How to compete with a franchise when you are a small business

Your café is thriving, with locals flocking to meet friends for a coffee and slice of homemade cake. Business is going well – well enough to catch the attention of a franchise owner, who sees the opportunity to settle across the road, offering the same items, only cheaper. How do you compete with someone who not only offers similar products and services, but also has the strength of a corporation behind them? 

When you’re faced with any nearby competition, it is important to maintain your vision for your business. You chose to open an independent restaurant because you had a vision of how it would look and what kind of menu you would offer. Otherwise, you would have invested your capital into a franchise. Keep clear about what you intended to create and achieve rather than being distracted by the competition. However, it doesn’t hurt to know a little about your competition to ensure you remain strong and unique!

You have the power of individuality and versatility. The franchise across the road looks like every other shop under the same label, but you provide warmth and personality. The franchise has a tried and tested menu, but you offer homemade treats that cannot be found elsewhere. You can offer greater variations in texture and flavour, as well as your menu generally.

Add some personality to your restaurant by employing highly experienced wait staff. Franchise eateries often cut costs by employing extremely young staff at the minimum wage and trained to follow the rule book. Your own staff can be more personable and professional in their dealings with customers.

Your rival can’t change the menu or adjust prices – but you can. Take a few steps to ensure you truly differentiate with your rival: if you are both serving banana and pear bread, switch your recipe to banana and raspberry bread and add some other cakes. If your colour schemes are similar, repaint.
Arrange any special deals so they are not comparable with your rival. Rather than copying your rival’s two-for-one deal, add a complimentary dessert. Consider changing your opening hours, so you have a few hours without competition.

Add some other homemade products to your range, such as gift-wrapped sweets or condiments. This will introduce another stream of traffic to your restaurant, helping to raise your profile.

You don’t need expensive advertising to raise your profile in the local community. Offer gift vouchers for fundraising to local schools and charities. Invite passers-by to taste-test samples from your menu. You could also receive free press coverage by hosting a promotional event, such as a charity lunch or attempting to break a world record.

The franchise’s biggest advantage over you as a business is the solid background support of the franchise business. While you are on your own, other people have a vested interest in the success of the franchise.

However, all your profits go to you, once you’ve paid your bills and wages. Unlike some franchisees, you also have the freedom to make independent decisions about where to shop and what to serve, so you have the power to economise at your own discretion when necessary.

If you are going to succeed, you must keep track of how your expenses compare to your income. While you may not always make a profit – especially in the first year of opening your restaurant – you need to constantly look ahead to ensure you will make a profit in the future. This is true for franchisees as well as independent owners. But as an independent restaurant owner, you have greater control over your decisions.

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