Fortunes can be made, and lost, in fast food. Just look at the billionaires behind such well-known brands as Jimmy John’s (Jimmy John Liautaud), Jersey Mike’s (Peter Cancro), In ‘N Out (Lynsi Snyder), Panda Express (the Cherngs) Chick-fil-A’s Cathy family and plenty of others. It’s not only founders and their families who can cash in. Thousands of people nationwide franchise these brands in hopes of making good money. Altogether there are more than 190,000 franchised restaurants in the US, according to an annual report from the International Franchise Association, that brought in roughly $289 billion last year and employ more than three million people.
While Americans have grabbed food at many of these brands, dozens of which are household names, their finances are surprisingly opaque. That’s true despite the fact that each one has to provide a franchise disclosure document showing information such as the fees, relationship with the brand and a range of potential costs. As part of Forbes’ reporting on Jersey Mike’s for a recent cover story, reporters dug into the numbers of several competitors and other fast-growing chains. One question we set out to answer was just how much money an individual franchisee could make. It turned out to be a very difficult task.
So we focused instead on four of the fastest growing fast food franchises on consulting firm Technomic’s list of the nation’s top 100 restaurant chains. One reached public markets almost entirely on chicken wings alone. Another is a sandwich chain that, even as it grows, tries to recreate the mom-and-pop deli feel from the Jersey Shore, and a third makes smoothies of all sorts of flavors. The last is a drive-through coffee chain that’s a direct competitor to Dutch Bros, which is also fast growing but isn’t franchising its brand right now. All have their strengths and weaknesses. Read on for a peek into the complex world of franchise finances.
Wingstop
Founded in 1994 as a buffalo-style chicken wing restaurant in Garland, Texas, Wingstop served its one billionth wing in 2002. A year later, the cofounders passed it off to Gemini Investors, who turned around and sold it to Atlanta-based private equity firm Roark Capital in 2010. The PE firm, which owns more than a dozen restaurant brands including Arby’s, Dunkin’ and Buffalo Wild Wings, took it public on Nasdaq in 2015 and cashed out entirely a year later.
The ownership changes of the wing chain — best known for its flavors like Lemon Pepper and Hot Honey Rub — didn’t slow it down. It remains one of the fastest-growing restaurant concepts and has some of the lowest labor costs in the sector, according to estimates from Jim Salera, a food-and-beverage analyst with investment banking firm Stephens, who calls it “best-in-class” due to how it runs efficiently with a relatively small number of employees. Based on Forbes’ own analysis, it has an estimated net margin of 17%. Our estimates also show franchisees might be able to break even in roughly two years or so. Fun factoid: rapper Rick Ross is a franchisee and reportedly owns more than 20 stores.
Scooter’s Coffee
Married couple Don and Linda Eckles opened their first coffee drive-through in 1989 in Bellevue, Nebraska. Today, Scooter’s Coffee — known for its “buttery-smooth,” 63 grams of sugar-filled Carmelicious drink — has 750 kiosks across the U.S. While it costs anywhere from $894,500 to $1,393,000 to open, it charges 8% a year in fees, less than many rivals. Also its 28% annual growth rate over the past five years makes it the fastest-growing quick-service franchise in America. With territories still available in dozens of states, prospective owners with net worths of roughly a million could get the jolt they’re looking for from this brand.
“There is no doubt that of the segments that are really moving, in terms of unit growth and interest in the restaurant world, coffee is near or at the top of the list,” John Gordon, the founding principal at Pacific Management Consulting Group, said.
Jersey Mike’s
Peter Cancro, the owner of Jersey Mike’s, started working part-time at a sandwich shop in his hometown of Point Pleasant, NJ at age 14. When the owner put it up for sale three years later, Cancro, then 17, got one of his football coaches, also a VP at a local bank, to lend him $125,000 at 10%. Today the chain, which is still based on the Jersey Shore, has over $3.3 billion in systemwide revenue from 2,800 locations and has grown roughly 20% a year for the past five years. That’s partly thanks to its obsessive training, hefty investments and a national ad campaign featuring fellow Jersey native Danny DeVito. As for potential franchisees, keep this in mind: according to the company, only 1% of applicants get to open a location, despite the fact that the initial investment is a relatively modest $500,000. If true, that means it’s easier to get into Harvard than to be accepted as the next Jersey Mike’s franchisee. Still, the initial investment is smaller, and the brand is growing at a higher five-year pace than many others.
Tropical Smoothie Cafe
Born on a beach in Destin, Florida in 1997, Tropical Smoothie Cafe was founded by Eric Jenrich and David Waler in 1997. They sold a controlling interest in the brand in 2012 and cashed out entirely in 2020. The smoothie and sandwich chain, which now has more than 1,400 locations in 44 states, making such blends as its Island Green smoothie (a mix of spinach, kale, mango, pineapple and banana) and the Bahama Mama (blended strawberries, pineapple, coconut and white chocolate), reported 12 consecutive years of same-store sales growth through 2023. Blackstone acquired the fast-growing brand, whose slogan is “you’re on Tropic Time,” in June 2024.
With additional reporting by Jemima McEvoy.
