What Are the Different Types of Food Service Franchises?

The decision to open a business is no small one, especially in the restaurant industry. As a franchisee, there are different fees and other costs associated with opening a food service business. There also are a variety of food service franchises available, so it’s important to understand what each of them are, as well as the potential benefits and drawbacks of each.

While there are several benefits to running a fast food restaurant, including high revenue, there are also some drawbacks. We recommend exploring the different types of food service franchises out there and then look at the pros and cons of running a franchise in the restaurant world.

The Four Types of Food Service Franchises

According to The Houston Chronicle’s Chron, there are four different types of food service franchises: fast-food or quick-service restaurants, fast-casual restaurants, fine-dining restaurants and casual-dining restaurants.

A fast-food or quick-service restaurant is a restaurant that provides food quickly and at lower prices. These are the typical fast-food restaurants you’re used to seeing, such as McDonald’s, Burger King and Taco Bell. The cost to start a franchise location for a quick-service restaurant varies depending on the brand you choose. 

Fast-casual restaurants are seen by customers as being “healthier,” which allows the brands in this sector to charge higher prices than quick-serve restaurants. The process for a fast-casual eatery involves customers ordering their food at a counter and waiting for it to arrive at their table, or through takeout orders. Panera Bread is a typical example.

Casual-dining restaurants are similar to the two listed above, but with table service. Restaurants like Applebee’s and Buffalo Wild Wings offer a family-friendly atmosphere that allows families to go out and enjoy a meal together. Casual-dining menus are typically more detailed than what you find on a quick-service restaurant’s menu, and a dining trip to one involves a server bringing your drinks, meals and guest check straight to the table. When it comes to the pricing at a casual-dining establishment, expect to charge more for items than at a quick-service or fast-casual restaurant, but less than what would be charged at a fine-dining restaurant. These concepts usually offer a variety of dishes such as pasta, chicken and simple seafood. 

Aspiring entrepreneurs who want to provide guests with an experience while eating their food may want to consider a fine-dining restaurant, where there are elaborate menus and higher prices. Some of these fine-dining options include Ruth’s Chris Steak House and Mastro’s Steakhouse, where the kitchen staff is composed of chefs who went to culinary school and have extensive experience in the industry.

The Benefits and Drawbacks of Investing in a Food Service Franchise

As with owning any business, there are pros and cons to it. According to franchise lawyer Charles Internicola of Internicola Law* Firm, some of the pros after signing an agreement to open a franchise location include that you’re opening a business with a well-established name and that you will receive training and support. Most franchise opportunities are with brands that are either well-known nationally or in the markets in which they operate. Additionally, franchises typically offer training and support to those who sign a franchisee agreement. So, even if you don’t have the most extensive experience in the restaurant industry, you’ll gain the knowledge necessary to get started and support to help the business grow.

Another benefit of entering the restaurant franchising industry is buying power, especially in a market in which there are supply chain issues and rising inflation. Restaurant Engine reported that the collective buying of a franchise group often allows franchisees to benefit from lower inventory prices. “Your bargaining power with vendors is also likely to be higher due to the name recognition,” the outlet stated.

According to the Small Business Administration, restaurants often have high turnover rates, hovering “around 70%.” This is a common issue in the restaurant industry, but certainly something that you want to consider as you go through hiring policies. 

Another con you may want to factor in when opening a restaurant franchise are the fees charged by the franchisor. Franchise royalties are paid depending on a variety of factors, but sometimes are an established rate or vary depending on the sales of the unit. 

Running a business is never easy, and there are pros and cons associated with every type of business – including the restaurant industry – but those who are committed to success will find that obstacles can be overcome along the way.