Food & Drink International - Spring 2017 Volume 1 - 17

Hidden Expenses

O

One of the benefits of buying a restaurant franchise over starting an eatery from scratch is that many of the initial costs that
you will face have already been planned out. However, once the
menus are printed, the doors are open and your business begins
to grow, other expenses that were not in the initial plan will begin to appear. From my experience of funding franchisees over
the last decade, there are five areas where extra expenses can
pop up:
1. Updating and
Replacing Equipment
Restaurant equipment takes a lot of
wear and tear; too much sometimes.
As a restaurant owner you must think
about how you will handle it when
your oven stops heating or your walkin stops cooling. Thorough cleaning and regular maintenance can,
of course, go a long way towards
preventing these problems, so make
sure every piece of equipment is on a
check-up schedule.
There are other options too. For
example, many restaurant owners
choose to lease equipment rather than
buy it because leased equipment often comes with built-in maintenance.
If, despite your best efforts, something does break, know your options
for finding a replacement quickly.

services. If your franchisor has a partnership with service software - and
many do - take advantage of it.

3. Extra Marketing
Big franchisors do a lot of heavy lifting
for their operators when it comes to
marketing, like spending big on print
and digital media advertising. These
campaigns may not go all the way
down to the local level where you operate, so you will need to close the gap.
Be smart with your marketing spend
and identify the best ways to reach
your audience. Will you get more
bang for your buck if you include an
ad in the local newspaper than support
a local sports team or school play?
Your marketing spend can accentuate
the highs and smooth out some of the
lows, if planned correctly.

2. Professional Services

4. Legal Costs

Many restaurant owners feel more
comfortable with front-of-the-house
operations over record-keeping and
management tasks. Many franchisors build their own computerized
systems to help with those tasks.
A sandwich franchise's inventory
system will, for example, track how
many sandwiches a vendor gets from
a cold cuts delivery.
If your franchisor hasn't done this
- or if you need more help with bookkeeping, accounting and the like -
make a budget for extra professional

We live in a litigious world and you
need to be prepared for it. Here, too,
prevention can go a long way. Make
sure that your employees are properly
trained to clean up any messes that
could cause slips or falls and make
sure that you follow all applicable
laws regarding hiring and management. Know what legal costs are and
aren't covered under your franchise
agreement, and take time to attend
business networking events in your
area where you might be able to get
to know local attorneys.

>> As a restaurant franchise grows, additional expenses that were not
in the original plan will begin to appear.

5. Upgrades
As franchise systems grow, they often
make changes to their branding and
outlet designs that can leave you with
unplanned expenses. Do you have the
capital in reserve for signage changes or extra equipment that might be
needed for a new menu?
The big expenses that can come
with a big upgrade can be good candidates for long-term financing - including loans guaranteed by the U.S.
Small Business Administration. An
application for long-term funding will
often need to be supported by financial records and projections, so be
sure to work with your accountant to
have those documents ready.

Stephen Sheinbaum is the founder of Bizfi,
an aggregation marketplace that offers many
kinds of alternative funding, from short-term finance to longer-term loans, equipment finance
and lines of credit.

food & drink international * spring 2017 volume 1 * www.fooddrink-magazine.com

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Table of Contents for the Digital Edition of Food & Drink International - Spring 2017 Volume 1

Contents
Food & Drink International - Spring 2017 Volume 1 - Cover1
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Food & Drink International - Spring 2017 Volume 1 - 1
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