In a report released Wednesday, Market research firm Technavio projects the worldwide smoothies market will grow $10.14 billion from 2020-2024. The company indicated the industry will see a compound annual growth rate of over 9% during the four-year period. The strong forecasts beg the question is now the time for a smoothie investment?
The smoothies market has seen significant growth in the U.S. over the past five years. According to market research firm IBISWorld, the U.S. Juice & Smoothie Bars segment of the market is currently worth $2.6 Billion alone. The segment saw a 1.5% annualized growth rate from 2015-2020. IBISWorld estimates the Juice & Smoothie Bars segment will grow 2.3% in the U.S. in 2020.
What’s Impacting the Market?
Market Drivers
Millennials are gaining more disposable income and making up a greater portion of food and beverage consumers. The generation has an affinity for healthy living, with 53% of millennials stating they are committed to organic foods and products. Accordingly, this implies a more health conscious millennial buyer across the functional food market. Notably, Millennials buying power is slated to reach $1 trillion this year.
The generational shift coupled with the adoption of health-conscious living across the globe is fueling the market’s rapid pace. Consumers are increasingly opting for healthy and functional food and beverage products. This is especially true of products rich in vitamins, proteins, and active digestive ingredients such as prebiotics and probiotics. Smoothies are made primarily from fruits and vegetables and provide essential nutrients, vitamins, and trace elements filling this need.
In addition, Consumers’ recent digestive health awareness has increased demand for smoothies. Smoothies made of yogurt and milk are also gaining popularity due to their probiotic properties, which help detox and cleanse the body.
Moreover, Consumers often view smoothies as a good substitutes for full meals given the assortment of vitamins and nutrients they contain. Doctors, trainers, and fitness professionals often recommend the drinks for those looking to lose weight.
Market Impediments
The market is not without its faults. Smoothie businesses tend to price their products higher than competitor beverages (soft drinks, juices, etc.) or substitute health food products. The higher price point decreases accessibility to some market demographics. Moreover, many smoothie outlets add more sugar to their products to enhance flavor, which decreases health benefits. In doing so, many smoothie businesses fail to capture health-conscious consumers. These factors hinder market growth.
While market data suggests a large global landscape, it is important to keep in mind the data is comprised of several segments. Most notably, it includes both packaged consumer product goods and goods sold from retail outlets. Although the market is sizable and growing, franchisors and franchisees will continue to compete with large conglomerates for marketshare.
Who are the Major Players?
The noteworthy players operating the global smoothie market include: PepsiCo Inc. (US), The Coca-Cola Co. (US), Tropical Smoothie Cafe LLC (US), Suja Life LLC (US), Innocent Drinks (UK), MTY Food Group Inc. (Canada), Bolthouse Farms Inc. (US), Jamba Juice Company (US), Boost Juice (Australia), Tropical Smoothie Cafe (US), Smoothie King (US), Barfresh Food Group (US), and Crussh (Australia).
Summary: Chick Fil-A is a safe bet for a restaurant franchise. The low starting cost makes this one of the most sought-after franchises for first-time owners.
Summary: Burger King is a tried and true franchise with worldwide appeal and recognition. The high starting cost can turn away some prospective franchise buyers, however, the payout after 5 years is worth the investment.
Jersey Mike’s announced a new catering program this week that provides customers with a more secure meal option for gatherings. The program offers contact-less choices for guests that include:
· Subs By The Box: Features individually wrapped and labeled subs. Each box feeds 12 people. The box includes four sub varieties, prepared the sub shop’s iconic “Mike’s Way.” (onions, lettuce, tomatoes, “the juice” and spices).
· Individual Lunch Boxes: Perfect for grab and go. Lunch boxes come with a choice of two sub sizes (regular or mini), with sub sandwiches prepared Mike’s Way. Each box includes a bag of chips and a fresh-baked cookie. A 20 oz. bottled drink can be added.
Cookie and brownie platters are also available.
“Although planned before the pandemic, our updated catering program addresses the need for individually wrapped meal options requested by so many of our customers,” said Rich Hope, Chief Marketing Officer, Jersey Mike’s Franchise Systems, Inc. “Demand right now is for catering options for small gatherings as well as for feeding essential workers.”
Jersey Mike’s also using the introduction to hint at a new contemporary design launching in outlets nationwide. The graphics on the catering boxes mirror the the new store design.
During the pandemic, franchise owners across the country have donated millions of sub sandwiches to healthcare workers, seniors, and children. Jersey Mike’s also donated more than $2 million to Feeding America and $1 million to Aaron Judge’s ALL RISE Foundation.
