Trends and Facts About Food Franchises

There are as many varieties of food franchises as there are types of foods! Investments can range from the very high end of hundreds of thousands of dollars for full-service restaurants, to a moderate capital outlay for vending machines.

There are franchises that specialize in sandwiches, barbeque, burgers, pizza, ethnic foods, candy, ice cream, smoothies and many other food types.

Food franchising is most often associated with restaurants, even though the industry also includes coffee, candy, smoothies, pretzels and other specialized commodities.

The whole concept of franchising has traditionally been attributed to McDonalds, and restaurant operations are especially adaptable to the franchise concept of consistency and uniformity.

1. The restaurant industry has earned a reputation for high risk and high rewards. Some industry analysts claim a dubious 90 percent failure in the first year. Franchise restaurants based on proven systems have a higher success rate -- about 62 percent over four years – than independent operators.

2. The National Restaurant Association forecasts restaurant revenues of $558 billion in 2008, at 945,000 restaurants nationwide. Restaurant revenue is expected to grow 4.4% in 2008 and make up 4% of the U.S. gross domestic product.

3. The average full-service restaurant in 2005 grossed $833,000. The restaurant industry is the nation’s largest employer after the government.

There are strong trends affecting traditional restaurant franchising businesses in this decade. With the economy slowing, and gas prices rising, people have less disposable income to spend on restaurants.

Construction costs are up, so new building is down. Rather than building new units, many well-known franchises that previously occupied niche markets, such as Taco Bell and Wendy’s, are expanding their offerings with “all-day” menus with breakfast, lunch and dinner specialties as well as free Wi-Fi and high-definition television to attract customers.

4. Research indicates that consumers have strong preferences about choosing where to eat -- with 62 percent saying they look for “environmentally friendly” establishments; 70 percent want offerings not easily duplicated in their home kitchens; and 83 percent express approval of healthier eating options at quick service eateries.

5. The sale of organic foods grew by percent in 2006 and generated $13.8 billion in revenue.


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