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The four numbers, not two
A renovation decision has four components. Most owners work with two of them.
- 1. Build cost. Hard costs plus soft costs — design, engineering, permits, project management. Everyone counts this.
- 2. Sales lift. The expected increase after reopening. Everyone counts this too, usually optimistically.
- 3. Disruption cost. What you lose while the work happens. Almost nobody counts this properly, and it is frequently larger than people assume.
- 4. The counterfactual. What happens if you do not do it. This is the one that changes the answer entirely.
Disruption is a real cost with a real formula
Lost revenue is not the right figure — you do not incur full food cost on sales you never make. Use contribution margin, and remember your fixed costs continue whether you are trading or not.
+ (daily sales × margin % × reduced-capacity days × % capacity lost)
+ fixed costs that continue through closure
This is exactly why a contractor who can keep you trading is worth more than a contractor who is cheaper. Two weeks of avoided closure at a location doing meaningful daily volume will usually exceed the entire price difference between two bids.
A worked example
Illustrative figures only — use your own numbers. The point is the structure, not the amounts.
| Build cost, hard and soft | $250,000 |
| Average daily sales | $6,000 |
| Contribution margin | 30% |
| Full closure | 5 days |
| Reduced trading, 40% capacity lost | 20 days |
| Disruption cost | $23,400 |
| Total investment | $273,400 |
| Expected sales lift | 8% |
| Additional annual contribution | $52,560 |
| Simple payback | 5.2 years |
Note what the disruption line did. It added roughly five months to the payback period, and it never appeared on a single bid.
Where to get an honest sales lift figure
Do not use the number in the marketing deck. Ask your franchisor’s field team for comparable sales data from locations that have already completed the same programme, in markets similar to yours, at least twelve months post-reopening. Ask specifically for the range, not the average — the average hides how often the lift is modest.
If nobody will give you that data, treat the projected lift as an assumption rather than a forecast, and run your numbers at a lift you would still accept.
The counterfactual changes everything
If your franchise agreement requires the remodel, you are not choosing between doing it and keeping your money. You are choosing between doing it and facing the consequences of not doing it: renewal put at risk, potential default, and a location that steadily loses ground against refreshed competitors.
In that situation the comparison is not remodel versus no remodel. It is this remodel versus a worse one later, under more pressure, with fewer contractors available. Which is a completely different calculation, and usually an easier one.
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