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Transcript of FBR FoodSector-FINALweb
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www.FranchiseBusinessReview.com
FOOD FRANCHISES2011 SpECIAl REpORt
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For the rightperson whonds the right
franchisebrand, the food
business canoer an exciting,
rewarding,and protable
opportunity.
erhaps no other industry in franchising is as trend-driven and
competitive as the food sector. To be successful, franchisees
must overcome ckle consumer preferences, uctuating food costs,
y-by-night diet crazes, and immense pressure. But for the right person
who nds the right franchise brand, the food business can oer an
exciting, rewarding, and protable opportunity.
This report is designed to give you a detailed look at the food
franchise sector. We will explore the dierent 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 rm 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 than75 brands and 20,522 franchised businesses. We also talked to senior
executives at several brands for their rst-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.
FOOD FRANCHISES
Cover photos courtesy of (clockwise from top left
Papa Murphys, Auntie Annes, East Coast Wings & Grill, Nothing Bundt Cake
For more information on this report, visit: www.FranchiseBusinessReview.com 1
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2011 SpECIAl REpORt: Food Franchises
Models/ConceptsThe franchise concepts within
the food sector typically fall into
one of several major categories:
quick serve restaurants (QSRi.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-servicerestaurants. Some franchisors
oer multiple business models.
These models may be further
broken down by food type, such as
burgers, wings, pizza, Mexican, ice
cream/yogurt, coee, and sushi,
to name just a few. Because many
of the models t into a number
of categories (a coee shop that
serves breakfast sandwiches, forexample), the concept lines are
often blurred.
For this report, we looked at many
dierent brands representing
several dierent concept types in
an attempt to accurately compare
and analyze both the companies
themselves and the overall market.
InvestmentThe food sector oers 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 initialinvestment of the top 30 being
$491,307. (Note that this is the
total initial investment, but with
nancing 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 onthe real estate and equipment
needed to run the business. At
the low end of the investment
spectrum, you have opportunities
like Happy and Healthy Products,
a distributor of frozen treats,
which oers franchisees a full or
part-time home-based business
opportunity with an initial
Photo courtesy of VooDoo BBQ & Grill
How long have you been a franchisee?
I have been a franchisee of the Marcosbrand since June 2011 but have been afranchisee of various other brands for over10 years.
Why did you decide to buy a franchise?
Having gone through all the hard work ofdeveloping my own concept in the past, Iknow rsthand the value that a franchisewith great systems already in place canyield. Being part of a franchise allowsme to focus on growing the number oflocations in my organization quickly andsaves a considerable amount of money onestablishing an infrastructure. I look for acompany with a great foundation of solidpeoplethat is the company I want toinvest in and grow with!
Why did you choose your franchise?
I absolutely love the product that Marcosprovides. When I became aware of the fastgrowth the company was experiencing, Iwanted to know more. After speaking withother Marcos franchisees and visiting withtheir corporate team, I was sold!
What is the best part of being
your own boss?
I like controlling my own destiny. Whenyou work for yourself, you dont alwayshave someone patting you on the back,saying, Good job, but you also dont haveto deal with being underappreciated.
What is the worst part of being
your own boss?
The hours involved. One week may be20 to 30 hours, and the next, its 90+,but I would not trade it for a 40-hour,9-5 any day!
For more information about Marcos,
please visit www.marcos.com or contact
Lauren Johnson at [email protected]
or (419)724-1867.
Daniel Caskey,Marcos Pizza
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investment of about $32,000.
Even some businesses that oer
hot, prepared foods are delivery-
based 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 full-
service restaurant, which requires
a large, stand-alone site (and
more employees and overhead for
day-to-day operation), typically
costs more than a million dollarsto 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, oer the option of
traditional stand-alone locations
as well as kiosk, retail store, strip-
center, and other non-traditionallocations. 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
oers a number of non-traditional
location types, including airports,
gas stations, military bases,casinos, and even churches,
which may make ownership more
aordable.
