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Seven major risks for quick service restaurant franchise owners — and how to tackle them across multiple locations

May 24, 2023

Katie McCann

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The quick-service restaurant business can be a risky one for so many reasons.

The competition is stiff, the standard coming from customers is high, and there can be a lot of room for things to go wrong — internal and external theft, chargebacks, and more.

The key to success? Finding ways to minimize these risks.

This article will dive into some of the biggest internal and external risks you face while overseeing the operations at numerous quick-service restaurant franchise locations and, more importantly, how to deal with each.

Internal Risks

Internal risks are risks that are within your business and you have more control over. Training, policies, and the right technology can minimize, if not completely eradicate, some of these risks.

1. Bandwidth

The risk: When managing numerous locations of a franchise QSR, bandwidth can be a huge risk. At a certain point, you as a franchise owner simply won’t have enough hours in a day to drive between locations, train your teams, and review the profit — and imagine if you want to expand your franchise operation soon!

The solution: Hire the right people and optimize your tech stack. These two areas can give you bandwidth back to focus on other efforts, like expansion.

Roles like district managers, store managers, and key leads will become more and more important as more locations fall under your management. You want to hire people you can trust, and that can take some of that responsibility off your back.

Now imagine being able to pull the performance of all your locations no matter where you are — goodbye hours of driving between locations! With the right tech, that’s completely possible. There’s technology out there — like DTiQ — that can provide you with a report card for performance at each individual location. You would receive a grade on everything from store cleanliness, to uniform, to the amount of refunds and everything in between.

Tech you may want to look at optimizing include:

Your point of sale
Video surveillance technology
Drive-thru tech

2. Food Safety

The risk: Food safety is an internal cornerstone to running a good business — and a major area for risk. There is a lot that can go wrong. Some major areas for food safety risks at a QSR include:

Cross-contamination: When foods that shouldn’t contact each other do, bacteria can transfer from one food to another. This increases the chance of foodborne illness

Improper storage: This is especially important when it comes to meat. Improper temperature for your food storage can lead to food going bad quickly and lead to foodborne illness — or a complete loss when food goes bad, and you must toss it

Poor hygiene from team members: Team members must hold their hygiene at work to a high standard to ensure that food handling is hygienic. This includes wearing hairnets, washing hands regularly, and ensuring your team is wearing clean uniforms

The solution: Make sure your team is up to date on all food safety training. Food safety training should never be one-and-done — consider making your team refresh their food safety understanding on a bi-annual or quarterly basis.

3. Injury/Slip-and-Fall

The problem: Not actively working to prevent slip-and-fall or other injuries within your QSR can be costly. If somebody slips and falls on an unmarked spill, you’re looking at tens of thousands of dollars to either settle with them or pay a lawyer to not settle. Either way, being on top of preventable injuries or slips-and-falls is critical for your bottom line.

This is especially risky when you oversee many locations. The more locations you have, the more chance for injury. And dealing with numerous injury payouts can get extremely costly.

The solution: Training is critical when it comes to stopping injuries before they can even happen. Make sure your team knows how to handle spills, where to find proper “Wet Floor” or other warning signage, and more.

In the case that somebody is injured, despite your best efforts, easily accessible security footage lets you get the proof you need to show you did due diligence — and avoid a settlement.

4. Internal Theft

The problem: Nobody wants to assume the worst about their staff, but internal theft is a rampant issue in the industry. According to the U.S. Chamber of Commerce, 75% of employees steal from their workplace at least once (with half stealing repeatedly). And the National Restaurant Association reveals that internal theft is responsible for 75% of inventory shortages.

This means you need to be aware of internal theft and have a plan in place to deal with it.

The solution: The two parts of tackling internal theft involve trying to mitigate the appeal before it happens, but also having something in place to catch internal theft after it happens.

See how you can make your employees feel valuable to try and prevent internal theft from happening. If your staff feels valued, they won’t want to steal from you. This can look like paying above minimum wage, offering an end-of-shift meal, or investing in their professional development.

However, every effort won’t get rid of internal theft entirely. You need a plan to spot — and deal with — theft after it happens. This can look like video surveillance set up in the back of house or regular surprise spot checks and reviews of the cash flow.

Pro tip: DTiQ SmartAudit solutions use AI and intelligent video to catch theft when it happens. You can have custom reports that send suspicious transactions or videos directly to your phone or email. It’s easier than ever to catch and stop theft right in its tracks.

External Risks

External risks are the opposite. These are risks that happen to your business and are typically outside of your control. So, while you can’t out-train these external risks, you can prepare for how to handle them.

1. Food Delivery Chargebacks

Problem: Third-party food delivery chargebacks are a costly external issue for restaurants. This is when somebody orders from your restaurant through a third party, like Uber Eats or Grubhub, and has an issue with their meal. Naturally, there will be times when there genuinely was an issue and the refund will go through.

However, the idea of claiming something went wrong with your food to cop a free meal has gone viral across the internet, some people dubbing it their “unethical life hack”. Even when the meal is correct people will claim something was wrong so the third party will provide a refund. Hence, the free meal.

Solution: You can use video proof to show evidence that your restaurant completed their order in-full and on time. Users can look at the time that Uber, Grubhub, or any other third-party delivery services send the dispute to review the order time and easily pull video footage. Once the footage is shared with the third-party delivery service, you’ll win the chargeback.

2. External Theft

Problem: External theft is typically more extreme than internal theft in the sense that it is a larger-cost traumatic event. Think robbery, where an external person or people demand something from your QSR (likely cash).

Solution: Unfortunately, these events happen — and it is most often entirely out of your control. You can try and take preventative measures to mitigate the appeal of external thieves. Have signs that show you have minimal cash on-site or that call out that your store is being monitored by cameras.

You also want to go beyond just having cameras just for show. You hear time and time again about stores that have cameras that don’t work as a means for preventing crime, and then they do not have video in place when something does happen. Having an intelligent video solution in place will give you the footage you need to get support from the authorities.

Pro tip: Having an easily accessible video for authorities goes beyond theft incidents at your restaurant. You would also be able to help provide footage of any other theft or crime in the area, provide insights into a car accident in the parking lot, and more. With DTiQ RISA+, videos can be downloaded remotely and shared with staff or law enforcement immediately.

3. Reputation Risks

Problem: Whoever said all publicity is good publicity never worked in the quick service restaurant space.

Dings to your reputation can be crippling. This typically comes in the form of public complaints (like comments on Instagram or reviews on Yelp) but can also happen in ways you can’t measure like word of mouth. If your customers don’t have a good experience and feel that they aren’t heard about it, they may take to telling people around them.

And a bad reputation can have potential customers turning away from your locations before they’ve even given you a chance.

Solution: Implement a customer feedback program to ensure that customers choose to bring their issues to you instead of the court of public opinion. You can have a number for customers to text where they share their complaints directly to you, and they can move on with their day knowing they were heard.

You also gain valuable insight into the customer experience straight from the customer’s mouth. These programs are truly a win-win for both the business owner and the customer!

Tackle Risks with Ease at Your QSR

These risks are a part of the quick-service restaurant experience, but there are more ways now than ever to minimize — and almost entirely eliminate — them.

If you’re looking for another set of eyes to keep operations as smooth as possible, see how DTiQ can help. You can contact us or book a demo to see our technology in action — and learn more about the risks it can minimize at your QSR.

Seven major risks for quick service restaurant franchise owners — and how to tackle them across multiple locations

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