Restaurant Franchises Are Growing

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A restaurant industry research group says casual restaurant chains are franchising more stores because it's cheaper.

We’ve written about how to start a restaurant franchise before. A new report from food industry research group Technomic suggests now may be a good time…

The Top 400 restaurant franchise companies generated an estimated $34 billion in sales in 2011 and accounted for almost 10 percent of the total commercial restaurant industry’s sales of $370 billion. Total units from the Top 400 came to 27,206, comprising nearly 5 percent of the commercial restaurant industry’s units.

NPC International continued to dominate franchise sales at $938 million in 2011. As the largest Pizza Hut franchisee, it operated 1,151 restaurants at the end of last year, an increase of 1.3 percent from 2010.

Eighty-seven percent of McDonald’s sales came from franchised stores for a total of $29.7 billion in 2011, whereas Subway’s system is 100 percent franchised, meaning that all $11.4 billion was generated by franchisees. The next largest chain in terms of total U.S. franchise sales was Burger King at $7.4 billion.

The report suggests restaurant chains are moving toward franchising and selling off company-owned-and-operated stores, among “the fast-casual and quick-service segments in particular.” Quick-service is industry jargon for fast food. Fast-casual is that middle ground where effort is put into making the place nice to sit down at for a bit, but there’s still no wait staff: Think Panera Bread or Chipotle.

The full report costs $1,500.

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