Is The Food Franchise Dam About To Break?

I’m going to say something that might make some franchisors and franchisees in food-service businesses uncomfortable.

I’m worried about food franchises.

Not mildly concerned. I’m actually worried. A lot.

Here’s why.

Why I’m Worried About Food Franchises

Food costs for consumers are brutal right now.

The “convenience” argument for grabbing prepared food used to be a slam dunk. Save time. Grab and go. Easy.

But when a family of four is staring at a $60 fast-casual tab, convenience stops being the deciding factor. Price wins. And right now, price is killing the impulse. As it should.

Note: As of this writing, gas is at or over $5 a gallon.

Not only does that impact where consumers are going to spend their money, but $6 a gallon diesel fuel that truckers need to deliver food to food franchise businesses like Subway will force higher prices.

There are major employee shortages in food franchises.

There are critical employment issues in food franchising.

Bluntly, this generation of teenagers, broadly speaking, isn’t showing up the way prior generations did.

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In my experience, working in junior high school and high school used to be a rite of passage.

Heck, I had my first job (as a dishwasher in a Chinese restaurant) when I was 15. And I haven’t stopped working since.

Did I like it?

Sometimes. But it built character. It built work ethic. And it provided freedom and gas money. But something has shifted. I don’t know exactly what. But I see the results.

And even when food franchisees do manage to hire someone? That person often “tries it out” for a week or two. Then quits. No notice. No explanation. Just gone.

Turnover in food service was always high. Now it’s a different animal entirely. Ask any restaurant owner or manager.

Then there’s the cost side of the equation. This makes me worry about today’s food franchises.

Ingredient costs keep climbing. The conflict involving Iran is pushing food input costs higher. Franchisees are getting squeezed from both ends. Customers spending less. Costs going up. Margins shrinking.

That’s not a business problem. That’s a survival problem. And I especially feel bad for the folks who plucked down hundreds of thousands of dollars to take their shot at The American Dream.

What Happens Next in Food Franchising?

My fear is that the dam breaks. Not industry-wide, not all at once.

But franchisees in specific food niches and specific geographic markets are going to have to make hard choices. Scale back hours. Close locations. Walk away entirely.

My point?

We can hang out on LinkedIn and like me, see most of the people there pretend that inflation and political/world events aren’t factors. Like them, you can hope for the best and keep your head down.

But that’s not a strategy. That’s denial. I see it every day. And it’s getting old.

I mean, what’s wrong with stating there’s a problem?

Here’s What I’d Ask the People in the Room

Do food franchisors have a realistic contingency plan for franchisees who are genuinely struggling? Not platitudes. Actual support.

Are there food franchise models quietly outperforming right now, and if so, why? And who are they?

What adjustments, operational or otherwise, are actually moving the needle for franchisees in high-cost markets?

With those things in mind, I don’t have a clean answer. I wish I did.

But I know this: ignoring the warning signs has never once made them go away.

What are your thoughts? If you’re in the food franchise space, I want to hear what you’re seeing on the ground.

Drop me an email: Joel@thefranchiseking.com