food franchises - Franchise Business Review

Transcription

2011 special report
FOOD FRANCHISES
www.FranchiseBusinessReview.com
2011 SPECIAL REPORT: Food Franchises
food franchises
For the right
person who
finds the right
franchise
brand, the food
business can
offer an exciting,
rewarding,
and profitable
opportunity.
erhaps no other industry in franchising is as trend-driven and
competitive as the food sector. To be successful, franchisees
must overcome fickle consumer preferences, fluctuating food costs,
fly-by-night diet crazes, and immense pressure. But for the right person
who finds the right franchise brand, the food business can offer an
exciting, rewarding, and profitable opportunity.
This report is designed to give you a detailed look at the food
franchise sector. We will explore the different types of franchise
concepts, the resources they involve, the pros and cons of the sector,
and the characteristics of a “typical” franchisee. We will also forecast
where we think the food franchise market is going and identify the
top food franchises based on our franchisee satisfaction research.
Who We Are
Franchise Business Review is a national market research firm that
performs independent research of franchisee satisfaction. Our products
include franchisee satisfaction research, economic impact studies, and
sector reports. The data for this report was compiled as part of our 2011
food franchise study, which recognizes the top brands based on overall
franchisee satisfaction. To compile the data for this report, we surveyed
nearly 2,000 franchisees from the food sector, representing more than
75 brands and 20,522 franchised businesses. We also talked to senior
executives at several brands for their first-hand perspective
of the food industry.
It is important to note that not all of the companies mentioned in this
report participated in our franchisee satisfaction survey or interview.
These companies were researched using publically available
company intelligence.
Cover photos courtesy of (clockwise from top left):
Papa Murphy’s, Auntie Anne’s, East Coast Wings & Grill, Nothing Bundt Cakes
For more information on this report, visit: www.FranchiseBusinessReview.com
1
Daniel Caskey,
Marco’s Pizza
How long have you been a franchisee?
I have been a franchisee of the Marco’s
brand since June 2011 but have been a
franchisee of various other brands for over
10 years.
Why did you decide to buy a franchise?
Having gone through all the hard work of
developing my own concept in the past, I
know firsthand the value that a franchise
with great systems already in place can
yield. Being part of a franchise allows
me to focus on growing the number of
locations in my organization quickly and
saves a considerable amount of money on
establishing an infrastructure. I look for a
company with a great foundation of solid
people—that is the company I want to
invest in and grow with!
Why did you choose your franchise?
I absolutely love the product that Marco’s
provides. When I became aware of the fast
growth the company was experiencing, I
wanted to know more. After speaking with
other Marco’s franchisees and visiting with
their corporate team, I was sold! What is the best part of being
your own boss?
I like controlling my own destiny. When
you work for yourself, you don’t always
have someone patting you on the back,
saying, “Good job,” but you also don’t have
to deal with being underappreciated. What is the worst part of being
your own boss?
The hours involved. One week may be
20 to 30 hours, and the next, it’s 90+,
but I would not trade it for a 40-hour,
9-5 any day!
For more information about Marco’s,
please visit www.marcos.com or contact
Lauren Johnson at [email protected]
or (419)724-1867.
Photo courtesy of VooDoo BBQ & Grill
Models/Concepts
The franchise concepts within
the food sector typically fall into
one of several major categories:
quick serve restaurants (QSR—i.e.,
fast food), fast casual (a variation
of QSR that includes higher end,
counter-service establishments),
retail stores, mobile (based in a
kiosk or mobile cart, for example),
delivery only, and full-service
restaurants. Some franchisors
offer multiple business models.
These models may be further
broken down by food type, such as
burgers, wings, pizza, Mexican, ice
cream/yogurt, coffee, and sushi,
to name just a few. Because many
of the models fit into a number
of categories (a coffee shop that
serves breakfast sandwiches, for
example), the concept lines are
often blurred.
