The market in 2021 has shifted in a way beyond imagination in literally a matter of months, from traditional bricks and mortar sites to now the development of virtually ones has been an eye opener, food brands seem to have been fairly resilient of late, but which type should you opt for if you are considering a franchise in this sector, lets discuss!
Which F+B Brand Is Best?
You will be used to the terminology fast food, or QSR (quick service restaurants) and there continues to be no shortage of these types of establishments to cater for our need for speed and convenience, whether it is a burger, pizza, coffee, cake, or dessert. Then, there is the full-blown sit-down restaurant format, often specialising in country specific cuisine such as America, Italy, Japan and so much more compared to decades ago. You would expect food costs to be higher in a restaurant as they have to balance their fixed costs into the overall package to ensure a repeatable and scale able business, and as we move more towards a need for customer experiences, the businesses that can literally cater to this need will survive and continue to push up average spend to thrive.
What To Expect From Buying A Food Franchise
As a franchisee of a franchised food brand, you will enter into an agreement giving you the rights to operate as that brand name and trade at a certain location. Often gaining initial and ongoing training, as well as ongoing support as part of your franchise fee. Moving on to you trading, part of your ongoing revenue will be shared by way of royalty payments to the franchisor (or head office) often calculated as a percentage of sales or fixed cost and you will also be required to commit to ongoing marketing or advertising costs, which will not only help your own site develop, but will continue to assist the brand develop a national presence, where you might have already benefitted from by joining the brand in the first instance.
The Shift To Online Ordering
Food franchises have always been reliant on the need for customers to get access to their preference when they want, at a time that they want, and where they want it, often at home, and the last 18 months has seen a further rise and demand for this, where some establishments might have seen a twenty to thirty percent result in online orders historically, many were 100% reliant to be able to continue to trade during the pandemic, and whilst this trend might drop as we return to some sort of normality, we can be sure that the demand will continue to remain strong for some considerable time if current statistics are anything to go by, in fact, many food brands are now shifting their entire modelling to capitalise on this now as they see it to be the way forwards!
Not All Premises Are Franchised Owned
The average customer would barely know one location from another, and indeed whether the actual store they visited one week would be a company owned one or franchised site unless the delved into the ownership, and even then it wouldn’t necessarily be apparent unless their receipt indicated as such, and here there is a clear advantage, not only to the brand, but also to you as the franchisee as you get to operate under these conditions from day one, meaning you will most likely start to generate revenue much quicker than a start-up and continue to grow at a faster rate than you would do otherwise, this is one of the reasons you will often see some fairly heavy initial and ongoing investment as the franchised brands realises this and understands that it can capitalise on it in order to continually develop.
Why Now Could Be The Best Time To Take A Food Franchise
The past year, or more, has created more opportunity for food brands, many have had to flip their model to survive. Being creative and offering a customer experience will no doubt mean that some stores will be looking to actually increase the square footage of sites, especially if landlords become more willing and able to negotiate on how they calculate the value of their units, in the market, many more conversion opportunities are appearing today, more than at any other time in history, as often , very viable sites where businesses that purely through the unavailability of cashflow have had to close down, but left established and fully kitted out units can be remodelled at nominal cost for a new owner in order to open very quickly. The rise and rise of virtual, or dark kitchens, either as an add-on or new entity in a secondary location has further fuelled the opportunity for this sector.
Have You Heard About The Mysterious ‘Ghost’ Kitchen?
Let us also not forget about the growth of in-store or concession options, maybe in a shopping centre, mid-aisle concept, these might become increasingly popular as the economy bounces back and we once again get back to our old shopping habits, in fact, this is predicted to boom as there will be pent-up demand and our own appreciation on what we have missed becomes available to us. Who knows we might even see more presence of food vans and trailers at food events and festivals, now who looks forward to going back to one of those!
The Franchisor’s Shift To Helping You Get Into The Food Sector
Let us not forget too that any franchisor wants to sell you a franchise, ideally understanding that there is the need to ensure the correct fit for both parties, and today, as a direct result of this, will often be more creative on your options, this could mean they create incentives for a multi-site operation, and in some instances might even make a suggestion of you becoming the equivalent of them (if you have the right background) and offering you an unbelievable way of achieving an amazing return on investment!
Food businesses have seen to faired quite well during the latest economic reset and there is no reason to believe they will not continue to do so, especially as they adapt, expect to see many new brands enter the franchise market and as always, perform all your own due diligence before you enter into any agreement!
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Article by Richard Pakey of Lime Licensing Group, for the Quality Franchise Association.
