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Franchising without losing your soul

4 tips for growing a restaurant business
Photograph: Kabbage

Chicago pizzeria owner Simon Mikhail knew from the beginning that he wanted to build a franchise out of his original restaurant, Si-Pie. But he wanted to do it the right way, and that meant working through a few missteps – and a certain amount of trial and error.

“I burned a lot of pizzas those first few months trying to perfect a formula,” he says. “I even threw a few on the floor.”

But it was worth it in the end. Mikhail, with help from Kabbage, opened his second location this summer nearly Wrigley Field and is working on opening a third on Chicago’s North Side.

For Mikhail, this is just the start. In the long run, he hopes to open seven to 10 franchise locations around the city.

Getting there won’t be a sure thing, however. While franchises generally enjoy a higher success rate than independent restaurant businesses as a whole, a recent study by the Service Employees International Union showed that nearly 20%of franchise loans issued through the Small Business Association ended in failure. And entrepreneurs who franchise, like Mikhail, face a number of challenges, including the loss of control over operations and difficulty innovating.

Kabbage spoke to Mikhail and other entrepreneurs about how to franchise a business without sacrificing its soul.

Make sure the processes are documented

Mikhail spent those first several years in business making sure he had a consistent process for making his pizzas.

He ordered the same ingredients, regardless of whether the price fluctuated. He used machine rollers for his dough rather than tossing it by hand, and got the measurements and cooking times down precisely, even making sure the calibration of his conveyor-belt ovens was consistent. Now, he can train a new employee over the course of a couple of weeks.

“It has to be consistent,” he says. “That’s the number one thing in the restaurant business. And that’s the reason why franchises make you follow their rules.”

Set the foundation for a positive employee culture

The other major priority for Mikhail as he grew his business was to stay focused on the customer experience. That meant being a constant presence in the shop, responding to negative online reviews and offering discounts for unsatisfied customers.

But he knows that as his business expands, he can’t be everywhere at once.

In a tight labor market, it isn’t always easy to find reliable employees. As the business grows — and particularly as he brings in franchisees — Mikhail is working on a set of rules that will allow Si-Pie to shape its overarching culture, like offering small bonuses to employees who are mentioned by name in five-star reviews. He also offers employees attractive benefits like healthcare and a 401(k) plan so that they’re willing to embrace the culture.

“I want to make them feel like they should enjoy and have fun at work,” Simon says. “Then they’ll come there and give 110%.”

Stay true to what worked

Veteran chef Lamar Moore was working for an upscale restaurant franchise when it replaced the fresh tuna on its menu with frozen blocks of the fish. It was enough to make Moore and his fellow employees wonder what other shortcuts the franchise was willing to take, which had a negative impact on morale.

“If you start to devalue what’s important, your staff will start to wonder if this is still going in the same direction they’ve come to love,” Moore says. “If they’re willing to make that change, who knows what other changes they’re willing to make down the line?”

What you see is what you get

“When you franchise, the best way to describe it is having a piece of paper you send through a copy machine, and that’s it,” says Louis Maskin, a strategist for San Francisco-based restaurant consulting firm The Culinary Edge.

In other words: Have a vision set in stone before you make the leap because it’s not going to change a great deal once you do. That includes the overarching concept, the branding, the look and feel — and, of course, the food.

This post is sponsored by Kabbage

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