If you’re looking for a place to get a quick bite, and you have a choice between a spot with a fresh, modern look and one with a stale, outdated style, which one are you likely to pick? Appearance has a powerful effect on our choices, and most people will be attracted to a restaurant that’s been recently upgraded.
Not surprisingly, many QSR brands are encouraging or requiring their franchisees to remodel their stores to draw in new customers and reenergize existing ones. If you’re a franchisee, you may be debating when to take the plunge on remodeling. Should you do it now or delay as long as possible?
In this post, we’ll share how remodeling can drive profitability and ways to finance your upgrades.
New customer preferences are appearing now that the disruptions of the pandemic have subsided. Drive-thru traffic, while still a major revenue driver for QSRs, is declining. Delivery remains strong, and takeout is burgeoning, up 15.5% year-over-year in 2025.
And it looks like customers have finally come back to on-site dining. Dine-in business rose 6.3% year-over-year in 2024; in 2025, it’s up by 1.2%.
New store designs and improved layouts can help a QSR operator make the most of these new traffic trends, leading to increased revenue. While there are no guarantees, chains that have implemented remodeling programs are reporting increased sales numbers. For example, both sales and traffic have increased by 6% at Denny’s sites that piloted the brand’s recent upgrade program. Popeye’s, which saw disappointing sales in 2024, is betting that its two-year plan to remodel stores and update technology will drive higher revenues and improve profitability.
Restaurateurs aren’t limiting their renovations to cosmetic changes. Upgrades to ordering systems, kitchen equipment, and store layouts can improve efficiency, speed up order fulfilment and save on energy costs. A new HVAC system can improve customer comfort while reducing energy expenses by 15-25%. Improved lighting with LED fixtures enhances the dining experience and often pays for itself within 18 months.
The Popeye’s initiative, dubbed “Easy to Run,” focuses on technology upgrades to improve the speed and accuracy of orders while improving the employee experience. Where the model has been piloted in Houston and Orlando, operators have seen significant performance gains.
Similarly, Wendy’s has reported they expect the chain’s new technology upgrades to increase restaurant margins by over 2% over the next three years.
If remodeling is mandatory, common sense would suggest that moving ahead earlier would be more prudent than waiting. First, getting the project done right away will start driving increased revenues more quickly. Second, many experts are now predicting the Fed will continue cutting interest rates, meaning that the cost of borrowing is likely to go down.
Finally, remodeling now helps you get ahead of the competition. Your store will be the new shiny one on the block that will catch the eye of customers.
At First Franchise Capital, we have a long history of lending to franchisees. We can create a financing package that will help cover construction costs while managing cash flow during the remodeling period.
Not sure if the time is right? Why not have a conversation with one of First Franchise Capital Corporation’s lending specialists? They can show you how financing may make the improvements that will grow your business more affordable.