For many restaurants, the last year and a half have been a nightmare. Establishments closed their doors for good while others still struggled to keep the lights on. Yet, despite all of this, the restaurant franchise industry is booming.
The Pandemic Expands Restaurant Franchise Opportunities - Here's Why
Lockdowns and restrictions forced many restaurants to close their doors, but some companies saw this as an opportunity to expand their franchising opportunities.
For those that had the cash reserves, the lockdowns presented a unique opportunity to fill a need and get ahead of the competition in the changing food industry. Here's why franchising sales are on the rise.
Real Estate Prices are Favorable for Restaurant Franchising
In 2020 alone, more than 100,000 restaurants and bars closed their doors for good. The industry was hit hard by lockdowns and gathering restrictions. But some chains were able to take advantage of the situation by scooping up cheap real estate left behind by shuttered restaurants.
These former eateries already have kitchen buildouts and dining spaces. Some even have drive-thrus. With lower start-up costs, franchises have an easier time expanding their footprint and scaling operations.
Franchise Expansion Strategies are Focusing on Suburbia
In January 2021, more than half of Americans were working from home. Even as states began to lift restrictions, many Americans continued to work from home and do so to this day.
With more people using their homes as their work offices, suburban real estate has become a hot commodity for restaurants and particularly franchises. In addition, as more people move away from city centers, more restaurants and bars are moving closer to suburban areas.
Landlords are More Accommodating to Those Opening a Restaurant Franchise
Those looking for a restaurant franchise opportunity may find landlords to be more accommodating since the pandemic.
Landlords are eager to fill empty storefronts and are much more willing to negotiate with potential tenants.
The South's Relaxed Pandemic Restrictions are Ideal for Franchise Expansion
Thanks to relaxed pandemic restrictions, the south has become a hotspot for restaurant franchising opportunities. Expanding into southern states may help some franchises insulate themselves from risk in future pandemic conditions.
In Texas, Florida, South Carolina, and North Carolina, it's back to business as usual.
The warmer weather is another perk of moving into the southern states. Restaurants are able to keep their outdoor dining spaces open for longer or year-round.
Roy Rogers is just one example of a franchise that's making its way into Southern states. Prior to the pandemic, the restaurant chain focused primarily on the Northeast and Mid-Atlantic states. Now, the franchise is using artificial intelligence to find prime locations in the South, particularly Texas.
More than 200 franchises have expanded to new locations in Florida alone, including Del Taco, Freddy's, Slim Chickens, Stoner's Pizza Joint, The Great Greek Mediterranean Grill, and more.
Many areas of the Southeast have relaxed regulatory laws, so it's relatively quick and easy for franchisees to prepare documents and start operating. However, the franchising process is far more complex in the Northeast and California.
Texas and Florida are Prime Locations for Franchise Opportunities
Florida and Texas are the second and third largest states in the U.S., and their populations are booming. They're also business-friendly locations and have no state income tax.
Florida doesn't have any franchise laws, which makes it easy to get things up and running. These states have lower labor costs, too.
The Takeaway
In the wake of the pandemic, restaurant franchise opportunities are expanding. Franchisors are looking to take advantage of the newly available real estate from former restaurants and move into Southern states where restrictions are much more relaxed.
These trends in restaurant franchising show no signs of slowing, even as things inch closer to business as usual.