What South Carolina's Economic Outlook Means for Franchisors

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

By Victoria CampisiStaff Writer

9:09AM • 07/11/23

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 South Carolina, 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: 21
2023 Economic Performance Ranking: 9

The State

South Carolina's economy is projected to slow down in 2023, but it is expected to outperform the national economy due to its above-average population growth and long-term investments in manufacturing. The state's real gross domestic product (GDP) is predicted to grow by 1.7% this year and 1.1% next year.

The demand for workers in South Carolina has remained strong, with job openings increasing by 60% compared to the period before the pandemic, which is higher than the national increase of 40%. The state's unemployment rate has decreased, despite robust growth in the labor force.

However, job gains have been uneven across industries in recent months. Wholesale trade, retail and manufacturing sectors have experienced limited growth, while transportation and health care have been the leading sectors for employment since the start of the pandemic. The unemployment rate in South Carolina is projected to increase starting late this year, reaching a peak of around 4.4% in late 2024.

Meanwhile, South Carolina was the third-fastest growing state in 2022, according to data from the U.S. Census Bureau. The state’s population grew 1.7% from 2021 to 2022, behind only Florida and Idaho.

Making Sense of the Data

What does this mean for South Carolina’s economy? To start with the Economic Performance report, the index shows that within the past 10 years, South Carolina has been outperformed by eight 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. South Carolina has seen an absolute domestic migration of 467,858, making it the top fifth in the country.

The Economic Outlook tells another story about South Carolina’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, South Carolina appears at No. 21, with a top marginal personal income tax rate of 6.5% and a top marginal corporate income tax rate of 5.0%.

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.

Pollo Campero*

Current units in state: 0
Growth capacity in state: 10
Total jobs created at max growth capacity: N/A
Total unit count: 350
Investment range: $1,287,250 to $2,491,500

Fast-casual chicken franchise Pollo Campero has identified South Carolina as a prime market for growth due to its flourishing economic landscape, unmet demand among both legacy consumers and new fans, and wide-open territory availability.

“South Carolina is one of the fastest-growing areas in the country,” said director of franchise development Blas Escarcega. “If you look at the projections of the next five years, areas like Myrtle Beach and Greenville have seen an over 3% average growth rate in their population. This is because the cost of living is great, and the economy is doing very well. It is a very business-friendly state. We are already in Georgia and North Carolina, so we have the opportunity to fill that gap geographically.”

810 Billiards and Bowling

Current units in state: 0
Growth capacity in state: 10
Total jobs created at max growth capacity: 400
Total unit count: 7
Investment range: $1,427,500 to $2,917,000

810 Billiards & Bowling*, the seven-unit bowling, dining and entertainment franchise, is expanding in its home state of South Carolina as part of its plans for targeting the southern half of the United States.

“A lot of our development pipeline is stringing together that southern corridor between South Carolina and Arizona,” said founder and CEO of 810, Michael Siniscalchi. “We’ve found great franchise partners in this area, and there is a lot of built-in infrastructure there to support them as they develop.”

Icebox Cryotherapy

Current units in state: 1
Growth capacity in state: N/A
Total jobs created at max growth capacity: N/A
Total unit count: 18
Investment range: $318,750 to $547,445

Icebox Cryotherapy, the first brick-and-mortar cryotherapy franchise, is giving prospective franchisees in South Carolina the opportunity to change lives and dominate one of the coolest categories of the health and wellness space as it eyes crossing the 50-unit mark. The brand’s first South Carolina franchisees, John and Jennifer Hooks, have already seen great success by bringing cryotherapy to the community of Columbia.

“We didn’t have anything like cryotherapy in Columbia,” Jennifer said. “Our first experience with the brand really made us realize how much we would love to have this type of service around here.