Tag Archives: restaurant franchises

Restaurants React to New BAC Recommendation

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Restaurants and restaurant franchises feel the new suggested blood alcohol content level will negatively impact sales and end profits without significantly improving road safety for patrons.

The recommendation to change the current legal blood alcohol level came from the National Transportation Safety Board last week. The NTSB suggested that the states reduce the legal BAC level from the current level of 0.08% to 0.05%.

The average BAC level in fatal automobile accidents occurs when drivers are at twice the legal limit. Less than 1% of deaths occur when the driver’s blood alcohol content level is between 0.05 and 0.08.

One of the biggest arguments restaurants are making in opposition to the National Transportation Safety Board is alcohol’s ability to enhance food and the dining experience. In addition, alcoholic beverages are big ticket items for restaurants and are often marked up considerably more than food items. Despite this fact, recent years have seen sales drop in alcoholic beverage consumption as penalties for driving under the influence have become more strict.

While the National Transportation Safety Board cannot change laws outright but can influence future legislation, though it might take a generation or so.   A person’s blood alcohol content level depends greatly on height, weight and gender. Changing the legal drinking limit to 0.05% would mean an average-sized male could enjoy two alcoholic drinks. An average sized female could enjoy a single alcoholic drink, if not less.

What do you think? Do you think the BAC level should be changed from 0.08 to 0.05? 

Why Restaurant Franchises Cost What They Do

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A question we are often asked by entrepreneurs is, “Why do restaurant franchises require such a high investment?” While every restaurant or food franchise’s fees differ, some of the most popular food franchises require investments between $101,000 and $1,700,000.* How can a restaurant franchise cost so much? Aren’t they just selling burgers and fries?

 

The Franchise Fee:

 

Most franchises require franchisees to pay a one-time franchise fee at the start of the franchise agreement. This is, in essence, how most corporate franchise entities make money. It’s equatable to buying any good. If you want the right to own or to use something, you must pay for it first. In the case of a franchise, the franchise fee most often covers the “how-to” guide, which will instruct the franchisee on just about everything concerning his or her franchise.

 The Royalty Fee

 

Not all but many franchises require franchisees to pay an ongoing royalty fee for use of trademarked items. After all, a franchise’s trademarks include more than its logo and slogans; you’re paying for brand recognition. The biggest difference between a double cheeseburger with special sauce and a Big Mac® is the name, not what’s between the buns.

 Operations Costs

 

Running a restaurant might seem fairly straightforward but there’s a reason why most independently owned restaurants fail. (The failure rate for restaurant and food franchises are lower.) The labor, food and operations costs are high when compared with the average 2-3 percent profit margins experienced by most restaurants and food franchises. You’ve got to charge enough to keep the lights on, to keep your servers and cooks paid— but not charge so much that your customers feel you’re unreasonable.

 

If you’re wondering why franchisees put up with so many expenses and risk of failure consider the propensity for success of restaurant franchises. The most popular kind of franchise to start is a food or restaurant franchise for one major reason: there’s huge global demand for fast-casual, quick-service and fine dining establishments with a successful track record.

 

 

*Some franchises, like Taco Bell, require franchisees to own more than one franchise.