Why Investing in Fast Food May Be a Good Thing
The concept of fast food may be a recent phenomenon but the hospitality industry has existed and thrived for hundreds of years. Since the earliest days of the Wild West, rapid urbanization, and resource exploitation, entrepreneurs around the world have dived into restaurant ownership. The food business derives much of its value from its proven ability to generate cash flow and increase income.
But what makes the fast food industry survive through thick and thin?
This brings us to the titular question, ‘why investing in fast food may be a good thing’. The following reasons are just a starting point. Any seasoned fast food entrepreneur can easily expand this list by another 20 or more.
The world’s obsession with fast food
Fast food has maintained a presence in every person’s life almost every day. In America alone, nearly a 1/4th of the adult population is said to eat fast food every day. The burgeoning size of the fast food industry registers year on year growth in excess of 8.9% and, at the time of writing, was valued at a whopping $278.6 billion in terms of market size.
The total market size of the world’s fast food industry is valued at $647.7 billion – and that was just in 2019.
These numbers are unprecedented and make it abundantly clear that people aren’t getting tired of fast food any time soon.
Fast food chains can adapt and improve
The only ‘real’ threat to fast food chains has been the recent rise of health consumerism as foodies around the world seek healthier alternatives to food. Many fast food chains have capitalized on this trend and revamped their menu to reflect health and sustainability.
Case in point would be Subway’s meteoric rise as a dominant sub-sandwich chain because of how the brand framed itself as a healthier option to customers. At the time of writing, the franchise has annual revenues of over $10.4 billion. Granted Subway has had its fair share of ups and downs, but it’s still going strong.
This proves that whether it’s technological innovation, a global pandemic, or disastrous weather events – fast food chains can survive through the worst of it all and generate a reliable cash income come what may.
There is always a need for fast food
Even health-conscious consumers cave in and indulge in fast food every now and then. We all have a craving for pizzas and burgers at some point, whether it’s for a family treat on the weekend or a quick lunch during a work break.
Sure you may be wondering – isn’t this market oversaturated? The answer depends on how the brand markets itself. Brands that have maintained a consistent presence through carefully optimized advertisement strategies have always come out on top. You can start investing in any proven fast food franchise that is popular in your area and start generating cash flow in no time.
Fast food is just convenient
Besides being a guilty pleasure for millions of foodies, fast food is convenient to eat. For example, most meals at Wendy’s can be eaten with just one’s hands – no need to bring cutlery. This allows the meals to be eaten anywhere and at any time. Studies show that nearly 1 in 5 fast food meals are eaten inside cars – you can’t do that with traditional food.
The fast food market is partly driven by college students who find it hard to find the time to cook meals due to their busy schedules. Studies have shown that more than 20% of college students rely on fast food every day with nearly 50% of students buying at least 3 fast food meals every week.
High risk comes with high returns
Fast food investment is often associated with a higher risk in comparison to other asset classes. This is where the right fast food chain and asset management experience comes into play, where knowledge of both the food industry and investment strategies are determining factors in the success or failure of a fast food
If you’re an expert in fast food investment, you can greatly reduce the risk of your investment while also working on optimizing the business. It definitely helps to be experienced in both the hospitality industry and investment instruments to maximize your chances of success.
The economy will steadily grow in the next several years
The pandemic may have rocked the global economy but experts agree that there won’t be a recession, nor would there be an economic boom like the post-World War II era. This doesn’t mean that growth will come to a grinding halt either. The post-pandemic period is a good time as any to make investments, especially in the fast food industry.
For the most part, it looks like the world’s economy will continue to be stable for the next several years without any considerable shakeups like the ones we’ve seen recently.
Your fast food investment is likely to maintain its growth without any major setbacks, which should only serve to increase your confidence in the investment.
The wellness business is booming… Fast food is capitalizing on it
As mentioned earlier, many people in 2021 will continue to be conscious of their physical health. They will pay more attention to what they eat and where the ingredients for the food come from.
Consumers are more aware of what they’re ingesting, what ingredients are harmful to them, and how livestock are treated. Whether you run a fast food restaurant on your own or run a franchise, you can offer local farm-to-table food options – many smaller fast food restaurants have decided to do this.
If you decide to invest in a fast food franchise, make sure to study their policies on sustainability and supply chain. This is especially true if your local base heavily cares about the traceability of their food.
It’s also worth noting that not all consumers care about ‘healthy’ food alternatives, so keep that in mind, too. Some foodies want a traditional burger with bacon and cheese, while others will opt for non-GMO organic salads made of locally sourced veggies – you can cater to both using a carefully designed food menu.
Learning about your consumer base will go a long way in helping you choose a restaurant franchise that caters to their needs.
The world population is expanding
A quick look at the world population clock shows we have more than 7.9 billion people… and counting. The United States has 328 million people (2019 estimate), and they love fast food. The population continues to grow and that spells opportunity for any fast food investor.
Seniors and Baby Boomers who are reaching the twilight years of their life and reaching retirement continue to have a massive influence on the economy. They likely don’t have the time to cook meals.
The millennial generation is maturing and reaching the pinnacle of their purchasing power. With so many different segments of the market, there will be a demand for fast food products.
The best part about fast food investment is that you can cater to different diet types and themes. The rise of one trend doesn’t have to mean the death of another. Trends come and go – it’s just a matter of surviving until the next big trend comes.
The bottom line is that people don’t like cooking at home and if your fast food restaurant can provide them with a quick, healthy, and delicious meal, they will spend their money at your establishment. As a matter of fact, many Americans are more likely to spend money on eating out than having to buy groceries every week.
Fast food franchises are great low-cost, low-risk investment options
It takes time to grow a brand, unless your marketing campaign goes viral somehow. This is why most restaurateurs are opting for fast food franchises because they get all the brand power from the get-go. There are many popular fast food franchises like Chick-fil-A and Taco Bell with strong brand strategies that foodies can recognize right away.
By investing in a fast food franchise, you get the benefit of sharing the same brand. And if you open up multiple units of the same fast food franchise in one area, you can establish your own little business empire.
In fact, most franchise units tend to be multi-unit franchises. Owners of these business units can benefit from multiple streams of revenue at the same time. And if one unit is going through a slowdown, at least they can rely on income from the other unit.
From this point on, you can simply hire general managers to oversee the day to day operations of the franchise and you’re good to go. This can free the business owner to focus on business growth, franchise strategies, and managing all of the other sister units in the area.
There are many reasons to invest in a fast food restaurant or franchise. Anyone can start one as long as they keep up with regulations in their area. As a restaurateur, it’s important to recognize your reasons for restaurant ownership – as this will drive your decision making, business plan, and branding decisions for years to come.
Finally, do keep in mind that clients are the lifeblood of each and every fast food restaurant and they should be satisfied with the products and services.