About Jersey Mike’s
Jersey Mike’s, a fast-casual sub sandwich franchise with more than 2,500 locations open and under development nationwide, believes that making a sub sandwich and making a difference can be one and the same. Voted America’s Favorite Sandwich Brand in Market Force Information’s 2019 QSR study, Jersey Mike’s offers A Sub Above®, serving authentic fresh sliced subs on freshly baked bread – the same recipe it started with in 1956 – and is passionate about giving back to its local communities. (Founder and CEO Peter Cancro shares company history.) For more information, please visit www.jerseymikes.com or follow us on Facebook (facebook.com/jerseymikes), Instagram (instagram.com/jerseymikes) and Twitter (twitter.com/jerseymikes).
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With over 36,000 stores and counting, McDonald’s maintains a strong presence nationally and worldwide. Ever thought about owning one and perhaps wondering how much the McDonald’s franchise cost is? Check out how you can own a McDonald’s franchise and how much you should prepare if you’ll decide to get one.
McDonald’s Store Franchise and Market
Before the world was introduced to the famous McDonald’s golden arches, The McDonald brothers (Dick and Mac) started their venture as a drive-in restaurant in the late 1940s. As their success flourished, they franchised their drive-in to nine locations.
When Ray Kroc came into the picture, he saw the restaurant’s potential. So, he became the brothers’ franchising agent, and by 1955, he established his first McDonald’s in Des Plaines, Illinois. This store followed the redesign integrating the golden arches.
McDonald’s then started its international operations back in the ‘60s when the franchises opened in Canada and Puerto Rico. Since then, more franchises have opened globally, with franchises available in countries like the United Kingdom, Philippines, Australia, and Japan. Thus, McDonald’s has become a notable global brand.
The fast-food chain faces stiff competition from local and national quick-service restaurants (QSR) and other foodservice businesses. KFC, Wendy’s, and Burger King are its biggest competitors nationally and globally. Still, McDonald’s maintains high rankings in different company or brand lists.
QSR Magazine lists McDonald’s at the top of their rankings. On the Forbes 2020 Global 2000, McDonald’s snags the 209th spot. In 2019, McDonald’s reigned over the Franchise 500 list. However, Dunkin’ and Taco Bell overtook the fast-food chain in the 2020 ranking, dropping to number 3. On the other hand, Interbrand lists the QSR at number 9, the only fast-food chain making it to the top 10.
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How Much Does a McDonald’s Franchise Cost?
Based on the McDonald’s Franchise Disclosure Document, you should have a total investment starting at $1,314,500. It can go upwards to $2,306,500. You’ll also have to pay a franchising fee of $45,000.
According to McDonald’s, they advise you have at least $500,000 non-borrowed personal resources to qualify for a franchise. Plus, McDonald’s requires you to pay an initial down payment of 40% (of total cost) for a new location or 25% (of total cost) for an existing location.
Below is the table that breaks down the initial investment costs.
Initial Cost Breakdown
Name of Fee
Low
High
Initial Franchise Fee
$0
$45,000
Real Estate and Building – 3 months’ rent
Base Rent: $0Percentage Rent: 0%
Base Rent: $229,000Percentage Rent: 28%
Signs, Seating, Equipment, and Décor
$325,000
$1,550,000
Opening Inventory
$10,000
$35,000
Miscellaneous Opening Expenses
$46,500
$56,500
Travel and Living Expenses while Training
$3,000
$36,000
Additional Funds – 3 months
$80,000
$355,000
ESTIMATED TOTAL*
$464,500
$2,306,500
Ongoing Cost Breakdown
Aside from the initial McDonald’s franchise cost, you have to pay a 4% service fee and rent. Plus, you’ll also have to take note of annual fees in the POS and other management software applications.
Check the table below for the ongoing cost breakdown for a McDonald’s franchise.
$1,000 one-time licensing fee; $1,000 annual fee (for kiosk only restaurants without outdoor digital menu boards, the licensing fee, and annual fees are each reduced to $500).
Kiosk Software – (McD Corp)
$1,500 one-time licensing fee; $350 annual fee.
How Do I Start a McDonald’s Store Franchise?
To start the McDonald’s franchise, you need to ensure that you have (more than) enough of the initial investment required by McDonald’s. If you have the cash to start the franchise, you can fill out and submit their free form online on their website. Otherwise, download the form and send it via email or fax. By then, McDonald’s will have to undergo an interview and an extensive 18-month long training process, if you qualify.
Now that you have an overview of the McDonald’s franchise cost and other requirements, it’s time you decide if owning a McDonald’s would become a good fit for you.
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