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Franchise Prospector » Franchise Trends
Diversity and Flexibility Create Hot Opportunities in Fast-Food Franchising
The fast food industry offers global franchising opportunities - Subway alone has 26,000 outlets in 85 countries - to franchisees from diverse background with distinct culinary interests.
The current trends toward diversity and flexibility mean more lucrative fast-food franchising opportunities, regardless of a franchisee's business background or culinary preference. Whether a potential fast-food franchisee's passion is burgers, raw veggies, or ethnic cooking, there's a perfect franchise for them--especially if they've had some management training. Here's just a taste of the current trends and opportunities.
There's a franchise for every taste
Consumers rule - and they want it all. Across the country, fast-food franchisees are venturing beyond burgers and chicken. New franchise choices include pasta and noodles (Mama Fu's, Nothing But Noodles), healthy food (Blendz, Energy Kitchen), and vegetarian or vegan (Red Veg, Native Foods, Mr. Goodburger's).
Niche franchises also offer diverse fast-food specialties such as soups, salads, raw vegetables, and great ethnic food from around the globe.
Co-branding: two birds in the hand
Co-branding--putting several fast-food franchise restaurants at the same location--can counteract the high costs of real estate, construction, and start-up and increase profits by enabling customers to mix and match popular menu items.
- Cinnabon, the popular cinnamon-roll franchise, recently started co-branding with Freshens, a licensing seller of smoothie drinks.
- Taco John's and KFC, both owned by PepsiCo, have effectively paired up franchises in the same location in several states.
- Taco John's has also successfully co-branded with Good Times Burgers & Frozen Custard, an independent franchise.
Multiple units minimize risk, maximize profit
Franchising several of the same fast-food units in one market area can translate to savings in marketing and advertising because local radio, TV, and newspaper ads reach all potential customers.
Guillermo Perales is the largest Latino franchisee and the largest Golden Corral franchisee in the U.S., with more than 130 Golden Corral units--along with nearly 70 Popeye's Chicken and Biscuits restaurants, 17 Burger Kings, five Denny's restaurants, and a Bennigan's restaurant. An interview in Latino Leaders shows that Perales understood the benefits of multiple units even before his very first franchising experience: opening up five Golden Corral units instead of just one.
"I was trying to do two, three, four, or five really fast, because most of the time, when you only have one, you can fail really easily. …I didn't want to give myself the chance to struggle, and so I moved fast. In retrospect, if we had not opened all those stores that fast, we probably would not have made it, because store number one wasn't very successful, though the others were."
Ex-CEOs: in demand as franchisees
Whether they retired or were "pink-slipped," executives who have left the corporate world have many of the skills necessary to build a lucrative business from fast-food franchising. "The downturn in employment in the corporate world has been a boon to small business ownership. All those pink-slipped executives make great franchise material," notes BusinessWeek. In addition to management expertise, they often have the cash required to get into franchising--and a high tolerance for taking calculated risks.
Of course, fast food isn't always the first choice for retirees looking for franchises. As Tranette Ledford reports in the Army Times, a soon-to-retire utility executive insisted he wouldn't consider a fast food franchise because he "didn't want to flip hamburgers for a living." Oddly, this executive overlooked the most obvious point about franchising - the franchisee is the manager, not the employee. And ex-CEOs, who are comfortable handling complex business systems and staffing issues, understand the value of measuring their success and are hungry to grow their profits.
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