Trends and Facts About Restaurant Franchises

Eating out is a big business in the USA. We love our world foods -  anything from traditional American to Mexican to Chinese to European. 

American  households, on average, spend around $3000 a year on eating out. And  while that figure sounds high, it all adds up: $10 for your daily  workday lunch, $3 for a coffee in the afternoon, $20 for dinner with  friends once or twice a week. Even takeout and delivery meals count.  When you add it all up, we spend a lot on restaurant food. 

Think  about it: if you spend $50 a week on food and drink from restaurants,  you're paying $2.5K a year on eating out, which equates to almost 50% of  the average American's yearly food budget. 

The restaurant  industry makes up around 10% of the overall US workforce. Almost 50% of  adults have worked in the restaurant industry at some point in their  careers, while a third of all American workers gain their initial work  experience in restaurants. 

In general, restaurants mark-up their  costs by 300%, covering sourcing and preparation, service, and  convenience. According to the National Restaurant Association,  restaurant businesses bring around $800 billion to the US economy each  year, accounting for 4% of GDP.

Like we say, eating out is a big business. 

Franchising offers a unique opportunity to people hoping to leave the rat race behind and go into business for themselves.

When  you invest in a franchise business, you inherit the hard-earned  reputation of an established partner. This gives you greater visibility  to consumers who already know and trust the brand because you deliver  the same quality, excellent service, and experience as your parent  company.

One of the most beneficial elements of all restaurant  franchise partnerships is the world-class training that accompanies the  investment. Your parent company will make sure that you develop the  expert skills needed to deliver their exclusive menu and service  consistently and with the care and love of their very first restaurant. 

On  top of the training support, most restaurant franchise parent companies  offer a business and HR support package to help ensure that you adhere  to complicated tax- and industry regulations. 

Your restaurant  franchise partner gives you access to an established supply chain,  ensuring you receive the best quality ingredients at the most  competitive rates. Great quality ingredients make great food, after all.  

Taking on a restaurant franchise brings with it the benefit of  instantly recognizable branding. This gives your new business instant  curb-appeal. People know what they're getting with a brand, and when  you're asking your customers to part with their hard-earned cash,  quality counts every time. 

Independent companies that start-up  without the support of an established partner are fighting a tough  battle right from the start. Their first three years of trading are  often particularly precarious, as these initial years are full of  financial instability. All businesses need to glean back their initial  investment before they genuinely turn to profit, and - for independent  companies - that can be a long time coming. 

Franchise businesses,  however, tend to recoup their investment quicker than independents  because they have instant appeal and a ready-made reputation. Very few  indies come into profit until Year 4, by which time it's often too late,  and the business folds. 

Franchising offers those new to business  the opportunity to hit the ground running with a restaurant chain that  customers already know and trust. Of course, it depends on the size of  your initial investment, but many franchises turn their profits around  within the first year. 

There  are currently over 1 million restaurant locations in the United States,  and more than 90% of them employ fewer than fifty people. 

Restaurant  franchises cater to all tastes, from quick-turnaround fast food joints  to formal seated service and fine dining. Regardless of the market  sector for whom you're aiming to cater, the restaurant sector has seen  healthy growth over the past thirty years. 

The restaurant sector  is a leading contributor to the US economy: sales within the industry  have doubled since the turn of the millennium. This makes restaurant  franchises a particularly fertile driver of economic growth in the US. 

Prior  to the COVID-19 pandemic, American restaurants had become a crucial  part of everyday life - we were dining out more frequently and spending  increasing amounts of money. The impact of COVID will diminish over the  next couple of years, so it's a good time to think about investing in a  sector that the American public deeply values and will be keen to return  to once things settle. 

Of course, the pandemic has temporarily  impacted the sit-in dining experience; but the take-away and delivery  service sector is booming. 

The businesses that have expanded  their digital presence are the restaurants that have thrived throughout  the stay-home period. And restaurant franchises are ideally placed to  develop their digital presence because they have the scale to adapt to  market challenges. 

Franchise businesses benefit significantly  from their parent companies' digital and marketing budgets who provide  websites, marketing campaigns, and special offers that attract  customers. Businesses that have the scale to adapt are the ones who are  thriving in these difficult times. 

Banks  and moneylenders tend to favor franchise businesses when it comes to  awarding start-up funds. Franchises are built on proven metrics - the  business model has a healthy record of growth, profit, and  sustainability. Also, restaurant franchises have better access to the  marketplace and a robust financial model that helps sustain them when  times are tough. 

On the other hand, independent companies tend to  struggle to win affordable interest rates for start-up collateral due  to an unproven business model. 

When you take on a restaurant  franchise, you inherit your franchise parent's reputation, business  model, and marketplace position. Franchises often experience much  healthier starts than independent businesses because they have instant  curb appeal and a customer base who already recognize and trust the  brand.