In a world full of franchising concepts, restaurants remain one of the strongest categories for multi-unit development
In a world full of franchising concepts, restaurants remain one of the strongest categories for multi-unit development

Why restaurants? What are the benefits of growing within the segment and why are multi-unit operators continuing to develop despite risks?

In a world of franchising options and concepts, one constant has remained the same for almost the entire history of the business model– restaurants lead the way.

According the National Restaurant Association, the restaurant industry generates more than $782 billion in sales and employs 14.4 million people, equaling 10 percent of the overall U.S. workforce. Additionally, eight of ten restaurant owners started their industry careers in entry-level positions. What does this all mean? The restaurant industry continues to be a very desirable business segment – whether franchised or not. So, why restaurants? And why do multi-unit developers continue to see the benefit of restaurant investment? 

I believe that food is at the center of everything. It's a force that binds communities, families, friends and colleagues together. Food is a great equalizer and something we can all relate to no matter culture or socio-economic background. Whether it’s your neighborhood restaurant down the street where they know your favorite order or a new concept that you’re trying for the first time – there is lot to get excited about when it comes to restaurants. People love to share food together – so, as an investor, why not continue to help build that excitement?

Chad Tramuta, franchise development manager for Smoothie King, sees the multi-unit appeal daily and breaks down the attraction into three key areas.

“The first thing a multi-unit owner looks for in a brand is if they have a connection with it – a unique draw that separates the brand from the segment in which it falls,” said Tramuta. “Secondly, multi-unit investors are smart, savvy, numbers-oriented people. Because of that they need to see the unit economics and know that they are making a good business decision. And, third is scalability, because they need to know this can grow into something bigger.”

Tramuta is aware that if these three areas don’t resonate and make sense to a potential investor, the appeal diminishes.

“For Smoothie King, we’re in a sweet spot,” he added. “Our brand is quick, affordable, convenient and appeals to a wide audience, which separates us. And, because we don’t deal with the same level of issues and challenges that other food brands do, combined with a low cost of goods and low cost of labor, the unit economics make sense. Most franchisees in our system are looking to expand and add units, and we’re appealing more to the multi-unit investors because we can offer the whole package.”

Jay Hummer, franchisee and development agent for MOOYAH Burgers, Fries & Shakes, also knows about a multi-unit appeal as both a franchisee and development agent for a nearly 100-unit better burger brand.

“After I left corporate America, MOOYAH was the first brand I added to my portfolio. I wanted to launch with a hamburger franchise because Americans have an insatiable craving for burgers and fries,” said Hummer. “People are choosing MOOYAH because the food is on another level. Were talking about burgers and fries, but the quality is so good they want to be behind the brand. At the end of the day, when someone can buy into the food they know, consumers will to.”

Hummer and Tramuta, who are in very different segments, agree on three major factors that are captivating multi-unit investors, and that’s quality of the product, having a brand that stands out in crowded space and the savvy-ness of the prospect. So, focusing on the areas of differentiation in your brand – whether product, culture, or any other area – could just be the key to success and the reason why restaurants continue to be an attractive investment.