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Fast casuals might be franchisees’ darlings, too

 


After years of operating Applebee’s and Taco Bell restaurants, uber-franchisee Greg Flynn recently added 47 units of Panera Bread to his fold, noting, “We had been looking for some time to plant a flag in the fast-casual segment."

His desire was likely stoked by the lines out the door of such brands as Five Guys, Firehouse Subs and Panera itself. But a new study suggests franchisees should love fast casuals as much as customers do, and not merely because of the sector’s unmatched sales growth. The report from Technomic shows the fast-casual segment leads all others in such key measures for franchisees as return on investment and profitability.

Fast casuals ranking within the 100 largest franchised brands, a group that excludes the non-franchising Chipotle and Starbucks, had an average sales-to-investment ratio of 1.7, meaning the restaurant will generate initial sales of about $1.70 for every $1 that was invested in it. The average for all 100 brands is 1.4, according to the Top 100 Franchise Chain Restaurant Benchmarking Report.

The mean is even lower for conventional quick-service chains, midscale franchisors and casual-dining brands, Technomic noted.

Fast-casual franchisors also bested all others in average revenue per square foot of restaurant space, with a mean of $505. Casual dining and quick service averaged $488 and $460 per square foot, respectively, and midscale brands trailed with $382 per square foot.

The brands with the highest revenue per square foot also generated growth in franchise-unit counts well in excess of 10 percent. The pacesetters included Raising Cane’s, Dickey’s Barbecue and Jimmy John’s.

 

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