Accounting for about 25% of the total of all U.S. franchise establishments, fast food is the most common franchising segment—not just the most prevalent food franchising segment.
Food production in fast food restaurants, also known as quick service restaurants (QSRs) or limited service restaurants, is focused on immediate consumption. Fast food meals are commonly taken out or delivered. However, some fast food franchises offer limited on-site seating.
White Castle, founded in 1921, is widely considered the first fast food franchise. (Though A&W, founded in 1919, can now be considered a fast food franchise, it wasn’t considered one until several years after it began operations.) The most popular fast food brands in the United States now include: McDonald’s, Burger King, KFC, Subway, Taco Bell, Pizza Hut, Domino’s, Chipotle, Panda Express…and many, many more.
The fast food franchise model underwent a massive transformation following the acquisition of McDonald’s by Ray Kroc from its founders, brothers Dick and Mac McDonald. Kroc revolutionized the industry by implementing and overseeing procedural changes that would become the foundation of virtually all fast food systems.
Nowadays, you can find fast food franchises all over the globe, serving all types of cuisine—but burgers still reign supreme. According to MarketResearch.com, hamburger restaurants account for about 40% of sales among U.S. fast food establishments, while sandwich, pizza, chicken, and Mexican food restaurants each account for about 10%.
A common feature of fast food franchises is the drive-thru, allowing for quick, safe, and convenient order and pick-up of menu items. While some fast-food franchises focus entirely on this approach, others offer limited on-site seating.
Fast food restaurant seating facilities are made for speed rather than comfort. The seats are often benchlike, offering a place to perch while eating rather than the comfort of a chair for a more extended stay. Customers usually eat without utensils, and supplementary items such as cups and napkins are disposable.
The fast-food industry in the United States is currently worth a whopping $239 billion each year. For anyone hoping to enter this super-competitive marketplace, you can never underestimate the value of established branding and a familiar menu!
Providing Healthier Fast Food Options
Over the years, fast food has been rebuked for having less-than-ideal healthy eating options.
As a result, fast food franchises as a whole are constantly developing menu items that will satisfy the customer’s desire for healthier fare. In fact, sales of plant-based menu items have seen a significant boost at virtually all food franchises, as much as 20% in recent years, according to the Plant-Based Foods Association.
One of the largest contributors to the popularity of these plant-based items has been the rise of the so-called “flexitarian.” A flexitarian is a person who primarily eats vegetarian but occasionally eats meat or fish.
“Nearly one-third of the consumer identifies as either flexitarian or say they limit or avoid animal proteins,” says Patty Trevino, senior vice president of brand marketing for CKE Restaurants Holdings, Inc., which includes Carl’s Jr., Hardees, Green Burrito and Red Burrito.
Although, while research still indicates that as a whole fast food customers are trying to eat healthier most of the time, they are still indulging every now and again.
The Variability in Fast Food Franchise Opening Costs
The amount necessary to open a franchise can vary widely depending on the unique business system and execution requirements. The opening costs for a fast food franchisee can depend on many factors, including but not limited to: the franchise fee, land and building costs, training expenses (such as travel and living expenses, not the actual training courses), grand opening advertising and marketing costs, and more.
One of the most important variables in how much it costs to open a franchise is the type of franchise being opened and how big it is. Commonly, the two types offered are traditional and non-traditional. Traditional franchises are usually the biggest option. They are typically standalone buildings where the service of the franchise is the only business offering. Sometimes food court locations are also considered traditional locations. Non-traditional franchises are smaller, and typically located within another building like an airport or gas station. Other franchise types include kiosks and food trucks.
Franchisors offer estimates in their FDD based upon their experience establishing, and in some cases operating, units. However, prospective franchisees should keep in mind these estimates are just that – an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.
Drive-Thrus Prove Their Worth during Unprecedented Times
As stated in QSR Magazine, “many have theorized that drive-thru, curbside, and ghost-kitchen-powered delivery will become the beating heart of foodservice’s future.”
With social distancing now a part of daily life, many Americans have a new outlook on the traditionally crowded dining room, and are responding by continuing to order food to eat off premises.
With analysts stating that the presence of a drive-thru can add as much as 30% in sales to a company’s bottom line, food franchise businesses of all types and sizes are evaluating their service options—and making adjustments accordingly.
For instance, Schlotzsky’s expects 99% of its new restaurants will have a drive-thru going forward. Also, don’t be surprised to see more double drive-thru—ala Chick-fil-A—become more common as well.
“Ghost Kitchens” Making Waves in Food Franchising
Even before a pandemic forced dramatic changes in the food world, ghost kitchens were already making waves.
A ghost kitchen is a shared working space for multiple restaurant concepts to prepare food. These spaces reduce financial overhead by using delivery or to-go-only operation. No dining rooms or servers. By foregoing any on-site dining, they can offer a diverse menu of food options at reduced cost levels.
