Q1 2025 Is Ending—Now What? Key Considerations for Restaurant, Laundromat, & Hospitality Franchise Groups

At a glance

• The main takeaway: As Q1 2025 wraps up, restaurant, laundromat, and broader hospitality industry franchise operators should strategically analyze their performance.
• Impact on your business: Now is the time to fine-tune operations, control costs, and position for sustainable growth in Q2 and beyond.
• Next steps: Connect with Aprio’s Restaurants, Franchise & Hospitality team to boost profitability and position your business to better serve guests.

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The full story:

As Q1 2025 wraps up, restaurant, laundromat, and broader hospitality industry franchise operators should strategically analyze their performance. Using key benchmarks from 2024, which provide a baseline for comparison and a guide for improvement, now is the time to fine-tune operations, control costs, and position for sustainable growth in Q2 and beyond.

This article lists five questions and their corresponding factors to consider when positioning your business for continued, sustainable growth throughout the year.

1. Financial & operational check-in: Are you on target?

The past year saw fluctuating costs and shifting consumer habits, making it critical to assess your Q1 results against key industry metrics.

• Prime costs (COGS + labor) target for restaurant & hospitality: Industry best practices suggest keeping this below 55%-60% of revenue. If you’re exceeding this range, review vendor pricing, labor efficiency, and menu optimization.

• Utility & maintenance costs for laundromats & self-service franchises: Water, electricity, and machine maintenance typically account for 20%-30% of revenue in laundromat operations. If expenses are climbing, explore energy-efficient equipment, preventive maintenance, and smart meter monitoring.

The EBITDA margin benchmarks vary across different industries, with restaurants and quick-service restaurants (QSRs) typically ranging between 15% and 20%. In contrast, laundromats exhibit higher margins, usually between 25% and 35%, thanks to lower labor costs despite facing significant fixed expenses. Other service-based franchises generally fall within a typical EBITDA margin of 20% to 30%.

Same-Store Sales Growth (SSSG) is a key industry focus area. For restaurants, a target of 3% to 5% year-over-year (YOY) growth is expected to assure steady performance, while laundromats see their growth influenced more by local demand and pricing conditions. The ideal goal for laundromats is 5% to 10% YOY growth, which also considers potential expansion opportunities. This could include adding services like wash-and-fold or vending to enhance revenue streams and meet customer needs.

2. Labor & staffing adjustments: Are you managing costs effectively?

Labor remains a major concern across franchise sectors, requiring a balance of cost control and workforce stability. In the restaurants and hospitality sector, keeping labor costs under 30% of revenue for full-service establishments and around 25% for QSRs is significant. Due to fewer employees, laundromats typically have labor costs ranging from 10% to 15%, although rising wages can still affect profitability.

Employee turnover rates in the restaurant and hospitality industry soared to an annual average of 70% to 80% in 2024, and investing in retention programs can reduce hiring and training costs. Laundromats experience lower turnover due to minimal staffing, but ensuring employee reliability remains essential for smooth operations.

3. Pricing & revenue diversification: Are you maximizing profitability?

Menu & pricing adjustments for restaurants should stay between 28%-32% of revenue. If they are rising, consider supplier renegotiations, portion control, and menu engineering.

• Price optimization for laundromats & self-service franchises:
  • Average price per wash/dry should align with local market conditions while covering increased utility costs. Many laundromats adjusted pricing by 5%-10% in 2024 due to rising water and electricity costs.
  • Consider premium services like drop-off laundry, subscriptions, and vending sales to boost revenue.

• Membership & loyalty programs:
  • Restaurants with strong digital loyalty programs saw 20%-25% of total revenue from members in 2024.
  • Laundromats implementing RFID-based or app-driven loyalty systems increased customer retention by 10%-15%.

4. Technology & efficiency gains: Are you leveraging the right tools?

POS & data analytics usage: Restaurants should track key performance metrics such as average ticket size, table turnover, and online order trends. On the other hand, laundromats can benefit from smart payment systems that monitor real-time machine utilization and revenue, enabling owners to make informed decisions about their operations.

In terms of energy efficiency, laundromats have the opportunity to significantly improve their profit margins by investing in newer high-efficiency washers that reduce water usage by 30% to 50%. Additionally, implementing smart thermostats and LED lighting can lead to an annual reduction in energy costs by 10% to 15%, contributing to a more sustainable business model.

The adoption of AI and automation is also transforming both industries. AI-driven labor scheduling and demand forecasting can help reduce operational costs and optimize staffing levels in restaurants. For laundromats, incorporating self-service kiosks and app-based payment systems enhances the customer experience and streamlines overall operations, making them more efficient and user-friendly.

5. Growth & expansion: Are you positioned for long-term success?

Here are a few things to consider and ask yourself in making sure your business is positioned for long-term success.

• New unit performance:
  • QSR & full-service restaurants: A successful new location should break even within 12-18 months and achieve an average unit volume (AUV) of $1M-$2M+, depending on concept.
  • Laundromats: New locations should aim for a breakeven period of 24-36 months due to high initial capital investment.

• Lease & occupancy costs:
  • Restaurants should keep rent and occupancy costs under 10% of total revenue.
  • Laundromats, often tied to fixed-location leases, must assure location choice aligns with long-term demand projections.

• Franchisee support & expansion plans:
  • Are franchisees hitting key performance benchmarks?
  • Is now the right time to expand or invest in remodels?

The bottom line

Q1 sets the tone for the year, but it’s never too late to adjust. By benchmarking against key 2024 KPIs and identifying operational efficiencies, restaurant, laundromat, and hospitality franchise groups can refine strategies for a strong and profitable 2025.

Related Resources/Assets/Aprio.com articles/pages

• Aprio Restaurants, Franchise & Hospitality Page