We’ve all heard it—location, location, location. But in the fast-food franchising world, that phrase needs an important addition: location… backed by numbers. The best spot in town means little if it doesn’t align with your financial reality. Before you fall in love with a corner unit next to a mall or a bustling city center, you need to do your homework.

Table of Contents

1. Start With a Financial Feasibility Audit

2. The Core Question: Can the Business Sustain the Rent?

3. Step 1: Break-Even Analysis—Your Compass

4. Step 2: Estimate Daily Footfall and Conversion Rate

5. Step 3: Know Your Concept’s DNA

6. Step 4: Run a Profit Stress Test

7. Step 5: Factor in Growth and Scalability

8. Conclusion: Numbers First, Emotions Later

Start With a Financial Feasibility Audit

Before signing any lease, the first step should be a financial feasibility audit, not a gut feeling. This evaluates whether the franchise concept can sustain the costs of a specific location—especially the rent. It’s not about foot traffic alone, but whether the traffic translates into enough paying customers daily to break even and turn a profit.

The Core Question: Can the Business Sustain the Rent?

A “great location” with high visibility but unaffordable rent is a financial trap. The best location is one where customer volume and profit margins comfortably exceed your operating costs.

Step 1: Break-Even Analysis—Your Compass

Before you fall in love with any location, you need to ask one critical question:
“How many customers do I need each day to break even?”

This isn’t just about how much money your restaurant should generate daily, weekly, or monthly—it’s about customer volume. That number will vary based on location, rent, staff costs, and your average ticket size. In other words, every location has its own unique break-even point.

For seasoned franchisors or fast-food professionals, this calculation might be second nature—like driving for someone with years of experience. But if you’re just starting out, calculating the worst-case scenario customer threshold can feel like your first driving lesson.

That’s why it’s essential to ask your franchisor for a break-even analysis tailored to your specific site. Be cautious of templated or copy-paste numbers—those don’t reflect your rent, neighborhood foot traffic, or expected sales.

By the way, we at franed.com offer a practical course that walks you step by step through all the financial considerations—including how to accurately calculate break-even points. More info below…

Step 2: Estimate Daily Footfall and Conversion Rate

Foot traffic matters only if it converts. Count how many people pass the site daily and estimate a conversion rate (3-5% is realistic for new brands).
If your break-even is 93 meals/day and you convert 10%, you need 930 people to pass daily.

Step 3: Know Your Concept’s DNA

Not all franchises fit all areas. Ask:

• Does your concept serve office workers, students, commuters?
• Are your prices aligned with the local demographic?
• Can the area support your brand long-term?

Location must match both your franchise and your customers.

Step 4: Run a Profit Stress Test

Test your numbers under less-than-ideal conditions:

• What if you hit only 70% of your sales target?
• What if suppliers increase costs?
• What if your rent increases next year?

Always know your downside risk before committing.

Step 5: Factor in Growth and Scalability

Think long-term:

• Is there space for delivery pickup, outdoor seating, drive-thru?
• Can you open early for breakfast or late for night shifts?
• Will foot traffic improve with new developments nearby?

Choose a location that can grow with you, not one that restricts you.

Conclusion: Numbers First, Emotions Later

Don’t let glossy signs or bustling sidewalks fool you. A location is only as good as its ability to deliver profit. Always start with a break-even analysis, understand your concept’s needs, and make data-driven decisions.

Franchise success starts with smart site selection. Do the math. Ask the hard questions. And if needed, consult an expert who has walked this path before. Numbers don’t lie—but locations sometimes do.

How we can help:

At FranEd, we offer a practical course that walks you step by step through all the financial considerations—including how to accurately calculate break-even points and everything else you need with regards to building a business plan, P&L reports, cash flow management and more.

If you found this blog insightful and are ready to dive deeper into franchising, check out my “Business Plan Master Class”—currently in development. Let us know how we can help you take the next step using this form.

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