What Missouri’s Economic Outlook Means for Franchisors

If you’re a franchisor looking to develop your business in Missouri, you’ll want to consider the state’s policy variables and growth rates when scaling your plans.

By Victoria CampisiStaff Writer

10:10AM • 07/17/23

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 Missouri, 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: 31
2023 Economic Performance Ranking: 28

The State

In 2022, Missouri's real gross domestic product (GDP) reached $300.68 billion, indicating an increase from the previous year when the state's GDP was recorded at $295.69 billion.

Notably, a poll of 600 business leaders for the Missouri Chamber of Commerce and Industry found that two-thirds of the state’s employers see crime hurting the state’s economic competitiveness. Sixty percent of those surveyed called crime a “growing concern,” and 24% called it their top overall concern.

In May 2023, Missouri's seasonally adjusted unemployment rate remained steady at 2.5%. This rate showed a slight increase of 0.4 percentage points compared to May 2022 when it was 2.1%. Additionally, the estimated number of unemployed individuals in Missouri was 78,891 in May 2023, which saw an increase of 965 people compared to April.

In 2022, Missouri's population saw a slight growth, with approximately 6.18 million people residing in the state. This represented a small increase from the previous year when around 6.17 million individuals lived in Missouri.

Making Sense of the Data

What does this mean for Missouri’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, Missouri has been outperformed by 28 other state economies.

The performance index is based broadly on a state’s performance within state GDP, absolute domestic migration and non-farm payroll employment. Missouri has seen an absolute domestic migration of -32,793 ranking it 28th in the country.

The Economic Outlook tells another story about Missouri’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, Missouri appears at No. 31, with a top marginal personal income tax rate of 5.95% and a top marginal corporate income tax rate of 4.58%.

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.

Atomic Wings*

Current units in state:
Growth capacity in state: 10
Total jobs created at max growth capacity: 100
Total unit count: 23
Investment range: $155,900 to $338,500

Atomic Wings, the 14-unit New York-style buffalo chicken wing restaurant chain, has signed a deal with a long-time Missouri restaurateur Mike Domico to bring 10 units to the state. Domico will serve as Atomic Wings' area representative for Missouri, and his first restaurant will also serve as a training site for future franchises.

MaidPro

Current units in state: 8
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: nearly 300
Investment range: $105,560 to $130,800

In 2022, home cleaning franchise MaidPro identified St. Louis, Missouri, as a target market for further franchise development.

“St. Louis has an existing population of almost 3 million people, and it’s very family-friendly,” explained MaidPro’s president at the time. “Though housing developments are ongoing in the area, its lower cost of living will be even more attractive to families as the cost of living skyrockets elsewhere.”

Pet Wants

Current units in state: 3
Growth capacity in state: 25
Total jobs created at max growth capacity: 200+
Total unit count: 146
Investment range: $131,500 to $202,500

Pet Wants, a leader in the fresh pet food industry, named Missouri as one of its target markets this year.

"All of our target states are in the top half of states, with favorable conditions for strong franchise growth and success,” said DeNita Carani, brand president. “In many cases, year-round favorable weather also plays a strong part in our target markets, allowing our franchise owners to organically connect with their customer base in community events. Pet ownership is high in these areas, providing a strong customer base for both new and existing Pet Wants franchise owners. "