The restaurant industry seems like a good investment for 2012; at least according to cumulative data compiled by Entrepreneur magazine.
The publication just released its 33rd annual Franchise 500, a list of the country's best franchised companies based on financial strength and stability, growth rate and size of the system. Quick-service, pizza and fast casual brands made up more than 20 percent of the list, including A&W Restaurants, which has been franchising since 1925, and newer companies such as Smashburger.
Other considerations for the ranking include the number of years a company has been in business, length of time it's been franchising, start up costs, litigation, percentage of terminations and whether or not the company provides financing. The factors were added into the Franchise 500 formula and then listed, in order, based on a cumulative score.
The full list can be viewed here. Below is a look at many of the restaurant brands being represented on this year's list:
No. 2, Subway: The Connecticut-based Subway chain recently became the largest QSR in the world and includes 35,500-plus units. It ranks second on the franchise list behind Hampton Hotels, and has a startup cost of $84.8K to $258.8K.
No. 6, McDonald's: The ubiquitous Golden Arches, a longtime top 10 franchisee, supports its operators through training, ongoing meetings, purchasing cooperatives, field operations/evaluations, co-op advertising, restaurant-specific support and more. Startup costs range between $1.07MM and $1.89MM.
No. 9, Pizza Hut: The chain, owned by parent company Yum! Brands, is growing aggressively throughout the world and enjoys "fine dining" status in China. Startup costs range between $295K to $2.15MM.
No. 10, Dunkin' Donuts: The newly IPO'd coffee/donut chain offers training, meetings, grand opening support, security/safety procedures, regional advertising support and more. Startup costs range from $368.9K and $1.74MM.
Other restaurants on the list and their rankings include:
- No. 17: Yum! Brands' KFC Corp.
- No. 20: Yum! Brands' Taco Bell Corp.
- No. 22: Jimmy John's Gourmet Sandwich Shops
- No. 23: Dairy Queen
- No. 27: Papa Murphy's take-and-bake pizza
- No. 31: Papa John's International Inc.
- No. 32: CKE Restaurants' Hardee's chain
- No. 34: Church's Chicken
- No. 47: CKE Restaurants' Carl's Jr. chain
- No. 48: Dunkin' Brands' Baskin-Robbins Co.
- No. 50: Cold Stone Creamery
- No. 52: Arby's Restaurant Group
- No. 58: Recently sold Long John Silver's Restaurants Inc.
- No. 62: Buffalo Wild Wings
- No. 70: Cinnabon
- No. 79: Hungry Howie's Pizza & Subs
- No. 80: Sonic Drive-In Restaurants
- No. 81: Jersey Mike's Subs
- No. 83: Culver Franchising System Inc.
- No. 88: Bojangles' Restaurants Inc.
- No. 89: Moe's Southwest Grill
- No. 90: Qdoba Mexican Grill
- No. 92: Wingstop Restaurants Inc.
- No. 93: Charley's Grilled Subs
- No. 96: Firehouse Subs
- No. 102: Auntie Anne's Hand-Rolled Soft Pretzels
- No. 108: Blimpie Subs and Salads
- No. 113: Marco's Franchising LLC
- No. 122: Smoothie King
- No. 124: Taco Time
- No. 126: Wetzel's Pretzels
- No. 132: Pita Pit Inc.
- No. 134: Chester's
- No. 136: Jet's Pizza
- No. 143: Nathan's Famous Inc.
- No. 148: Penn Stations East Coast Subs
- No. 151: Togo's Franchisor LLC
- No. 152: CiCi's Pizza
- No. 156: Rita's Italian Ice
- No. 162: Taco John's International Inc.
- No. 165: Great American Cookies
- No. 166: Great Harvest Franchising Inc.
- No. 172: Which Wich Superior Sandwiches
- No. 188: Villa Enterprises
- No. 190: Pizza Ranch
- No. 198: Checkers Drive-In Restaurants Inc.
- No. 199: Carvel
- No. 207: Yogurtland Franchising Inc.
- No. 212: Famous Dave's
- No. 227: The HoneyBaked Ham Co. & Café
- No. 235: Yogen Fruz frozen yogurt
- No. 238: Ben & Jerry's
- No. 242: Ledo Pizza System Inc.
