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 inexpensive restaurant franchises that are affordable to start, providing valuable insights for individuals considering entry into this exciting and lucrative market.
The Advantages of Low-Cost Restaurant Franchises
Lower Startup Costs
One of the main benefits of investing in low-cost restaurant franchises is the significantly reduced startup cost. Traditional restaurants typically require large spaces, expensive kitchen equipment, and a considerable amount of staff.
In contrast, these affordable franchises often require less capital for initial setup. Shared resources, a proven business model, and brand recognition lower the barriers to entry.
Access to an Established Business Model
When you invest in a franchise, you aren’t starting from scratch. Low-cost restaurant franchises still offer franchisees access to comprehensive training, marketing support, and established operational procedures.
This means you can benefit from a tried-and-true system with a higher likelihood of success compared to starting an independent restaurant.
Faster Return on Investment (ROI)
With lower initial investment costs and more streamlined operations, affordable franchises often allow franchisees to achieve profitability faster. This makes them an attractive option for individuals seeking a quicker return on investment compared to traditional restaurant models.
A Growing Market
The food service industry continues to expand, with certain niches, such as quick-service restaurants (QSRs), experiencing steady growth.
According to Market Research Future, the global take-out fried chicken market is projected to reach a $9.85 billion valuation by 2030, with a 5.50% CAGR, signaling strong demand for convenient, fast food options. This growing demand creates a lucrative environment for low-cost food franchises.
Top 10 Cheap Restaurant Franchise Ideas for 2024
Restaurant franchises, particularly low-cost food franchises, often come with reduced startup expenses thanks to shared resources, established brand recognition, a proven business model, streamlined menus, and more.
For potential franchisees, these affordable restaurant franchises provide an easy entry into the industry. Many of these options have the lowest investment costs and franchise fees, offering a way to avoid the difficulties of starting a business from the ground up.
1. Submarine Sandwich Shops
Submarine sandwich shops, also known as sub shops or hoagie shops, have long been a favorite among consumers due to their convenience and versatility. These fast food chains offer a wide range of menu options, from cold cuts to specialty hot sandwiches, catering to various tastes and dietary preferences.
Why Are Sub Shops Affordable?
Sub shops are among the cheapest restaurant franchises because they typically require fewer employees and less complex kitchen equipment than full-service restaurants. This lowers overhead costs, making them an excellent option for those seeking low-cost food franchises in the food industry.
Franchise Cost Breakdown:
- Initial Franchise Fee: $10,000 - $50,000
- Estimated Initial Investment: $200,000 - $600,000, depending on the brand and location
- Royalty Fees: Typically range from 4% to 12% of gross sales
Key Benefits:
High Customer Demand: Sub-shops attract a diverse customer base, ensuring repeat business.
Lower Operating Costs: Simplified operations reduce staffing and food costs, improving profitability.
Smaller Footprint: Sub-shops require less space, lowering rent and utility expenses.
Franchise Scalability: Many sub-shop franchises offer multi-unit ownership, making it easier to expand.
Popular sub-shop franchises like Subway and Jimmy John’s are excellent examples of affordable franchise options in this category.
2. Ice Cream Parlors
Ice cream parlors have always been popular with dessert lovers, catering to all age groups. These shops are ideal low-cost food franchises, making them a smart investment in the food industry.
Why Are Ice Cream Parlors a Good Investment?
Ice cream parlors generally have lower startup costs because they require minimal equipment compared to full-service franchise restaurants. Ice cream is easy to prepare and serve, and the businesses often operate in smaller spaces, reducing overhead.
Franchise Cost Breakdown:
- Initial Franchise Fee: $15,000 - $30,000
- Estimated Initial Investment: $150,000 - $300,000
- Royalty Fees: Typically 6% to 8% of gross sales
Key Benefits:
High-Profit Margins: The cost of ingredients is low, allowing for higher margins.
Flexible Business Models: Ice cream parlors can operate as kiosks, mobile trucks, or full-service shops.
Franchise Support: Well-known brands like Baskin-Robbins and Dairy Queen provide extensive training and support.
