(Newswire.net — January 30, 2020) —
And while franchises continued to grow overall throughout 2019, Entrepreneur’s Franchise 500 list indicates the top-ranked category witnessed major shifts.
Entrepreneur’s Franchise 500 list is the world’s most comprehensive franchise ranking. It takes into account size and growth, cost and fees, brand strength, financial stability and support offered. More than 1,000 franchises applied to make the 2019 iteration, but, naturally, only 500 made it.
Food is the top category in the now 41-year-old list. And that’s little surprise. After all, people need to eat. What is, perhaps, surprising is a major shift in consumer preferences—as manifest in the contraction of certain food brands that made the 2019 list.
Food Brands Decline
In 2018, 18 full-service restaurants made Entrepreneur’s list. In 2019 that number was down to nine. These full-service establishments are defined by, among other things, guests sitting down and being served their food. So, what could explain the 50% decline of brands like Denny’s, Golden Corral and Buffalo Wild Wings on Entrepreneur’s list?
A report by the NDP Group, which tracks Americans’ dining and eating habits, shows people are taking fewer opportunities to sit down to eat. The “Eating Patterns in America” report says consumers will average just 1,410 occasions of sitting down at a restaurant to eat, as compared to 1,453 in 2009.
While this decline in Americans’ preference for visiting full-service restaurants may not seem dramatic, all told it’s compelling news for brands that rely fully on dine-in consumers.
Consumer Preferences Change
A possible explanation for the decline of visitors to full-service food franchises is a growing penchant for eating on the go. According to a report by foods producer Mondelēz International, consumers’ dietary preferences are changing throughout the world. The debut “State of Snacking” report, developed in partnership with consumer polling specialist The Harris Poll, finds people want smaller bites throughout the day, healthy choices and quality ingredients.
In fact, 70% of Millennials surveyed as part of the report said they prefer snacking throughout the day, as opposed to eating larger meals. This is little wonder as modern, busy lifestyles demand unceasing attention. Taking the time to dine in a restaurant may, at times, seem like mere nostalgia.
But it’s not only full-service food brands that slipped in Entrepreneur’s Franchise 500. Only 86 quick-service food brands made the 2019 list. Last year, there were 94. Could a changing consumer preference for healthy, quality ingredients be partly to blame for the deterioration of fast-food staples from the Franchise 500? Maybe.
According to a 2018 food and beverage survey by L.E.K. Consulting, 93% of consumers reported they want to eat healthy at least some of the time. And, of those 1,600 surveyed, 63% reported trying to eat healthy most or even all of the time.
This growing consumer trend for eating both on the go and healthy has seemingly presented even the top restaurant brands with a challenge—as evidenced in their waning franchise rankings. Further, the pressure for the world’s largest food brands to continue to grow in this changing climate seems to be stressing franchisor-franchisee relationships. For instance, McDonald’s franchisees created the first-ever National Owners Association amid tension between the parent brand and franchise owner-operators.
Maintenance Category Surges
While food franchises struggle to stay steadfast atop the Franchise 500, the maintenance category continues to bloom. What’s long been the second-largest category on the list continued its growth in 2019. There are 70 maintenance-related franchise brands on the list this year, compared with only 62 last year. And there’s been such impressive gains in crime-scene cleaning businesses that a subcategory was created just for them.
Modern Business Opportunities Meet Consumer Trends
Franchise opportunities aren’t the only investment option for budding entrepreneurs. Some other business opportunities provide the support of franchises without the ongoing fees and royalties. One such business opportunity lies in a specialized sector of vending.
The healthy vending industry is seeing impressive growth—seemingly spurred on by the growing consumer preference for both wholesome and convenient nutrition, as apparent in Mondelēz International’s “State of Snacking” report.
The purported leader in the healthy vending industry is Healthy YOU Vending. According to the company’s website, the vending and automatic merchandising industry is worth $43 billion, and growing. And with an initial investment starting at $30,000 to become an operator, it may be a more approachable business opportunity for those who don’t have the, typical, hundreds of thousands of startup capital to invest in a traditional franchise.
With consumers preferring healthier diets, and modern lifestyles demanding more attention and time, how will businesses such as healthy vending grow in the coming years to meet shifting public needs? Will a penchant for eating smaller meals throughout the day grant the healthy vending industry room to grow into territory previously reserved for traditional food franchises? One thing’s for sure: People need to eat. It’s how, when, why and where they decide to meet their nutritional needs that will shape the future of the food industry.