The food franchise business has had a paradigm shift in the last few decades which was further accelerated by the pandemic in the last two years. With all of this behind us, the change in food franchise business is not just being driven by food or the pandemic alone. There are several factors that are at play here.
The food franchise business space is being moved by numerous other elements connected to the overall restaurant experience, such as convenience, payment method, dine-in options and delivery options. Baby boomers steered America into fast food drive, millennials are driving the food industry by technology in the form of swiping, tapping, and clicking the food service industry into a mish-mash of digital convenience and real life community eating experiences.
The advent of online ordering, third party order delivery apps such as GrubHub and UberEATS, extensive use of technology in day to day operations has made many new formats of food franchise business possible. Gone are the days when food franchises were only a quick-service dine-in place, a café, or a full-service fine-dine restaurant. Whether you can invest big or small, there are various formats in food retail franchising that work. Owning a food franchise business is no more a distant dream.
The new trends defining the food franchise business landscape
New-age restaurant technology
The acute labor shortage and high-employee turnover is an unsaid reality of the restaurant industry and more so in QSR franchise chains like McDonald’s, Starbucks and many similar chains. To tackle this shortage and simplify redundant tasks the food franchise industry has retorted to technology and new technologies continue to make inroads in the industry to help restaurants beat labor shortage, improve service standards, and meet the tech-savvy customer expectations. Rise, a very popular breakfast franchise chain famous for its delicious biscuits and chicken, implemented self-serve kiosks in its outlets which helped them enhance their revenue by 25%. Restaurants are embracing a wide array of technologies across many functions, some of which include:
- QR code menus and ordering
- Contactless payment using apps
- Pick-up lockers for deliveries
- Robots for flipping burgers
Shift from Multi-unit (MU) to Multi-Brand (MB) Franchisees
The Franchise model started with giving a franchisee to run a single unit which evolved to franchisee operating multiple units within a particular territory which now over the last decade has evolved to operating MB franchises. What is MB franchising?
Many companies like Yum foods own and manage several brands, and now have restaurants running under different brand names. This is a great way to expand into newer business opportunities, minimize labor needs, optimize resources by sharing resources between facilities. A few famous multi-brand franchise businesses are Dunkin’ Donuts and Baskin Robbins or Kentucky Fried Chicken and Taco Bell. Business risk diversification and a lack of territory availability for the primary brand in preferred geographies are the key drivers behind the growing popularity of the MB franchise model.
Once MU franchisees gain experience and knowledge in a specific geography or market, their next logical growth path is to expand with a new brand in the same market. They know this market well and it is like a safe haven for them.
Demand for More Pick-Up and Delivery Options
Over the last five years, food delivery increased by 200% and is still in high demand, despite many COVID regulations being lifted. To survive the competition franchise food business owners need to push the envelope and offer versatile delivery and pick-up options. Offering both in-house delivery and third-party delivery options will not only help tap a large market, both modes have their own merits. While in-house delivery has little to no room for communication gaps, third-party delivery models ease franchisees from the logistics management of order deliveries.
Growth of Ghost Kitchens
Ghost kitchens are restaurants that only prepare food for delivery with no dine-in options for customers. Customers can order food via apps or websites. Ghost kitchens are becoming popular by the day and the market is expected to be worth $1 trillion by 2030. The rising popularity presents a great opportunity for franchise business owners to branch out and use ghost kitchens to cash on the increasing demand for delivery options without a significant rise in business operational costs.
Interest in Healthier Food Options
Eating healthy is trending and becoming fashionable. More and more people now look for plant-based or healthy options on restaurant menus when dining out. Fast food franchises need to catch up on this trend and offer an array of healthy food options in addition to their fast food menu.
Push for More Sustainable Business Models
Sustainability is the buzzword these days across industries and the restaurant industry is no exception to this trend. About 20% of Americans constantly think about sustainable food production. But how does one create a sustainable restaurant franchise:
- Be vocal for local, prepare a menu keeping easily accessible local produce in mind
- Find ways to minimize gas and water usage
- Switch to renewable energy sources
- Implement recycling
- Minimize food waste
- Use recyclable packaging
Technology is redefining all areas of our lives and businesses and the food franchise industry is no exception.