Changing landscape of the Retail Food Franchise Industry

The food franchise business has had a paradigm shift over the last few decades, accelerated by the pandemic. The change is not driven by food or the pandemic alone. Several factors are at play.

The food franchise space is being moved by elements connected to the overall restaurant experience: convenience, payment method, dine-in options, and delivery. Baby boomers steered America into the fast food drive. Millennials drive the food industry through technology, swiping, tapping, and clicking the food service industry into a mix of digital convenience and real-life community eating experiences.

The advent of online ordering, third-party delivery apps such as GrubHub and UberEATS, and extensive use of technology in day-to-day operations has made many new formats of food franchise business possible. Gone are the days when a food franchise was only a quick-service dine-in place, a cafe, or a full-service fine-dining restaurant. Whether you can invest big or small, various formats in food retail franchising work. Owning a food franchise business is no longer a distant dream.

The new trends defining the food franchise business landscape

New-age restaurant technology

Acute labor shortage and high employee turnover are an unsaid reality of the restaurant industry, more so in QSR franchise chains like McDonald's and Starbucks. To tackle the shortage and simplify redundant tasks, the food franchise industry has turned to technology. New technologies continue to make inroads to help restaurants beat labor shortage, improve service standards, and meet tech-savvy customer expectations. Some chains have added self-serve kiosks to speed up ordering. Restaurants are embracing a wide array of technologies across many functions, including:

• QR code menus and ordering
• Contactless payment using apps
• Pick-up lockers for deliveries
• Robots for flipping burgers

Shift from multi-unit to multi-brand franchisees

The franchise model started with a franchisee running a single unit. It evolved to a franchisee operating multiple units within a territory, and over the last decade it has evolved again to operating multi-brand franchises. What is multi-brand franchising?

Many companies, such as Yum Foods, own and manage several brands, with restaurants running under different brand names. This is a way to expand into newer business opportunities, minimize labor needs, and optimize resources by sharing them between facilities. A few well-known multi-brand franchise pairings 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 multi-brand franchise model.

Once multi-unit franchisees gain experience and knowledge in a specific 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

Food delivery has grown sharply and remains in high demand, despite many COVID regulations being lifted. To survive the competition, franchise food business owners need to offer versatile delivery and pick-up options. Offering both in-house delivery and third-party delivery helps tap a large market, and both modes have their own merits. In-house delivery has little to no room for communication gaps, while third-party delivery eases franchisees from the logistics of order deliveries.

Growth of ghost kitchens

Ghost kitchens are restaurants that only prepare food for delivery, with no dine-in option for customers. Customers order food via apps or websites. Ghost kitchens are becoming more popular by the day. Their rising popularity presents an opportunity for franchise business owners to branch out and use ghost kitchens to capture growing delivery demand without a significant rise in operational costs.

Interest in healthier food options

Eating healthy is trending and becoming fashionable. 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 choices alongside their fast food menu.

Push for more sustainable business models

Sustainability is the buzzword across industries, and the restaurant industry is no exception. A growing share of Americans think about sustainable food production. How does one create a sustainable restaurant franchise?

• Be vocal for local, and build a menu around easily accessible local produce
• Find ways to minimize gas and water usage
• Switch to renewable energy sources
• Implement recycling
• Minimize food waste
• Use recyclable packaging

Closing thoughts

Technology is redefining all areas of our lives and businesses, and the food franchise industry is no exception.