Franchising News
Top 7 Franchise Food Chains By Store Revenue
Written by Tim Morral
Published: 9/5/2014
QSR Magazine reports that only seven of the nation's top 50 fast food chains earn $2 million or more per location--and some of the biggest names in food franchising are missing from the list.
In franchising, a successful franchisor doesn't necessarily translate into a successful store location. In fact, some of the nation's most recognizable franchise food chains are falling short when it comes to per store revenue, according to a list released by QSR Magazine.
Citing the QSR Magazine release, The Franchise Herald recently reported that just seven of the top 50 fast food franchises earn more than $2 million in per-store annual revenues. Franchises that made the list include:
- Chick-fil-A ($2.85M per store)
- Krispy Kreme Doughnuts ($2.57M per store)
- McDonald's ($2.5M per store)
- Panera Bread ($2.47M per store)
- Jason's Deli ($2.4M per store)
- Chipotle ($2.17M per store)
- Whataburger ($2.1M per store)
The $2 million revenue threshold may seem arbitrary. However, according to Forbes magazine contributor Carol Tice, a $1 million per-location threshold is a sign of profitability, since it takes at least that much revenue for franchisees to earn a profit.
The $2 million revenue threshold is a sign that a franchise is firing on all pistons. To earn $2 million in revenue, "you've got to have every element of your restaurant operation working perfectly: great, on-trend food, smart location selection, strong staff, effective marketing," Tice told The Franchise Herald.
Some of the big names missing from the $2 million list were Subway, Burger King and Starbuck's. Although Subway ranks second behind McDonald's in total sales, it only earns $400k per store. Likewise, Starbuck's ranks third in total sales and Burger King ranks fifth.
For would-be franchisees, before buying a franchise it's important to evaluate the financial performance of other franchise locations--including per-store revenues. Although the franchisor may be a leader in total sales, a large number of locations or other variables could significantly reduce the amount of revenue you can expect to yield from your franchise.
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