The Quaker Steak & Lube® Franchising Blog

QSL vs. QSR: The Advantages of Owning an Award-Winning Full-Service Restaurant Franchise

What are the most important factors when deciding to invest in either a quick-service restaurant franchise (QSR) or a full-service concept?

Many first-time franchisees are drawn to QSR brands because of the simplified business model they commonly operate. On the other side of the coin, those who have backgrounds in the restaurant industry recognize the higher earning potential of operating full-service restaurant franchises.

The advantages of owning a full-service restaurant concept outweigh perceived barriers to entry, particularly when prospective franchisees consider the benefits a brand like Quaker Steak & Lube (QSL) can offer. Here are just a few:

Restaurant Franchise Profit Margins

QSR Magazine put together a Top 50 list of quick-service concepts and the average unit sales they generate. For the top 10 concepts, the average sales per unit is roughly $1,391,629 per year. Across the fast food industry, the average profit margin hovers around 3 percent. As a result, the actual profit the average QSR franchisee would take home at the end of the year is close to $42,000. Of course, average annual profit margins and unit volumes will vary among different QSR concepts, but the industry average demonstrates the slimness of margin many operators must face.

Meanwhile, the average net profit margin for full-service restaurants was 6.1 percent in 2017, according to financial information firm Sageworks. So, while operators often have larger initial investments to open full-service restaurants such as Quaker Steak & Lube, they tend to see stronger margins than with the average QSR restaurant.

Another big question that restaurant franchise owners should keep in mind is how quickly they’ll be able to generate a return on their initial investment. Among other factors, it’s important to keep in mind the working capital owners will need to launch and sustain their businesses to keep pace with standard operating costs. These include prime costs (labor and cost of goods sold, for example), marketing, occupancy and administrative costs. Owners can then compare that with their projected cash flow to get a better understanding of the potential return on their investment.

Experience Over Transaction

Consumers are increasingly willing to pay for an experience over simply buying “stuff.” This trend is particularly strong among millennials, who make up the largest group of consumers at this point in time. They spend upwards of 44 percent of their food budget on eating out, according to recent research. They also prioritize cost and convenience.

So, restaurant franchise brands that deliver on experience, value and convenience are in the strongest positions to attract and retain millennials and other demographics that share similar priorities.

What differentiates Quaker Steak & Lube from other restaurant concepts is the fact that the option of a larger footprint allows franchisees to create memorable experiences for guests. Many locations have outdoor patios and segmented indoor seating areas that create spaces for a variety of events. For example, franchise owners can hold Bike Nites or Car Cruise-Ins, during which guests in the local community bring their vehicles to show off and share their enthusiasm for motorsports, custom cars and motorcycle culture. Franchise owners can also have live bands play on the outdoor patios or inside in a space dedicated to performances.

By and large, most quick-service concepts don’t have the capacity or wherewithal to consistently hold events like Quaker Steak & Lube. Most interactions are transactional, where guests enter, order their food and leave. These types of experiences lack the unique qualities that a brand like Quaker Steak & Lube brings.

At the same time, Quaker Steak & Lube franchisees can take advantage of other revenue streams built into the business model. A huge disruptor in the restaurant industry has been the rise of delivery apps and adapting to the demands for great convenience regardless of the type of food a restaurant offers. Quaker Steak has been ahead of the curve providing guests with pick-up window and in-store pick-up options to get the brand’s award-winning food in whatever way is easiest for them. Third-party delivery services are also an option to consider in most markets.

Although QSR brands have grown in number over the past few years, experience-driven concepts like Quaker Steak & Lube have proven to be successful over the long haul, having been an iconic restaurant brand in communities across the U.S. for the past 45 years.

To learn more about joining Quaker Steak & Lube as a franchisee, get started by filling out a franchise application.