Investment
The food sector offers a wide
range of investment options
for prospective franchisees.
Some concepts require less than
$100,000 to get started, while
others cost a million dollars or
more. The investment range of our
2011 Top 30 Food Franchises (see
list on page 12) is $30,000 to $2.3
million, with the average initial
investment of the top 30 being
$491,307. (Note that this is the
total initial investment, but with
financing and lease options, the
typical upfront cash requirements
tend to be 20% to 40% of that
total investment.)
The amount of the initial
investment typically depends on
the real estate and equipment
needed to run the business. At
the low end of the investment
For this report, we looked at many spectrum, you have opportunities
like Happy and Healthy Products,
different brands representing
a distributor of frozen treats,
several different concept types in
which offers franchisees a full or
an attempt to accurately compare
part-time home-based business
and analyze both the companies
themselves and the overall market. opportunity with an initial
2 For more information on this report, visit: www.FranchiseBusinessReview.com
investment of about $32,000.
Even some businesses that offer
hot, prepared foods are deliverybased and do not require a large
physical footprint. The typical
initial investment for a business
like this is around $200,000.
A quick-serve brand based in
a retail strip center can cost
less than $500,000 initially,
depending on the real estate and
overhead requirements. A fullservice restaurant, which requires
a large, stand-alone site (and
more employees and overhead for
day-to-day operation), typically
costs more than a million dollars
to get started.
Even within brands, you may see
an array of investment options.
Both Subway and Dunkin Donuts,
two of the biggest franchisors
in the sector, offer the option of
traditional stand-alone locations
as well as kiosk, retail store, stripcenter, and other non-traditional
locations. A Dunkin Donuts
franchisee might be able to open
a small, grocery-store-based
unit for around $150,000, while
a full-size traditional store runs
over a million dollars. Subway
offers a number of non-traditional
location types, including airports,
gas stations, military bases,
casinos, and even churches,
which may make ownership more
affordable.
In 2010, East Coast Wings
and Grill, traditionally an
eat-in, full-service restaurant
concept, introduced a lower
investment QSR model for current
franchisees, which enables them
to expand their market at a
$285,000 price point (about half
the cost of the full-service model)
because the real estate footprint
is much smaller than for a fullservice restaurant. East Coast CEO
Sam Ballas told us that a number
of existing East Coast franchisees
embraced this model as a way to
expand and grow in some of the
smaller communities near their
full-service locations.
The time investment for a food service franchisee varies
as much as the monetary investment, depending on the
size and capacity of the franchise concept.
Typical Investment Ranges for Food Franchise Locations
Kiosk /Mobile /Non-Traditional Locations
$30,000 – $250,000 +
Conversions of Existing Locations
$100,000 – $400,000 +
Retail /In-Line Strip Center Locations
$175,000 – $500,000 +
Stand-alone /New Construction Locations
$750,000 – $2,000,000 +
*These are broad estimates of initial capital investments, and each franchise brand will have
specific liquid capital and net worth requirements.
The time investment for a food
service franchisee varies as much
as the monetary investment,
depending on the size and
capacity of the franchise concept.
Obviously, the more employees
a business has, the more
management is required on the
part of the franchisee. Distributortype concepts can sometimes be
run on a part-time basis, and some
of the snack/pizza/ice cream
concepts offer more flexibility.
Full-service and breakfast-todinner QSR concepts, on the
other hand, require considerable
night and weekend involvement.
Even franchisees with onsite
managers to handle day-to-day
operations must invest a lot of
time promoting and marketing
their businesses.
Another factor contributing
to the financial and time
investment of a food business is
the fairly common requirement
by franchisors that franchisees
operate multiple units. It is
easier for the franchisor from
a development standpoint to
work with an owner who is going
to operate several locations,
and many of the higher-end
investment brands prefer not to
deal with single-unit franchisees.
These brands would rather have
a big operator who plans to open
five to 10 locations over a certain
time period. Obviously, running
multiple locations involves much
more time and money than a
single unit, so this is an important
consideration for prospective
franchisees.
