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Can You Spot these Mistakes When Operating Your Franchise with Extended Hours?

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For over a decade the Fast Casual and Quick Service Restaurant industry has debated extending hours of operation.  

The advantages of staying open later are to cater to the nocturnal crowd that work and play during the wee hours of the night and to gain a competitive advantage in the marketplace.  Many locations extended closing time by an hour or two while others ventured into the arena of staying open 24 hours.

The unknowns were how to generate sales to cover labor and operational expenses and make a profit, and effectively educating the public on the open later concept.  

If locations were staying open 24 hours, another issue was to effectively and efficiently close out sales for the day and prepare for the opening of the next day's business while keeping track of sales during the transition time. 

Claims to Rescind Extended Hours

There have been varying levels of success in extending late night hours. Some corporate mandated extended hours have come under the scrutiny of franchisees.  Labor costs and security and safety of employees working the late night shifts have been cited as reasons to rescind extended hours.  Both are certainly valid reasons.  

Profitability is always a key issue in determining hours of operation.  Citing the security and safety of employees - who can argue with that?  

Loss/Crime Prevention Considerations

Late night operations are particularly challenging.  Adequate staffing can be a problem, and dealing with an increase in "drunks and punks" is particularly unpleasant.  

Let's look at the issues from a security, safety and loss prevention perspective, which unfortunately, is frequently left out of the equation in the decision to extend or cut back on the hours of operation. 

Analyzing Profitability

In analyzing the profitability of extended hours, the handling of cash, counting of deposits, securing funds, auditing of cashier performance including average check, no sales, price reductions, under ringing, and the security of the back door are important factors - as important as transaction counts and sales.  

The supervision of employees must be strong.  Many times the younger, less experienced managers run the late and overnight shifts. Profitability may be adversely affected by internal cash and food thefts, undocumented waste, lesser food quality, and poor customer service.  The overnight shift may not be as effective and efficient as other day segments. 

The late night operations must be routinely reviewed to make certain that sales are rung properly, and managers are upholding the highest standards of employee conduct and food quality.  Monitoring and managing these components may increase profitability during late night hours.

Employee Safety Concerns

The two hours before closing is the "critical period' in robbery prevention. Extending late night hours requires increased efforts in effective security policies and procedures, background checks of applicants, handling cash and deposits, drive-thru window and perimeter door control, entering and exiting the building according to best practices and trash removal. 

Formal training classes should be conducted to educate managers and late night crews in dealing with conflict, cash management, crime prevention, and proper robbery response.  Without this due diligence for those working the late night shifts, the increased vulnerability to crime is not fair to them. 

Claiming that employees working late into the night are in more danger at 2 AM than at 10 PM, while hiring crew with violent criminal pasts, no back door security, poor supervision and providing no training on what to do in the event of a robbery or how to enter or exit safely is a disservice.  The employees are more vulnerable in these conditions, no matter what time of day or night it is.

Validating the Issues

So, the extended hours debate rages on.  Can locations afford it or not? Those questions may be more easily answered with careful analysis and review of late night operations.  Sales are not likely to reach desired results simply by adding hours to the closing time on the hours of operation sign. Are employees exposed to more danger in the extended hours' time frame? 

Maybe - maybe not.  Police reports, analysis and anecdotal information of violent crime in the area occurring during late night may substantiate the claim.  

Playing to emotions by claiming increased danger is not valid without empirical information to support it.  In locations open 24 hours, instituting proper security and safety measures may even make the employees less vulnerable to robbery and other violent crime.

Make your claim in whether to extend late night hours or cut back on them, but do so with accompanying investigation beyond sales and transaction counts.  

Make certain that security and safety policies are in place and the staff is trained in crime prevention procedures.  A thorough analysis will make your decision more relevant.

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3 Comments

I knew of major Canadian coffee franchise that required 24 hour operations -even for locations downtown in the business core a which was dead after 6:00 pm.

This was a clear case of putting franchisor's royalties ahead of franchisee unit profitability.

Extending hours of operations is attractive to franchisors, and it's easy to calculate why.

However a rush into longer hours doesn't always pay at the unit level and sometimes not for every location.

Joe is spot on. Franchisors do it because the research may indicate it is needed, that they receive a royalty on the incremental sales, but more likely because its a way to expand same store sales comps, at least for one year.

Looking at the food sector, not every location is a 24 hour location everytime of the year. It takes some planning and review to scope it.

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About this Entry

This page contains a single entry by Libby Libhart published on June 30, 2013 7:39 PM.

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