When prospective franchisees are evaluating franchise opportunities, one of the most crucial metrics to compare options is unit economics. Unit economics is a means by measuring, tracking and improving the performance of a franchise at the unit level. If a franchise doesn’t have strong unit economics, it’s not an investable concept — because without strong unit economics, you can’t have strong ROI.
Improving unit economics basically boils down to generating more revenue and optimizing costs. On the sales side, brands need to either promote more spending and frequency of customers, or create a new revenue stream like off-premise, catering or wholesale. Optimizing costs doesn’t necessarily mean cutting, but rather get creative and find a better alternative to doing the same thing.
Here are five real world ways to improve unit economics in today’s challenging restaurant landscape.
