How restaurant AI can work for your business
Hotels
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How restaurant AI can work for your business

When you think of restaurant AI, you might imagine a kitchen run by sophisticated robots. While automated chefs may be possible in the future, current restaurant technology solutions are focused on driving efficiency and improving the customer experience. Restaurants are using AI technology to streamline every aspect of operations, including ordering, delivery, back-of-house workflows and supply-chain management.

The best part? AI is readily available — in fact, you can start implementing it in your restaurant today.

How AI is being used in restaurants today

AI is everywhere in the restaurant industry; in many cases, companies are building machine learning into existing systems to create a more convenient and efficient process. Some of the AI ​​tools in use today include:

  • AI-enabled self-serve kiosks. Self-serve kiosks have provided a convenient ordering experience for years. With the addition of AI, they can deliver extra personalization — by recommending a menu item based on the person’s past orders, for example, or recognizing customer loyalty rewards. Restaurants, including Panera Bread, also allow customers to use kiosks to redeem subscription programs. Some kiosks can even scan a customer’s tray, identify the items and charge accordingly.
  • AI-powered inventory management systems. This type of AI system analyzes your restaurant data to help you forecast inventory needs, order efficiently and ensure you always have the right ingredients on hand. Point-of-sales systems use this technology to improve the way you manage your business.
  • Voice search. Some restaurants are integrating voice-powered virtual assistants such as Siri or Alexa into the ordering process. That way, customers can simply tell the system what they’d like to order — even if they’re driving home or doing household chores. As this technology evolves, voice AI might also be able to schedule restaurants or answer questions about the menu.
  • Food delivery apps. Apps such as Grubhub use AI to deliver a seamless experience for guests and restaurants. The system can analyze data to offer compelling promotions and make personalized recommendations based on order history or customer preferences.
  • Scheduling systems. AI-driven scheduling software tracks and correlates sales data, employee hours and individual performance. Then, it can recommend staffing levels, suggest schedules and identify opportunities for training and improvement.

Artificial intelligence is also helping food-service businesses improve the customer experience. One of the most futuristic applications is the self-driving robot — restaurants are using these small devices to run food from the kitchen or deliver food off-site. The robots add an element of fun for customers and reduce labor requirements. On a more practical level, restaurants can use AI to suggest wine pairings, ensure accurate customer orders and detect and prevent payment fraud.

Pros and cons of AI in restaurants

As with any new tool, AI technology has both pros and cons for restaurant owners and restaurant operators. If you’re thinking about implementing AI-driven systems, it’s important to understand the realities of the process.

Advantages of AI in restaurants:

  • Reduce food waste by tracking stock and improving order accuracy
  • Improve ordering and inventory management
  • Create a more pleasant, convenient and personalized guest experience
  • Improve customer satisfaction
  • Save time for customers and restaurant employees
  • Cut costs for labor and food waste

Disadvantages of AI in restaurants:

  • Expensive to purchase and implement
  • Extra training requirements
  • Stored customer data creates privacy and security concerns
  • Confusing operation for older guests
  • Costly, time-consuming maintenance

How AI could impact the future of the restaurant industry

There’s no doubt about it: Restaurant AI is here to stay. If you run a food-service business, it’s important to track emerging and ongoing trends — that way, you can make smarter investment decisions and keep up with the technology as it changes the restaurant industry.

Based on the latest AI trends in restaurants, it’s safe to expect tech companies to direct their attention to solving common industry problems. One pressing issue? Labor shortages. AI technology has the potential to reduce the number of employees restaurants need to operate at full capacity.

  • Fully automated drive-throughs: Using voice-recognition technology, drive-through systems can interact with customers like a voice assistant. Restaurants wouldn’t need to hire a person to work the intercom, and they could take a large number of orders simultaneously.
  • Automated food prep: For businesses that use premade ingredients and limited menu selections, AI could streamline some or all of the food-prep processes in the restaurant operations. Chipotle has tested a robot that makes tortilla chips, and pizza vending machines are already using this technology to prepare, bake, package and dispense pizzas.
  • Automated food delivery. Self-driving delivery robots use AI to plan a route, navigate sidewalks, and verify the customer’s identity. As weatherproofing, security, and traffic sensors improve, these robots can handle short-range restaurant deliveries.

