This isn’t a list of your most popular fast-food chains in the world where McDonald’s tops the list year in and year out. No, it’s listing top fast food franchises, or more specifically top Per-Store revenue earners.
Many considerations need to be taken in to account order for a new restaurant to successfully bring in profits such as location, public appeal, and competitive prices.
Here are the facts:
- McDonald’s is not number 1
- An average fast-food restaurant grosses a little over $750,000 per year
- The top franchise on this list earns $3.1 million per year
- and lastly, McDonald’s is not number 1.
Top In-Store Earning Franchises
Interesting numbers indeed. As an investor, making an initial investment on a fast-food franchise, albeit tacky, can also be extremely profitable. However, each company has a different franchising method which divides the profits earned differently. For the purpose of this examination, we will look at Chick Fil A’s franchising method and requirements since they represent the most profitable opportunity on average.
The Financials Behind Owning a Chick Fil A Franchise:
To start, Chick Fil A has an application in order to even be considered as an “Operator” of a Chick Fil A franchise. They are extremely selective with this process and usually only accept anywhere between 50-100 out of 10,000-25,000 applicants a year with 100 being the highest in general.
Once accepted, you have to pay a $5,000 licensing fee among other costs which FranchiseDirect.com estimates to be at about $80,000 on the lower side and $770,000 on the higher side. These costs are so variable based on the size and revenue potential of the eventual establishment, let’s assume that the higher initial investment means that you will most likely own a location that grosses more than the average $3,158,000 a year of sales.
Here’s the game changer. That initial capital of about $770,000 (A rather steep price at first glance) is entirely covered by the company. Wow. Essentially, to be a part of this, you only need some luck and $5,000.
Now, Chick Fil A has a few recurring fees. Notably the 10% a year they take from gross sales (Not profits mind you). However, given the 1,100 operators share an average profit a year of $210,000,000 that spells out an average of about $190,000 per operator.
Its beginning to become quite clear why there are so many applicants a year. If you have the capital and the will to spend the required 35 hours a week in your new store without pursuing any other business ventures, this is a surefire way to see some serious returns on investment.
Franchise or Invest?
What do you think about franchising? Is this a good investment or is the commitment to high? Regardless, if you aren’t interested in getting a franchise of your favorite restaurant, or you’re just out to make money, the discussion starts here!