America's #1 Franchise Directory, Trusted for Over 15 Years

Retail Food Franchise Industry Report


U.S. Retail Food Industry


Industry Overview 


U.S. Retail Food and Beverage stores reached sales of $560.6 billion in 2007 according to the U.S. Census Bureau. The US Retail-Food industry is a dynamic and highly competitive market. The term ‘Retail-Food’ encompasses many types of store outlets, including candy stores, bakery stores, sandwich stores and convenience stores. Despite the decline in retail performance over previous years, convenience stores and specialized retail-food stores have showed resilience in the tough economic climate.  


The U.S. retail specialty food industry includes gourmet, organic and health food stores, bakeries, and confectionary stores. It includes approximately 20,000 businesses, accounting for revenue of $20 billion annually1. The U.S. convenience store industry has approximately 144,000 stores with combined revenue of an estimated $400 billion annually2. This includes some of the major franchise stores including 7-Eleven and Circle K. Both speciality and convenience store industries are highly competitive markets and stores compete with other retailers, grocery stores, supermarkets and restaurants. 


The number of Retail-Food franchise businesses grew 34% to 61,039 establishments from 2001 to 2005, with an annual growth of 7.6%, according to the International Franchise Association. The food retail sector represents nearly 7% of establishments in the overall U.S. franchise industry. 


According to the IFA, the Retail-Food franchise industry created 779,360 jobs for the U.S. economy in 2005. It contributes a further $14 billion in payroll and $47 billion in output to the U.S. market.  



Candy stores 


Despite the recent economic climate, the confectionary industry has proved to be very resilient, with the average U.S. consumer spending $93 a year on confectionary products in 2008, according to the National Confectioners Association. A number of new candy franchises have entered this industry in recent years, setting up traditional candy stores as well as franchise stores specializing in gift baskets, floral candy arrangements and chocolate bouquets. 


The U.S. confectionary industry generated approximately $28 billion in retail sales in 2008, an increase of 2% since 2007. Chocolate sales represent $16.1 billion (up 4.6%), non-chocolate $8.6 billion (up 5.1%) and gum $3.3 billion (up 4.4%) of this3. American consumers are still indulging in sweet confectionary products regardless of the cut-backs in larger purchases. Companies within this industry are responding to customer demands with new and exciting flavors and healthier candy options resulting in increased customer satisfaction.  


According to the National Confectioners Association, candy confectionary has profit margins of over 35 per cent. Nielsen’s recession vulnerability analysis points out candy, baking and pasta items as the main categories with the highest ability to recover from a recession and the lowest vulnerability in a recession. This presents an excellent opportunity for profit building for candy store franchisees.  


The sugar-free candy sector is continuing growth in the current recessionary times, with high demand for low-carb treats from health conscious customers. Sugar-free/diet candy sales reached $71.4 billion for the year ending July 2009 according to Information Resources, Inc., a Chicago-based market research firm. Sugarless Gum sales increased 9.6% to $1.2 billion for the year ending May 2009. With increased sugar-free and lower calorie products offered, this sector is expected to experience high profit margins in the coming years. 


The organic confectionary sector has experienced explosive growth over previous years, with a 16% increase in sales from 2007 to 2008, and a further 17% growth in sales from 2008 to 20094. Recent research into the health benefits and antioxidant effects of dark chocolate could be suggested as the impulse behind the increase of dark chocolate sales by 12% in 20083. Energy bars only comprise of 4% of the overall confectionary market4, but are expected to continue successful growth due to the consumer placing high importance on a healthy lifestyle options. 


Candies and confections have long-term associations with a number of American holidays. Christmas, Valentine's Day, Easter and Halloween are all occasions for chocolate and candy lovers to indulge in luxury treats. The trend of indulging in confectionary items over the holiday periods will continue to prosper.  With the confectionary industry demonstrating extraordinary resistance to the recession, candy franchises are thriving, with these trends expected to continue into the near future.   


Convenience stores 

According to the National Association of Convenience Stores (2008), the U.S. convenience store industry has approximately 144,875 stores accounting for over $624 billion in sales. Texas and California hold 16% of this market, with 14,112 stores in Texas and 10,298 in California. The industry has experienced remarkable growth over the last three decades with nearly triple the number of convenience stores today than in 1978. 


Convenience stores remain a popular choice for consumers by providing a convenient and timesaving shop for foodservice. Food service at convenience stores includes freshly prepared food, confectionary, hot and cold beverages plus beer and other alcoholic products. Candy products groceriesin convenience stores are a high impulse item and accounted for store sales of $4.5 billion in 20085. Coffee is the number-one hot beverage of choice among convenience store customers. The resilience of the coffee industry will prove advantageous for the convenience store industry also. 


Recession proof? 

Cigarettes dominate in-store sales for convenience stores, accounting for 34.4% of convenience stores sales in 2006. Average sales of cigarettes per store were $393,327 in 20066. Cigarettes, also known as “sin stocks”, are reporting healthy sales despite the economy. Sin stocks are thought of as “recession proof” and a way the consumer can comfort themselves in tougher economic conditions. 