3. Coffee Shops
The coffee industry is thriving, driven by increasing demand for specialty drinks. Coffee shops have become social hubs, offering a profitable business model for entrepreneurs entering the food franchise sector.
Why Are Coffee Shops Affordable?
Coffee shops are relatively low-cost to open because they require simpler equipment, such as coffee machines and grinders. Additionally, coffee shops can operate in smaller spaces, further reducing rent and utility costs.
Franchise Cost Breakdown:
- Initial Franchise Fee: $25,000 - $40,000
- Estimated Initial Investment: $100,000 - $300,000
- Royalty Fees: Typically 4% to 8% of gross sales
Key Benefits:
Low Overhead: Coffee shops don’t need full kitchens, reducing startup costs.
Flexible Formats: Coffee franchises can operate as standalone stores, kiosks, or drive-thru locations.
Brand Recognition: Brands like Dunkin’ and The Coffee Bean & Tea Leaf have established loyal customer bases, ensuring steady traffic.
4. Pizza Chains
Pizza remains a top contender in the fast food franchise world. With high demand for both dine-in and delivery, pizza franchises are an excellent opportunity for those seeking a proven business model.
Why Are Pizza Chains a Cost-Effective Option?
Pizza chains are easy to operate thanks to standardized cooking methods and pre-portioned ingredients. These factors make them a cost-effective choice among franchise restaurants.
Franchise Cost Breakdown:
- Initial Franchise Fee: $20,000 - $40,000
- Estimated Initial Investments: $200,000 - $600,000
- Royalty Fees: Typically 6% of gross sales
Key Benefits:
Efficient Operations: Pre-portioned ingredients and standardized cooking processes reduce waste.
Delivery Demand: Pizza is one of the most popular delivery items, tapping into a lucrative market.
Scalability: Many pizza franchises, such as Papa John’s and Domino’s, encourage multi-unit ownership.
5. Donut Shops
Donut franchises offer a business model with low overhead costs and high-profit margins. These shops are popular in both the breakfast and snack markets, making them an appealing option in the fast food chains segment.
Why Are Donut Shops Affordable?
Donut shops require less specialized equipment and fewer employees than full-service restaurants. They typically operate in smaller spaces, which reduces rent and utility expenses.
Franchise Cost Breakdown:
- Initial Franchise Fee: $10,000 - $30,000
- Estimated Initial Investments: $200,000 - $500,000
- Royalty Fees: Typically 5% to 8% of gross sales
Key Benefits:
Low Ingredient Costs: Donuts require basic, inexpensive ingredients, maximizing profit margins.
Brand Recognition: Well-established franchises like Krispy Kreme and Dunkin’ have a loyal customer base.
Menu Expansion: Many donut shops offer coffee and sandwiches, appealing to a broader audience.
6. Burger Chains
Burger franchises are a cornerstone of the fast food franchise world. With simplified operations and high demand, burger franchises offer a proven business model with strong brand recognition.
Why Are Burger Franchises a Good Investment?
Burger franchises typically operate on a streamlined model, making them easier to manage than full-service restaurants. Established brands such as Burger King help new franchise owners generate immediate customer traffic.
Franchise Cost Breakdown:
- Initial Franchise Fee: $20,000 - $50,000
- Estimated Initial Investments: $300,000 - $1 million, depending on the brand
- Royalty Fees: Typically 6% to 10% of gross sales
Key Benefits:
High Demand: Burgers are a staple of American fast food, ensuring steady customer traffic.
Standardized Operations: Pre-portioned ingredients and simple preparation reduce food waste.
Scalability: Many burger chains offer multi-unit ownership, making expansion easier.
7. Taco Franchises
Taco franchises tap into the growing demand for Mexican cuisine, offering a unique fast food franchise opportunity. These businesses have a simple menu and low operational costs, making them a great investment.
Why Are Taco Franchises Affordable?
Taco franchises typically use a few core ingredients, which makes inventory management simpler and less costly. Many taco shops also operate in smaller spaces, reducing rent and utility expenses.
