15 Cheapest Restaurant Franchises With Low Total Investment
In this article, we will talk about the 15 cheapest restaurant franchises with low total investment. If you want to skip our detailed analysis, you can head straight to the 5 Cheapest Restaurant Franchises With Low Total Investment.
The food service industry, commonly known as the restaurant sector, not only plays a pivotal role in our economy by providing employment opportunities but also holds a substantial financial share. Within this diverse industry, there exists a wide range of restaurant franchise opportunities.
Restaurant industry market analysis
The global foodservice market, valued at USD 2,395 billion in 2022, is projected to reach USD 5,423.5 billion by 2030, with a CAGR of 10.79% during 2023-2030. This growth is driven by rising disposable incomes, increased fast food consumption, and the convenience factor, notably due to the growing number of working women worldwide.
Franchising, embraced by industry leaders like Domino's, McDonald's, and KFC, continues to propel growth. McDonald's, for instance, has franchised over 38,000 restaurants in over 100 countries, serving nearly 68 million customers daily. This model allows large companies to expand into new markets, minimize costs and risks, and rapidly grow their global footprint.
In the ever-evolving restaurant and food industry, one prominent trend that has gained substantial traction in recent years is the surge in popularity of the vegan diet. To cater to this surging demand, major players in the market are actively innovating and adapting. Notably, Yum! Brands, Inc. (NYSE:YUM) and Beyond Meat, Inc. (NASDAQ:BYND) have entered into a strategic partnership to introduce plant-based chicken products in the US market. Beyond Fried Chicken, a product of this collaboration, was made available to consumers at Taco Bell, KFC, and Pizza Hut locations for a limited time.
Moreover, major chains, including KFC, McDonald's, and Burger King, are introducing vegan menu items in response to increasing consumer demand for healthier and sustainable options.
Also, the rise of shopping and dining malls has been a prominent trend in recent years, resulting in heightened consumer expenditure at restaurants and contributing substantially to market expansion.
Notable Industry Players
As per IMARC Group's report, the fast-food industry, known as the Quick Service Restaurant (QSR) sector, exhibited robust resilience, boasting a valuation of $243.9 billion in 2022. Projections indicate that this industry is set to further expand, with an estimated value of $319.7 billion anticipated by 2028, reflecting a substantial Compound Annual Growth Rate (CAGR) of 4.7% during this period. Adding to this, some of the largest food chains are part of the fast food industry.
Among the notable players in the food service industry, the top three largest firms include McDonald's Corporation (NYSE:MCD), Starbucks Corporation (NASDAQ:SBUX), Subway, and Yum! Brands, Inc. (NYSE:YUM). Together, these industry giants collectively oversee an impressive network of nearly 150,000 branches worldwide.
Analyzing their performance this year, it becomes evident that investors may have certain expectations for the economy. McDonald's Corporation (NYSE:MCD) shares have surged by approximately 12% year-to-date, while Starbucks Corporation (NASDAQ:SBUX) and Yum! Brands, Inc. (NYSE:YUM) have experienced gains of around 4% and 8%, respectively.
Furthermore, industry analysts anticipate robust profit reports from renowned restaurant chains like McDonald's Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM) in the latter half of 2023.
Glancing at their recent financial results, McDonald's Corporation (NYSE:MCD) delivered a robust second-quarter performance, exceeding expectations with an impressive 13.60% earnings per share (EPS) surprise. Similarly, Yum! Brands, Inc. (NYSE:YUM) exceeded the estimated expectations by 13.70%, while Yum! Brands, Inc. (NYSE:YUM) surpassed expectations with only 5.30% EPS surprise.
What's driving the growth of these industry players? One key factor is their strategic marketing and the digital transformation of their business operations. For instance, McDonald's CEO, Chris Kempczinski, has echoed similar sentiments when discussing the reasons behind McDonald's growth in recent earning calls. He states:
“Last quarter, I talked about consistency, consistency in our numbers, consistency in the drivers of our business and consistency in the excitement across the system about the opportunities ahead. This quarter, the theme is — well, if I’m being honest, the theme was Grimace. I mean, Grimace has been everywhere the past few months, all over the news and more than 3 billion views on TikTok. Not bad for a 52nd birthday. This viral phenomenon is yet another proof point of the power of marketing at McDonald’s today. Aside from Grimace, what really stood out about this past quarter was our continued consistency. In Q2, we delivered yet another quarter of strong performance, achieving global comparable sales of 11.7% with double digit comparable sales across each of our segments.”
