The rise of restaurant franchising

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Franchising is understood as “the granting of rights to exploit a product, activity or trade name, conceded by a company to one or several individuals in a given area”. This proposal generates impressive benefits for both parties involved. Pecuniary benefits for the franchisor and exploitation rights for the franchisee.

Since they arrived in Spain in the 1950s, franchises have become an attractive opportunity to generate value in multiple sectors. The restaurant sector stands out, where franchises have taken on a leading role. According to data from September 2022, Spain accounts for 328 brands in the HORECA sector, grouping a total of 13,064 establishments. These networks have a turnover of more than 7,000 million euros, accounting for 21.3% of the total restaurant industry, and generate more than 80,000 direct jobs.

Such figures are especially relevant when compared with a decade ago. According to statements by The NPD Group, the presence of restaurant chains has doubled in the last ten years. However, the franchise business is by no means thought to have reached the top. According to the same source, eight out of ten chains were expected to grow by more than 10% by 2022. These forecasts have yet to be confirmed with the year-end data.

Reasons for optimism

What are the main factors behind this growth forecast? Besides the rebound effect of the economic situation post-pandemic, two trends will favor the rise of franchising in our country:

  • In the first place, the pandemic has led this sector to reinvent itself and reinforce lines of business that already existed, such as delivery or takeaway. The data have demonstrated the effectiveness of this strategy. According to Franquicias de Restauración, 36% of what consumers disbursed during the first half of 2021 was through these lines of business, 15 percentage points above the same period in 2019.
  • On the other hand, the globalization of this business model is another great advantage for the future. Attending the report “La Franquicia española en el mundo 2021” (The Spanish Franchise in the world 2021), the sector already has 1,481 establishments implemented by 54 Spanish chains in 78 countries.

The keys to success

As Restauración News reports, there has been an increase in the interest of entrepreneurs in franchising businesses. Given this new opportunity for many entrepreneurs, the next question is: What are the keys to a successful franchise? According to the consulting firm Tormo Franquicias, these are some of the influential factors:

  • Number of franchisees. Franchises aim to grow in an orderly fashion but without setting limits. A high number of establishments is usually synonymous with success.
  • Customer-centric model. All successful franchise projects are designed to provide an extraordinary attraction to the consumer, offering easily perceptible advantages.
  • Openness to capital. This type of business model requires a capital contribution to be successful. Therefore, entrepreneurs must look for investors and/or rely on financing platforms.
  • Cellular division. Most well-received franchises result from companies with considerable weight in the market that, at a certain moment, decide to franchise one of their lines.
  • Experience of proven success. The main principle of a franchise is founded on a business model with proven results in the market for some time and, therefore, offers guarantees to potential franchisees.

These factors are among the cornerstones of a growing business model in our country, such as restaurant franchises. In the coming years, we will foreseeably witness a boom of such franchises as protagonists in the restaurant sector.

Grupo Dihme

Grupo Dihme arrives on our platform this week. Owner and franchiser of EL KIOSKO and Colmado Parranda, as well as the third franchisee of Telepizza. The company introduces itself as a restaurant company that has come to “revolutionize the restaurant industry” and offer franchisees “simpler and more profitable management models”.

Grupo Dihme launches a funding round with a target capital of €500,000 (expandable to €1 M) to open its own premises, develop logistics capacity, franchise expansion support, marketing, and technology. And it is not the first round! More than €600,000 have already been raised through our platform in the past. Today, we are “doubling the investment” for a business model that has doubled its market presence in the last ten years, rewarding the investor.

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