Investing in cheap restaurant franchises offers a financially viable option for entrepreneurs. These franchises entail lower total initial investment costs and reduced operational costs, paving a practical pathway for individuals entering the competitive restaurant industry.
Also, the affordability factor associated with these franchises is a key driver, making them an attractive option for aspiring franchise owners to venture into the dynamic realm of food service.
In this blog, we will introduce you to 10 cheap restaurant franchises that are affordable to start, providing valuable insights for individuals considering entry into this exciting and lucrative market.
Top 10 Cheap Restaurant Franchises
Almost 4% of small businesses in the United States are franchises. Therefore, considering franchise opportunities within the affordable restaurant sector might be a practical choice.
These cheap restaurant ideas offer a relatively accessible entry into the industry without avoiding the hurdles of launching a business from scratch.
Now, let’s take a look at each cheap restaurant franchise.
1. Submarine Sandwich Shops - one of the affordable restaurant franchises
Submarine sandwich shops, which also go by the names of sub shops, hoagie shops, or grinder shops, are renowned for being affordable restaurant franchises.
Sub sandwiches are a popular and convenient food option, appealing to a wide range of demographics, and often result in repeat customers, thereby creating a reliable income stream.
Opening this franchise requires fewer employees than full-service restaurants, which could potentially reduce payroll costs. Additionally, the total initial investment ranges may be lower, but the royalty fee typically ranges from 4% to 12% of gross sales or more depending on the franchise brands.
That said, submarine sandwich shops are considered a viable option for potential franchise owners, and here are the other reasons why:
Reasons why sub shops are affordable franchises:
- Relatively low start-up costs: Compared to other restaurant concepts, subshops typically require less initial investment in equipment, furniture, and build-out.
- Simple menu: Most subshops offer a focused menu with basic ingredients, reducing food cost complexity and inventory management needs.
- Standardized operations: Franchise systems often provide standardized recipes, procedures, and training, allowing for efficient operation and minimal waste.
- Smaller space requirements: Subshops generally require less space compared to full-service restaurants, impacting rent and utility costs.
- High-profit margins: Subsandwiches can offer high-profit margins due to the relatively low cost of ingredients compared to the selling price.
- Scalability: The franchise model allows for easy expansion and potential for multi-unit ownership, increasing profitability.
2. Ice Cream Parlors
This franchise is in high demand and the key points discussed below support its affordability.
Ice cream shops sell a variety of flavors in cones or cups, some offering gelato and sorbet. In the US, George Washington and Thomas Jefferson popularized “ice cream,” the first American ice cream parlor opened in New York City in 1776.
On the other hand, the ice cream market shows a promising future with increased demand for premium varieties. In this situation, significant players adopting trends like:
- frozen treats
- mobile vending
- and expanding pop-up and seasonal shops.
Furthermore, the ability of ice cream shops to operate efficiently in smaller spaces enhances their cost-effectiveness for franchising compared to larger restaurant models.
Various reasons contribute to this situation, such as:
Low Initial Investment
Ice cream franchises offer a cost-effective venture with minimal branding needs; introducing a popular product in a new location requires a relatively lower initial investment.
Flexible Business Formats
Ice cream businesses have different types, from small take-out spots to sit-down restaurants and specialized parlors. Thus, this flexibility helps franchisees adjust their model based on audience, location, costs, and customer experience preferences.
Operational Efficiency in Smaller Spaces
Ice cream shops operate efficiently in smaller spaces, reducing overhead costs compared to full-service restaurants. This size flexibility enhances potential profitability and ease of management for franchisees.
So, for individuals aspiring to recreate with the new generation, launching an ice cream shop presents the ideal opportunity.
3. Coffee Shops
Let’s delve into the details of this franchise, affirming its affordability:
Coffeehouses serve a range of coffee options, non-caffeinated drinks, and food. Moreover, they originated from the Ottoman Turks in 1475 with Kiva Han, where women could seek divorce if their husbands didn’t provide daily coffee.
Apart from that, English coffee shops were called “penny universities” due to their affordability and inclusivity. They are growing in semi-urban and urban areas due to the demand for modern cafes and higher incomes among young consumers.
