Setting up a catering business? Franchise or independent − which is best?
Starting a catering business can be a big step, especially if you have limited experience. Buying into a franchise can offer a way round these risks, but this route doesn’t provide you with the creative freedom of an independent outlet.
Why choose a franchise?
Purchasing a franchise enables you to use an established name that consumers are familiar with. This reduces the initial marketing costs and means that consumers know exactly what they are getting. According to figures from the British Franchise Association, 97% of UK franchises are profitable.
There are financial benefits to using a franchise, as banks will be able to see how other outlets have performed. You will also receive support and training from the brand, which can be particularly valuable if this is a completely new venture.
You will find some disadvantages to operating a franchise, however. Often they have a high turnover of employees, as wage levels are low and there is no commitment from the employees to the business. There will also be a considerable initial investment, including the cost of commercial refrigeration equipment and other catering supplies, and marketing and royalty costs.
Going it alone
An alternative to the franchise approach is to develop your own brand and create something unique that will appeal to customers. Research found an increase of 27% in the number of independent food retailers between 2012 and 2013, with consumers looking to pop-up venues and different cuisines.
With an independent business, you have more freedom to design the outlet as you wish; to choose your own suppliers, such as FFD Ltd; and to develop different menus. You don’t have the restrictions of a franchise’s precise format and can concentrate on what your customers want.
One of the difficulties of an independent outlet can be getting yourself known in the area and encouraging customers to try your food. Social media is a cost-effective and simple method of marketing, enabling you to reach your target audience and interact with customers.
Whichever format you choose, it is vital that you research both options and choose the one that best meets your needs. There will be a risk when opening any new business; therefore, you need to understand exactly how to turn it into a profitable venture.