What Delaware’s Economic Outlook Means for Franchisors

This month, 1851 is taking an in-depth look at ALEC-Laffer’s 16th annual “Rich States, Poor States” Economic Competitiveness Index and how it can be useful to franchisors as they expand their footprints. The report ranks all 50 states based on two criteria: 1) Economic Outlook, a state’s current standing in 15 state policy variables; 2) Economic Performance, a retrospective measure based on a state’s performance over the past 10 years.

For the state of Delaware, these rankings reveal a lot about where the state economy is going and where there is opportunity for their economy to grow. 

• 2023 Economic Outlook Ranking: 29
• 2023 Economic Performance Ranking: 23

The State

Delaware currently has a gross domestic product (GDP) of $84.2 billion and a GDP per capita of $83,922. Its economy is driven by finance and banking, with numerous financial institutions and corporations headquartered in the state.

In January of this year, a U.S. Census Bureau report estimated that Delaware’s population growth rate began outpacing North Carolina and Arizona, ranking seventh in the nation. The bureau estimated that Delaware gained more than 13,000 residents between 2021 and 2022. In the 2020 Census, Delaware fell just short of 1 million residents.

As of May, Delaware has an unemployment rate of 4.2%, with 21,000 people unemployed. However, Delaware jobs were 14,600 higher over the previous year in January and increased 2,300 over the month of December. 

Making Sense of the Data

What does this mean for Delaware’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Delaware has been outperformed by 22 other state economies. 

The performance index is based broadly on a state’s performance within state gross domestic product, absolute domestic migration and non-farm payroll employment. Delaware has seen an absolute domestic migration of 58,420, the 16th highest in the country. 

The Economic Outlook tells another story about Delaware’s economy. The ranking is based on a state’s current standing in 15 state policy variables. Each of these factors, ranging from sales tax burden to state minimum wage, is influenced directly by state lawmakers through the legislative process. In this ranking, Delaware appears at No. 29, with a top marginal personal income tax rate of 7.85% and a top marginal corporate income tax rate of 11.72%.

The report indicates that, generally speaking, states that spend and tax less experience higher growth rates than states that spend and tax more. While this is an important finding for entrepreneurs looking to start their own businesses, it shouldn’t discourage them from investing in their dream franchises if they're in a market with a slower growth rate. 

Franchise Growth Plans

So what should franchisors do with this information? When it comes to deciding where franchisors should develop their brand, it’s always important to look at the complete picture of what the region has to offer. Though most franchisors take a shotgun approach — meaning wherever a prospect franchisee inquires, the franchisor will typically entertain that marketplace — the strategy of looking at these overall policies can help them scale their business at a more efficient rate. With that said, findings within the report should not be the deciding measure for franchisors, but they should play a role in the decision. 

Joshua Tree Experts

• Current units in state: 0
• Growth capacity in the state: N/A
• Total jobs created at max growth capacity: 5 to 7 per location
• Total unit count: 2
• Investment range: $196,760 to $303,091

Joshua Tree Experts is looking to expand in states close to its home state of Pennsylvania, including Delaware. 

“We’re looking at the East Coast and states like New Hampshire, Massachusetts, Connecticut, Delaware, New Jersey and Pennsylvania,” said Joshua Malik, founder and CEO. 

TaKorean

• Current units in state: 0
• Growth capacity in the state: N/A
• Total jobs created at max growth capacity: N/A
• Total unit count: 3
• Investment range: $215,500–$781,500

TaKorean is targeting Wilmington, Delaware for development. 

“Wilmington is right on the I-95 corridor, so it’s really easy to access for vendors, and it’s easy for us to get to provide support,” explained TaKorean’s founder and CEO, Mike Lenard. “Locationally and population-wise, there are some pockets within the area where we could thrive.”

Wayback Burgers

• Current units in state: 6 
• Growth capacity in the state: N/A
• Total jobs created at max growth capacity: around 30 per location
• Total unit count: 120+
• Investment range: $550,000 to $650,000

Wayback Burgers is one of Delaware’s most successful quick-service food brands and is continuing to grow in the state with plans to open a Delmar location by the end of the year.

“We are pleased to continue the expansion of Wayback Burgers in Delaware,” Patrick Conlin, president of Wayback Burgers, said in a statement. “Home to our flagship restaurant in Newark, we take great pride in continuing to bring the Wayback Burgers dining experience to Delaware.”

Franchise Brands Headquartered in Delaware: 

None at this time