Franchising Sector Analysis: Take Away Food

Franchising Sector Analysis: Take Away Food

Take-Away Food Sector remains as one of the most sought-after franchises, why are they so popular and if it is for everyone?

The concept of take-away (take-out) franchise began in United States, initially, this was only available from well known brands like Dominos, it was originally just pizza-oriented businesses, since the 1990s, the variety of take-away menus have expanded, and also in terms of choices for franchises.

The fundamental demand behind this growth was increasing number of families now rely on take-away as their means; there has been a drastic reduction in home cooking last 15 years; in fact, a recent study in Australia, which is also consistent with US and Asia; take-away means now account for over 50% of meals for average families, with some families now eat-out or take-out up to 80% of their meals. This trend is very positive for take-away franchises, and its variety has expanded to pizza, burgers to more healthy and international choices like Chinese Food, Sushi-take-away, Korean, Arabic Kebabs, healthy food, vegetarians, organic food.

The services have also been expanded and now include simple take-away counters to delivery services; as well as full-service restaurants.

Definition of Take-Away Business
A food take-out and delivery business is defined as a business where food is intended to be eaten off the premises. Food can either be taken “to go” by the consumer or delivered to the consumer’s home or place of choice.

Industry Background

Take out and delivery sales account for approximately 6% to 12 % of total sales in restaurant franchises in United States that primarily cater for on premises business but who have a take out and delivery section.

According to the National Restaurant Association in United States, nine in ten family-and casual-dining operators and three-quarters of fine-dining operators offer food for takeout.

A second survey completed by the National Restaurant Association indicated that 66% of quick service operators believed that food delivery would become more popular during 2009.

Take-out and delivery is an effective way for a restaurant franchise to increase sales. According to the National Restaurant Association’s 2009 Restaurant Industry Fact Sheet, 69% of adults said purchasing meals from take-out and delivery restaurants makes it easier for families with children to manage their day-to-day lives.

Domino’s Pizza, one of the leading delivery and take-out franchises, has experienced increased success due to the rise in popularity of food take-out and delivery.

Domino’s operates a worldwide network of nearly 9,000 franchised and company-owned stores and generated revenue of $1.37 billion last year. Net income as-reported was up 76.6% versus the prior year, 2008.*

Variety of take out and delivery restaurants

Take-out and delivery only

Certain establishments do not offer any sit-in facilities but cater entirely to consumers who want a food delivery or collection service.

Delivery has long been a major growth business for many restaurants, especially pizzerias, which dominate the delivered-food category. For more information on the pizza franchise industry please click here.

An advantage to this type of franchise is the lower start up costs which have a low initial investment cost, and can be set-up relatively quickly.

Full Service Restaurants

Another trend both in Australia and in North America, is to order takeaway from full service restaurant for pickup , as an alternative to the traditional take-away places that is often found in food court areas.

These franchises and businesses offer a full service dining area, a full menu and also a take away or delivery service.

The dishes are packaged in special containers designed to stay hot, hold their flavor, and travel well.

Catering

Many established restaurant franchises and businesses do not offer individual orders for delivery or take-out. Instead these establishments offer catering for parties generally over 8 people.

Catering is often a business that has been overlooked by many franchisees; and it is also a highly profitable opportunity with recurring income from corporate.

I have known a caf© near my office where eventually, catering accounted for 40% of its businesses; and the margin is also higher than take-away meals as you can pre-order larger quantities of ingredients at wholesale price.

Catering is usually very location-centric, if you are looking to open up a take-away franchise, make sure you do a comprehensive research on what businesses are around for you to offer catering services.

A Korean sushi takeaway place in a nearby school has set up in a small shopping center, and have been supplying sushi to school children and school staff on the weekly basis, the owner has told me that during school terms, these can add up to 90% of their businesses.

Delicatessen

Most delicatessens in the Australia have a sandwich menu, most of which are made to order behind the counter at the time of sale, to be consumed off the premises. They also sell cold cuts by weight and prepare party trays to be consumed off the premises. These franchises also offer catering services like sandwich platters, or mixed plates, some even offer fruit plates for businesses.

Drive-thrus

Customers are hungry for choice in where, when and how their food is cooked and served. Drive-thrus have experienced increased popularity due to the convenience and cost effectiveness that they offer the consumer. When consumers decide on which drive-thru to visit, the key factors that they take into consideration are speed, menu, price and location.

Drive-thrus, though, are not easy to find franchises as it often need higher investment capital to build the driveway, ordering system, and additional staff on 24 x 7 basis, which means additional rate for night-time staff, as well as security systems.

Demand Factors for Take-Away Franchises

Convenience and Variety of Choices

Consumers want the “eat out” experience of quality food but are saving money by eating food delivered to their home.

According to the market research firm NPD Group’s 2009 study A Look into the Future of Eating, the number of restaurant meals eaten at home is expected to grow by 20% in the next 10 years, with many expect perhaps up to 30% due to social changes, such as smaller families, young couples and double working parents.

The increase of at home leisure activities has been a key growth driver in the take-out and delivery franchise sector.

This market is largely being catered for via pizza home delivery franchises started by pizza delivers, but is now spreading to much more different choices. There is an increasing consumer demand for take-out prepared meals.

Technology and Innovation

The Internet & mobile phones offers restaurant franchises and businesses a new market in which to reach potential customers.

Increased trust in online purchasing and the introduction of new e-commerce platforms offers the benefit of convenience to consumers. An increasing number of online users in the US now order food online, and sometimes you can receive promotions from online specials.

It is predicted that the internet, interactive TV and text-messaging will eventually overtake telephone ordering of collection and home delivered foods. It is therefore important for a business to promote themselves online and through new media. Pizza Hut, has used a new smart-phone application in order to boost sales. The smart-phone application, which was released in July 2009, was responsible for $1 million in sales by the end of November 2009.