So why coffee shops are often seen as an affordable franchise option, consider the following factors.
Affordable Coffee Shop Franchise Opportunities
Coffee shop franchises offer different investment levels, allowing franchisees to choose a suitable starting point. Additionally, some require higher initial investments, while others start at just a hundred thousand dollars.
Cost-Effective Ongoing Expenses
Apart from the starting investment, ongoing expenses such as royalties and marketing are crucial for franchise owners. However, specific coffee shop franchises excel by providing minimal or zero ongoing costs, ensuring better long-term financial viability.
Budget-Friendly Cafe
The food and beverage industry provides diverse cafes, like drive-thrus, food trucks, or smaller spaces, with lower costs than standalone establishments.
In detail, this variety in cafe formats lets entrepreneurs select a cafe within their budget, expanding accessibility to coffee shop franchises for more investors.
4. Pizza Chain- one of the cheap restaurant franchises
Pizza chains are indeed considered one of the more affordable restaurant franchises to own, offering several potential benefits for aspiring entrepreneurs. Here are some key reasons why:
Lower Startup Costs:
Pizza chains often follow a standardized model, which simplifies their equipment requirements compared to full-service restaurants. By focusing primarily on pizzas and a few side dishes, they can easily manage their inventory and reduce purchasing costs.
Furthermore, many pizza chains operate efficiently within a smaller space, minimizing their rent and utility expenses.
Streamlined Operations:
Consistent quality and reduced preparation time and waste are achieved through the use of standardized recipes and pre-portioned ingredients. Franchise systems usually offer comprehensive training programs for both franchisees and staff, ensuring efficient operations and strict adherence to brand standards.
Preparing and baking pizzas is often a straightforward and efficient process, allowing for simplified production.
Increased Efficiency:
The pizza business is a lucrative one with high-profit margins. The cost of ingredients is relatively low compared to the selling price.
Moreover, pizzas are fast and convenient, making them an ideal choice for takeout and delivery customers. The quick preparation process ensures that customers are served promptly.
Furthermore, the franchise model is scalable, which means easy expansion through multi-unit ownership, leading to increased potential profitability.
5. Donut Shops – among the inexpensive restaurant franchises
Donut shops can be highly profitable due to the low cost of ingredients compared to the selling price. Established franchises benefit from existing brand recognition, which can reduce marketing expenses compared to launching a new brand.
As market demand grows, businesses expand their menu offerings to meet diverse customer expectations and regulatory standards.
In 2022, the U.S. doughnut store sector exceeded $7.3 billion, surpassing the previous year’s $7.26 billion, offering a profitable and budget-friendly franchise opportunity.
Donut shops indeed rank among the inexpensive restaurant franchises due to their low start-up costs.
Compared to full-service restaurants, donut shops require less specialized equipment, focusing primarily on fryers, ovens, and display cases.
Their core business revolves around donuts, with additional offerings like coffee and breakfast items often pre-made or readily available, simplifying inventory management.
Moreover, these franchise systems typically operate efficiently within a smaller space, minimizing rent and utility expenses.
6. Burger
Determining the absolute “cheapest” burger franchise is difficult as franchise fees and costs can vary significantly depending on the specific brand, location, and even individual franchise agreements.
However, several factors can generally contribute to a more affordable burger franchise model:
Lower Initial Investment Costs
Opt for franchises with a simple menu, requiring less equipment and inventory. Choose smaller store footprints, consider drive-thru or delivery options, and limit dine-in seating.
Franchise Selection
Newer or less established burger franchises often have lower upfront fees and royalties. However, this comes with the risk of building local brand recognition. Regional franchises with a strong local presence may offer lower fees and existing regional awareness.
Location Selection
Suburban or non-metropolitan areas generally have a lower franchise fee and operating costs, though they may attract less foot traffic. Consider the trade-off between costs and potential revenue when selecting franchise locations.
7. Taco – part of the cheap restaurant franchises
Tacos are a beloved Mexican dish, consisting of a small tortilla (either corn or wheat), filled with a variety of seasoned ingredients and toppings. This handheld delight is perfect for a meal or a quick snack.