It’s likely that artificial intelligence will be used to deliver a more personalized customer experience. Writing tools such as ChatGPT could be trained to write menu descriptions and respond to customer service emails, social media comments and reviews. Automated marketing programs might track guest behavior, manage customer segmentation, identify triggers and automatically send discount codes or promotional emails exactly when a person is in the mood to buy.

Customer data collection made easy

Every AI solution depends on a steady flow of data — the more information you can input, the better results the AI ​​algorithm can deliver. Whether you’re planning to implement artificial intelligence in a few months or a few years, now is a great time to start collecting data on your business and your customers. Grubhub can help you get a head start. When you join, the system automatically starts gathering information about customers, orders and revenue. You always have access to customer data, and the system’s built-in data analytics can help you track sales, monitor orders and keep an eye on customer demand. To start using the customer insights dashboard, sign up for Grubhub today.

Ouch, Siesta Key ranks among the worst hotel service in the nation, study shows
Hotels
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Ouch, Siesta Key ranks among the worst hotel service in the nation, study shows

Does a room with a paradisal view make up for poor hotel service? apparently not.

Despite being recognized for having one of the best beaches in the country and in the world by Tripadvisor, Siesta Key was ranked the 4th worst city for hotel service out of 20 cities, according to a study from Planetware.

The study analyzed nearly 8 million hotel reviews from more than 9,000 hotels across 95 US cities to determine those with the worst hotel reviews, worst hotel service, and the common complaints made.

Based on their methodology, they took the millions of hotel reviews and formed a percentage of all analyzed hotel reviews in a given city that were 1-star or 2-star reviews. Rankings for worst hotel service were based on the frequency of keywords mentioned in bad reviews.

What other Florida cities made the list for worst hotel service?

Five Florida cities made the top 20 list for worst hotel service:

  • Miami Beach – 1

  • Key West – 10

  • Panama City Beach – 12

  • Fort Lauderdale – 15

  • Daytona Beach – 19

Spotted in Sarasota? Bobby Flay eats at the popular Sarasota food truck, says the signature sandwich is ‘delicious’

What city had the worst hotel reviews?

Topping the list for the most one and two-star reviews at 20% is Myrtle Beach, South Carolina.

In case you missed it: North Port Little League memorializes a 6-year-old boy who died after a dog bite

What other cities made the list of worst reviews?

The top 15 cities with the worst reviews are:

  • Myrtle Beach, South Carolina

  • Atlantic City, New Jersey

  • Virginia Beach, Virginia

  • San Jose, California

  • South Padre Island, Texas

  • Memphis, Tennessee

  • Tampa, Florida

  • San Antonio, Texas

  • KansasCity, Missouri

  • Columbus, Ohio

  • Indianapolis, Indiana

  • Lexington, Kentucky

  • Phoenix, Arizona

  • Nashville, Tennessee

  • Galveston, Texas

What are the most common bad reviews left for hotels?

Nationally the most common bad reviews left for hotels:

How do I make sure I’m booking a good hotel?

As for cleanliness after you book, nonprofit founder Christopher Elliott offered tips for USA Today in 2021 on how to tell if your room is actually clean, such as:

Read online reviews. User-generated online reviews are a great source of cleanliness ratings. He recommends a zero-tolerance policy at a time like this, adding if he sees just one review that suggests the hotel isn’t taking sanitation seriously, he usually books elsewhere.

Pay attention to high-touch surfaces. At a hotel, that would be the doorknobs and TV remotes. Often, they aren’t cleaned between guests, says Roman Peysakhovich, CEO of Onedesk, a commercial cleaning company. “This carries serious risks in terms of passing germs.” His advice: Clean them yourself as a precaution.

Look for real evidence of cleaning. Some hotels place seals on the door, and others shrink-wrap your TV remote in plastic. He wrote that the two most proven methods were looking for dirt and dust and giving the room a sniff test. If you smell a faint odor of cleaner and don’t see any dirt, that’s usually a good sign.

