The concept of selling prepared food goes back to ancient Rome, where street vendors sold sausages, bread and wine. In the modern U.S., restaurants and other food franchises are popular places to eat. A food franchise is a good investment in changing economic times. Even during a recession, the average U.S. household budgets about $3,000 per year for dining out.
Food franchises are good for the economy. The U.S. has the world’s largest fast food industry, with over 100 countries serving American fast food. The fast food industry also helps support the U.S. economy, with over 2 million jobs related to food service and preparation.
Fast food restaurants have well-established brands and markets. This means you don’t need to invest as much into marketing strategies and advertising. Being a franchisee allows you to follow in the footsteps of other successful entrepreneurs without making the same mistakes others make in the food industry. The most difficult year in the restaurant business is the first. Increase your chances of survival by selecting a well performing franchise.
There are also tax benefits to owning a food franchise. You can write off expenses, including the capital used to start the franchise, and ongoing operating expenses like rent and utilities. You can write off large purchases of equipment and their depreciation over a period of years. Or you can expense a large amount in one year, called a Section 179 deduction. Always consult a tax advisor before making any tax decisions.
Food franchises all have flexible operating schedules. As a franchisee, you can decide the optimum opening and closing hours for your geographic area, and modify them as needed throughout the life of the business. For example, if you are located in a community that is made up mostly of senior citizens, open early in the morning to serve breakfast and offer early dinner specials.
As a food franchise owner, you can also benefit from co-marketing with other franchisees by offering coupons for related services. For example, you can offer a coupon for 15 percent off dinner with the purchase of a nearby movie theater ticket or childcare service. Restaurant franchises allow you to be creative about how you operate your business.
During more difficult economic cycles, you may choose to scale back your food franchise by reducing hours and serving only breakfast and lunch. If you need to make up for business volume by closing during dinner, a food franchise has the benefit of offering catering. This means your total volume of business is based on both walk-in customers and catered orders. Not only do some businesses cater conferences and meetings, some also arrange for daily lunches. Having a food franchise allows you to profit from larger money-making events such as weddings, family reunions and birthdays.
When you establish a food franchise, you can also ensure your territory is well protected. Not only does the federal government help protect franchise territory, the company you invest with will help protect your territory as outlined in the franchising contract. Read the details of the contract to find out about exclusive territories and how far away a direct competitor is required to site their business.