These are interesting times for food franchises. Consumer tastes are shifting and changing, leaving the heads of these companies to wonder, “How do we respond?”
Fortunately, because eating is a necessity, food franchises will always have a well-funded place. For 2015, food-related franchises (quick service restaurants, full service restaurants and retail food) are estimated to account for an estimated $341 billion of economic output in United States. In addition, franchises in these categories account for 33% of all franchise establishments in the U.S. Food franchises directly employ almost 5 million people, which is 56% of direct franchise employment, according to IHS Global Insight.
For prospective food franchise investors, however, the sheer size of the food franchise industry makes the process of choosing the right opportunity for them a daunting task, as illustrated by the following overview of the major divisions of the food franchise industry:
Fast Food Franchises
With about 20% of the total of all U.S. franchise establishments, fast food is the most common franchising segment. Food production in fast food restaurants, also known as quick service restaurants (QSR), is focused on immediate consumption. Fast food meals are commonly taken out or delivered, yet may also be consumed on-site.
Full Service Franchises
Full service franchise restaurants encompass anything from a casual family-style eatery to an elegant restaurant. Meals from full service food franchises are typically eaten on-site, although takeout or delivery service may be provided.
The coffee franchise industry is well developed and competitive, and maintains strong consumer demand. Coffee is second only to water in beverage popularity in the U.S., and consumption continues to increase. Many coffee franchises have other sources of revenue – including pastries or sandwiches -- in addition to coffee.
The four main types of pizzerias are full service, limited service, non-traditional and take-and-bake. The fast food pizza market is a $32 billion annual industry by itself, according to Crest, the food service unit of NPD Group.
Ice Cream & Frozen Yogurt Franchises
The demand for frozen desserts is more evenly distributed throughout the year than it was a few decades ago. Customization has become a feature of many ice cream franchises as those franchises are taking lessons from the surging frozen yogurt franchise segment.
These franchises offer specialties to customers, with menus that feature full sandwiches, soups, and additional items. Others focus on certain areas e.g., bread, muffins, bagels, croissants, pastries, donuts and other sweet goods.
And those are just the major segments. There are other food segments, including food gifting, juice and smoothie franchises, and vending machine food franchises. Even convenience stores have made an entrance into the mix by increasing their food offerings in recent years.
To assist you with your research process on this vast industry, we’ve compiled information on a few notable industry trends and investment data, including sample franchise costs.