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Protect Your Eroding Bottom Line

multi-unit franchising numbers profit Oct 15, 2021
Protect Your Eroding Bottom Line

(Part 4 of the Multi-unit Franchising Conference)

I enjoy attending franchise events to learn from successful franchisees and brand executives. I recently went to the Multi-Unit Franchising Conference 2021, and in this post, I’m sharing my notes and perspective on the session titled Operations Track: Protect Your Eroding Bottom Line.

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This was a panel of four franchises from different industries that shared their thoughts and experiences on how to maximize profitability and maintain quality at all your stores. They focused on three main topics: product cost, technology, rent, and labor cost.

  1. Product cost

How to face the increasing cost? The panel agreed that you have to have the courage to increase prices to the point that you have your variable cost where they need to be so you can have profitability. One of them even mentioned that right now is the best time to do it. Yes, this is causing inflation, but the reality is that you cannot be left behind because then you are hurting your bottom line.

Tune-up your finances with this video of the three most important numbers in your business.

Another piece of advice they gave was to eliminate most of the discounts, if not all of them. That will help you make up for all the increasing costs in the area of cost of goods, food cost, or product cost, whatever industry you're in.

  1.  Technology

When it comes to the equipment upgrades, the panel recommended seeking devices that imply less work, ease operations, and an increase in volume throughput. The goal is to have incremental profits or reduction of costs, which in the long run, will help you be sustainable and win and pay that investment back.

This made me remember an international master franchisee in Singapore I worked with back in 2012. He had a staffing issue and as a way to compensate for it, he implemented the kiosks model to eliminate cashiers. By doing this, he reduced the number of people that were necessary to take the orders, and the crew that he did have focused on producing the orders and giving them to the customers.

I know some of our followers are not existing franchisees, some are thinking about becoming one or growing as a multi-unit franchisee. If that’s your case, I strongly recommend looking for a franchise that’s investing in technology, because it is one of the answers to overcome the present and future business challenges. And if you are already a business owner, I urge you to embrace technology because it’s going to help you run the business better.

Take Domino's Pizza as an example. While they are a pizza company, they are also a technology company. I was working there when they developed their internal software in the year 2000 and I can tell you that the Department of Technology was bigger than almost any other department, except for Operations. That vision got them to where they are today.

Another important thing to consider: if you want to be a multi-unit multi-brand franchisee, you're going to need technology to be able to manage your company, even from your phone.

Review here the Pros and Cons of Becoming a Multi-Brand Franchisee.

  1.  Rent

In terms of the rent, the panel discussed how being able to negotiate your rents, or lock them for as long as you possibly can, is critical because then you are in control of what that very big fixed expense is going to be. 

They also agreed that, when possible, the best option is to purchase the land or the building to have that as your asset. 

  1.  Labor cost

You do need to adjust your pay rates based on the market’s behavior, however, offering more money is not always the right answer. 

They also agreed that technology can help you not only alleviate some of the labor costs but also to increase your revenue so that even though your product and labor costs might go up, you can compensate for that with increased volume.

One of the panelists shared how they have added a second line to their drive-thrus, used exclusively for delivery and preorders. This is a very innovative strategy since one of the challenges that come with the increment of deliveries is the congestion in the drive-thrus because third-party companies don't want to do line up to pick up the orders.

As for the cost of the delivery from third-party companies, the panel agreed that the best way to compensate for it is to charge more to make up for that expense. The customers know that there is a service fee and are willing to pay for it.

This was a piece of advice that I actually heard in another panel of the Conference, which was called “Lessons from the Edge” (View this vblog here).

The panel also agreed that their biggest concern in the long run as far as expenses for their businesses is the labor because of the potential for the further increment of costs and the shortage of employee availability. 

This is something that we all know and agree with. Today, being able to retain the best people in our organization is critical. If you want to get valuable information on how to overcome the crisis and business tools to help you achieve business success, subscribe to our YouTube channel and our newsletter at the link below.


  • Is rising your prices the right move for you or can you make other financial adjustments?
  • How much are you embracing technology?
  • What processes can be automated to give you incremental profits?
  • Can you negotiate your rent or even buy the land or building you operate in?