- No. 245: Pretzelmaker
- No. 246: Recently sold A&W Restaurants Inc.
- No. 250: Donatos Pizza
- No. 253: Menchie's frozen yogurt
- No. 255: Straw Hat Pizza
- No. 259: Rocky Mountain Chocolate Factory
- No. 265: Smashburger Franchising LLC
- No. 268: Biggby Coffee
- No. 291: Fox's Pizza Den
- No. 292: Marble Slab Creamery, which recently combined with MaggieMoo's to form one concept
- No. 296: Philly Pretzel Factory
- No. 300: Zoup! Systems LLC
- No. 307: Freddy's Frozen Custard LLC
- No. 312: Capriotti's Sandwich Shop Inc.
- No. 319: MixStirs, smoothies, wraps and salads
- No. 331: Tasti D-Lite
- No. 332: Stevi B's Pizza
- No. 338: Hurricane Grill & Wings
- No. 345: Mountain Mudd Espresso
- No. 347: The Haagen-Dazs Shoppe Co. Inc.
- No. 350: Bruster's Real Ice Cream
- No. 357: Mooyah Franchise LLC
- No. 359: Orange Leaf Frozen Yogurt
- No. 365: Sub Zero Ice Cream
- No. 368: VooDoo BBQ & Grill
- No. 382: Maui Wowi Hawaiian Coffees & Smoothies
- No. 384: Cousins Subs
- No. 390: L&L Hawaiian Barbecue
- No. 409: Gigi's Cupcakes LLC
- No. 411: Boardwalk Fresh Burgers & Fries
- No. 420: Big Apple Bagels
- No. 423: Pizza Factory Inc.
- No. 424: Red Mango Franchising Co.
- No. 431: Port of Subs
- No. 439: Great Wraps sandwiches and subs
- No. 442: Elevation Burger
- No. 458: Golden Chick
- No. 460: Nestle Toll House Café by Chip
- No. 470: Figaro's Pizza
- No. 476: Nature's Table Café
- No. 477: The Great Steak & Potato Co.
- No. 479: The Human Bean Drive Thru
- No. 483: Larosa's Inc. pizza and Italian
- No. 484: Salsarita's Fresh Cantina
- No. 486: HuHot Mongolian Grill
- No. 489: The Steak Escape
Fastest-growing franchise concepts
Not only do restaurants make up a formidable chunk of the top ranked franchised businesses in the U.S., they also have a solid representation on Entrepreneur's list of fastest-growing franchises. The ranking is based on the number of new units added in the U.S. and Canada from 2010-2011.
Subway, ranked No. 3 last year, is ranked as the No. 2 fastest-growing franchise this year. The chain has been ranked in the top 3 since 2007.
Dunkin' Donuts, ranked No. 29 last year, is this year's No. 6, and for good reason. The Massachusetts-based chain is in the middle of an aggressive expansion plan, including west of the Mississippi and overseas.
Chester's quick-service chicken restaurant is this year's 7th fastest growing franchise system in the country. Last year, it ranked No. 11. It includes about 690 units with total investment costs of $6.14K to $344.5K.
Also included in the fastest-growing list are: Jimmy John's (11); Pizza Hut (13); Papa John's International (15); Taco Bell (20); McDonald's (27); Red Mango (29); Edible Arrangements International Inc. (31); Menchie's (33); Dairy Queen (39); Cinnabon (42); Buffalo Wild Wings (44); Papa Murphy's (46); Jersey's Mike's Subs (48); Auntie Anne's Hand-Rolled Soft Pretzels (51); Yogurtland (58); Marco's pizza and Smashburger (64, tied); Orange Leaf Frozen Yogurt (71); Firehouse Subs (74); Which Wich Superior Sandwiches (76); Charley's Grilled Subs and Yogen Fruz (79, tied); Jet's Pizza (82): Gigi's Cupcakes (87); Bojangles' Restaurants and Moe's Southwest Grill (101, tied).
Also of note: Yogurtland (No. 3), Menchie's (No. 9) and Smashburger (No. 10) were listed on the top 10 new franchisees list for 2012.
Read more about franchising.
Alicia Kelso has been a professional journalist for 15 years. Her work with QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.