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 themto 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 full-
service 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 thesmaller 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.
Obviously, the more employees
a business has, the moremanagement is required on the
part of the franchisee. Distributor-
type concepts can sometimes be
run on a part-time basis, and some
of the snack/pizza/ice cream
concepts oer more exibility.
Full-service and breakfast-to-
dinner 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 nancial and time
investment of a food business is
the fairly common requirementby 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 havea big operator who plans to open
ve 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.
Typical Investment Ranges for Food Franchise Locations
Kiosk/ Mobile /Non-Traditional Locations
Conversions of Existing Locations
Retail /In-Line Strip Center Locations
Stand-alone/New Construction Locations
*These are broad estimates of initial capital investments, and each franchise brand will havespecic liquid capital and net worth requirements.
$30,000 $250,000+
$100,000 $400,000+
$175,000 $500,000+
$750,000 $2,000,000+
The time investment for a food service franchisee variesas much as the monetary investment, depending on thesize and capacity of the franchise concept.
For more information on this report, visit: www.FranchiseBusinessReview.com 3
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Protability
Getting started in the food
sector typically requires a large
investment, and early prot margins
can be much lower than some other
service industriesespecially for
operators of high cost, single-unit
operations. Therefore, it can take
a long time for a new operatorto recoup start-up costs. Many
franchisees choose to operate
several locations because this
typically helps them turn a higher
prot and lowers some costs.
Based on our 2011 survey, the
average annual protability (dened
as any income, salary, or prot the
Getting started in the food sector typically requires alarge investment and early prot margins can be muchlower than some other service industriesespeciallyfor 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 averageprotability 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.
When you look at just the Top 30
food systems on our list (see page
12), average protability improves
by 16%, with the average
being $89,749.
At rst glance, these numbers
look quite good compared to
the overall franchise industry,
but from a return on investment
perspective, thats 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
Average Protability of FBRs Top 30 FoodFranchises vs. All Food Franchises
Protability Range
$0 - $25,000
$25,000-$50,000
$50,000 - $75,000
$75,000 - $100,000
$100,000 - $125,000
$125,000 - $150,000
$150,000 - $175,000
$175,000 - $200,000
$200,000 - $225,000
$225,000 - $250,000
$250,000+
0% 5% 40%35%30%25%20%15%10%
Percent Response
FBRs Top Food Franchises All Food Franchises
*Protability data listed above is based on independent surveys completed with 1,781 food industry franchisees in the previous 12 months. This sampleincluded data from 78 franchise brands, representing 20,522 operating units. Protability is dened as any annual pre-tax income the franchisee receivedincluding salary and/or business prots.
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protability just 13% more isnt
so impressive. For comparison,
the senior care sector has an
average annual protability of
$98,723 (based on surveys of
842 senior care franchisees),
and the average investment iswell 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 canchoose to run anything from a van-
based delivery business to a full-
service restaurantwith dozens of
other business types in between.
The industry also provides
instant gratication in the way of
customers love for food. For true
foodies, theres nothing more
rewarding than serving a productor meal that the customer truly
savors. Franchisees often get to
witness rsthand consumers
enjoyment of their products.
Although the industry is aected
by trends and competition, the
convenience, entertainment value,
and overall enjoyment of a meal
ordered out will never go away.
Despite reports of the economys
negative eects on the restaurant
business, many franchise brands
have actually performed very well
in the past few years. Don Fox,
CEO ofFirehouse Subs, says the
stability of the sectorat least for
certain conceptsis 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 multi-
unit operators in particular may see
a signicant return on investment
once they are established. The widerange 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 signicantbenets from being part of a
large franchise system rather than
operating alone. The food industry
is highly competitive and trend-
driven, and operators in this space
must constantly be marketing
themselves and developing new
products. Franchisees benet from
having a recognized brand and
the support and resources of acorporate oce to help with
these tasks.
Photo courtesy of Auntie Anne
For true foodies, theres nothing more rewardingthan serving a product or meal that the customertruly savors.