Contributing: Samantha Neely, Fort Myers News-Press

This article originally appeared on Sarasota Herald-Tribune: Siesta Key ranks among the worst hotel service in the nation, study shows

How to start a restaurant
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How to start a restaurant

Opening a restaurant is a dream for foodies everywhere. As an owner, you enjoy full creative control over the menu, food quality and customer experience. Before you start a restaurant, however, it’s important to understand exactly what goes into the process.

So sit back, untie your apron and dig into the steps for opening a restaurant.

Steps to open a restaurant

Opening a restaurant is both exciting and complicated. From getting licenses to planning a menu and buying kitchen equipment, each phase requires patience and attention to detail. Use these steps to organize your plan of attack.

1. Decide on a restaurant concept

Your restaurant concept is the central idea or theme of the business. Typically, it involves two core elements: the cuisine you offer and the environment in which you serve it.

Popular cuisines include:

  • italian
  • Indian
  • mexican
  • chinese
  • American
  • sushi
  • vegan
  • BBQ
  • Pizza

Once you know what kind of food you want to serve, it’s time to design the environment. Some common style and size options are:

  • Diner
  • Fast food
  • fast casual
  • Counter-serve
  • Sit-downs
  • ghost kitchen
  • Fine dining
  • Café/bistro
  • Coffee shop
  • Pubs

To crystallize your concept, summarize the idea into a sentence. For example, “a small fast-casual café serving espresso drinks and elevated comfort foods in a cozy setting.”

A list of 10 restaurant concepts.

2. Build a restaurant business plan

Write a restaurant business plan that describes your operations, analyzes the market and identifies the target audience. It should also lay out the structure of the organization and make financial projections.

A well-researched plan is a roadmap for opening a restaurant — you can use it to guide every important decision, from choosing a location to setting the menu. Potential investors will use the plan to determine your potential for success.

When you’re opening a small restaurant, the business plan can be less complex. You might include fewer details about the organizational structure and focus primarily on the target audience and competitor analysis.

3. Secure restaurant funds

There’s no getting around it: It’s expensive to open a restaurant. Many owners need to seek funding to help cover the costs of rent, furniture, decor, equipment, insurance, licensing and labor.

Some common funding sources for restaurants are:

  • Business loans
  • Business lines of credit
  • Financial support from family and friends
  • External investors
  • Crowdfunding
  • Grants

Restaurant startup costs can vary considerably based on size, type, and location. One survey of restaurant owners reported that average totals range from $175,000 to $750,500. Another report estimated startup costs ranging from $95,000 to $2 million.

Owning a restaurant can be profitable. However, since profit margins are tight — usually ranging from 3% to 5% — you must control factors such as inventory tracking, ingredient selection and food waste.

4. Find a restaurant location

Location is one of the most important factors in a restaurant’s success. It determines everything from public perception to the customers you’re most likely to attract. A restaurant that’s highly visible and set in a convenient location may have an easier time than one that’s hidden away on a back street with no parking.

As you evaluate locations, consider these factors:

  • Price
  • size
  • Layouts
  • Available parking
  • driving distance
  • Proximity to public transportation
  • Visibility from the sidewalk or road
  • Ease of access
  • Existing kitchen facilities

Think about your target audience, too. Where do they live? Will they walk or drive to the restaurant? What kind of environment do they prefer?

Use audience insights to guide your property search. If your goal is to be the local date-night hotspot, for example, you might prioritize a property with a beautiful view or an intimate vibe.

5 questions to ask before signing a restaurant lease

5. Obtain restaurant licenses and permits

Every restaurant needs a license; it demonstrates to customers and officials that you know how to operate legally and safely. Restaurant licensing requirements vary based on your location and business and may be required by city, county, state, or federal regulations. Common licenses and permits include:

County/city

  • Business license
  • Food service license
  • Food handler’s license
  • Building health permit
  • Certificate of occupancy
  • Sign permit

state

Federal

6. Create your restaurant menu

Work with your chef to craft a menu. Most menus fall into five categories: static, cyclical, fixed-price, du jour and à la carte. As you choose dishes, consider these factors:

  • Alignment with restaurant concept
  • Popularity and competitive advantage
  • Most important ingredients
  • Ingredient availability and seasonality
  • Prep time and complexity
  • Costs and profit margins for each dish
  • Food allergies and dietary preferences

When you come up with a short list of dishes, consider menu pricing; set prices that are acceptable to your target market but still enable you to make a profit. If certain items are too expensive for the restaurant concept, eliminate them from the menu.

