So You Want to Open a Restaurant? How franchising can make your restauranteur dream a reality.
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Reserve a seat at the table
If it's been your life-long dream to own a dining establishment and you've considered taking the franchising route there, you're certainly not alone. Statistics reveal that one category of dining, fast-food – also referred to as quick service restaurants (QSR) – make up the largest segment of the franchising industry. It's estimated that fast-food units make up a quarter of all franchise operations (nearly 200,000), and generate $241 billion in total economic output in the U.S., according to Statista. Some of the most globally recognized brands fall into the category of QSR's, including McDonald's, Subway and Pizza Hut. But there are more options than just fast-food if you're looking to take the restaurant route of franchising. There's fast casual, coffee shops, ice cream and yogurt stores, mobile operations, sandwich shops and healthy eating concepts.
The subtle differences between fast-food and fast casual
Fast-food, or QSR, are the most common and prolific franchises in the U.S., followed by fast casual at a close second. While the two may seem similar, their differences are shown in regard to time, convenience and ambiance. Fast-food is about generating food quickly for people on the go, making these locations convenient for those wishing to dine quickly, cheaply and efficiently. They tend to have limited seating, ordering kiosks and drive-through lanes, with hours of operation exceeding other restaurant categories, many of which are open 24/7. Fast casual, on the other hand, offers slightly more than QSR's. While still convenient, they provide more seating and ambiance that welcomes diners to stay longer and enjoy their meal. Fast casual dining typically operates through counter service and diners pick up their own food. A majority of fast casual restaurants have customizable food, using an assembly line approach to serving their specialties. The cost of dining at a fast-food location is in the $10-15 range, while fast casual tends to be slighter higher at $15-20 per meal. In short: Taco Bell is fast-food. Wingstop is fast casual.
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Coffee, coffee, coffee, buzz-buzz-buzz
Ever since Starbucks became a nation-wide phenomenon, America's love affair with coffee has only accelerated. Dunkin' consistently ranks among the top-ten most popular franchises, and there are still more than two dozen other coffee and cafe-related franchise opportunities. An added bonus of choosing a coffee-related franchise concept is that there's typically less inventory and employees involved, as opposed to a fast-food or fast casual franchise.
Sweet tooth craze
Some of the most popular franchise brands on the market right now are the frozen dessert variety – including ice cream, yogurt and soft-serve brands. The frozen yogurt market in the U.S. generates $654 million in annual revenue, according to data from IBISWorld. This sector has received a boost from consumers who prefer a low-fat alternative for their frozen treats, and the self-serve toppings bar found in some franchise concepts has become increasingly popular with children of all ages.
Mobile food franchising
The food truck industry has gained traction and popularity in the past few years. Though not all food trucks are franchised operations, the barriers to entry are much lower and, rather than seeking to draw customers to a single brick-and-mortar location, you can decide when, where and how to pursue your consumers.
If you decide to buy
If it's been your dream to own a restaurant and you choose to take the franchising route, here are some tips to consider aside from the traditional investigative process:
- Be realistic about your finances. Have a clear understanding of your financial tolerance – this will determine the restaurant concept within your budget. Big-name brands like KFC require upwards of $1 million. However, there are plenty of options available at every budget level – so it's crucial to know what you can and can't afford when going about your investigative process.
- See for yourself. If the brand has already established a presence in your area, you can do your own investigating in person. Get a feel for the brand and decide if it's right for you.
- Think about your desired level of involvement. Depending on your background, experience level and the training provided, you'll need to make a decision on whether you'll be a hands-on owner, or simply someone who manages the manager. By having a clear idea of how involved you want to be, you'll be able to narrow down your search and find a franchise concept that meets your needs as a leader.
Franchising can be advantageous in establishing yourself as a restauranteur, but it's not for everyone. But if a restaurant is your calling, as they say, "Bon Appetit!"
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