Why Franchising Is the Future of the Healthy-Fast-Food Movement
At this point, the overweight American is a cliché known around the world. And in spite of quips at their expense, many Americans continue to shove down burgers and fries with a big gulp at their favorite fast-food restaurants. But the long-term health effects are truly alarming.
An astonishing 42.4 percent of Americans were obese in 2018, which is a roughly 12 percent increase from 2000, according to the CDC. Naturally, obesity is inextricably linked to higher incidences of heart disease, stroke, type 2 diabetes and more, which don’t bode well for future life expectancies.
Considering that social media is now overrun with fitness gurus and Instagram influencers peddling healthier lifestyles, you would assume that health metrics would be lower than they were in the early 2000s.
Not so, unfortunately.
Much of the reason that people continue to eat at fast-food restaurants like McDonald's is because the food is cheap and easily accessible for people with few resources — financially or time-wise. But convenient, fresh, healthy foods are becoming more and more accessible to regular people. From Blue Apron to Freshly to Chipotle, it's just as easy to have it delivered or pick it up on the way home as it is to stop by McDonald's. The healthy option is becoming less costly.
The products these healthy-food chains sell are relatively cheap and healthy, and many of the companies behind them are socially conscious, supporting charities and global movements. Modern ecommerce and branding are providing plenty of opportunities for our food culture to turn a new leaf. Now consumer preferences just need to follow suit.
An evolving market
The quick-serve restaurant (QSR) boom, colloquially called fast food, technically started with the Golden Arches in 1940, but the market today is much more nuanced. Burger joints still dominate, but more healthy options like Subway, which now has more locations than McDonald’s, started the trend for a different kind of QSR experience.
The popularity of Chipotle’s assembly-line style serving quickly solidified those changes. Now the competition between QSRs is less on outdoing other burger joints and more on innovating the market entirely. Specifically, many of the companies pushing the boundaries of QSR are promoting a distinct healthy flavor, and they’re using technology to rise above the crowded field of competition.
Ecommerce is the new QSR sword, and if companies can’t appeal to the consumer preferences of the ballooning Gen Z and millennials, then they will have an uphill battle for market share.
Interestingly, some tech unicorns play a pivotal role here. For example, startups like DoorDash and Postmates serve as the pseudo-ecommerce delivery partners of many health-forward brands that begin as brick-and-mortar retail locations. Although companies like Postmates and UberEats are valued in the billions, they operate on razor-thin margins. And in many instances, they operate at a loss, which is why some of the market leaders are weighing a merger.
Enter the opportunity for boutique QSR brands at the edge of e-commerce, production, and retail.
Franchising is alive and well, but the operational and capital burden for people launching a franchise is heavy. However, the sub-franchiser model is gaining traction as a more cost-effective avenue for franchisees. For example, the sub-franchise method requires less corporate overhead and enables retail locations to spread faster.
One of the most salient developments is also the onset of broad-based wholesale divisions for franchises. Franchisees have significantly reduced startup costs and better margins, making the option enticing.
The more franchisees, the broader the brand’s network. Eventually, middlemen delivery services like Postmates that rely on unconventional pickup models from brick-and-mortar stores may be crowded out of the market as larger brands turn to their own production and ecommerce delivery methods.
Why not excise middlemen like UberEats and Postmates, and instead, deliver directly like any other ecommerce retailer? Delivery costs are cheaper and faster than ever, and ecommerce tech like PWAs or social commerce only serve to make the experience more seamless for the end user.
More retail locations mean a broader delivery audience, and the diminished need to rely on DoorDash or Postmates for sales outside of in-store transactions.
Distinct preferences and creating brand access
The ability of QSRs to extend into multiple locations around the country has always hinged on franchising. However, it will also be buttressed by changing consumer preferences, and in many cases, the health-forward predisposition of younger generations. To many consumers around the country, the biggest obstacle to healthy-fast-food chains is access, not lack of interest. Not only are younger generations more health-conscious, but they're also more passionate about supporting small brands. According to a recent report by Visual Capitalist, younger generations absolutely love intimate and boutique brands. Those include the booming wellness and nutrition brands like health-forward startups Blue Apron and Sun Basket, and blossoming Kombucha brands like Health-Ade.
Amazon still reigns supreme as the favorite ecommerce brand, but many young consumers revel in the personal touch of community-driven brands over corporate chains. To attract more attention to the accessibility of healthy eating in today’s hyper-paced world of apps and smartphones, startup brands need to demonstrate a willingness to challenge the status quo of Amazon and companies like DoorDash.
Fusing ecommerce into a rapidly growing national franchise network is the optimal avenue. In many of the country's markets, there's a real demand for healthy-fast-food restaurants, and boutique companies are positioned to open franchises that cater to a region's local cuisine and produce in ways that traditional fast-food burger joints do not.