For more information on this report, visit: www.FranchiseBusinessReview.com 5
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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 foodcosts, soaring competition, high
employee turnover, and long
hours are just a handful of the
sectors drawbacks.
The expensesboth initial and
ongoingare much higher than in
other sectors, unless the business
is a mobile concept. And accessing
capital to nance a business is stillnot easy, despite improvements
in the economy. Ron Lynch,
CEO ofTilted Kilt (a sports pub
franchise), says the lending
landscape is his biggest challenge
to growth because even qualied
franchisees arent always able to
access the capital they need to
nance a franchise. (The estimated
start-up costs for a Tilted Kilt
franchise are around $2 million,
including a $75,000 franchise fee.)
This may improve as prospective
franchisees nd alternativeways to nance their businesses.
People are nding ways around
the banks, Lynch told us.
We have found many people
coming to us with cash. Theyve
taken their money out of the
stock market, and they really
are interested in investing in
themselves, said Debra Shwetz,co-owner of specialty baking
franchise Nothing Bundt Cakes.
When franchisees do have success
accessing traditional bank loans,
franchisors say its from local and
regional banks rather than the big
national players. However, Ballas of
East Coast Wings and Grill said hes
starting to hear from national banks
that havent expressed interest in
lending in the past few years.
The time investment for running afood franchise is also signicant,
especially in the early days of
start-up. Even mobile concepts,
which may oer more exibility 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 whats 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
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6 For more information on this report, visit: www.FranchiseBusinessReview.com
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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 coee, 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 optionssuch
as salads, grilled chicken, and
smoothiesand attracted anentirely new customer base.
Of course, these transitions also
required an additional investment
from franchisees to re-vamp
equipment and train sta.
Nothing Bundt Cakes recently
introduced a new producta
bundtinia miniature bundt cake
for people wanting a treat withoutthe 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 didnt.People like their sweets, and they
like to indulge themselves. Theyre
going to do that no matter what
the current trend isat least
thats what weve found.
Even servers of traditional fast
foods like hamburgers have
increased their emphasis on fresh
and wholesome ingredients.
Five Guys and Jakes 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 freshestingredients.
Because of the competition in
the food space and the economy,
there is also signicant pressure in
terms of pricing. Franchisors must
constantly keep an eye on their
prices, adjusting them to compete
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 ofbasic food supplies like coee,
our, and eggs skyrocketed,
franchisees ended up losing
money as they were forced to
oer more food for less money. In
many concepts, even when sales
were up, unit-level protability
suered considerably.
Photo courtesy of Nothing Bundt Cake
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Market Analysis
While high-end restaurants
suered dramatically, lower costoptionslike pizza, wings, and
some fast casual conceptsdid
well despite the economy
because they oered families an
inexpensive dinner option that
didnt 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 than25% 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 hard-
hit states like California, Arizona,
Florida, and Nevada.
I havent seen that much disparity
on the selling subs side of the
business, but selling franchises
was denitely aected on a
regional basis, said Firehouse
Subs Fox. Las Vegas and Phoenix
While I had very high unitvolumes therewhich should help
promote franchisingthe 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 putout 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.)
Anecdotally, franchisors agree with
the promising reports. Lynch of
Tilted Kilt told us 2011 may be his
franchises best year ever in terms
of new unit growth and protability.
Executives from Papa Murphys,
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 Murphys Take N Bake
pizza, which enables customers to
purchase a freshly made pizza and
cook it at home.
We probably benetted more
than most in 2008 and 2009, said
We have certainly benetted from real estateavailability and real estate costs in dierent markets.Weve seen reductions in construction costs becausetheyre more competitive and very at equipmentpricing because of the recession.Kevin King, Papa Murphys
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2011 SpECIAl REpORt: Food Franchises
Photo courtesy of Firehouse Subs
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Kevin King, senior vice president
of operations for Papa Murphys.
