Are Chicken Restaurants Profitable?
Find out more about how much it will cost and what details you should consider when opening a chicken restaurant.
Fast food chicken franchises are a booming — and consistently growing — industry worth $55 billion in 2022. With a growth rate of over 9% each year between 2017 and 2022, it is clear that the market is strong and able to persist despite economic uncertainty, supply chain struggles and other market challenges.
Depending on which chicken restaurant model you choose to pursue, startup costs may vary, as will long-term support and results. Some chicken concepts require a negligible initial investment, sitting happily in the thousands of dollars range, and others can climb to require multi-million-dollar startup funds. Which is right for you will depend on the market you plan to enter, the business model that is most attractive to you, what level of overhead and ongoing operating costs you’re comfortable with and the level of support you will require as a business owner.
Why Should You Look At Buying a Chicken Franchise?
Above all else, the chicken franchise model will provide a wealth of education, support and brand awareness that is not easily accessible for those starting an independent business from the ground up. A franchise is often a favorable investment opportunity for newer entrepreneurs or those who have rich experience and are looking to add to a broad and varied investment portfolio.
What are the pros and cons of buying a chicken franchise?
One of the primary cons discussed among prospective franchisees is the supply chain. Depending on the offering of the chicken restaurant, supply chain challenges could arise. For example, if a concept is based primarily on the sale of chicken wings, chicken-related supply chain issues could create hiccups as the larger chicken production industry is not intently focused on the production of chicken wings specifically — they are often seen as more of a byproduct by producers. However, looking for a restaurant opportunity that is not as intently focused on a single cut of chicken, or one that has proven its ability to weather supply chain challenges, is an easy way to navigate this potential hurdle with confidence.
Another major consideration is the details of the franchise agreement. Some franchisees are hesitant to pay a franchise fee, ongoing marking costs or consistent royalties. While the financial aspect of the franchise model can be intimidating or off-putting to some investors, the cost does unlock resources that are unavailable to independent business owners.
Franchisees are granted access to an established brand, often with a loyal following, and a developed business model, often complete with support staff, training and ongoing education, marketing support, coaching and other resources that serve to boost the success of the business.
By working with a big-name franchise, local owners also gain access to proprietary recipes and economies of scale that are associated with bulk product and equipment purchases.
Are Chicken Franchise Businesses Profitable?
While franchisors cannot legally guarantee a certain level of sales or profits associated with their business models, many Franchise Disclosure Documents will contain an Item 19 that details average unit volumes and other financial representations that prospective franchisees can use to evaluate the potential performance of their business.
According to the Federal Trade Commission’s A Consumer’s Guide to Buying a Franchise, the many variables that can impact profitability, including costs, franchisor controls and contractual obligations, should be weighed when deciding whether you want to invest in a given franchise.
Franchisees who invest in well-established brands have often completed a validation process, discussed the brand and opportunity with existing franchisees and seen the longevity of the business model. In order to continue to grow a brand, both with consumers and through franchise expansion, it is crucial that individual units remain profitable and are able to reinvest, so a long track record speaks to the historical success of a brand.
How does product impact profitability?
The chicken space specifically presents lots of opportunity for prospective owners. Chicken is an in-demand staple, proven by a U.S. per capita chicken consumption of about 100 pounds in 2022. Better yet, the product is fairly versatile, with many chicken franchises offering chicken breasts, legs and wings that are baked, fried or grilled.
Having an in-demand product does not necessarily guarantee profitability, as the franchise owner must manage labor, product and overhead costs to ensure operating costs do not exceed what the business is bringing in in sales, but it does create an appealing opportunity. In a high-demand market like that of chicken restaurants, franchisees have access to a sizeable consumer base. By offering customizations such as the cut of chicken, varied preparation offerings and a range of flavors, owners can develop strong relationships with the guest and encourage repeat revenue, driving the likelihood of profitability.
With proper inventory management and the backing of a large franchisor’s supply chain connections, owners of chicken franchises are able to drive profitability by offering a product that is appealing to a wide audience.
Factors That Can Influence What a Franchisee Makes
Even with a strong business model in a high-demand segment, the outcomes of franchise ownership can be greatly varied. There are a range of factors, both within the franchisor’s system and the franchisee’s background, that should be considered when thinking about the potential success of a franchise business model.
The franchisee should consider what level of support they will receive. This is often greatly impacted by the size of the initial investment and ongoing costs, but the details of the available support will be outlined in the Franchise Agreement. However, a franchisee should look at these costs as a trade-off of sorts. While a given franchise may require a higher percentage of monthly revenue to be paid to the franchisor for national marketing efforts, this is an investment in the growth of the brand and will likely lead to increased brand awareness which will, in turn, strengthen the performance of the individual unit.
With a strong initial training program and ongoing education, support and operational guidance, the franchisor can make a big impact on the success of local franchisees. How can a franchisee impact their business?
Expertise of the Franchise Owner
The business acumen of a franchise owner plays a crucial role in the success of the business. While many experienced entrepreneurs or former executives will leverage franchising as an investment opportunity, it is not always necessary for a franchisee to come with decades of experience. Prior experience with financial services, marketing, customer service and other similar industries can provide a strong baseline upon which an owner can build.
Taking full advantage of the initial training, ongoing education and support, and any franchisee networks or mentorship relationships can equip an owner with the knowledge they need to succeed long-term.
Proper Inventory Management
The restaurant industry is notorious for especially thin margins, meaning it is crucial that a franchise owner appropriately manage their inventory. In addition to favorable supply chain connections through the franchisor, each local owner needs to properly monitor inventory levels and adjust when necessary.
The most straightforward way to achieve unit-level management is proper employee training on topics from stocking to food preparation. Ensuring that food items are properly received and stored can prevent loss from spoilage or contamination, and thorough training on food preparation can reduce the prevalence of inconsistent or accidentally increased portion sizes.
Ongoing monitoring of market trends and demand shifts that may be specific to local consumers empowers franchisees to adapt their supply orders beyond the standard issue guidance a franchisor may provide to further trim costs, only paying for what is truly necessary.
The Bottom Line
A chicken franchise can be a great investment opportunity for a myriad of reasons. The franchise model itself can save entrepreneurs money by providing the structure, processes, brand awareness and peer connection that can take more time and effort to develop when building a business from the ground up. As part of an expansive network, franchisees are positioned to take advantage of economies of scale while building something for themselves and their families.
While a franchisor will provide certain support resources and prescribe some marketing and operations approaches, all of which will be outlined in the Franchise Agreement, most franchisee/franchisor relationships truly function like a partnership. Ideally, a comfortable franchise relationship will allow the franchisee access to the support and expertise they need to succeed without imposing overbearing fees or restrictions on just how the business is run. This is, by and large, the case; according to Statista’s Franchising in the U.S., there are nearly 800,000 franchised establishments in the nation that create an economic output of $825.4 billion, indicating the strength and performance potential of the model.
All of this is true in the chicken franchise space, as well. Not only do chicken franchise owners receive the benefits associated with the franchise business model, they are also situated in a high-demand, ever-growing market. With a range of chicken franchise businesses available, each interested franchisee can evaluate the initial investment, ongoing fees, available support and possible revenues to determine which opportunity might be right for them.
Now you know how much it costs, let’s talk about how much you can make