Becoming a taco franchisee requires meeting minimum net worth and liquid asset requirements. However, this opportunity is still an affordable option due to several factors:
Simpler Menu
Taco menus typically focus on a smaller set of core ingredients and offer less variety compared to full-service restaurants.
This simplifies inventory management, reduces ingredient costs, and potentially minimizes equipment needs.
Smaller Footprint
Taco franchises often operate efficiently within a smaller space, lowering rent and utility expenses. This can be particularly true for fast-casual taco chains.
Standardized Operations
Established taco franchises typically have standardized recipes, processes, and training procedures, which help streamline operations, minimize waste, and potentially reduce labor costs.
If you’re considering franchising a taco business, here are a few additional points to consider:
8. Chicken restaurant
Also, based on Market Research Future, a $9.85 billion valuation for the take-out fried chicken market by 2030, indicates a consistent 5.50% Compound Annual Growth Rate (CAGR) and a growing preference for diverse culinary options.
Why does a successful chicken sandwiches chain like the Chick-fil-A franchise offer the cheapest food franchises? In this scenario, there are various investment options, spanning from low to high expenses.
Take a look at the low-cost factors below:
Diverse Franchise Models
It offers varied franchise models, allowing a franchise owner to choose based on their budget and resources. Furthermore, integration with convenience stores and supermarkets, known for lower overhead costs, adds to this affordability.
Express Orders Concept
The franchise adopts the grab-and-go concept, featuring pre-made meals with less labor and streamlining operations costs.
Minimal Investment and Labor
This franchise system requires minimal investment and labor since meals are pre-prepared. Consequently, it eliminates the need for extensive kitchen facilities or specialized staff.
No Royalty Fees
Some chicken franchise stands out by waiving royalty fees. This practice eases the financial burden on franchisees and enables them to retain a higher portion of their revenue.
9. Smoothie Cafe
Smoothie cafes have become increasingly popular among busy individuals as they offer a healthy and convenient food option. This growing demand makes smoothie cafe franchises a potential investment opportunity for aspiring entrepreneurs.
Here’s why smoothie cafe franchises can be attractive:
Affordable Entry Point:
Smoothie cafes require lower initial investments compared to other restaurant concepts. This is because they have simpler equipment needs which primarily focus on blenders, refrigerators, and display cases.
In addition, they have a limited menu that is based on a few ingredients and standardized recipes, making inventory management much simpler.
Moreover, these cafes can operate efficiently in smaller spaces, which reduces rent and utility costs, making it a cost-effective option for entrepreneurs looking to start a new business.
Healthy Appeal:
The rise of health consciousness makes smoothie cafes cater to a growing market segment.
High-Profit Margins:
Smoothies can offer high-profit margins due to the relatively low cost of ingredients compared to the selling price.
Recurring Revenue:
The convenience and affordability of smoothies often attract repeat customers, creating a reliable income stream.
While the initial investment might be lower, ongoing fees, such as the advertising fee and royalties are part of the operational costs. Success hinges on considerations like foot traffic and demographics, emphasizing the need for meticulous location selection.
10. Grill Restaurant Franchise
The market for dining options is poised to expand steadily over the coming years, primarily fueled by the surging demand for convenient and laid-back dining options.
Additionally, the growing preference for grilled foods, which are perceived as healthier alternatives, is also contributing to the market’s growth. In comparison to other restaurant models, grill restaurant franchises offer a relatively affordable option.
Affordable franchise settings, such as non-traditional models are available in shopping malls, hotels, ships, and trains.
This franchise can also be offered through catering services. The menu can include a variety of dishes, from juicy steaks and chops to perfectly charred salmon filets.
Final Thoughts about the Cheap Restaurant Franchises
If you have an entrepreneurial spirit but don’t want to build your business from the ground up, look no further. The food franchise industry has many business opportunities to start with.
Consequently, owning your own business doesn’t have to be expensive, and these cheap restaurant franchises are ideal.
Franchisors may require prospective franchisees to demonstrate a certain level of liquid assets to ensure that they have the financial capacity to start and sustain the franchise business.
Talk to a franchise consultant to help you with financial qualifications and understand everything about franchising.