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 its worth some
short-term margin hits for long-
term share and trac gains. In the
long run, the changes paid o for
Papa Murphys 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
nance franchised restaurants
than other business types because
their SBA failure rate in the past
few years has been lower than
both independent restaurants andsmall business in general (19%
compared with a failure rate of
24% for all small business).
Things are denitely getting better
from the lending standpoint, said
Fox of Firehouse Subs. Frankly,
the lending terms before were far
too liberal going back four or ve
years ago. If the concept is soundand banks can see it and all your
fundamentals are good, theres
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.
Ill 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 signicant
savings in real estate during the
recession, saving upwards of $10 a
square foot since 2009. Its been
extremely positive for us in our
stores that we rolled out in the last
two years, he said.
We have certainly benetted
from real estate availability and
real estate costs in dierent
markets, said King of Papa
Murphys. Weve seen reductions
in construction costs because
theyre more competitive and veryat equipment pricing because
of the recession.
Theres a ip side, however, to
that real estate market for Papa
Murphys, which has built about
100 locations a year since the
recession began.
This is one of the few franchise sectors where priorexperience is not only a nice-to-have, itsoften required.
Photo courtesy of East Coast Wings & Gril
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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. Wehave 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 homecare 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, its often
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, howeverespeciallymultiple unitsmany franchisors
require their franchisees (or
their partners) to have had
vast operational experience in
the industry. This helps on two
levelsfranchisees know what
theyre getting into and they are
more likely to be successful in
the day-to-day operations of their
business because theyve done or
seen it before.
Although restaurant experience is
not required for us to do a deal with
single-unit franchisees, if were
going to enter into a multi-unit
development with someone, we
prefer prior restaurant experienceand really prior multi-unit
restaurant experience just as a way
to shorten the learning curve, said
King of Papa Murphys.
Even if a brand doesnt require
their franchisees to have prior
restaurant experience, a
lender might.
Although franchisee satisfaction tends to be lowerin the food sector, a handful of franchise conceptshave managed to buck that trend and have createda successful and satisfying investment opportunity
for their franchisees.
Photo courtesy of Ground Round
2011 SpECIAl REpORt: Food Franchises
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Lenders are putting more priority
on people having very specic
related experience if theyre going
to write a loan for it, said Fox of
Firehouse Subs.
In addition to prior industryexperience, 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 productwe have a very
simple conceptbut they have tobe able to get out there and talk
to people about it, give samples,
and have events. Theres tons and
tons of community involvement,
said Shwetz of Nothing Bundt
Cakes, which uses a proling
system to determine whether a
candidate will be a good t as
a franchisee.
Historically, weve taken people
from all dierent backgrounds
from school teachers to
executivesand theyve made
successful franchisees, Papa
Murphys King said. Its more
about the skills and qualities
that the individual has, how
involved theyre going to be in
the business, and their abilityto 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, youll
often see experienced franchisees
buying out low-performing
Prospective franchisees must do their homework andcompare brands side-by-sidelooking at bothwell-known food franchises and some of the smaller,lesser-known opportunities. Every food franchise has
its own culture, and franchisees should carefullyconsider how that culture ts with their own businessgoals before committing to a brand.
Subs. If the franchisee cant bring
a real service culture and be a
people person not only with their
sta but with their guests, theyre
not going to be successful.
To this end, Firehouse Subsrequires all prospective
franchisees to work in one of the
brands training restaurants for 50
hours before they enter into any
franchise agreement.
Franchise ownership can look
great from the customer side
of the counterespecially if
franchisees have not been in therestaurant business beforebut
getting them on the other side
really tells a story, Fox said.
operators who didnt have a solid
food industry background when
they entered the industry.
The amount of sta management
required to run the day-to-day
business of a food franchise maybe 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.
Were looking for a lot as far as
personality, said Fox of Firehouse
Photo courtesy of Ground Roun
2011 SpECIAl REpORt: Food Franchises
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core values of franchisor,
nancial opportunity, and general
satisfaction, as well as a self-
evaluation of the franchisees
work-life situation.)