Despite the challenging economy, franchisees are still investing in 7-Eleven Inc., the largest convenience store chain in the U.S. The franchisees have stated that their investment makes for a rewarding business venture, due to the excellent franchisee support system and successful track record of the franchise. 


Ampm Mini Market is one of the largest convenience store franchises, with over 1,000 franchises in the U.S. and nearly 3,000 franchises internationally in 20097. The franchise has seen a growth of 37% in the number of franchises in the U.S. since 2008, proving that convenience store franchises are showing resilience in the economic recession.  


Vacancies and Rental Rates


There has been an increase in the number of vacancies in retail property, in particular in more attractive high-traffic areas. In addition, landlords are becoming more willing to negotiate, resulting in more favorable rental rates and lease terms for the retail franchisee. The average asking rental rate on convenience store buildings has decreased 11% to the current rate of $21.89 per square foot, according to Co-Star Group.


Bakery stores


The US bakery industry has approximately 9,600 retail bakeries, including commercial and smaller bakeries, with combined revenue of $27 billion annually1. The Retail-Baking industry includes stores that service freshly baked goods including bread, bagels, pretzels, cookies and donuts. 


Despite the rising prices of baking ingredients, retail-bakeries have remained resilient in the current economic conditions. Trends in the baking industry are largely related to consumer lifestyles and eating trends. Adapting to changing consumer lifestyles such as high demands for convenient food options, healthy eating options, smaller food sizes and more ethnic products have kept the baking industry profitable in recent years.  


bakery2A key factor contributing to the baking industry’s growth is the recent consumer demand for convenient, ready to eat foods. This is fuelled by busier consumer lifestyles and less time for food preparation. Baking franchises can reap the benefits of the growing requirement of convenient-eating among time-starved Americans. 


Growing health awareness is resulting in bakeries producing more nutritious foods and introducing whole grain products to their stores. Whole wheat bagels are proving to be a growth driver for Bagel and Sandwich stores, as the American population is more aware of the benefits of whole grains. Bagel franchises such as Bruegger's Bagel Bakery and Einstein Noah Restaurant Group (parent company for Einstein Bros. Bagels, Manhattan Bagels and Noah’s New York Bagels) are ranked among the top franchises in the baking category.  


Bakeries are also responding to America's rising interest in ethnic cuisines and flavors. With the increasing Hispanic population in the U.S. and the Asian market growing, both Latin American and Asian baking styles are becoming increasingly popular. Bakeries are focusing on diverse and authentic baking products in order to tap into these growing markets. Kolache Factory franchise, ranked in Modern Baking’s Top 50 food service bakery operators in 2006, services authentic baked goods using popular world recipes. 


As coffee is a natural companion to baked products, a number of retail-baking franchises are introducing coffee as part of their product range. Dunkin’ Donuts, the top franchise in the baking category, is also a major player in the coffee industry due to its line of coffee products. Other bakery stores are introducing miniature versions of popular baked products to satisfy the consumer demand for healthier, low-carb products. 


Growth via Franchising


In recent years, a number of retail-bakery stores are using franchise growth to compete for a larger market share. Corner Bakery Café launched a wide scale franchise expansion program in 2006 to increase its market share of the retail-baking industry. It plans on doubling its current store number of over 115 stores by 20168. A number of retail-baking competitors are growing due to their franchising activities. Dunkin’ Donuts, Auntie Anne’s, and Cinnabon were ranked in Modern Baking’s Top 10 foodservice bakery operators in 2006. Dunkin’ Donuts ranked 1, Auntie Anne’s No.4, and Cinnabon No.10 in the report. Dunkin’ Donuts saw an increase of 10% to 6475 US franchises from 2008 to 2009.


Competition and Trends 


US Retail-Food outlets are taking on new measures in an effort to keep pace with changing customer demands in the recessionary economy. According to the CEO and president of the Food Marketing Institute (FMI), Leslie G. Sarasin, “The industry (Retail-Food) showed its resilience in the most challenging economy in modern history. Retailers aggressively discounted products and increased their lines of private brands to help American families lower their grocery bills. At the same time, they continued to control costs by improving efficiency and productivity, a hallmark of this industry.”  


fruitstallThe FMI ‘State of Food Retailing 2009’ report demonstrates the significant adjustments retail-food stores are making in response to consumer demand. Findings indicated a “significant increase in companies emphasizing low prices as a competitive strategy”. Retail-Food stores are responding with lower cost foods, and featuring more private brand products accounting for 15% of sales, and new product assortment and variety. These new measures are reflected in strong sales increases, with overall hourly sales for Retail stores increasing to $145.51 in 2008. This shows a remarkable increase from $138.90 in 2007 and $133.31 in 20069


Recession Resistance 


Retail-Food sales are expected to remain stable, with customers recognising this channel of service for its grab-and-go foodservice and variety of products. Through the new measures introduced by many retail-food businesses, increased consumer satisfaction will have a positive effect on the performance of the retail food franchise industry. Specialized retail-food stores are proving ‘recession-proof’ according to industry professionals, especially the candy and confectionary franchises. 