3
Average Profitability of FBR’s Top 30 Food
Franchises vs. All Food Franchises
Profitability Range
$250,000 +
FBR’s Top Food Franchises
All Food Franchises
$225,000 - $250,000
$200,000 - $225,000
$175,000 - $200,000
$150,000 - $175,000
$125,000 - $150,000
$100,000 - $125,000
$75,000 - $100,000
$50,000 - $75,000
$25,000-$50,000
$0 - $25,000
0%
5%
10%
15%
20%
25%
30%
35%
40%
Percent Response
*Profitability data listed above is based on independent surveys completed with 1,781 food industry franchisees in the previous 12 months. This sample
included data from 78 franchise brands, representing 20,522 operating units. Profitability is defined as any annual pre-tax income the franchisee received
including salary and/or business profits.
Profitability
Getting started in the food
sector typically requires a large
investment, and early profit margins
can be much lower than some other
service industries—especially for
operators of high cost, single-unit
operations. Therefore, it can take
a long time for a new operator
to recoup start-up costs. Many
franchisees choose to operate
several locations because this
typically helps them turn a higher
profit and lowers some costs.
Getting started in the food sector typically requires a
large investment and early profit margins can be much
lower than some other service industries—especially
for operators of high cost, single-unit operations.
owner takes out of the business) of
a food franchisee is $77,511, which
is 13% higher than the average
profitability of all franchisees (based
on data from 10,073 franchisees
from all industry categories). Yet
55% of food franchisees earn less
than $50,000 a year.
Based on our 2011 survey, the
When you look at just the Top 30
average annual profitability (defined food systems on our list (see page
as any income, salary, or profit the
12), average profitability improves
by 16%, with the average
being $89,749.
At first glance, these numbers
look quite good compared to
the overall franchise industry,
but from a return on investment
perspective, that’s not necessarily
the case. The average food
franchise investment is two to
four times the cost of a non-food
franchise, so having an average
profitability just 13% more isn’t
so impressive. For comparison,
the senior care sector has an
average annual profitability of
$98,723 (based on surveys of
842 senior care franchisees),
and the average investment is
well under $100,000.
Pros
Although food is at the heart of
every franchise concept within the
food sector, there are countless
investment options, business
models, and food types for
franchise operators to choose
from. A prospective franchisee can
choose to run anything from a vanbased delivery business to a fullservice restaurant—with dozens of
other business types in between.
The industry also provides
instant gratification in the way of
customers’ love for food. For true
“foodies,” there’s nothing more
rewarding than serving a product
or meal that the customer truly
savors. Franchisees often get to
witness firsthand consumers’
enjoyment of their products.
Although the industry is affected
by trends and competition, the
convenience, entertainment value,
and overall enjoyment of a meal
ordered out will never go away.
Despite reports of the economy’s
negative effects on the restaurant
business, many franchise brands
have actually performed very well
in the past few years. Don Fox,
CEO of Firehouse Subs, says the
stability of the sector—at least for
certain concepts—is actually one
of the upsides of the industry.
“During the worst year of the
recession on a comp basis, the
food industry was down about
3%. Most industries in this
country would die to have that
as a number. Yes, there is fallout
even with a 3% decrease in sales,
but for people who go in and
embrace it and do a great job at
it, it is an extremely vibrant and
healthy business,” Fox said.
A food franchise can be a
substantial moneymaker, and multiunit operators in particular may see
a significant return on investment
once they are established. The wide
range of franchise models available
to someone looking to enter the
food services sector make the food
business a feasible endeavor at
almost any investment level.
Perhaps more than in any other
franchise sector, operators of food
franchises may reap significant
benefits from being part of a
large franchise system rather than
operating alone. The food industry
is highly competitive and trenddriven, and operators in this space
must constantly be marketing
themselves and developing new
products. Franchisees benefit from
having a recognized brand and
the support and resources of a
corporate office to help with
these tasks.
