Food Franchises - A Staple in the American Economy

Food Franchises - A Staple in the American Economy

Gina Gill, Franchising USA

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One of the most enjoyable activities for many Americans is going out to dinner. Known as a great time to spend time with friends and family, most of us enjoy an outing to a restaurant or even a drive-thru to take a break from our everyday, busy lives.

Food franchises are a staple in the American economy – an ideal that was essentially born and grown within the country. The food industry is dominated by restaurants and take out; it also covers grocery stores and beverages. The global food and agriculture industry totalled nearly 8.7 trillion dollars in 2018 (source) – because not only is it a desire for consumers, it’s also a necessity. And as technology allows the world to grow a little smaller, accessing food, traditions and resources from across the globe has widened the economic palate. 

 

Fast-Food

The fast-food industry is essentially a franchise staple. What was once considered to be quantity over quality, has now grown to reach a larger breadth of customers. A lot of fast-food restaurants came under scrutiny when the population became more aware of their health needs and less concerned with fast-paced convenience. The benefit of a franchise is that the model can always be updated and quickly responds to the needs of its consumers. Drive-thrus that used to offer cheeseburgers and fries, with a side milkshake, now come equipped with specialty coffees, desserts, salads and healthy meal options. The fast-food industry now offers choices representative of many Americans.

Quick service restaurants were said to be worth an estimated $256 billion in 2018 (source). As the founder of fast food, 50 million Americans eat fast food every day (source) – making it popular and guaranteed for profit.

The most significant benefit of the fast-food industry is the reputation and brand. You will likely have a huge team of marketers behind you, selling your products without having to do any of the work. Everyone recognizes and loves their favourite quick-serve meal deals, and a franchisee would directly benefit from the long-standing reputation of the majority of franchises.

On the other hand, a lot of these restaurants are well established and set up for success in a lot of territories, so finding the right location might be difficult. While it also carries a pretty hefty price tag, it’s definitely worth the investment.

 

Retail and Grocery Stores

There is a tendency to view food franchising as the restaurant industry, but it also includes supermarkets and grocers. There are over 38 thousand grocery stores in the US alone (source) with Americans preferring traditional supermarkets as their primary source of food supply. While there is competition with warehouses and independent grocery stores, supermarkets dominate this field – with US sales in supermarkets reaching $638 billion in sales in 2014. (source).

If the idea of owning a huge retail store feels overwhelming, with a high price range than one anticipated, there are choices for smaller supermarkets that come with the credibility and reputation of the franchise brand. On the other hand, if you have the budget to invest in a larger supermarket, the profit can be huge. The supermarket specializes in groceries but covers a lot of products, allowing customers a one-stop-shop experience. People can now pick up all their essential needs, including clothing, toiletries and even home décor while pursuing the aisles.

Speciality Grocery Store

Speciality grocery stores are also a franchising option. Honing in a particular consumer need is the basis of this industry which mainly focuses on the health food trend. If you have a passion for a specific market, you could pursue it in a smaller store. As consumers grow more knowledgeable about the benefits of eating healthy, they prefer to invest in such foods. There are health food stores that specialize in particular diets and allergies, while others have extensive knowledge of supplements and vitamins, that aren't available at regular supermarkets. 

It is estimated that the US Organic food market will be worth nearly $70 million (source), especially as Americans become more globally conscious, they are willing to pay for quality over quantity. A drawback of this industry is that it could merely be a fad. Eventually, consumers will find themselves back in the larger supermarket stores, and it’s also a franchise focused on a specific type of customers. However, it has proven to be a successful smaller form of business over the last decade.

 

Coffee Shops

A franchise that has gained ongoing popularity over the last ten or so years is the coffee shop franchise. A smaller investment for franchisees, but a hugely profitable one because of the popularity of the product. 

Over 50 percent of Americans consume coffee daily and consume over 400 million cups of coffee per day. Similar to fast food joints, a lot of coffee franchises have dominated the majority of territories, but there is still a lot for new venues on other street corners. These type of franchises do live within relative close space, so a lot of consideration regarding population and consumer-based would be necessary. Find a franchisor that would support you before investment and determine the best location for a successful endeavour.

Small businesses are direct competition with coffee franchises, and there is a trend amongst consumers to buy locally. Look at different ways a franchise gives back to the community and how your choice would allow you to have a leg up on the small business competition. Independent coffee shops make 12 billion dollars in sales alone, and it would be wise to keep a physical distance from any direct competition.

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One of the safest, but yet most expensive franchise option is within the food industry, but with some much choice, there are different means to invest less money and gain a great profit and successful outcome. As someone who might be passionate about mixing food with business, the branding that reinforces the success of a franchise is the best route to take when it comes to investment and starting a business.

 

After receiving an English Degree, followed by a Journalism Diploma, Gina Gill became a freelance journalist in 2008. She has worked as a reporter and in communications, focusing on social media. She currently works as a community information officer with Epilepsy Society, while pursuing her writing career at the same time.

 Look out for our next special feature: CHILDREN'S PRODUCTS & SERVICES FRANCHISING