Franchise Cost Breakdown:
- Initial Franchise Fee: $10,000 - $40,000
- Estimated Initial Investment: $150,000 - $500,000
- Ongoing Royalty Fees: Typically 6% of gross sales
Key Benefits:
Simplified Inventory: Fewer ingredients reduce food waste and inventory costs.
Flexible Formats: Taco franchises can operate as fast-casual restaurants, food trucks, or kiosks.
Low Operating Costs: Smaller spaces and fewer staff reduce operational costs.
8. Chicken Franchises
Chicken franchises have become increasingly popular due to the versatility and affordability of chicken. Whether fried or grilled, chicken appeals to a broad range of customers, making it a reliable investment in the fast food chains sector.
Why Are Chicken Franchises a Good Investment?
The chicken franchise is the cheapest food franchise due to the low cost of chicken as a protein. These franchises cater to both fast food lovers and health-conscious consumers with grilled options.
Franchise Cost Breakdown:
- Initial Franchise Fee: $10,000 - $50,000
- Estimated Initial Investment: $200,000 - $700,000
- Ongoing Royalty Fees: Typically 5% to 8% of gross sales
Key Benefits:
Low Ingredient Costs: Chicken is one of the most affordable proteins, helping keep food costs down.
High Demand: Chicken is a popular choice for fast food and healthier meal options.
Franchise Variety: Chicken restaurant franchise businesses offer various formats, from dine-in to takeout and drive-thru models.
Popular chicken franchises include Chick-fil-A, Popeyes, and KFC.
9. Smoothie Cafes
As health consciousness continues to grow, smoothie cafes have become increasingly popular. These cafes are considered low-cost food franchises due to their simple operations and small space requirements.
Why Are Smoothie Cafes Affordable?
Smoothie cafes generally require less equipment than full-service restaurants, making them cost-effective. Smoothies are made from simple ingredients like fruits, vegetables, and protein powders, keeping inventory costs low.
Franchise Cost Breakdown:
- Initial Franchise Fee: $15,000 - $30,000
- Estimated Initial Investment: $100,000 - $300,000
- Ongoing Royalty Fees: Typically 6% to 8% of gross sales
Key Benefits:
Low Equipment Costs: This franchise system primarily require blenders and refrigerators, reducing startup expenses.
Health Appeal: The demand for health-conscious food options ensures steady traffic.
Flexible Business Models: Smoothie franchises can operate as standalone cafes, kiosks, or drive-thrus.
10. Grill Restaurant Franchises
Grill restaurants cater to health-conscious diners by offering grilled meats and vegetables, making them an attractive alternative to traditional fast food. This franchise business is a good option for entrepreneurs seeking affordable franchises in the casual dining segment.
Why Are Grill Restaurant Franchises Affordable?
Grill restaurants typically have lower startup costs than full-service restaurants because they require simpler equipment and offer a streamlined menu. With grilled food’s health appeal, these franchises can attract a broad range of customers.
Franchise Cost Breakdown:
- Initial Franchise Fee: $20,000 - $50,000
- Estimated Initial Investment: $200,000 - $700,000
- Royalty Fees: Typically 5% to 7% of gross sales
Key Benefits:
Health Appeal: Grilled foods are perceived as healthier than fried options, attracting health-conscious customers.
Simplified Menu: Grill restaurants often have a streamlined menu, reducing food costs and simplifying operations.
Flexible Formats: Grill franchises can operate in various settings, from casual dining to food trucks and even catering services.
Popular grill franchises include Char-Grill and Backyard Burgers.
Final Thoughts
If you’re an entrepreneur with a limited budget, consider these 10 cheapest franchise businesses in restaurant industry. They offer great opportunities to enter the food service industry without a hefty upfront investment. From sub-shops to smoothie cafes, these franchises give aspiring business owners a proven path to success while minimizing financial risk.
Pro Tip: Before investing in a franchise, it’s crucial to research the franchisor’s support system, initial investment requirements, and ongoing fees. Consulting a franchise expert can help you find the right opportunity that aligns with your goals and budget.
Consider speaking with a franchise consultant to evaluate your financial qualifications and gain a better understanding of everything you need to know about franchising.