For true “foodies,” there’s nothing more rewarding
than serving a product or meal that the customer
truly savors.
Photo courtesy of Auntie Anne’s
5
Own the Hottest Brand in the Country!
s 30 Consecutive Same Store Sales Growth Quarters*
s $1,275,058 Average NET Sales*
s $264,805 Average EBITDA*
s Ratio of average investment to first year gross sale 1:3*
s Single & Multi-Unit Territories Available
Winner at the 2010 National
Buffalo Wing Festival
*This advertisement is not an offering of a franchise. An offering can be made only by prospectus. We only sell franchisees in states where our offering
is registered.. Figures reflect averages for lowest and highest sales and EBITDA as submitted by our full service franchised restaurants operating in
2010 as published in item 19 of our April 2011 Franchise Disclosure Document. Same store sales growth figures are from 1/1/94 through 6/30/11 as
reported by franchisees. Individual financial performance will vary.
©2011 East Coast Wings Corporation. All rights reserved.
For Franchise Information, Contact
LG-SSS 082011
www.eastcoastwings.com
Half Page Horz Lead Generation Ad.indd 1
Cons
The food sector is not for the
faint of heart in terms of what
it takes to run and operate a
successful business. Rising food
costs, soaring competition, high
employee turnover, and long
hours are just a handful of the
sector’s drawbacks.
Lee S. Easley 1.800.381.3802
8/31/11 10:22 AM
start-up costs for a Tilted Kilt
franchise are around $2 million,
including a $75,000 franchise fee.)
This may improve as prospective
franchisees find alternative
ways to finance their businesses.
“People are finding ways around
the banks,” Lynch told us.
“We have found many people
coming to us with cash. They’ve
The expenses—both initial and
ongoing—are much higher than in taken their money out of the
other sectors, unless the business stock market, and they really
is a mobile concept. And accessing are interested in investing in
capital to finance a business is still themselves,” said Debra Shwetz,
co-owner of specialty baking
not easy, despite improvements
franchise Nothing Bundt Cakes.
in the economy. Ron Lynch,
CEO of Tilted Kilt (a sports pub
When franchisees do have success
franchise), says the lending
landscape is his biggest challenge accessing traditional bank loans,
franchisors say it’s from local and
to growth because even qualified
regional banks rather than the big
franchisees aren’t always able to
national players. However, Ballas of
access the capital they need to
finance a franchise. (The estimated East Coast Wings and Grill said he’s
starting to hear from national banks
that haven’t expressed interest in
lending in the past few years.
The time investment for running a
food franchise is also significant,
especially in the early days of
start-up. Even mobile concepts,
which may offer more flexibility in
scheduling, usually require a lot of
weekend time.
The food sector is probably the most
competitive space in franchising
(and in business in general).
There are millions of options for
consumers, both franchised and
not, and the market is strongly
driven by what’s hot now, which
can change overnight. Franchise
companies must constantly be
researching and developing new
products to keep up with the latest
food trends. Otherwise, a popular
food craze (e.g., the carb-free diet)
can be death to a franchise brand
that focuses only on, for example,
donuts. However, some brands have
made the most of the national push
to eat healthier.
Dunkin Donuts successfully
made the transition from a focus
on only donuts to coffee, bagels,
and meal options for day parts
other than breakfast. Other fast
food brands that once focused
on burgers and fries have added
healthy menu options—such
as salads, grilled chicken, and
smoothies—and attracted an
entirely new customer base.
Of course, these transitions also
required an additional investment
from franchisees to re-vamp
equipment and train staff.
and wholesome ingredients.
