Top Food Franchises for 2020

Despite the challenges of this year, many of the top food franchises are thriving and growing. The best franchise companies have ramped up support of their franchise owners and adjusted their business models to meet Covid-19 head-on. While no business is completely recession-proof, franchise companies are showing the world the value of the franchise business model— which is founded on "being in business for yourself, but not by yourself".

This year's list of our Top Food Franchises for 2020 includes 35 franchises that are outperforming their competitors and franchisees' expectations. We invite you to explore franchise opportunities with these brands that have the highest franchisee satisfaction in the food industry.

 

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Food Franchises Remain Strong Despite 2020 Challenges

When you think about franchises, restaurants typically are the first to come to mind. There’s a good reason for that: More than one-third of all franchises fall into this category, making it one of the most popular segments in franchising. Just weeks before the pandemic hit the United States, the National Restaurant Association released its 2020 State of the Restaurant Industry Report, which predicted the industry would reach a record $899 billion in 2020, with the moderate 4% growth rate mirroring general economic conditions. 

Recipe for Disaster?

The restaurant industry faced an unexpected roadblock when the coronavirus forced dining rooms across the country to shutter—closing some businesses for good. But others bridged financial gaps by capitalizing on curbside pick-up and delivery services to attract new customers and retain loyal patrons. Those restaurants that thrived during the pandemic drew upon their positive company culture, strong leadership, and core values to beat expectations. 

“In January I would have said food and beverage franchises can be difficult to run since success relies heavily on great products and people. Post-COVID, those are still challenges, but now there are added considerations around safety protocols, technology, and how take-out and delivery can be a bigger part of the business,” says Michelle Rowan, president of Franchise Business Review. 

Firehouse Subs, a Jacksonville, Florida-based gourmet sub-franchise with more than 1,500 locations throughout the country, experienced record sales this summer, according to its CEO, Don Fox. Most of its locations don’t have drive-throughs, and at some points in the spring, its restaurants were forced by state mandate to close their dining rooms.   

At the beginning of the pandemic, the franchise suffered crushing 45% losses. Instead of comparing themselves to past performance, they drew upon their can-do team culture and concentrated on pivoting their strategy to get food to their customers. This is where previous investments in food packaging and advertising paid off, Fox said, allowing Firehouse Subs to shift to a delivery model that didn’t compromise its food quality. 

“We threw out all points of comparison and rallied around a few things. We focused on one thing—do what you can do to make today and tomorrow better,” he said. “We did that, day after day, week after week until we hit the 9-week mark, and by that time we were beating last year’s sales by a lot. And, in the past 13 weeks, we have never performed at this level in our history.”  

Fox describes the Firehouse Subs brand as one that is based on the values of philanthropy and treating others (employees, coworkers, vendors, and customers) fairly. Each team member lives the brand’s mission statement: To carry on our commitment to and passion for hearty and flavorful food, heartfelt service, and public safety, Fox said. To date, the brand has donated more than $52 million in life-saving equipment to first responders through its non-profit Firehouse Subs Public Safety Foundation. Donations come primarily from their customers, who have the opportunity to give back each time they visit a Firehouse Subs location by rounding up their purchase to the nearest dollar. Staying true to their firefighter roots and supporting local communities continues to serve the brand well. 

“We stay customer-focused. We set very high standards because if we don’t, too many competitors will catch up and defeat us,” he said. “We believe in philanthropy and always giving back to the community. To be a part of us, you need to embrace that part of the culture.”

Listening to Franchisees Helps Raise the Bar

With more than 850 locations across the country, Tropical Smoothie Cafe offers healthy sandwiches, wraps, bowls, and smoothies as well as catering services. The Destin, Florida-based franchise, was also forced to pivot its café business to delivery and curbside pick-up in the wake of the coronavirus.

Like Firehouse Subs, Tropical Smoothie Cafe has experienced unprecedented growth through the pandemic. The chain reported that July's comp sales were up 25.5% and that transactions were also up 5.8%, according to Fast Casual. The brand attributes its success to its healthy menu and a variety of contactless food delivery options. Tropical Smoothie Cafe still plans to open 85 new cafes this year.

The leadership at Tropical Smoothie Cafe listens carefully to feedback provided by its franchise owners through franchisee satisfaction surveys. Charles Watson, CEO of Tropical Smoothie Cafe, said franchisee surveys helped the corporate office better understand how well locations heard messages the brand was delivering in the wake of the pandemic and helped the corporate office determine how locations were taking action during the crisis. The brand views its franchisees as its customers and seeks to provide a business model that works for them, Watson said.

“At Tropical Smoothie Cafe, franchisee satisfaction is #1. We have to know what they think and feel about our brand on a consistent basis,” he said. “Without that incredibly important information, we can’t make changes to our business model and to our support structures in order to continue to drive our business. At the end of the day, we don’t have a business without our franchisees.”

Reinvention Based on Feedback

Cliff Kennedy, CEO of Frios Gourmet Pops, was a franchisee before he became “the boss.” And before he became a franchisee, he was a customer who indulged in the frozen desserts several afternoons each week. His experiences gave him key insights into how the corporate office could better support its franchisees and delight its customers. Originally founded in 2013 in Gadsen, Alabama and now operating 36 locations, Frios made Franchise Business Review’s list of Top Food Franchises for the first time in 2020.