At this point, you should have a final list of dishes. To design the menu, follow these tips:

  1. Separate dishes into categories.
  2. Allow plenty of white space.
  3. Highlight priority meals with bold fonts or graphic elements.
  4. Indicate items that are safe for allergies and dietary restrictions.
  5. Write applying descriptions.
  6. Take beautiful photos for your website and delivery menu.

7. Find restaurant equipment and food suppliers

With your menu in mind, find suppliers that can deliver the necessary ingredients on your required schedule. Build community and gain a competitive advantage by working with local suppliers to source high-quality foods with short delivery times. Other options include national wholesalers, catering suppliers, and commercial butchers, farmers, and fishmongers.

Then, purchase the necessary equipment for the restaurant. At a minimum, you’ll need appliances and furniture for:

  • Food preparation
  • Foodstorage
  • Foodservice
  • Guest comfort
  • safety
  • Cleaning
  • trash collection

Equipment is a big investment, but you can buy used items to save money without sacrificing functionality.

Technology is another important consideration; it helps you market the company, process orders efficiently, and capture more delivery business. Most restaurants need a point of sale (POS) system, printer, cash drawer, payment processing technology, kitchen displays, and a mobile ordering system. Grubhub can streamline your tech stack — it integrates with many POS systems, so delivery orders flow right through to the kitchen.

8. Hire restaurant staff

Place job postings in local newspapers, on online job boards, and in social media groups. You can also reach out to professional contacts for referrals, especially when it comes to manager and chef candidates.

The number of employees you need depends on the size of the business. At a minimum, you should hire:

  • general manager
  • Chefs and/or cooks
  • Dishwashers
  • Hosts
  • Bartenders
  • Servers
  • bussers
  • Janitors

In small restaurants, the same people may fill several of these roles. Large or specialized restaurants may need additional staff members, such as a food and beverage manager, executive chef, pastry chef, sommelier and kitchen manager.

Onboarding is paramount for a new restaurant. With thorough orientation and training, workers can do their jobs with confidence and create a positive experience for customers. This is a great time to establish company values ​​and traditions that minimize employee turnover: respect, fair and flexible scheduling, continuing education, staff safety and an inclusive environment.

9. Create a restaurant marketing plan

Marketing is critical for a restaurant startup. Done successfully, it builds a buzz and gets local customers excited to try your food. A marketing plan helps you stay on task and build brand awareness, even amidst the chaos of a grand opening. This document maps out your marketing strategy — what you want to achieve with your promotions, how you’ll do it, and how you’ll know it’s successful.

As you build a restaurant marketing plan, include these items:

  • Description of the target audience
  • Competitor marketing analysis
  • Marketing objectives, such as building brand awareness or increasing foot traffic
  • Marketing activities that achieve your objectives, such as social media campaigns or marketing emails
  • Metrics to track the performance of marketing activities

For modern restaurants, a website is the most important marketing tool. It’s the core of your web presence; customers will visit to see the menu, look at photos and find opening hours. To drive additional business, consider adding a branded online ordering website with Grubhub Direct.

10. Host a grand opening

There are two phases to a restaurant opening: the soft opening and the grand opening.

During a soft opening, you invite a select group of people to try your restaurant. It’s a great time to get your staff up to speed, refine your operations and experiment with a trial menu to see how customers respond to different dishes. Before your soft launch, you should have a menu with prices, all necessary equipment and trained kitchen and front-of-house staff.

After you implement the lessons from the soft launch, you can plan the grand opening — the first day the restaurant is open to the public. Make sure to build excitement with advertisements, social media posts and influencer marketing. Create a sense of occasion by offering special treats to the first customers, setting up a photo background or planning live entertainment.

Invest in tools to grow your business

Getting to your restaurant’s grand opening takes time and effort, but the results are rewarding. With careful planning and an organized approach, you can set the business up for long-term success. Grubhub is here to support restaurant growth. Our solutions like professional delivery, direct online ordering, POS integration and virtual restaurant support can help get your new restaurant in front of eager customers. Want to learn more about how partnering with Grubhub can benefit your business? Try Grubhub free for 30 days.

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 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.