Food Franchising – Feature Article
When you say the word ‘franchise,’ people likely picture a restaurant, as fast food places have been franchising at a furious pace since the 1950s. But, it’s not just fast food restaurants anymore.
All types of eateries have begun franchising. In fact, when you look at the available restaurants for franchising, you can choose from dozens of different types of food from the classic burger-and-fries joints to candy, smoothies, ice cream, health-food and everything in between.
Among franchises, food reigns supreme. The International Franchise Association (IFA) 2012 Franchise Opportunities Guide shows that about one-third of all franchise establishments are somehow food related.
This includes fast food, retail food and full service restaurants. The report goes on to say that the restaurant industry generates an estimated $632 billion annually with typical industry sales of about $1.7 billion on a daily basis. It employs approximately 12.9 million employees and is expected to add another 1.4 million positions in the next decade.
Independent, standalone restaurants are notoriously difficult to make successful. During a recession, restaurants, particularly full service ones are “the first to feel the pinch and the last to feel the recovery,” according to Nima Samadi, senior analyst at market research firm IBISWorld. So, having the backing of a successful brand name and franchising system can be extremely helpful.
The businesses that made franchising what it is today – these ubiquitous establishments – are familiar to most people. They are centered on getting you your food as quickly as possible with upfront payment and no wait staff or table service.
A 2012 Franchise Business Review report said over 4,000 franchisees from 84 different fast food brands experienced increasing profitability. The survey also said sandwich franchises were on the rise while pizza franchises saw a drop from 2011 to 2012.
The rise in sandwich shop concepts is likely due to people’s increasing demand for healthier alternatives. The fast pace of most people’s lives has ensured that fast food franchises remain viable, but the demand for healthier food means franchises that offer healthy alternatives have an advantage in this industry. Even franchises that have not been traditionally known for being health conscious have overhauled their menus to get healthier alternatives onto them.
Seeing as how these franchises are mostly about convenience, there are many more locations open to franchisees than for full-service restaurant franchisees. Malls, airports, gas stations, campuses and other places like these are all open to the fast food franchisee provided it gets approval by the franchisor. Many franchises now have multiple formats for franchisees, often having an “express” type format for these types of locations.
Companies that own more than one fast food franchise often pair them together now to give customers a choice of foods or they will pair foods that are complementary to each other like a sandwich shop and ice cream shop so customers can enjoy both places when they visit.
Full service restaurants are the kind where people come in and sit down to eat and pay after they’re done. They often have a hostess and have wait staff and can range from casual to fine dining.
When it comes to food franchises, full service restaurants require the largest investment, both financially and personally. Even though you have the backing of a recognized brand, you’ll still be running a restaurant, which can be incredibly difficult work.
Aside from the food itself, obviously, location is perhaps the most important thing to consider. Even if the food is amazing a restaurant that is in a poor location can suffer, particularly if the demographics in the area cannot generate enough business to sustain it. Seeing as how food franchises are the most popular franchises available, there is a lot of competition out there so you will have to choose your location wisely to make sure you’ll be able to get your fair share of the available customers.
Do Americans like their coffee? Well …
- Greater than 80 percent of Americans drink coffee.
- 52 percent drink it every morning.
- Coffee drinkers will spend nearly 45 hours each year in line waiting for coffee to go.
- The average coffee drinker will spend an estimated $165 per year on it.
These eye-opening numbers come from National Geographic and show just how much the bitter, black brew has inundated our lives. And, we’re going to continue drinking it more and more, at least according to the 2012 National Coffee Drinking Trends study published by the National Coffee Association of USA. That report showed among respondents aged 18-24, daily consumption of coffee jumped to 50 percent from 40 percent in 2011. For 25 to 39 year olds, the increase was to 63 percent in 2012 from 54 percent in the previous year.
Obviously, coffee is just one beverage a coffee shop sells. They usually have some simple food items and a bevy of other beverage choices for customers. And one other thing they have in abundance is competition, because it’s not just competition from other coffee shops they face, but competition from every other place that sells coffee … and almost every other place sells coffee.
Of course, not every other place sells specialty coffee, which is really the bread and butter of most coffee shops. Although it seems like there can’t possibly be anywhere left that doesn’t have at least one coffee shop on every block, the fact that people keep drinking more and more of it means they’ll continue to need places to buy it from.
Pizza franchises can either be sit down full service restaurants, limited service restaurants where people place an order and then collect it to go or take and bake style restaurants where people order the pizza in the store and then take it home to bake themselves.
The name of the game for a lot of pizza places is setting themselves apart with untraditional toppings and crusts. While a lot of people still like classic toppings like pepperoni, ham, sausage, onions, peppers or mushrooms, pizza places continue to introduce unique toppings and various kinds of crust — stuffed and non-stuffed — to cater to people’s desire to try new things. In fact, food industry research firm Technomic said in a report on the pizza industry that artisan pizza (think craft beer, but for pizzas) are growing in popularity and chicken made in its various flavors, has overtaken the classic pepperoni as Americans’ favorite pizza topping.
More pizza franchises are also starting to add other items aside from just the usual pizza and breadsticks to their menus. Salads, pasta dishes and chicken dishes are starting to pop up where once only pizza could be found. This can be attributed to franchises trying to entice more people, but also the general trend toward healthier eating that has swept across the entire food industry. A National Restaurant Association (NRA) survey from 2011 said seven out of ten consumers polled said they are trying to eat healthier when eating out now compared to a few years ago.
Ice Cream and Frozen Yogurt
These dessert franchises often sell items like smoothies and milkshakes besides their main offerings from kiosks and stores in strip malls to ice cream truck franchises. Although it may seem counterintuitive, items like ice cream and frozen yogurt don’t see a dramatic drop during tough economic times, according to IBISWorld. It turns out that people like these comforting treats when times are tough.
“Despite low disposable income and consumer sentiment, consumers indulge in inexpensive luxuries like frozen yogurt and other comfort foods during gloomy times,” the research firm said in a report on the industry.
In keeping up with the general shift to more healthy menu items, the ice cream and frozen yogurt industry has shifted right along, now offering low fat, fat free and sugar free varieties.
Another shift has been the move toward dessert customization. It’s not enough now to offer just nuts or sprinkles. People want to be able to choose from a whole variety of toppings and base flavors. Do-it-yourself places like Menchies are also gaining popularity, as they allow people to have complete control over their dessert creation. This is especially important for younger people.
“Younger generations are all about finding their individual identities and brands that make consumers feel empowered and celebrated will gain their loyalty,” says Kerri Smith of global marketing agency iProspect.
One thing franchisees who live in colder climates will have to keep in mind is the fact that ice cream and frozen yogurt sales tend to be seasonal in nature. Once the temperature starts dropping outside, people tend not to feel like a cold treat, although it’s still possible to keep a franchise open and running all year even in cold weather climates.
Not all food franchises are restaurants. Bakeries, convenience stores, food gifting services, juice and smoothie franchises and vending machine franchises also fall under the food franchising umbrella.
As with any other type of franchising, research is the most important thing to do when deciding what type of franchise would do well in your area. It’s what your area doesn’t have that will likely do best, providing it has the demographics to sustain a profitable business. Franchisors will help with research to decide if your area is a place they can be successful.
Seeing as how food is one of the things people literally cannot live without, it seems like a fairly safe bet when deciding on a franchise. Providing you can find a niche to fill in your area, a food franchise can help you satisfy your hunger to own your own business.
About the author : A former journalist, Rob Swystun, has been writing professionally since 2006 and now concentrates on freelance writing. He lives in Winnipeg and is currently an Athabasca University student studying for a BA in Communications.