Five Guys and Jake’s Wayback
Burgers, two successful burger
franchises, are known for serving
big, juicy hamburgers that, while
they may not be low in fat, are
marketed as made of the freshest
ingredients.
with other concepts. In recent
years, a number of QSR and fast
casual concepts have introduced
value-menu pricing as a means
to out-price competition and
keep customers coming in the
door. At a time when the cost of
basic food supplies like coffee,
flour, and eggs skyrocketed,
Because of the competition in
franchisees ended up losing
the food space and the economy,
money as they were forced to
there is also significant pressure in offer more food for less money. In
terms of pricing. Franchisors must many concepts, even when sales
constantly keep an eye on their
were up, unit-level profitability
prices, adjusting them to compete suffered considerably.
Nothing Bundt Cakes recently
introduced a new product—a
“bundtini”—a miniature bundt cake
for people wanting a treat without
the full-size guilt. The company also
provides Weight Watchers points
and other nutritional information
to any inquiring customers.
“We were concerned about the
whole low-carb thing,” said
Nothing Bundt Cakes’ founder
Shwetz. “We read about it, we
waited for it to hit … but it didn’t.
People like their sweets, and they
like to indulge themselves. They’re
going to do that no matter what
the current trend is—at least
that’s what we’ve found.”
Even servers of traditional “fast
foods” like hamburgers have
increased their emphasis on fresh
Photo courtesy of Nothing Bundt Cakes
7
“I haven’t seen that much disparity
on the selling subs side of the
business, but selling franchises
was definitely affected on a
regional basis,” said Firehouse
Subs’ Fox. “Las Vegas and Phoenix
… While I had very high unit
volumes there—which should help
promote franchising—the reality
is the overall economic climate in
those markets was a deterrent to
potential franchisees.”
For all types of concepts, it
appears the economic situation
in the food sector is improving. A
2011 Economic Outlook report put
out by the International Franchise
Association and prepared
by PricewaterhouseCoopers
forecasted an increase in units,
employment growth, and output
for both QSR and full-service
concepts in the coming year. (This
increase follows a decline between
2008 and 2009.)
Photo courtesy of Firehouse Subs
“We have certainly benefitted from real estate
availability and real estate costs in different markets.
We’ve seen reductions in construction costs because
they’re more competitive and very flat equipment
pricing because of the recession.” Kevin King, Papa Murphy’s
Market Analysis
While high-end restaurants
suffered dramatically, lower cost
options—like pizza, wings, and
some fast casual concepts—did
well despite the economy
because they offered families an
inexpensive dinner option that
didn’t necessarily require tips,
a bar tab, or some of the other
“extras” of a full-service restaurant.
Not surprisingly, these concepts
also had the highest satisfaction
among franchisees (note that
pizza concepts make up more than
25% of our 2011 Top 30 Food
Franchises list).
However, even the franchise
brands that continued to perform
well throughout the recession
faced regional challenges in hardhit states like California, Arizona,
Florida, and Nevada.
Anecdotally, franchisors agree with
the promising reports. Lynch of
Tilted Kilt told us 2011 may be his
franchise’s best year ever in terms
of new unit growth and profitability.
Executives from Papa Murphy’s,
Firehouse Subs, East Coast Wings
and Grill, and Nothing Bundt Cakes
echoed that sentiment.
One franchise concept that did
well in the struggling economy
was Papa Murphy’s Take ‘N’ Bake
pizza, which enables customers to
purchase a freshly made pizza and
cook it at home.
“We probably benefitted more
than most in 2008 and 2009,” said
Kevin King, senior vice president
of operations for Papa Murphy’s.
“The challenges for us came later
on when pizza pricing became very
aggressive in 2010. We encouraged
our owners to get equally
aggressive or more aggressive.
That took some time, convincing
franchisees that it’s worth some
short-term margin hits for longterm share and traffic gains.” In the
long run, the changes paid off for
Papa Murphy’s franchisees, King
said, and they were able to recoup
some of the early lost revenue as
their customer base increased.