Numerous franchises, new and well-established are getting in on the method.
For example, Combo Kitchen and The Local Culinary are two newer franchises that have tailored their franchise offering around being lean and efficient. Both concepts offer the franchisee a chance to serve customers menu items from several (upwards of 50, in some cases) types of food from one hub. According to the franchisors, franchisees and their staff will be fully trained on how to prepare the menu items from each of the restaurants they select for their kitchen.
More well-established fast food brands getting in on the ghost kitchen phenomenon include Taco Bell, which in late 2020 introduced its new prototype.
At a total size of 1,325 square feet, the new Taco Bell prototype is roughly half the size of a traditional Taco Bell (2,500 square feet). For potential seating, it only consists of an outward-facing bar dining area, essentially making it a hub for off-premise dining. It also includes a second drive-thru lane dedicated to pick-up only for digital order customers.
Franchising
It's safe to say that there's absolutely no shortage of fast-food venues in the United States, so anyone entering this competitive space as an independent concern has a significant battle on their hands to break through the noise of the principal players.
Franchising offers a unique opportunity to hit the ground running, providing instant brand recognition and a menu that future customers already know and love.
On average, American households spend around $2800 on food each year. That's $233 each month, $54 each week, or $7.65 each day.
There's plenty of profit to be made in fast food, as long as you get your business model correct. And with fast-food franchises, the business model has already been tried and tested.
Franchising offers an opportunity for people new to business to benefit from:
- Established, instantly recognizable branding
- A prior reputation for customer satisfaction
- Immediate curb appeal
- A loved menu
Fast food franchises offer choices that customers already know and rely on. So, fast-food franchises are a wise investment, allowing new business owners to benefit from pre-existing demand and the marketing budgets of their parent companies.
Independent companies often struggle to establish themselves. The first three years for new businesses are fraught with peril as the owners work to recoup their initial investment. Profits come slowly to most indies.
Fast-food franchises, on the other hand, are already popular (and welcome) in most American towns and principalities.
The franchise parent company usually provides world-class training opportunities and management programs for franchise owners and their staff. They also often extend their support package beyond opening day; helping with your new business's complex administrative setup and running.
Facts About Fast Food Franchises
Fast-food restaurants serve meals at a low price point with a limited menu and table service. The majority of fast-food franchises are self-service affairs, where the customer queues to order their food and usually clears away their own tray after eating. This brings the running costs for QSRs down, allowing for higher profit margins.
In 2017, there were almost 191,000 fast-food franchise outlets across the US. And while the customer service is limited, the US public loves their fast food joints. In fact, the average American Customer Service Satisfaction index score for fast food franchise restaurants was an impressive 78 out of 100 - that's almost 8/10.
More recently, fast-food franchises have become increasingly digitalized, with self-service Point-Of-Sale units and smartphone apps which make the ordering process simple for the user.
The digitalization of fast-food restaurants provides greater options for customization, offering customers the possibility of creating healthier versions of the QSR's regular menu.
Many fast-food franchises have developed partnerships with online food delivery services such as UberEats and Deliveroo to extend their reach, offering the convenience of home delivery. This online marketplace has proven crucial during the COVID-19 pandemic, allowing fast-food restaurants to remain in operation.
Burgers are the significant bedrock of the fast-food industry, with 56% of consumers eating burgers at least once a week.
Top fast-food franchises include McDonald's, Burger King, Subway, and Yum! Brands, Taco Bell, KFC, and Pizza Hut.
Fast food franchises don't just offer fatty, unhealthy, deep-fried fare. Almost half of the US population aim for healthier options when selecting items from a menu, so those chains that accommodate the health-conscious, such as Subway, thrive.
In recent years, McDonald's has introduced lower-calorie options, and KFC has even started to appeal to the growing interest in veganism. A third of the American public eats from a fast-food venue on a daily basis; those that offer healthy options are the businesses that appeal to the younger generations.
Franchising Vs. Independent
Depending on the size of the franchise company you're considering, you'll need a considerable upfront investment. Most people, of course, don't have access to ready funds, so they need to rely on banks and moneylenders.
Luckily, moneylenders tend to favor franchise businesses: the business model has already proven itself popular, profitable, and sustainable.
Independent companies, however, often battle to raise their necessary startup collateral. When they do achieve it, the interest rates are usually higher than those enjoyed by franchise businesses because their new business plan has no evidence of viability. Also, independent companies often go into business without the support of an established partner, unlike franchises who benefit from their parent company's business acumen and expertise.
Fast-food franchises tend to hit the ground running as soon as they open their doors because of the immediate visibility and familiarity of their branding and a menu that local customers already know and adore.
Fast-Food Franchises
You really are spoiled for choice with our fantastic range of potential fast food franchises. Turn your love of foodservice into a career today.
You can also check out many more Food Franchises here on Franchise Direct, such as: