The term or idea of a “restaurant” has been around hundreds of years. They started out as simple tea houses or taverns, but when traveling became easier, people wanted a way to have a nice, home-cooked meal on the road instead of bringing their own food and attempting to cook a good meal along the way. This began the growth of all types of restaurants around the world. Italian, Chinese, Thai, Mexican, and eventually American restaurants could be found in any city. By the 1900s, traveling around the country or even across seas was no issue, and ways of refrigeration and preservation were becoming easier as well. I think these two things helped the idea of franchising grow. Families were beginning to bring their own lunches in coolers on road trips, so the need to stop at a restaurant for every meal was dying out. Plus, many people didn’t want to take the hour or so time out of their day to sit down at a restaurant and eat a full meal. Like I have stated in my past blog posts, in the 1950s, Ray Kroc came up with the idea of a fast and efficient type restaurant where people can buy their food quickly and return to their daily routine.
This idea of franchise restaurants caught on very fast; and the industry has profited ever since. Just like regular, sit-down restaurants, there are franchises that serve Italian, Mexican, American, and Chinese food so that they can relate to any culture around the world. Fast food restaurants first caught on during the Industrial Revolution. More people began working away from home, and that required them to find another way to eat lunch, or dinner on the way back home. For lunch, they didn’t have the option to take their time and return home for a meal, so street vendors, drive-in restaurants, and food stands became the new way to get a fulfilling meal during their lunch break. The new trend for our culture today is the necessity for people to obtain what they want as fast as possible. The invention of cell phones instead of land lines, laptops replacing desktop computers, and even the combination of internet on your cell phone are just some of the ways our society has changed. People want all information right at their fingertips, and this has transferred to the availability of food as well. In the future, I think that this trend will last a very long time, and the franchising industry will stay strong for many decades to come as well. So far, they seem to know exactly how to cater to their customers, so it will be interesting to see the ideas companies come up with in the future to improve the system even more.
Fast-food has even branched out to other areas. If you go to your local county fair, there are many food booths that are franchised out. For example, the Dippin’ Dots franchise has only been around for about 15 years, but already, they have been able to catch on to the public’s interest. Not to mention pretty much anyone loves to eat ice cream on a hot summer day at the fair. Another way franchise restaurants have expanded their business is by partnering with department or retail stores. Wal-Mart pairing up with McDonalds has been going on since the mid 1990s. Their main objective: if customers get hungry while shopping, or their children start to get fussy, all they have to do is walk over to McDonalds and buy a burger or Happy Meal. This keeps the customers in the store and makes it more convenient for them to finish their shopping (or buy more than they would if they had to leave for food). By 2007, there were about 700 McDonald’s restaurants in Wal-Mart stores and supercenters, and I have no doubt that this number has grown in the past three years. In 2008, an article was written about the two companies and how, despite the recession of the United States, Wal-Mart and McDonalds have not hurt financially. More specifically, in the Dow Jones stock index, there are thirty companies that make up this index. Wal-Mart and McDonalds were the only two that had an increase of stock price compared to 2007. One thing that both these companies have in common is their low prices. This can be seen in McDonalds with their Dollar menu and Wal-Mart with their “rollback savings”. Of course, during a recession, families look to save money more than when the economy is doing well. Therefore, they are more likely to shop at these types of companies. The success of their popularity impacted their growth as a company all around the world. In the past few years, Subway has also paired up with Wal-Mart stores around the United States. This could be partly because (as I have mentioned before) that customers are becoming more conscious of what they are eating and looking more towards healthy foods. This is just another way that franchise companies are making it easier for the consumer to find what it wants quickly and with little effort.
With the healthy trend exploding in the United States, as well as around the world, it is interesting how franchise restaurants alter their menus to keep up with the needs of their consumers. According to the National Center for Health Statistics, 66.5% of American adults are overweight or obese, and 19% of children are overweight. This is not a good statistic, and is also bad news for the majority of the fast food industry. People are becoming less inclined to “super-size” their meal, and are opting for water with their meal instead of soda. Therefore, a new challenge has presented itself to franchises. They need to come up with menu items that are still able to be prepared in a short amount of time, are reasonably in-expensive, and still an item that customers would want to buy. Subway restaurants have succeeded in providing menu items that are tasty, but are relatively healthy. For example, recently they have been promoting their 8 subs with 6 grams of fat or less option which gives customers a variety of low fat sandwiches to choose from. This option gives Subway an advantage over other fast-food restaurants because of their large number of healthy options, which in turn, increases their profit and allows them to expand and grow even more. Despite the fact that other franchise restaurants are trying to be healthier, for the past few decades, society has become used to thinking of McDonalds or Burger King as the place to go if you want a good burger or fries, not a nice salad or grease free sandwich. Breaking away from this label will be a challenge for many years because they have put in so much time and money to let consumers know what their most delicious and popular products are.
One of the issues with healthy, fresh food is that it can be a bit more expensive. I think this is another reason why the healthy menu items at McDonalds, Taco Time, etc., are not selling well. People come to those restaurants because in past visits, they know that their food is cheap. When looking at the menu and comparing the items, they are more likely to buy the cheaper item, which is usually more processed and not as healthy. At the newer fast food restaurants that are known for their healthier selection, customers know what to expect and won’t mind as much to spend a few more dollars. As this trend continues, I am curious as to how the various types of fast food restaurants will change their ad campaigns and menu to what the general public wants.
The future of franchises is a popular topic for economists, businessmen, and consumers. For the most part, any franchise restaurant in the United States that opens is likely to have a decent amount of business and will be profitable. I have already discussed why this is, because of their skills in fast, efficient, and dependable service. Will this success continue in the future? Or will some new way of finding a quick meal be invented, driving away the fast food franchise business? One source says, “Within a decade or less, franchising will comprise over 50% of the retail economy, will employ millions of people, and will enable hundreds of thousands to realize the American dream of successful business ownership.” The opportunity for more jobs is definitely a positive aspect for the future and could help get the United States out of the current recession. But are these the jobs we want the majority of our society to have? Optimistically, it is better than no jobs. With the current recession and layoffs, people are turning to the opportunity to open up their own restaurant because it has proven to be a thriving investment. Also, as the number of franchise owners increases, the amount of power they have increases as well. Currently, the overall franchisor has the majority of power in what the restaurants need to look like and what to serve as well as how much in fees the franchise owner needs to pay. Some predict that this balance might shift in the future to give more benefits to the franchise owner. As cities all over the world grow, this will also lead to growth in the fast food industry. China and the United States are two countries who are seeing major growth. The population is increasing, meaning there are more mouths to feed in a concentrated area. Because of this, I believe the future will consist of a lot growth in franchise restaurants, especially in these two countries.
Overall, I don’t think franchise restaurants will be going away anytime soon. This idea of “fast” food has impacted our society way too much, and I believe that now, we couldn’t live without it. The fact that chain restaurants can be found on pretty much every continent or country proves this point. As a whole, the industry is very profitable, even through times of bad economies and protests against the companies. The strength globally will help them grow even more in the future and keep customers coming to buy their food. In our lifetime, and probably our children’s lifetime, I am guessing they will still have the opportunity to buy the famous Happy Meal.
Sources:
Franchising
The History of Restaurants
Food Timeline
Dippin Dots
McDonald's, Walmart strengthening partnership
McDonalds and Walmart beating the recession
Walmart and Subway
Healthy Fast Food
Healthy Fast Food Blog
Future of Franchising
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