And while the lending situation
remains a big roadblock for
prospective franchisees, a report
in The Restaurant Finance Monitor
says lenders are more likely to
finance franchised restaurants
than other business types because
their SBA failure rate in the past
few years has been lower than
both independent restaurants and
small business in general (19%
compared with a failure rate of
24% for all small business).
“I’ll speak to the availability
of talent,” Shwetz said. “In Las
Vegas, where unemployment is
around 14%, we have been able
to hire some really great, amazing
people.”
Ballas of East Coast Wings and
Grill says his brand saw significant
savings in real estate during the
recession, saving upwards of $10 a
square foot since 2009. “It’s been
extremely positive for us in our
stores that we rolled out in the last
two years,” he said.
“We have certainly benefitted
from real estate availability and
real estate costs in different
markets,” said King of Papa
Murphy’s. “We’ve seen reductions
in construction costs because
they’re more competitive and very
flat equipment pricing because
of the recession.”
There’s a flip side, however, to
that real estate market for Papa
Murphy’s, which has built about
100 locations a year since the
recession began.
This is one of the few franchise sectors where prior
experience is not only a nice-to-have, it’s
often required.
“Things are definitely getting better
from the lending standpoint,” said
Fox of Firehouse Subs. “Frankly,
the lending terms before were far
too liberal going back four or five
years ago. If the concept is sound
and banks can see it and all your
fundamentals are good, there’s
money to be had out there.”
According to franchisors, there
has actually been an upside to
the recession in terms of real
estate, equipment costs, and
employee availability.
Photo courtesy of East Coast Wings & Grill
9
Photo courtesy of Ground Round
“One negative is the lack of new
shopping center development. In
the earlier part of the 2000s, we
would see 60% to 70% of our
new stores in new construction.
That has obviously changed. We
have to go into older centers and
take over existing space,”
King said.
Franchisee Success Attributes
A lot of people are attracted to
the food sector because they
recognize the brands, and it might
be a “sexier” business concept
than owning, for example, a home
care business. However, food is
a very tough business in which
to make money, and franchisees
need to have the right skills and
background to be successful.
This is one of the few franchise
sectors where prior experience is
not only a nice-to-have, it’s often
Although franchisee satisfaction tends to be lower
in the food sector, a handful of franchise concepts
have managed to buck that trend and have created
a successful and satisfying investment opportunity
for their franchisees.
required. In some ways, this goes
against the typical thinking in
franchising, in which franchisors
usually prefer people with
general business management
and marketing experience over
direct industry experience.
When it comes to running a food
franchise, however—especially
multiple units—many franchisors
require their franchisees (or
their partners) to have had
vast operational experience in
the industry. This helps on two
levels—franchisees know what
they’re getting into and they are
more likely to be successful in
the day-to-day operations of their
business because they’ve done or
seen it before.
“Although restaurant experience is
not required for us to do a deal with
single-unit franchisees, if we’re
going to enter into a multi-unit
development with someone, we
prefer prior restaurant experience
and really prior multi-unit
restaurant experience just as a way
to shorten the learning curve,” said
King of Papa Murphy’s.
Even if a brand doesn’t require
their franchisees to have prior
restaurant experience, a
lender might.
“Lenders are putting more priority
on people having very specific
related experience if they’re going
to write a loan for it,” said Fox of
Firehouse Subs.
In addition to prior industry
experience, successful franchisees
also must be experienced
business people, with knowledge
of sales, marketing, and people
management.
“We focus on sales and marketing
because we can teach anyone to
bake a product—we have a very
simple concept—but they have to
be able to get out there and talk
to people about it, give samples,
and have events. There’s tons and
tons of community involvement,”
said Shwetz of Nothing Bundt
Cakes, which uses a profiling
system to determine whether a
candidate will be a good fit as
a franchisee.
“Historically, we’ve taken people
from all different backgrounds—
from school teachers to
executives—and they’ve made
successful franchisees,” Papa
Murphy’s King said. “It’s more
about the skills and qualities
that the individual has, how
involved they’re going to be in
the business, and their ability
to get out in their local
communities and introduce
people to our brand.”