He further discussed digitizing the business operations and said:
“Our success is fueling even greater ambitions. We’re continuing to double down on our existing growth pillars while evolving our strategy through accelerating the organization to stay front footed with an eye towards the future. As we’ve previously shared, accelerating the organization is an initiative to reimagine how we work to bring the full breadth of McDonald’s skills and experiences together to come up with the best solutions that can be scaled. We’re bringing this to life through One McDonald’s Way, horizontal ways of working and digitizing the organization. While we’re just beginning to change our ways of working, we’re already seeing early benefits.”
With these details in mind, let’s now explore the cheapest restaurant franchises with low total investment.
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Our Methodology:
We compiled a list of the 15 cheapest restaurant franchises with low total investment by considering both initial payment fees and royalty fees. To gather fee information for each franchise, we consulted the franchisor's website. Finally, we ordered the list in descending order of low fees.
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15 Cheapest Restaurant Franchises With Low Total Investment
Here is the list of 15 cheapest restaurant franchises with low total investment.
15. Dunkin'
Initial Franchise Fee: $40,000
Royalty Charges: 5.90%
Dunkin' is the renowned American coffee and doughnut empire that has been serving customers since 1950 with 13,200+ restaurants in nearly 40 global markets.
Dunkin' provides support and training initiatives for franchises, offering thorough initial training, continuous assistance for advertising and marketing, and guidance for site selection and store design. With a proven franchise model and a powerful global footprint, Dunkin' stands out as an appealing choice for potential investors.
14. Jimmy John's
Initial Franchise Fee: $35,000
Royalty Charges: 6%
John's, a chance for success in the competitive world of restaurant franchises, stands out for its relatively low investment cost, making it a magnet for aspiring entrepreneurs. A typical Jimmy John's franchise generates $1 million in gross sales.
13. Muscle Maker Grill
Initial Franchise Fee: $35,000
Royalty Charges: 5%
Founded in 1995 by health enthusiast Rod Silva, the brand has gained popularity for their commitment to providing tasty, wholesome alternatives to traditional fast food. If you're considering investing in this franchise, you'll be joining a brand that appeals to a growing segment of health-conscious consumers seeking convenient and nutritious dining options.
12. Dickey's Barbecue Pit
Initial Franchise Fee: $30,000
Royalty Charges: 6%
Established in 1941 by Travis Dickey in Dallas, Texas, this renowned barbecue chain has become a household name in American barbecue culture. With a presence in over 500 locations across the United States, if you want to start your own barbecue restaurant, Dickey's Barbecue Pit gives you a chance.
11. Checkers & Rally's
Initial Franchise Fee: $30,000
Royalty Charges: 4%
Checkers & Rally's is a famous fast-food restaurant in the USA, founded in 1986. If you want to open one, you need to pay an initial franchise fee of $30,000. The total cost to start your own restaurant can be from $200,000 to $1.2 million. This investment covers factors like equipment, licenses, and operational aspects.
10. Quizno's
Initial Franchise Fee: $30,000
Royalty Charges: 1%
Quizno's is an American franchise fast food restaurant. They have over 1,150 restaurants in the US, Canada, Puerto Rico, the UK, Australia, and Japan. The first Quiznos was opened in 1981 in Denver, Colorado, by Jimmy Lambatos and Todd Disner. The initial investment to open a Quiznos franchise can vary due to different factors, but it typically ranges from $200,000 to $350,000. This includes the franchise fee, equipment, and initial inventory.
9. Taco Bell
Initial Franchise Fee: $25,000
Royalty Charges: 5.50%
Taco Bell is a popular Mexican fast food chain in the US and worldwide. They offer franchise opportunities for people who want to open their own fast food restaurant. To start a Taco Bell franchise, you need to pay an initial fee of $25,000. The total cost, which includes various factors, ranges from $525,100 to $3.37 million.
8. Papa John's
Initial Franchise Fee: $25,000
Royalty Charges: 5%
Papa John's is one of the cheapest franchises with low investment. It is a popular pizza chain in the US and worldwide. They have many restaurants and millions of loyal customers. To open a Papa John's restaurant, you need to pay an initial fee of $25,000. The total cost, depending on the location and format, is between $130,120 and $844,420.
7. Baskin Robbins
Initial Franchise Fee: $25,000
Royalty Charges: 4.50%
Baskin Robbins is a famous ice cream chain in the US and worldwide. They offer opportunities for people to start their own ice cream shop. To join, you need $25,000 in initial fee. The total cost is between $293,840 to $626,360, depending on the location and other factors.
6. Wingstop
Initial Franchise Fee: $20,000
Royalty Charges: 6%
Starting a Wingstop restaurant franchise can be a good chance for people who want their own restaurant. The starting fee is between $20,000. The total cost depends on the location and other factors, and can range from $315,310 to $948,750.
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Disclosure: None. 15 Cheapest Restaurant Franchises With Low Total Investment is originally published on Insider Monkey.