Frios Gourmet Pops started as a brick and mortar location, but since Kennedy acquired the company in 2018 just a few months after he signed on as a franchisee, he discovered new ways to reach customers. The company has now moved to Mobile, Alabama, where it has consolidated its production facility with its corporate office. Bringing the two functions together has allowed the teams to collaborate on new flavors and brainstorm new ideas in real-time, Kennedy said.

The coronavirus crisis quickly prompted the corporate office to seek input from franchisees who were finding success in an uncertain landscape. With children and families stuck at home, Frios Gourmet Pops could be delivered via pushcarts and trailers. Franchisees found success in promoting their intended routes on social media. When franchisees arrived at the neighborhoods, there would already be lines of children waiting to buy pops, Kennedy said.

“We listened to them. It wasn’t our idea to mobilize our product. That idea came from a franchisee,” Kennedy said. “Her sales were up, and we said, ‘hey look, everyone, this franchisee is successful, you could do that in your territories as well.’” 

Kennedy said Frios Gourmet Pops has built its foundation on its relationship with its franchisees. In the end, it sells fun—not pops, he said. Each week, the Frios corporate office provides a blog, training programs, and a private Facebook group to share best practices and successes.

“I wake up every day thinking, how can my franchisees be more successful, and what can I do to help them?” he said.

An Appetizing Investment

Although owning a food business, like any business, has its challenges, there is a high potential for return. That said, initial investments in the food sector are notoriously high due to real estate factors and build-out costs. When looking at the 35 brands on this year’s Franchise Business Review Top Food Franchises list, initial investments range from a low of $53,200 for a Happy and Healthy Products franchise, all the way up to $3,000,000 for a Wendy’s franchise. By the time the location’s first customers have eaten, wiped their lips clean and waved goodbye, most franchisees will have stocked their kitchen, settled their franchise fees, paid rent, covered renovations and made initial payments on a smorgasbord of expensive tools and equipment. 

Expenses add up fast, and if you are anticipating to recoup your initial investment quickly, prepare to be disappointed—margins in the food sector, especially in the early days of a location, are routinely thin. With high costs and low margins, there is not a lot of room for guesswork. It’s important for franchisees who want to succeed to have a firm grasp of the numbers: What are your main costs? Which costs can you control, and which costs are relatively fixed? And is there sufficient consumer demand to cover those costs and generate an income? 

The good news is, interest rates are at historic lows due to the pandemic. So for those investors looking to borrow the cash needed for the sizable investment typically required to open a food franchise, now is the time to take advantage of the opportunity for “cheap money.”

Factor in Satisfaction When Exploring Your Options 

No franchising investment should be made lightly. Today’s food and beverage franchises aren’t limited to fast food restaurant concepts--the sector has expanded to include mobile vans and trucks, curbside pick-up, and food delivery services that range from burgers to ice pops to Bundt cakes. With so many concepts to choose from, and the profound impact of the pandemic on business models and sales, it can be challenging to select brands that are not only financially lucrative but rank high when it comes to franchisee satisfaction.  

Examining the reviews and feedback from other franchise owners is one way to get unbiased advice from entrepreneurs who have already made the leap into franchise ownership and have first-hand experience with the brands you are considering.

“Potential business owners may be initially attracted to the hype around a particular brand or the overall idea of running a restaurant; but this should come second behind thorough due diligence. Prospective franchisees must do their homework and compare opportunities side-by-side—looking at both well-known brands, as well as smaller, lesser-known companies. Carefully considering feedback from current franchise owners as well as independent third-party rankings and reviews such as the Top Food and Beverage Franchises list can help aid in your decision making,” Rowan said. 

To help you narrow down the top brands based on franchisee satisfaction, Franchise Business Review analyzed 18 months’ worth of data from approximately 4,300 franchise owners representing nearly 100 brands regarding their overall satisfaction with their brands and their likelihood to recommend them to others. 

Instead of asking franchisors what makes their brands unique, we instead asked franchisees 33 key questions focused leadership, training, financial opportunity and core values as well 16 more personal questions related to their business lifestyle and overall enjoyment of running their franchise to give you insights into these brands based purely on independent surveys completed by the franchisees who own them.   

This year, 35 franchises made Franchise Business Review’s list of the Top Food and Beverage Franchises for 2020, thanks to the high marks they received from those closest to their businesses—their franchisees. Some of the recognizable brands that made the list include Kona Ice, Nothing Bundt Cakes, Wendy’s, and A&W Restaurants. Chicken Salad Chick and Checkers & Rally’s also made the list, along with newcomers like Frios Gourmet Pops.

“The 35 award-winning food brands that made the list were lauded for their strong leadership, open communication, and ability to work with franchisees to navigate all the challenges thrown at them this year,” Rowan said. “It’s no surprise that many of the brands that made this list were able to overcome challenges presented by the coronavirus.” 

If you are interested in pursuing franchise ownership in the food sector, this year’s list of the Top Food Franchises of 2020 is a great place to start.