The Toughest Franchise Business In The World

fast food collage

You’re already a customer of this type of franchise business. That means you know it…from a customer perspective. You’ve also probably heard that’s it’s a “tough business.” And, you’d be right.

It Always Wins The Popularity Contest

Almost 50% of the people that contact me are interested in buying one. Hands-down, it’s the most popular sector in my industry. It’s also very visible.

If you guessed that I’m referring to food service…mostly restaurants of the QSR (quick service restaurant) variety, you’re right.

Before I get into why the food-service business is the toughest around, I want to share some industry data and trends:

  • Fast-food restaurants, categorized as limited service restaurants by the Census Bureau (which did an economic survey of the franchise industry in 2007), topped the list of all franchise operations with 125,898 establishments.
  • If you’re thinking about opening up a food franchise, the location you choose is crucial…even the city in which you set-up shop. Here are some great places to start a business.
  • Today’s consumers are on all sorts of schedules. It’s rare to see an entire family sitting down for a meal at the same time anymore. That’s why more and more food franchises are developing bite-sized meals for people on the go. It’s really a growing trend, and one that won’t be going away anytime soon.
  • Did you know that there are 20 countries that make up the Mediterranean? According to Mary Chapman, director of product innovation for Technomic, Mediterranean food is a next-step type of cuisine. That’s why franchises like Zoës Kitchen and Roti Mediterranean Grill are gaining interest.
  • Fast food franchises have been adding healthier items to their menus for years. But, consumers still order a significant amount of less-healthy food according to this New York Times article.

Owning A Food Franchise

If you’re seriously considering becoming the owner of a fast food franchise, you need to make sure that you know exactly what your role is going to be as the franchisee.

For example, if you wanted to own a McDonald’s franchise in your area, not only would you have to have deep pockets; you’d also have to be prepared to be an owner-operator. In other words, if you have visions of opening up a McDonald’s restaurant and managing it from afar, you had better adjust your lenses.

That’s because McDonald’s expects you to be there. They also have a serious (and ongoing) training program, and it’s not one of those 2-week ones.

Another thing that’s worth asking (yourself) is what type of lifestyle it is that you want to have as an owner.

For example, are you looking for a franchise opportunity that will allow you to have a lot of flexibility when it comes to the hours you’ll be working? If so, the food-service business may not be right for you. In most cases you’ll need to be working in the business. In other words, you’ll be there a lot.

And, while you’re there…working in your food service franchise, you’re going to have to be a Jack or Jill of all trades. You’ll need to be flexible. If an employee doesn’t show up for work, you may have to drop what you’re doing and fill-in yourself. I was in food-service and employee no-shows are very common.

Why It’s A Tough Business

In a nutshell, it’s the absolute lack of control that makes owning a QSR…or any food-service establishment, very challenging.

Now, I don’t want you to feel that I’m trying to deter you from going after your dream. If you’ve “always wanted to own a restaurant” by all means investigate the opportunities that exist today. Just know that:

You’ll be Spending a Lot of Time Recruiting, Hiring, and Firing Employees

Turnover rates in food service can be as much as 50% annually. So, be prepared to go through a lot of employees.

You’re Going to Have a Total Lack of Control When it Comes to Food Costs

They vary tremendously. A lot of things can affect your food costs. Things like fuel prices (which affect delivery costs), natural disasters (which can wipe out crops) and other assorted maladies can and do affect food costs - your food costs.

Translation: your profit margins can drop quickly.

Your Restaurant Equipment Can Go on the Fritz

In my experience, this tends to happen on your businesses busiest days and times.

For example, if you own a full service restaurant and the dishwasher breaks, plan on experiencing one of the grossest jobs imaginable in food service; washing dirty dishes by hand. If you don’t have clean dishes available, you can’t serve your food.

Websites like Yelp Can Sometimes Make or Break Things for Your Franchise

On a positive note, a series of lousy reviews can help you figure out what’s wrong quickly so you can address it. And, if you can’t your franchisor can. Of course great reviews are just that; great.

You’ll be Working Harder Than You Ever Have in Your Life

It was true for me during the many years that I was in the food business. Of course there’s nothing wrong with hard work, but talking about having to work really hard and doing it 15 hours a day, 7 days a week, are two vastly different things.

If you want to become the owner of a food franchise, start your search for the right one with your eyes wide-open. There are great opportunities in food service these days. You should be able to find one that suits you. Just talk to a lot of existing franchisees before you become one yourself.

That way, you’ll know what to expect as an owner.

Fast Food Collage Photo via Shutterstock

9 Comments ▼

Joel Libava - Franchise Expert


Joel Libava Joel Libava is the Franchise Expert for Small Business Trends. Joel, The Franchise King®, equips today’s prospective franchise owners with time-tested, proven techniques designed to increase odds of success. He does this through one-on-one coaching, and gobs of useful content that can be found on places like Small Business Trends, SBA.Gov, and his award-winning franchise blog, The Franchise King Blog . He’s been featured in Entrepreneur® magazine, and is frequently called upon by national media outlets and publications for his no-spin insights into the world of franchising.

9 Reactions

  1. Would a frozen yogurt franchise get characterizes as QSR?

  2. Hi Robert…

    Great question.

    According to QSR Magazine-Yes.

    Link- http://www2.qsrmagazine.com/articles/ones_to_watch/116/zacks-1.phtml

    The Franchise King®

  3. Joel,

    Great, useful information – many thanks!

    My relative is running a restaurant. He owns several businesses in different niches, and he “testifies” that running a restaurant is one of the toughest businesses to run.

    Firstly, like you said, he needs to stick around with the day-to-day operations in order to keep watchful eyes on the operational.

    I was running a small burger stand. It’s a franchise. And you are right- lack-of-control was making me anxious, not mentioning the changing market behaviour and difficulty in choosing the right location.

  4. People on the go have built the fast food industry. Micro meals are convenient quick and can be healthier and that’s the direction of fast food, making a killer dollar menu that hits it out of the park is the key!

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