Despite the cut backs on consumer spending, candy remains a popular indulgence with American consumers. Candy is one of the most recession-resistant, according to Nielsen's analysis of recession vulnerability. U.S. candy companies thrived during the Great Depression, and will continue to prosper during the tough economic climate. Consumers are re-prioritizing their spending habits, but still enjoy small indulgences and treats such as chocolate and candy.  


Coffee consumption is showing consistency in the current recessionary economy, with over three out of four adult Americans drinking coffee regularly, according to the National Coffee Association. Retail-Food locations are a preferred destination for coffee drinkers. This provides Retail-Food franchise outlets with the perfect opportunity to build loyalty and repeat sales. 


Given the current economic conditions, the Retail-Food industry is proving resilient. This presents an ideal opportunity for franchisors to increase their presence in the market and expand their franchise units. Entering the industry as a franchisee will reduce the risks involved in setting up a new business alone. With the success of the Retail-Food industry and the attractive option of a proven franchise business model, future opportunities for success in retail-food franchising are looking optimistic. 


Initial Franchise Costs 


The following table contains information on the initial costs faced by franchisees. Information on the initial franchise fee, initial investment, and royalty fee of ten Retail-Food Franchises was extracted from the respective Franchise Disclosure Documents.


Name of Franchise
Initial franchise fee Estimated Initial Investment  Low - High Royalty Fee
ACE Sushi $4,000 $17,932 – $183,259 25%
Edible arrangements $25,000 $14,7530 - $307,980 5%
Great American Cookies $25,000 $167,000 - $296,500 6%
Pretzelmaker $25,000 $158,000 - $240,500 7%
Candy Bouquet $31,000 $16,800 – $52,380  
Candy express $30,000 $139,056 - $378,580 6%
Breadsmith $30,000 $238,000 - $317,000 7%
Auntie Anns $30,000    $197,875 - $384,100 7%
Cinnabon $30,000 $108,500 - $157,000 6%
JJ Gourmet $8,000 $297,000 - $303,900 $800


Retail food franchises offer a tried and tested formula and a proven business model to ensure the development of your own successful franchise. With ongoing franchisor support and experience, franchising gives you the recipe for success. The table below outlines the store numbers of ten successful retail-food franchises, extracted from Franchise Disclosure Documents.

Name of Franchise Total franchised Units at the end of 2008 Total Company-Owned units at end of 2008
ACE Sushi 349 38
Edible arrangements 636 2
Great American Cookies 286 0
Pretzelmaker 143 0
Candy Bouquet 733 0
Candy express 15 0
Breadsmith 31 1
Auntie Anns 657 12
Cinnabon 425 0
JJ Gourmet 0 6



  1. First Research Inc., Specialty Food Stores Industry Profile, 
  1. First Research Inc.,  (Convenience Stores Industry Profile)
  1. National Confectioners Association, 2008, U.S. Confectionary Market Overview
  1. Candy Industry, 2009, Back in the Race Curtis Vreeland
  1. National Association of Convenience Stores, Sweet Sales 2009
  1. The Centre for Tobacco Policy and Organising, Cigarettes Generate Big Revenue for Convenience Stores
  1., ampm International
  1. Retailer Daily, November 05, 2009
  1. Food Marketing Institute, State of Food Retailing 2009   

Franchise Direct’s Disclaimer

Food Franchises...

California Tortilla California Tortilla has redefined the fast-casual Mexican food segment. This is the franchise recipe you’ve been... Read More Min. Cash Required:

Classic Rock Coffee Company Start your own cool, classic rock coffee shop with Classic Rock Coffee, a rockin' franchise opportunity! Read More Min. Cash Required:

Camille’s Sidewalk Cafe Camille’s franchising system is a step-by-step method for developing your own restaurant. We'll show you how! Read More Min. Cash Required:

Abbott's Frozen Custard Frozen custard is the growth niche of the frozen dessert industry! Join today with an Abbott's franchise! Read More Min. Cash Required:

Teddy's Bigger Burgers Start your own high-energy burger joint with a modern twist. Read More Min. Cash Required:

Cold Stone Creamery® Bring The Ultimate Ice Cream Experience to your neighborhood with Cold Stone Creamery! Read More Min. Cash Required:

Your Request List

You can add items by clicking the "Add to Request List" button or checkbox when you find something you're interested in.

You may add up to 15 items to your Request List

Your request list will follow you around the site.

When you are ready to complete your request for free information, click "Submit" in your Request List.

Why not get started by browsing our New Franchise Opportunities or Low Cost Franchise Directory?

You may only enter 15 items in your Request List.

To request information from your selected companies, just fill in the form and click "Submit".

OK, got it

Request Info From:


Your List is Empty

You can add items by checking the "Request FREE Info" boxes.

* indicates required field

Optional Information

Join our mailing list!

We share your information only with your selected franchises.