According to a research by Franchise Business Review, 51.5 percent of food franchisees generate less than $50,000 per year in profits; only about 7% of food franchises earn more than $250,000. Profitability was an average of $82,033 for all restaurants included in the survey.
Additionally, consider that you will receive the residual region if you are considering a very established big-name franchise. Typically, franchise owners make good money from their franchises opened long ago and were awarded the greatest areas. And this is a frequently-heard argument: someone knows someone who owns ten Dunkin Donuts locations, and they did well, but they purchased them 20 years ago. Since then, there have been 20 years of competitiveness.
Today, we will examine both gross and net revenues. Annual gross revenue – for our prospective entrepreneurs – is the total amount of money that enters your store for all things sold. Net income is the money left over after paying rent, payroll, royalties, insurance, and other expenses. Who matters if you earn ten million dollars a year if your expenses are eleven million? Other critical figures, like discretionary income and EBITDA (earnings before interest, taxes, depreciation, and amortization), will be discussed in a subsequent video; for now, we’ll keep it simple.
Chick-Fil-A is the highest-grossing food franchise on the QSR50. Annual revenue generated by an average Chick-Fil-A is $4.16 million, and your investment is a mere $10,000. But, unlike other franchises, Chick-Fil-A owners do not receive a typical income split or even store ownership. You’ll earn a comfortable six figures, be exposed to a little risk, and be a part of a reputable corporation with conventional values, but you will not own the shop or gain any equity. Additionally, obtaining a restaurant is quite difficult; Chick-Fil-A receives tens of thousands of applications each year and routinely opens between 80 and 100 locations.
Purchasing a McDonald’s restaurant will cost between $1,263,000 and $2,235,000, not counting real estate. While many believe these large figures include real estate, they do not. The highest-earning franchisee in the McDonald’s chain grossed $12,457,000 in 2019, while the lowest-earning location generated $557,000. The average gross income per store open for more than one year is $2,815,000. How much of that does the owner retain? Bear in mind that all of your expenses, including staff, rent, insurance, royalties, and food, add up.
Additionally, your location significantly impacts revenues, as rents in certain cities and regions are extremely pricey and staffing costs. While being in a high-traffic region with low rent and payroll is ideal, finding suitable areas can be difficult. Bear in mind that McDonald’s franchisees can and do lose money; nevertheless, some franchise owners make half-million or more. The general perception is that a McDonald’s franchisee should expect to earn roughly $150k per year on average.
Dunkin Donuts financials segment earnings by region, so at the top end, a freestanding drive-thru building in the Northeast will earn an average of 1,397,936.00. In contrast, a freestanding restaurant without a drive-thru in the west will make only $974,874.00.
Senior care businesses are seeing explosive growth right now, with 10,000 baby boomers turning 65 every day. This trend is expected to continue for many years. Although not all franchise owners in this industry make millions, some do – up to 1.5 million. Thus, you can potentially earn the same revenue as a Taco Bell franchise, 1.6 million dollars per year, with a considerably cheaper investment – a Taco Bell franchise will cost approximately 1.6 million dollars to open.
In contrast, a senior care franchise will cost $100 and $150,000. Additionally, we own a senior care franchise with a territory that earns an astonishing $30 million every year. Notably, this is about three times the revenue earned by the highest-earning McDonald’s, which requires a 2.6 million dollar investment.
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