Can you share some financial strategies or practices that have been instrumental in the profitability of your units?

All businesses are run differently, and each owner has their own approach to what makes their operation profitable. However, there are certain commonalities across different brands and industries that lead to operational success.

Franchise Update asked several multi-unit restaurant franchisees about the financial practices that have played an important role in creating profitability for their locations. Each was willing to share some of the secrets to their success and provide helpful information for other franchisees looking to maximize the profitability of their restaurants.

Several franchisees stressed the importance of tracking operating expenses, including labor costs and inventory, while making smart purchasing decisions and eliminating unnecessary spending. Others recommended having strong programs in place for team member training and development as well as administrative systems for HR and employee health benefits. See their answers below for some of the top takeaways of ensuring restaurant profitability.

Switching to a lighter topic, we also asked some multi-unit franchisees about their favorite movie. Whether the film provides a laugh and much-needed distraction from the long hours of restaurant operations or an inspirational message for their business, movies are still a way to escape and find another source of enjoyment for several hours. Take a look at the Franchisee Bytes and see if you find any of your favorites.

Robert Pina

Company: Marco’s Pizza

Brands: 37 Marco’s Pizza

Years in Franchising: 40 (16 with Marco’s)

We monitor our labor and food costs very closely while using the Marco’s system to measure our service. In terms of profitability, providing good service will increase your sales which will be reflected in your bottom line. With Marco’s proprietary MOMs system, we monitor all our stores hourly. This system allows us to see our labor throughout the day, providing an opportunity for us to see where we can improve during shifts. We also monitor on a daily, weekly, and monthly basis. Once we compile our P&L’s, the supervisors go over all the numbers with our stores to make sure we follow the guidelines to hit our numbers.

Jamie Stapleton

Company: iHeartCoffee, LLC

Brands: 8 Scooter’s Coffee

Years in Franchising: 5

Two major pitfalls to avoid in business ownership are overspending and underinvesting. Many new entrepreneurs open a company wanting to become the next big giant, like Apple or Nike, but end up overspending on things for which their business is not ready.

On the other hand, underspending can also hurt profitability. Cutting corners on staffing or inventory can lead to missed sales opportunities and capping your business’ growth potential. I’ve learned to prioritize the well-being of my employees and foster a trustworthy relationship with them so that, together, we work towards the common goal of making this franchise a success.

Additionally, I recommend avoiding outsourcing every aspect of your business in the early stages. Take on the role of a manager, accountant, or barista, and get a full understanding of your operations. Being hands-on has helped me become a better business owner and cultivate a strong work culture that resonates with my employees.

Eric Sutterfield

Company: Tycor Management

Brands: 11 Beans & Brews Coffeehouse

Years in Franchising: 20

Inventory management is crucial. We focus on having the right amount of inventory at the right time—no more, no less—to minimize waste while keeping operations smooth. Since we deal with perishable products, we closely monitor stock levels and adjust ordering patterns accordingly to maintain efficiency and profitability.

Micah Sharpe

Company: Fresh Management

Brands: 11 Penn Station East Coast Subs

Years in Franchising: 2

I think the best practice we implement is the operator model, where our general managers are compensated based on their ability to successfully manage and grow their business. This model incentivizes our general managers to take ownership daily and run the business as if it is their business. The beauty of this system is that the earning potential can surpass many competing brands.

Julie Roettger

Company: Northcott Hospitality

Brands: 18 Perkins, 2 Houlihan’s

Years in Franchising: 23

We have created a library of additional resources for the management teams regarding our companies’ administrative functions, human resources and benefits, repair and maintenance, hiring and legal compliance, and financial training resources. Another practice we have put in place is to use our top talent, senior managers to go out in the field to help train and develop the new managers on labor or food cost controls.

Patrick Shannon

Company: Milan Pizza

Brands: 7 Hungry Howie’s

Years in Franchising: 29

It’s critical to pay attention and monitor your numbers. Watch your food costs, labor, and overall expenses and have a clear understanding of your financial goals.  When it comes to expenses, a major expenditure is labor. A small percentage increase in labor costs, even two percent, can have a major impact, especially when scaling multiple locations. We use tools like POS systems to track key metrics, like our food costs, paper, and supplies. Prices are always fluctuating so you’ve got to adapt. The bottom line is to watch the bottom line. Cut unnecessary expenses and set clear financial goals to stay profitable.

FRANCHISEE BYTES

What is your favorite movie?

“The Pursuit of Happyness.” It is a true story illustrating that no matter your circumstances and obstacles, you can overcome and triumph.
-Stephanie Moseley, President, Pisa Pie Enterprises, 6 Marco’s Pizza

“Office Space.”
-Irfaan Lalani, CEO/Co-Founder, Vibe Restaurants, 76 Little Caesars, 60 Wingstop, 3 Whataburger

“Ready Player One.”
-Chad Given, Brand President, Sizzling Platter, 361 Little Caesars, 107 Little Caesars Mexico, 185 Wingstop, 92 Jamba Juice, 33 Jersey Mike’s, 31 Dunkin Donuts, 7 Sizzler, 5 Red Robin, Cinnabon 1

“Dumb and Dumber.”
-Sam Chand, CEO, Jasam Enterprises LLC, 25 Checkers & Rally’s and 35 KFC’s

“Forrest Gump.” It depicts stories of perseverance, hope, and the American dream. It taught us that we can shape our own destiny through our disciplined actions and choices.
-Phong Huynh, Co-owner, Fuego Investment Inc. dba El Pollo Loco, 30 El Pollo Loco restaurants

“Black Hawk Down.” I love war movies. I used to watch them with my dad when I was a teen.
-Jerome Johnson, Multi-Unit Franchisee, John Cove Management and Jbar Inc., 4 Sonic Drive-In, 10 Dunkin', 4 Baskin-Robbins, 1 Jersey Mike's Subs

“Moneyball.”
-Yousuf Nabi, Owner & CEO of Gotham IP Inc., Gotham Cookies Inc., DBA Mrs. Fields Cookies, 10 Mrs. Fields, 10 Sbarro, 4 TCBY