If you’re looking for the best food franchise to own, it may be just around the corner—literally. And even better, you don’t need to be an expert chef to own one. To open one of the best restaurant franchises, you can even start with a small budget. All you really need is a passion for the brand and product.
How Much Does It Cost to Buy a Food Franchise?
To open any franchise, you have to pay a franchise fee plus other start-up costs. These include supplies, inventory, legal fees, insurance, and business licenses. The total cost of opening one franchise versus another can vary depending on the company, region, and the franchise fee.
To give an example among restaurant franchises, Kentucky Fried Chicken charges a $45,000 franchise fee, which is on the high end of the low-cost range. But total startup costs for a KFC location vary between $1.3 million and $2.5 million. In return for this rather expensive up-front cost, the average KFC restaurant brings in over $930,000 in revenue per year, according to QSR Magazine.
Whether these numbers make KFC the best restaurant franchise to own is debatable. Other restaurant franchises come with lower fees. For example, Chick-fil-A charges just $10,000 for its franchise fee. And there are no start-up costs because the company pays them.
So what’s the catch? Chick-fil-A franchisees must lease equipment from the company and turn over 50% of their pretax profit. That obviously takes away a lot of money. But per-store revenue averaged $4 million in 2017, making Chick-fil-A the most profitable franchise on a per-store basis. Despite its ongoing high cost, Chick-fil-A could very well be one of the best restaurant franchises out there.
Top 10 Low-Cost Restaurant Franchises
If sending the bulk of your profits to Chick-fil-A every month doesn’t appeal to you, perhaps you should consider one of these low-cost alternatives. They could very well be the best restaurant franchises available on the market currently.
Subway is an international fast-food sandwich chain that advertises heavily and brings in lots of customers. It has more than 42,000 locations around the globe, more than McDonald’s or Starbucks. The franchise fee for a Subway is $15,000, according to Business Insider. The total initial investment ranges from $100,000 to $400,000, which is much lower than McDonald’s initial investment of around $2 million.
In return for these impressive figures, Subway franchise owners generate around $417,000 on average in gross revenue per year.
If Subway’s $15,000 franchise fee is too much for you, you could buy a Quizno’s franchise instead. The fee is $10,000. The fast-food sandwich chain sells a similar lineup of foot-long and smaller submarine sandwiches. Expect to pay anywhere from $200,000 to $330,000 to get a Quizno’s location up and running.
If selling sandwiches doesn’t spark your interest, you may instead find that an ice cream parlor may very well be the best restaurant franchise to open.
Baskin-Robbins charges a franchise fee of $25,000. In return, you get to sell ice cream, cakes, desserts, and other ice cream-based treats. Like Subway, Baskin-Robbins is a well-known global chain. The downside of this is that franchisees have to pay an advertising fee of 5% of gross sales (and a royalty fee of 5.9% of gross sales). But the average Baskin-Robbins franchise is able to generate roughly $360,000 a year in ice-cream sales, which should leave room for a decent profit.
4. Domino’s Pizza
If $360,000 in annual revenue isn’t good enough for you, take a look at Domino’s Pizza. The average store in 2017 generated $1 million in sales. With that performance, it could definitely be one of the best restaurant franchises to open. But is it affordable?
According to FranchiseHelp, the company’s franchise fee is $25,000 with start-up costs varying between $120,000 and $460,000. Although the total required investment is a little high, the average profit per store could make it a good value.
This chicken restaurant serves fried chicken with a much lower franchise fee than KFC. A Chester’s chicken location can be had for just $3,500, one of the lowest prices on this list. The total amount to get the franchise up and running varies from $12,000 to $300,000.
6. Cold Stone Creamery
Another global ice cream store on our list is Cold Stone Creamery. It makes its ice cream every day in-store. The company’s franchise fee is $27,000. The total up-front cost is estimated at $50,000 to $470,000.
7. Mucho Burrito
As the name implies, this restaurant specializes in Mexican and Tex-Mex fare. The franchise fee will set you back $30,000 with the total up-front cost ranging from $270,000 to $630,000, which is much lower than a Taco Bell. Financing assistance is available, and with the right profit margin, this one could turn into the best restaurant franchise to own.
8. Scooter’s Coffee
To capture average annual drive-thru sales of $430,000, you could buy a Scooter’s Coffee franchise. While the business offers a similar drink and food menu as the famous Starbucks, the entry cost is quite a bit lower.
Scooter’s franchise fee is $40,000 with total establishment costs of $330,000 to $640,000. While these numbers aren’t the lowest in the restaurant industry, they’re quite a bit lower than the cost required to build a Starbucks. And if you can learn to manage cash flow, you could turn a Scooter’s Coffee into a profitable business.
9. Dickey’s Barbecue Pit
Not everyone drinks coffee, which is why a Dickey’s Barbecue Pit may very well be the best restaurant franchise to own. Offering ribs, brisket, and more, the company’s franchise fee is as low as $15,000 with start-up costs as low as $280,000. Pass the BBQ sauce.
10. Planet Smoothie
But health-conscious consumers may want to skip the barbecue and have a nutritious smoothie instead. That’s why you should also consider buying a Planet Smoothie franchise. With an up-front fee as low as $12,000 and start-up costs as low as $123,000, this one could be a home run.
Other Tips to Get a Restaurant Franchise
Consider these pointers before deciding to open a restaurant:
- The cost of running a restaurant franchise can be rather high. COGS (cost of goods sold) are things like food, beverages, take-out boxes, and cleaning supplies. These can eat into your profit margins. Labor and rent can be high, especially in prime areas.
- Financial help is available if you need it. Some companies help their franchisees with financing. Also, if you have just nine months of business experience, you may qualify for a loan from Camino Financial.
Grow Your Restaurant Franchise with Camino Financial
With the right financial assistance, it’s possible to run and grow your restaurant franchise. A business loan with Camino Financial can give you the funds you need to take your franchise to the next level. And with our user-friendly online application, the process is fast and easy. Many of our members are restaurant owners: we know the ins and outs of this industry like no other lender. We provide you not only with the financing you need but also with a variety of specialized tools and resources that can guarantee the success of your restaurant.
For more information on non-restaurant franchises, check out my other post What’s the Best Franchise to Own with a Small Budget?