New Report Shows Increased Profitability in Food Franchising
by Franchise Business Review
Franchise Business Review Report Looks at Food Industry, Names Top Brands
PORTSMOUTH, NH—Food franchise operators are experiencing increased profitability and higher satisfaction, according to a new report released today by Franchise Business Review.
Based on a survey of more than 4,000 franchisees from 84 brands in the food sector, Franchise Business Review’s study looks at an array of franchise concepts to assess the investment opportunity, pros and cons of the sector, and the success attributes of franchisees, as well as the outlook for food franchising in 2013. The report also lists the top 40 food franchises based on franchisee satisfaction—a list that includes Firehouse Subs, Culver’s, Auntie Anne’s, Ground Round, East Coast Wings & Grill, Simple Simon’s Pizza, Hardee’s, Bruegger’s, Papa Murphy’s, and Penn Station.
According to Franchise Business Review’s research, average profitability among franchisees is up 5.8% year-over-year. Average profitability among Franchise Business Review’s Top 40 food franchisees looks even better–15% higher than the rest of the sector. Franchise Business Review notes, however, that average financials can be misleading, as these figures lump together single-unit franchisees with multi-unit franchisees, as well as new units (usually not profitable for the first 12 -24 months of operation) with older, highly profitable units.
Franchise Business Review reports that the food franchise sector has seen a marked improvement in franchisee satisfaction over the past couple of years, and more than 70% of the food franchisees surveyed said they would recommend their brand to other franchisee candidates.
“Most food franchisors are beginning to understand that satisfied franchisees are more successful and more engaged, which drives improvement at the corporate level,” said Franchise Business Review president Michelle Rowan. “The brands on our list have maintained extremely high franchisee satisfaction, and, as a result, many have experienced double-digit growth right through the recession.”
Although profits and satisfaction are up, franchisors in the report say access to capital continues to be a factor limiting growth. Even for brands with a proven track record that are part of the SBA registry, it may require several attempts with different lenders before a loan is approved.
“I have one person on the staff whose sole job is helping franchisees obtain financing. In a fast-growth environment like we’re in, we need to do everything we can to help that process along,” Ken Switzer, vice president and CFO of Marco’s, told Franchise Business Review.
Franchisors and franchisees said they continue to benefit from the economic recession in terms of available real estate, equipment costs, and employee availability.
About Franchise Business Review
Headquartered in Portsmouth, NH, Franchise Business Review is a national franchise market research firm that performs independent surveys of franchisee satisfaction and franchise buyer experiences. The firm’s services include commissioned franchise research projects, as well as industry-wide studies of franchisee satisfaction.
To research a franchise company, FBR contacts every franchisee via phone or email and invites them to take part in an independent survey. Survey participation averages well over 50%, and in many cases, participation will be as high as 70, 80, or even 90%. Franchisees answer 37 benchmark questions ranking their franchise system in the areas of financial opportunity, training and support, leadership, operations and product development, core values (e.g., honesty and integrity of franchisor), general satisfaction, and the franchisee community. An additional 16 questions ask franchisees about the franchisee’s market area, demographics, business lifestyle, overall enjoyment running the franchise, and role in the franchisee community.
Franchise Business Review does not charge a fee for our base survey or awards. Any franchise company with at least 10 operating franchisees can participate in our research at no cost, and the companies listed in FBR’s reports are based solely on franchisee satisfaction ratings. Visit www.franchisebusinessreview.com or call (603) 433-2270 for more information.