If you’re looking for the cheapest food franchises to open, it may be just around the corner—literally. And even better, you don’t need to be an expert chef to open one.
To open one of the best restaurant franchises, you can even start with a small budget. All you need is a passion for the brand and product.A loan can help you!
What Is A Franchise?
It’s a business model where the franchisor (the franchise owner) allows other people (the franchisees) to open a business under their brand to market or sell their products or services.
In exchange for this license and the franchisor’s continued support, franchisees must pay an initial fee and, generally, monthly fees.
In the US, in 2020, approximately 750,000 franchise businesses were generating $670 billion and supporting 7.49 million jobs, according to Statista.
There are many different franchises, like food, car dealers, retail establishments, and many others.
The Restaurant Industry In The US
Restaurants are everywhere, from roadside diners to fine dining restaurants. They are an essential source of employment that helps stimulate the economy.
According to the National Restaurant Association, the restaurant sector is one of the largest employers in the country, with more than 14.5 million people working in these establishments.
Restaurants are one of the most popular industries to buy franchises. More than 30% of franchises are in the food and beverage industry.
This trend is not surprising since the food market grows around 4% each year. This explosive growth represents an excellent opportunity for potential entrepreneurs who want to open restaurants.
Reasons To Invest In One Of The Cheapest Food Franchises To Open
You can get a well-known food franchise at a very low price. These businesses generate huge sales, so the profit potential is high even if you pay less than $100,000.
The best thing about food franchises is that you can use a business model that is already successful. That way, you won’t have to worry about whether diners will like your concept.
In other words, the risk of failure is considerably lower.
Also, instead of starting your own business from scratch, you can use the knowledge and experience of the owners. They will teach you everything about their business model to be successful.
How Much Does It Cost To Buy A Food Franchise?
You have to pay a franchise fee plus other start-up costs to open any franchise. 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 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 start-up costs for a KFC location vary between $1.3 million and $2.5 million.
According to QSR Magazine, in return for this rather expensive up-front cost, the average KFC restaurant brings in over $930,000 in revenue per year. 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. So despite its ongoing high cost, Chick-fil-A could very well be one of the best restaurant franchises out there.
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Top 10 Cheapest Food Franchises To Open
You should consider one of these cheapest food franchises to open. 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 many customers.
It has more than 42,000 locations around the globe.
The franchise fee for a Subway is $15,000. The total initial investment ranges from $100,000 to $400,000, which is much lower than McDonald’s initial investment of around $2 million.
The fast-food sandwich chain sells a similar lineup of foot-long and smaller submarine sandwiches.
If Subway’s franchise fee is too much for you, you could buy a Quizno’s franchise instead. The fee is $10,000.
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. The brand sells ice cream, cakes, desserts, and other ice cream-based treats.
Baskin-Robbins charges a franchise fee of $25,000.
The downside 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 can generate roughly $360,000 a year in ice-cream sales, which should leave room for a decent profit.
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?
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. 155
This chicken restaurant serves fried chicken with a much lower franchise fee than KFC. They only started selling franchises in 2004.
You can have a Chester’s chicken location for just $3,500, one of the lowest prices on this list. However, the total amount to get the franchise up and running varies from $12,000 to $300,000.
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 around $50,000 to $470,000.
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 one of the cheapest food franchises to open.
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 a bit lower than the cost required to build a Starbucks.
Dickey’s Barbecue Pit
Not everyone drinks coffee, which is why a Dickey’s Barbecue Pit may very well be one of the cheapest food franchises to open.
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.
And if you can learn to manage cash flow, you could turn a Dickey’s Barbecue Pit into a profitable business.
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.
This is definitely one of the cheapest food franchises to open.
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5 Benefits Of Starting A Food Franchise
- Franchises allow entrepreneurs who lack resources to open their own restaurants.
- This business model is a great way to start a business with relatively little capital. The cheapest food franchises to open come in all options, sizes, and budgets.
- Many people who start a business with no experience fail. But with a franchise, it doesn’t matter if you don’t have previous experience; the brand will give you all the required information and training.
- Most franchises have brands with built-in marketing potential and various tools to attract customers. Most of the cheapest food franchises to open have a massive following on social media through Facebook, Twitter, and Instagram.
- This model will save you time and effort.
Tips When Choosing A Franchise
Some people will tell you to look for certain qualities when finding the right franchise.
But the important thing is that you know what you are looking for and that it fits your wants, needs, lifestyle, and budget.
Follow these tips.
- The ideal is a franchise has lower annual costs, even if that means a high initial price.
- Make sure you understand what you will have to pay monthly. It is usually a percentage of your total sales.
- Does the franchise offer support? Do they provide insights on how to run the business or just how to cook?
- If you are buying a franchise in your area, ask them if any competitors are nearby.
Before you decide, ask yourself some basic questions:
- What is your monthly budget?
- Do you have any experience related to the industry?
- Do you want a company that takes care of everything for you, or do you prefer to be the one doing the heavy lifting?
- Would you rather buy a local or regional franchise?
- Can you attract new customers and keep existing ones happy?
Another low-cost option is to start a food truck, whose initial costs are not that high.
The Cost Of Running A Restaurant Franchise Can Be High
A restaurant’s start-up costs can be high.
COGS (cost of goods sold) include food, beverages, take-out boxes, and cleaning supplies.
Labor and rent can be high, especially in prime areas.
Plus, you might have to consider liquor licenses.
These can eat into your profit margins.
Fortunately, financial help is available if you need it.
At Camino Financial, we have different loan products that can help you strengthen your business, whether you are just starting out or have been operating for several months.
Grow Your Restaurant Franchise With Camino Financial
With the proper financial assistance, it’s possible to get one of the cheapest food franchises to open.
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 with the financing you need and a variety of specialized tools and resources that can guarantee the success of your restaurant.Apply now!
What is the cheapest fast-food franchise to open?
Of all the franchises in this list, Chester’s is definitely the cheapest one. In addition, the restaurant has locations all over America in supermarkets, convenience stores, college campuses, and airports, so you have many options for where to start your Chester’s.
What is the most profitable franchise to buy?
While all these 10 franchises are quite profitable, the one that will probably win you the most revenue might be Subway. In return for your investment, Subway franchise owners generate, on average, around $417,000 in gross revenue per year.
How much does a McDonald’s franchise cost?
The cost of the franchise is $45,000. The costs of opening the restaurant could be up to $2 million.
How much does a Chick-fil-A franchise cost?
The cost of a Chick-fil-A franchise is $10,000.
How much does a Starbucks franchise cost?
Starbucks is not a franchise, but you must purchase a license. The approximate cost to start can be up to $400,000.
How much does a Subway franchise cost?
The cost of the franchise is only $15,000. Startup costs average $250,000.
How much does a Little Caesars franchise cost?
The franchise costs $20,000, but the total cost can add up to more than $1 million.
How much does an In-N-Out franchise cost?
This restaurant chain does not offer the option to purchase a franchise.
How much does a Burger King franchise cost?
The franchise has a cost of $50,000. Start-up costs for opening the restaurant can be as high as $3 million.