Fortunes can be made and lost in the fast-food industry, with some well-known brands being built by billionaires such as Jimmy John Liautaud of Jimmy John’s, Peter Cancro of Jersey Mike’s, Lynsi Snyder of In ‘N Out, the Chang family behind Panda Express, and the Cathy family of Chick-fil-A. Despite the success of these brands, the financial details of individual franchisees remain opaque, with over 190,000 franchised restaurants in the US bringing in $289 billion and employing over three million people in the last year.
In a recent report by Forbes, the complexities of franchise finances were explored by looking into four of the fastest-growing fast-food franchises in the nation. Wingstop, a buffalo-style chicken wing restaurant founded in 1994 in Garland, Texas, has maintained its growth and efficiency under various ownership changes. Scooter’s Coffee, known for its buttery-smooth drinks, offers prospective franchisees a lower fee rate and has shown rapid growth over the past five years. Jersey Mike’s, founded by Peter Cancro in New Jersey, has seen substantial revenue growth with a rigorous selection process for potential franchisees. Tropical Smoothie Cafe, founded in Florida in 1997, has been acquired by Blackstone and has reported consistent same-store sales growth.
Wingstop, which went public in 2015 under the ownership of Roark Capital, has been praised for its efficient operations and low labor costs. With an estimated net margin of 17%, franchisees may be able to break even in two years. Scooter’s Coffee, with its 28% annual growth rate, offers a more affordable initial investment compared to other coffee franchises, making it an attractive option for prospective owners. Jersey Mike’s, known for its Jersey Shore origins and stringent franchisee selection process, has achieved significant revenue growth, requiring a modest initial investment of $500,000. Tropical Smoothie Cafe, acquired by Blackstone, has seen consistent same-store sales growth over the past 12 years.
Despite the challenges of breaking into the fast-food franchise industry, these four brands offer unique opportunities for potential franchisees to enter a lucrative market. With their distinctive products and growth trajectories, Wingstop, Scooter’s Coffee, Jersey Mike’s, and Tropical Smoothie Cafe present diverse options for individuals looking to invest in the fast-food sector. As the industry continues to evolve and expand, the financial performance of these franchises offers valuable insights into the potential returns and challenges of owning and operating a fast-food franchise.
