Water may be the most popular beverage in the U.S., but the runner up is coffee. Around 1/3 of the American population drinks coffee every day, and around 1/2 drink it at least once per week. With numbers like that, it’s no surprise that the coffee franchise industry is a significant contributor within regional economies and to the U.S. economy as a whole, with an estimated worth of around 11 billion dollars. Due to the sheer volume of American citizens that drink coffee routinely, the coffee franchise industry is very stable. The industry is projected to reach 237.6 billion globally by 2025. The coffee franchise industry accounts for 1.6 % of the total US gross domestic product (GDP). Additionally, the coffee industry provides approximately 1,694,710 jobs in the U.S. The coffee franchise industry has developed important innovations over time, quickly responding to the changes in consumer demand and meeting the needs of millions of American consumers.
Entering a new decade, the Coffee Industry continues to change to fit the needs of its consumers. Although traditionally, drip coffee was the standard, by 2017, fewer than half of American coffee drinkers said this was their drink of choice. In fact, over half of the coffee beverages consumed daily in America are classified as espresso beverages or gourmet drinks. Businesses in the coffee industry are constantly innovating together with the trends positioned by the consumers.
The Paid-in-Full Rate is when the SBA loan is fully paid off by the small business owner including interest, indicating financial strength.
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
For every 8 SBA loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
-SBA Loan Data from 2010-2019
-Non-Franchise Businesses taken into account: 44,851
Coffee chains are some of the highest contributing businesses in the food franchise industry.
Despite the overall success of coffee franchises, these businesses still must work to compete with smaller independent coffeehouses, and coffee from home. Although many coffee drinkers have become major chain coffee consumer, over half of them still prefer to make it at home. Coffee franchises have persevered over this competition by providing more and more services to the consumer.
One major trend in the coffee franchise industry is a greater focus on atmosphere. Coffee shops, particularly franchises, are known for not only the delicious, caffeinated drinks consumers can buy there, but also for the trendy atmosphere. Coffee chains typically boast unlimited, free Wi-Fi, making them a primo destination for college students and working adults alike. Some coffee franchises have even begun opening conference areas, in order to further encourage this atmosphere. The rising trend of coffee shops being the new social and working hub for almost everybody is only expected to become more popular in coming years.
Convenience stores are becoming a force in food service footprint. Convenience store franchises have been increasing their food offerings in recent years. Featured convenient stores such as 7-Eleven has over 8600 stores in the United States.
Another major trend in fast food franchises is slimming down the menu. For instance, McDonald’s menu has ballooned by 70% over the years, leading to a slowdown in service is affecting customer satisfaction. The solution has been to cut down the menu to re-energize sales.
Through our online platform Vetted Biz, we have reviewed over 2,900 businesses and franchises. Currently, almost 25% of the businesses on our platform are food and beverage franchises. Of the food and beverage concepts we have reviewed, total investment amounts can start as low as $3,000 for smaller kiosk concepts all the way up to $6,732,615 for a full-service restaurant. Many factors will affect the investment amount, including but not limited to heavy-duty equipment like grills, or where the food and beverage concept needs to be located. In our research, the average royalty fee takes up 5.3% of gross revenue, and the average marketing fee is 2.3% of the gross revenue. From 2016 to 2018, an average of 2.78% of franchise units ceased operations for reasons other than terminations or non-renewals. Moreover, of the 100 franchises we reviewed, there are approximately 3100 franchise units projected to open next year.
Average Food Franchise Industry Percentage Fees
Standard Food Franchise Industry Investment
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 523 franchise concept investment breakdowns in order to calculate this figure.
The Paid-in-Full Rate is when the SBA loan is fully paid off by the franchisee including interest, indicating financial strength.
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
For every 9 SBA franchise loans fully paid including interest, 1 SBA franchise loan was unable to be paid back, or defaulted.
-SBA Franchise Loan Data from 2010-2019
-Franchise Businesses taken into account: 15,203
Learn more about the Food & Beverage Industry
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