Fast food franchises are bit of the business paradox. The food they serve is heavily criticised and blamed for obesity, yet the success of the operations attracts potential investors. At the end, the fast food franchise will prevail. The need for indulgence, fun and the quick meal-fix will always exist in the ever busier life style. From business point of view, it is unlikely that the known fast food franchises will ever fail. However, being known and famous does come with the substantial price. Today, there are many types of fast food franchises which serve the market. Most concentrate around burger type meals. Others, offer donuts and even very healthy choices (Subway, Sushi Bars).
Running a fast food franchise is not a simple task.
The reason is in the timely operations expected from the fast food service.
In order to optimise the service time, you need to employ more people.
This, in turn, leads to high overhead costs and the demanding management of a larger personnel.
There are other options among fast food franchises which are less demanding. The healthier option, such as sushi franchise has its product already prepared and pre-packed. These outlets will concentrate on just selling and minor preparations. However, sushi bars do not attract big crowds the same way as the conventional fast food franchises.
Generally, you cannot make a mistake with McDonalds, KFC, Hungry Jack or Red Rooster. All these fast food franchises are established giants. However, you will need a substantial investment to cover initial fees and similar amount for startup and running operations. As the rule of thumb you should set aside as much money for the unforeseen problems as you are expected to pay for the initial fees. The rule of thumb can be somewhat relaxed for outlets which use minimal personnel. Thus, the donuts franchise or the sushi franchise may cost the same as the conventional fast food franchises but the operational cost is lower.
Franchisors seldom indicate the overall cost to purchase and run their outlets.
Partly, this is related to the franchisor's lack of knowledge about the costs involved; partly - the fast food franchise administration does not want to reveal the expenses for each branch.
You will need about $300K-$500K to purchase McDonalds or KFC.
In some cases the initial fees for McDonald outlets are as low as $200K.
However, the initial purchase fee can be misleading.
Fast food franchises depend heavily on the running costs. The unforeseen expenses, breakdown of the machines, servicing of the equipment, safety issues and wages are real cost inflators. Thus, another $300K-$500K is needed for operations. Hungry Jack is more honest about its pricing model. They insist on $1.3 million in fees and the security to borrow (or own) another $1.3 million to operate. Red Rooster costs about $500K. However, the operational costs can easily demand another 500K to succeed.
The donuts franchise and the sushi franchise are as expensive. For example Donut King costs $230K-$400K. However, the Donut King's unforeseen costs are mostly included in the initial fees. The sushi franchise, such as Hanakai Sushi Bar and Grill, requests initial fees as little as $25K. Nonetheless, the total investment for Hanakai can be as high as $600K.