Everyone knows the perks and benefits of investing in restaurants when franchises are at hand. However, some of the best restaurant investments come from small, family-owned businesses in areas throughout the country. While franchises might have more professional models and training programs in place, family businesses tend to have more heart, sweat, and commitment because people are putting everything into their operation and they have to work in order to make it succeed. While there is work to be done for franchise owners, it’s much easier to open up a popular casual dining chain and be successful just because of the name of the establishment.
When people don’t know about a restaurant or if they’ve never heard of it, marketing will be much more critical. Therefore, when you are considering investing in restaurants that are locally-owned, you should always look at financial statements AND marketing plans so that you can get a clear picture of what the restaurant is going to do to sell itself to the general public. There are a lot of different considerations that come into play with restaurant investments, but seeing that a small family restaurant has a solid, plausible plan for the future can give you much more security in your investment.
Whether it is family-owned or franchised, investing in restaurants is NOT for the faint of heart. If you can’t afford to lose everything, you shouldn’t bother investing in a restaurant. The industry is far too touchy and every single restaurant opening is different. Some restaurants will be great right out of the gate and slow down a year or two into business. Others will fail miserably right from the start. Some, although not many, of the restaurants that are opened around the world, will start off on the right foot and become successful. The best restaurants will maintain that success over time.
Considering that as many as 35% of restaurants fail within the first year of opening, this is definitely an investment that needs careful consideration. It has been reported that only 10% of franchised restaurants will actually fail in the first year, while family-owned restaurants will have a much higher failure rate. Still, it is nothing nearly as bad as the commonly suggested 90% failure rate of first-year restaurants, which is a myth that has been circulating for years. Restaurants can actually be quite stable businesses, but when you are investing in family-owned restaurants you always need to use a little more caution before handing over the cash. For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!