Because so much experience
and knowledge is required to be
successful in this business, you’ll
often see experienced franchisees
buying out low-performing
operators who didn’t have a solid
food industry background when
they entered the industry.
The amount of staff management
required to run the day-to-day
business of a food franchise may
be a drawback for some operators,
depending on the size and structure
of the concept. Many concepts
require large numbers of low-wage,
low-skilled employees. Oftentimes,
these are teenagers with no prior
work experience. Franchisees with
experience managing this type of
workforce will likely fare better than
people without this experience.
Subs. “If the franchisee can’t bring
a real service culture and be a
people person not only with their
staff but with their guests, they’re
not going to be successful.”
To this end, Firehouse Subs
requires all prospective
franchisees to work in one of the
brand’s training restaurants for 50
hours before they enter into any
franchise agreement.
“Franchise ownership can look
great from the customer side
of the counter—especially if
franchisees have not been in the
restaurant business before—but
“We’re looking for a lot as far as
getting them on the other side
personality,” said Fox of Firehouse really tells a story,” Fox said.
Prospective franchisees must do their homework and
compare brands side-by-side—looking at both
well-known food franchises and some of the smaller,
lesser-known opportunities. Every food franchise has
its own culture, and franchisees should carefully
consider how that culture fits with their own business
goals before committing to a brand.
Photo courtesy of Ground Round
11
Top 30 Food Franchises
Auntie Anne’s
Firehouse Subs
Jet’s Pizza
Ground Round
East Coast Wings & Grill
Toppers Pizza
Marco’s Pizza
Penn Station East Coast Subs
Charley’s Grilled Subs
Papa Murphy’s
Great Wraps!
Bruegger’s
Jack in the Box
VooDoo BBQ & Grill
Einstein Bros Bagels
Happy and Healthy Products
Nothing Bundt Cakes
Straw Hat Pizza
Yogurtland
MixStirs
Scooter’s Coffeehouse
Jamba Juice
Donatos Pizza
LaRosa’s Pizzeria
PJ’s Coffee
Russo’s New York Pizzeria
Biggby Coffee
Zoup!
WOW Cafe & Wingery
Mooyah
*FBR’s Top 30 Food Franchises list is based
on independent surveys of 1,781 franchisees
across 78 franchise brands, representing
20,522 operating units. FBR’s proprietary
ranking formula is based primarily on overall
franchisee satisfaction, but also takes into
account systems’ size and survey response
rates. All 30 franchise brands appearing
on the list have above-average franchisee
satisfaction as compared to FBR’s Food Sector
Benchmark.
Photo courtesy of Penn Station East Coast Subs
Franchisee Satisfaction
Overall franchisee satisfaction in
the food sector traditionally runs
extremely low (10% to 15% lower
than in other sectors). This is not
particularly surprising given that
the industry as a whole is very
complex with lots of moving parts,
high costs (especially in the last
few years), potential day-to-day
management issues, and high
employee turnover.
Although overall franchisee
satisfaction in 2011 is up just
slightly from 2010 (65.2% vs.
61.16% in 2010), it remains on
the low side compared with other
sectors, and the sector as a whole
scored about 10% lower than
our overall benchmark in almost
every individual category of the
FBR survey. (Survey categories
include training and support,
leadership, overall franchise
system, franchisee community,
core values of franchisor,
financial opportunity, and general
satisfaction, as well as a selfevaluation of the franchisee’s
work-life situation.)
The sector scored especially
low in the area of franchisee
training and support, coming in
at 52.4%, compared with our
overall benchmark of 60.6%. In
the financial opportunity section,
the sector’s scores were more in
line with our overall benchmark,
differing by 3.3%. Despite the
lower-than-average satisfaction
scores, however, it is important to
note that 68.9% of food sector
franchisees said they would “Do it
Again” regarding investing in their
franchise brand.