The sector scored especiallylow in the area of franchisee
training and support, coming in
at 52.4%, compared with our
overall benchmark of 60.6%. In
the nancial opportunity section,
the sectors scores were more in
line with our overall benchmark,
diering by 3.3%. Despite the
lower-than-average satisfaction
scores, however, it is important tonote 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
Photo courtesy of Penn Station East Coast Sub
Top 30 Food Franchises
Auntie Annes
Firehouse Subs
Jets Pizza
Ground Round
East Coast Wings & Grill
Toppers Pizza
Marcos Pizza
Penn Station East Coast Subs
Charleys Grilled Subs
Papa Murphys
Great Wraps!
BrueggersJack in the Box
VooDoo BBQ & Grill
Einstein Bros Bagels
Happy and Healthy Products
Nothing Bundt Cakes
Straw Hat Pizza
Yogurtland
MixStirs
Scooters Coeehouse
Jamba Juice
Donatos Pizza
LaRosas Pizzeria
PJs Coee
Russos New York Pizzeria
Biggby Coee
Zoup!
WOW Cafe & Wingery
Mooyah
*FBRs Top 30 Food Franchises list is basedon independent surveys of 1,781 franchiseesacross 78 franchise brands, representing20,522 operating units. FBRs proprietaryranking formula is based primarily on overallfranchisee satisfaction, but also takes intoaccount systems size and survey responserates. All 30 franchise brands appearingon the list have above-average franchiseesatisfaction as compared to FBRs Food SectorBenchmark.
2011 SpECIAl REpORt: Food Franchises
12 For more information on this report, visit: www.FranchiseBusinessReview.com
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 verycomplex 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 onthe 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,
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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.
Its worth noting that more than
25% of the companies on our
2011 list are pizza concepts, and
many of the other top brands oer
similar quick, inexpensive foods
such as sandwiches and wings.
These concepts tended to fare
better nancially in the struggling
economy, which likely had an eect
on franchisee satisfaction. Also,because these businesses require
a smaller start-up investment,
they have become very popular as
franchise opportunities in the past
few years. Since there are more of
these concepts in general, it makes
sense that they have a bigger
representation on our list.
Summary
Food has always been synonymous
with franchising, so regardless of
whats going on in the economy,food franchises will always
be popular investments. And,
while the food industry may be
challenging, its operators are some
of the most passionate in all
of franchising.
Because of the popularity of
the industry itself, potential
business owners may be initiallyattracted to the hype around
a brand or the overall idea of
running a restaurant. The appeal
of a particular brand or product,
however, should be secondary to
thorough due diligence.
Prospective franchisees must do
their homework and compare
brands side-by-sidelooking 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 ts with
their own business goals before
committing to a brand.
Yes, food franchises have had their
ups and downs in recent years, but
the industry is clearly here to stay.
For the right person in the right
franchise, it can be a rewardingand exciting business.
For more detailed research
on specic food franchises,
please visit us online at:
FranchiseBusinessReview.com.
Franchisee Satisfaction:Food Sector vs. All Industries
Training + Support
Franchise System
Leadership
Core Values
Franchisee Community
Self-Evaluation
Financial Opportunity
General Satisfaction
0% 10% 80%70%60%50%40%30%20%
All Industries Food Sector
*Satisfaction comparison data above is based on independent surveys of franchisees completed within the previous 12 months. FBRs Food Sector Benchmarkis based on data from 1,781 food industry franchisees. The FBR Benchmark is based on data from 12,584 franchisees across all industries.
Percent of Satisfaction
2011 SpECIAl REpORt: Food Franchises
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LOCAL
FRANCHISEDEVEL
OPMENT
INCENTIVES
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.
We are committed to supporting your growth in
new markets, and demonstrate that with:
Were Growing andWere Taking You With Us
Acquire existingcompany restaurants and further develop these markets.
Call 858-522-4759 or visit jackinthebox.com/franchise
*Effective January 2012
The Mark 9 Model
Port Arthur, TX