Fractional CFO for Multi-Location Businesses
Financial leadership for franchises, chains, and distributed operations.
Key Takeaways
- •Unit economics at the location level determine enterprise viability
- •Same-store sales growth separates organic performance from expansion
- •Consolidation complexity increases exponentially with location count
- •Performance variation between locations reveals operational opportunities
Multi-location businesses—retail chains, franchise groups, service businesses with multiple branches—face unique financial challenges. Understanding unit economics, managing location-level performance, and consolidating across sites requires specialized CFO expertise.
A fractional CFO with multi-location experience can help identify which locations drive value, where operational improvements have the biggest impact, and how to scale financial operations as you grow.
Unit Economics: The Foundation
In multi-location businesses, everything starts with unit economics—understanding the financial performance of an individual location before corporate overhead allocation.
Four-Wall EBITDA
The key metric for location-level profitability. Includes only costs directly associated with running that location—excludes corporate overhead.
Revenue
- Cost of goods sold
- Location labor
- Occupancy (rent, utilities, property costs)
- Location operating expenses
= Four-Wall EBITDA
Target Unit Economics
Healthy unit economics vary by industry, but general targets help evaluate location viability:
- Four-wall margin: Typically 15-25% depending on industry
- Sales to investment ratio: Annual sales should exceed initial investment
- Cash payback: Location should pay back investment in 2-4 years
- Mature location ROIC: 20%+ return on invested capital at maturity
New Location Economics
New locations typically have different economics than mature ones—higher costs during ramp-up, lower revenue while building customer base. Model the path to maturity separately from steady-state performance.
Same-Store Sales Analysis
Same-store sales (comparable store sales, or "comps") measure organic growth by comparing locations that have been open at least one year. This separates true performance improvement from expansion.
Same-Store Metrics
- • Same-store sales growth %
- • Same-store traffic/transaction count
- • Same-store average ticket
- • Same-store contribution margin
What It Reveals
- • Pricing power
- • Customer retention
- • Marketing effectiveness
- • Competitive positioning
Total vs. Same-Store Growth
A company can show strong total revenue growth while same-store sales decline— growing by opening new locations while existing ones deteriorate. This is unsustainable. Investors and lenders focus on same-store performance as a key indicator of underlying business health.
Location P&L and Performance Management
Each location needs its own P&L to drive accountability and identify performance variation. The CFO's role is establishing reporting that enables location-level performance management.
Location Reporting Framework
- Revenue: Sales by category, transaction count, average ticket
- Cost of goods: COGS by category, waste/shrink
- Labor: Labor dollars and labor as % of sales
- Controllable costs: Expenses the location manager influences
- Non-controllable costs: Rent, insurance, etc.
- Four-wall EBITDA: Location-level profit
Comparative Analysis
Compare each location against:
Understanding Performance Variation
Performance variation between locations reveals opportunities. Understanding why top locations outperform enables replication across the network.
Controllable Factors
- • Manager quality and experience
- • Staff training and retention
- • Operational execution
- • Local marketing effectiveness
- • Customer service levels
Market Factors
- • Location quality and visibility
- • Local demographics
- • Competition intensity
- • Market size and growth
- • Rent and wage rates
The Variance Investigation
When top and bottom locations differ significantly, investigate why. Is it manager quality? Market characteristics? Operational issues? The answer shapes improvement strategy—training, process changes, market selection, or repositioning.
Financial Consolidation
Consolidating financial results across locations becomes increasingly complex as the network grows. Clean processes are essential.
Consolidation Challenges
- Chart of accounts consistency: All locations must use identical coding
- Timing differences: Month-end cutoff across locations
- Intercompany transactions: Internal charges that must eliminate
- Corporate allocations: Fair distribution of shared costs
- Different systems: Locations may have different POS or accounting software
Corporate Overhead Allocation
How corporate costs are allocated to locations affects reported profitability. Common allocation bases:
- • Revenue (most common)
- • Equal per location (simplest)
- • Activity-based (most accurate, most complex)
- • Headcount
Expansion Analysis
The CFO plays a critical role in new location decisions—analyzing potential sites and building financial projections.
New Location Analysis
- Market analysis: Demographics, competition, market size
- Site analysis: Traffic, visibility, co-tenancy
- Investment requirements: Build-out, equipment, working capital
- Revenue projection: Ramp curve and stabilized revenue
- Operating model: Expected costs based on comparable locations
- Return analysis: Cash payback, IRR, NPV
Growth vs. Returns
Expansion pressure can lead to marginal location decisions. A CFO should maintain discipline on return thresholds—growth that doesn't generate returns destroys value. Better to grow slower with higher-quality locations.
Related Resources
Multi-Location CFO Support
Eagle Rock CFO understands multi-location business finance. Let's discuss unit economics and scaling your financial operations.
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