Although franchisee satisfaction
tends to be lower in the food
sector, a handful of franchise
concepts have managed to buck
that trend and have created
a successful and satisfying
investment opportunity for their
franchisees. These brands make
up our list of the Top 30 Food
Franchises for 2011.
sense that they have a bigger
representation on our list.
Prospective franchisees must do
their homework and compare
brands side-by-side—looking at
Summary
both well-known food franchises
Food has always been synonymous and some of the smaller, lesserwith franchising, so regardless of
known opportunities. Every food
what’s going on in the economy,
franchise has its own culture,
It’s worth noting that more than
food franchises will always
and franchisees should carefully
25% of the companies on our
be popular investments. And,
consider how that culture fits with
2011 list are pizza concepts, and
while the food industry may be
their own business goals before
many of the other top brands offer challenging, its operators are some committing to a brand.
similar quick, inexpensive foods
of the most passionate in all
such as sandwiches and wings.
of franchising.
Yes, food franchises have had their
These concepts tended to fare
ups and downs in recent years, but
better financially in the struggling
Because of the popularity of
the industry is clearly here to stay.
economy, which likely had an effect the industry itself, potential
For the right person in the right
on franchisee satisfaction. Also,
business owners may be initially
franchise, it can be a rewarding
because these businesses require
attracted to the hype around
and exciting business.
a smaller start-up investment,
a brand or the overall idea of
they have become very popular as running a restaurant. The appeal
For more detailed research
franchise opportunities in the past of a particular brand or product,
on specific food franchises,
few years. Since there are more of
however, should be secondary to
please visit us online at:
these concepts in general, it makes thorough due diligence.
FranchiseBusinessReview.com.
Franchisee Satisfaction:
Food Sector vs. All Industries
All Industries
Food Sector
General Satisfaction
Financial Opportunity
Self-Evaluation
Franchisee Community
Core Values
Leadership
Franchise System
Training + Support
0%
10%
20%
30%
40%
50%
60%
70%
80%
Percent of Satisfaction
*Satisfaction comparison data above is based on independent surveys of franchisees completed within the previous 12 months. FBR’s Food Sector Benchmark
is based on data from 1,781 food industry franchisees. The FBR Benchmark is based on data from 12,584 franchisees across all industries.
13
We’re Growing and
We’re Taking You With Us
We know you want your investment working today, so
we want you to have existing locations.
Jack in the Box operates and franchises over 2,200
restaurants in only 19 states. That means we offer plenty
of growth potential to our franchisees. In select corporate
seed markets growth starts with an acquisition. You can
franchise recently opened company restaurants and
these locations could be used as a platform for future
market development.
LOCAL H ISE
FRANC OPM E NT
DEVE L TIVES
INCEN
We are committed to supporting your growth in
new markets, and demonstrate that with:
The “Mark 9” Model
Port Arthur, TX
s3PECIALROYALTYANDFRANCHISEFEEINCENTIVES
s/VEROFYOURMARKETINGFUNDCONTRIBUTION
REINVESTEDINLOCALMARKETINGEFFORTS
sWEEKTRAININGPROGRAM
s,OCALOPERATIONOPENINGSUPPORTTEAMS
#/20/2!4%3%%$-!2+%43 Acquire existing
company restaurants and further develop these markets.
#).#)..!4)s$%.6%2s).$)!.!0/,)3
+!.3!3#)49s/+,!(/-!#)49s45,3!
,EARNMOREABOUTTHEBRANDCURRENTFRANCHISINGOPPORTUNITIES
Call 858-522-4759 or visit jackinthebox.com/franchise
*Effective January 2012
¹*ACKINTHE"OX)NC"ALBOA!VENUE3AN$IEGO#!4HISISNOTANOFFERTOSELLAFRANCHISE
Jack in the Box is a registered trademark of Jack in the Box Inc.

food franchises - Franchise Business Review

Transcription

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