In the last blog we thought about restaurants as a industry, keeping in mind that a majority of the services industry’s revenues are derived from restaurants and qsr as a industry. We have established that restaurants have many variables to keep track on , so the efficiency goes down drastically.
QSR on the other hand is a better place to be in, there might be lower gross margins , but the standardization will increase the net margins as there is more efficiency and hence better asset turnovers. Also since most of the processes are fixed the variables here are lower i.e you can negotiate with your supplier as the items on your menu are based on a theme or sometimes a single product.
QSRs can be excellent investments and that’s the reason it has created wealth over time, also when brand building happens and you build an ecosystem around the chains the margins are likely to sustain and because of the creation of that brand , the margins will expand as sales go higher. Also you have this unique ability to cut down on costs when the demand environment is in a bad shape. There is scope of price cuts as overall prices go down and because you have fixed systems you are not dependent on a chef. This makes it an attractive model.
Simple Finance 