including branding. As the parent company, you provide all the marketing materials and branding elements to franchisees. This process lets you maintain control over the brand.
  • name recognition. Franchisees don’t need to worry about building an audience from scratch. Because they’re licensing your existing brand name, they gain access to an existing customer base. This can reduce purchasing barriers and make it easier to secure sales.
  • Easier operation. You can provide franchise owners with access to your existing advertising, supplier and support network. With these resources, they can run the business without expensive trial and error. The built-in support is especially helpful if you want to attract owners who are new to the restaurant industry.
  • Streamlined expansion. Franchising lets you build your brand without the level of investment that’s required to open company-run branches. While other people run individual locations, you still make a profit.

Cons of franchising restaurants

Franchises don’t operate like traditional restaurants, so make sure to understand the drawbacks before you license your restaurant’s brand.

  • Ample oversight. To maintain the integrity of the brand, you’ll need to spend a great deal of time and money monitoring individual restaurant franchise locations. If issues arise, you must manage disputes and pursue legal recourse, if necessary.
  • Strict requirements. Before you can franchise your restaurant, you’ll need to establish strict requirements. Some companies look for franchisees with experience in restaurants or commercial real estate development. Others require new owners to have a minimum net worth and the ability to pay start-up fees without borrowing money. These qualifications reduce risk, but they also make it more challenging to find qualified entrepreneurs.
  • Fees and royalties. Franchises come with a variety of fees, but even so, it takes time for the parent company to realize a profit on a new restaurant franchise.

How to franchise a restaurant

If you own a successful business, franchising is one way to expand your brand. You won’t own each location, but you’ll still receive a percentage of the profits. Learning how to franchise a restaurant takes time; the process varies but usually includes a few common steps:

  1. Standardize operations. A successful franchise restaurant is one that can be easily recreated by another owner in another location. Standard operating procedures are key — by standardizing and documenting each process in the business, you can help franchisees maintain the same quality and customer experience. You should have solid, repeatable processes for all common tasks, including ordering, inventory management, food service, food preparation, staff training and reporting.
  2. Claim your brand. Protect yourself and your brand from legal issues by trademarking the company name, logo, tagline and any other prominent identifiers.
  3. Build a franchise plan. Work with an attorney, a business analyst, and a financial planner to create a basic franchise plan. These professionals can help you analyze property costs, sales data and financial forecasts. With that information, you can determine the franchise fee, start-up costs and required capital. It’s also important to establish requirements for the owner, property, and equipment.
  4. File a franchise disclosure document (FDD). Use your franchise plan to create this overview document, which is required by the Federal Trade Commission (FTC). The FTC’s format is designed to provide potential franchisors with all the information they need to make a decision. You’ll need this document whether you’re franchising a fast-food or fine-dining brand; in some states, you must file or register the FDD.
  5. Write a franchise agreement. Have your attorney draw up a legal contract between you and your franchisees. It should spell out the responsibilities of each party in detail so everyone is clear about what to expect. The document should also explain the consequences if you or the franchisee fails to meet one or more obligations.
  6. Create franchisee resources. Build a resource library to help guide franchisees through the process of opening and operating a business. You might include information about finding property, choosing equipment, working with preferred suppliers, getting required permits, training employees, handling conflicts and managing revenue. If possible, create a forum or communication system that enables franchisees to support each other.
  7. Establish brand guidelines. Make sure each franchisee represents your brand accurately with clear, specific brand guidelines. This might include rules for social media, logo files, menu templates and interior design requirements. Be sure to explain exactly when and if franchisees have room for creativity in marketing and advertising and when they must follow established standards.

The cost of franchising your restaurant depends on attorney rates, state filing fees, and the complexity of your operations. Costs could range from $15,000 to more than $125,000.

Is franchising right for you?

Learning how to franchise a restaurant is just one way to grow a food-industry business. You can also expand your current location or open additional restaurants in other areas.

Franchising might be right for you if:

  • Your business runs on standard operating procedures.
  • Your menu is easy to replicate.
  • You have a reliable and established network of suppliers.
  • You’ve received numerous inquiries from potential franchise owners.
  • You have the resources to manage and communicate with each franchisee.
  • You want to diversify your income streams.
  • Franchisees can open a restaurant for a reasonable price.

Grow your restaurant with a trusted partner by your side

If you’re hoping to franchise your restaurant, either now or in the future, it’s important to build a solid foundation. Adding delivery or using a ghost kitchen can help you develop recipes, bring in new customers and increase brand awareness — all of which make the business more attractive to prospective franchisees. Grubhub can help; to learn more, sign up for a free trial.