2013 Best Restaurant Franchise Deals - Restaurant Brokers Weigh In

Posted by Fatyma Kante on Jul 10, 2013 3:25:00 PM

Quick Service RestaurantQSR Magazine published it's list of 2013 Best Franchise Restaurant Deals last week and the restaurant brokers have a few words to say on the topic. This is the fourth year of their “Best Franchise Deals” report and they base their ratings on internally developed criteria including, (according to them), "investment-to-sales ratio, marketplace differentiation, corporate support to franchisees, and positive brand momentum."  The restaurant brokers review is based on our own knowledge of the industry, visits to many of these stores and feedback from those buying a franchise. 

The magazine focuses on 12 brands in three categories, their "Hungry upstarts" the smaller emerging concepts, "The Rising Stars" those more established brands and "The Powerbrokers" - bigger concepts which are hav emore than 300 units. This article will look at the Hungry Upstarts.  We'll visit their "Rising Stars" and "Powerbrokers" in subsequent blog postings.

The restaurant brokers are excited to see an Atlanta start-up leading the list of "Hungry Upstarts."  Tin Drum Cafe is familiar to many of us in the Atlanta metro with their locations in Atlantic Station, Roswell, Midtown and Buckhead.  Their franchise fee is $35,000 and start up costs range from $300,000 to $477,000 according to their Franchise Disclosure Document. With eleven total units and nine franchisees, QSR thinks this brand is one to watch.  The restaurant brokers have had an eye on this chain for a while and believe they will continue to grow as well. QSR says they are "ahead of the fast-casual curve, throwing in bold flavor profiles, high-quality food, customization options, and convenience, to boot. An AUV topping $1 million, meanwhile, signals its appeal to a widening consumer base."  (Restaurant broker note:  AUV is average unit volume).

Second on the Hungry Up-Start list is Burger Fi with ten franchise units.  Headquartered out of South Florida, this chain has a location in the Atlanta Metro on Windward Parkway in Alpharetta.  Out local intel says they are hitting big numbers in the Atlanta suburbs and while we keep asking how many more burger concepts can make it before we hit total saturation, QSR editors feel good about this one.  Their franchise fee is $40,000 and start up costs range from $313,000 to $637,000.  The chain quotes average unit volume of $2 million in a chain that calls itself "eco-friendly" to boot.

Next on the QSR Hit Parade of best restaurant franchise deals is Fresh to Order.  The restaurant brokers recently blogged about this Atlanta start up which also recently made Nations Restaurant News.  The buzz is definitely out there on FTO or Fresh to Order.  We love this restaurant where the food is fresh and the options are healthy.  What we don't love about this as professionals selllng restaurants is an eye-popping start up cost of $550,000–$720,000.  That's a lot of money to sink into infrastructure for a build out with average sales of $1.7 million.  That being said, the restaurant plans to open 50 new stores in the near term and add another 50 in development.  That's a lot of growth for a concept with 3 franchise locations and a total of 7 stores today.d and corporate-owned locations. He says corporate stores show that the brand is committed to growing alongside its franchisees and to understanding “the reality of what is happening on the street level of its business.”

Texas based Taquerias Arandas is also on the list of Hungry Start Ups.  This has the most units of any on the list with 27 franchise stores already in operation.  The franchise fee is slightly higher at $45,000 and the restaurant brokers question how their start-up costs can range from a low of $98,000 to a high of $640,000.  This concept, based in Houston has average unit volume of $1.3 million.

The restaurants brokers advice on buying any restaurant franchise is one we described in detail in Appetite for Acquisition, our book available online and on Amazon.  We describe the franchise "rule of three" where you want to be the third owner of the store, rather tharestaurants for salen the first who spends all the money with an uncertain return.

If you're determined to buy a new franchise, then check out the 2013 best and let us know what you think.

Interested in seeing our Franchise Restaurants for Sale?  Check out the link. 

Topics: Restaurant Brokers

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