7 reasons I’ll never buy a food franchise (and 3 times you should)

Hey readers,

Let’s talk about the biggest fish in the franchising ocean: McDonald’s.

It’s probably the first brand that pops into your head when you hear the word franchise. And yeah, plenty of people have made a ton of money owning one.

But that won’t ever be me. I don’t own a single food franchise, and probably never will.

Here’s why food franchises are almost always a pass for me (and three scenarios where they might make sense for you).

Let’s do it.

The downsides of food franchises

1. Insane startup costs

Think seven figures, just to get your foot in the door.

McDonald’s estimates a build-out costs $1.5M to $2.6M. Compare that to my mobile service brands — $150K–$400K all-in.

Yes, higher investment can be fine if the cash flow justifies it. But most food franchises have thin margins (more on that later)... so you’re left with a massive upfront cost and a business that has to sprint just to break even.

That’s a terrible combo.

2. The labor model is a headache

Food businesses run on low-wage, high-turnover staff. 100%+ annual turnover is the norm.

That means constant hiring, firing, and retraining. Operational complexity goes way up, which means removing yourself from day-to-day ops is way harder.

→ Related read: Can you actually buy a franchise and not run it?

3. No recurring revenue

Let’s talk recurring vs reoccurring.

Food businesses sell reoccurring products — people might come back regularly, or they might not. You’re not billing them every month. You’re not building a base of predictable cash flow.

Compare that to a home service with recurring appointments or subscriptions. It’s night and day.

Not to mention, McDonald’s average ticket is $8.50, so you need to sell 600 burgers to match a high-ticket service business with a $5K invoice. 

A volume game like that will burn you out.

4. Thin margins

Top performing food franchises might push 10–12% margins. Most are in the single-digits. 

That means if your labor costs spike or, say, egg prices go bananas, you just lost half your profit.

Contrast that with services businesses running 20–30% margins. Way more breathing room.

5. Marketing is hard (and hard to track)

This one doesn’t apply to McDonalds, because they have marketing down cold. But most franchises don’t have billion-dollar ad budgets. And even if they did, attribution is nearly impossible.

You can’t A/B test your way to profitability when you don’t know what’s working. In my service brands, every lead is trackable down to the keyword.

That lets me turn marketing dollars into business with way more certainty.

6. Consumer tastes are fickle

Trends move. TikToks go viral. Diets shift.

And suddenly your best-selling menu item is obsolete. That’s a massive risk when you’re tied to a product you don’t control.

On the other hand, no one ever stopped needing roofs, mold remediation, or clean windows.

7. Failure rates are brutal

60% of restaurants fail in their first year. Even with the franchise bump, food is still one of the riskiest categories out there.

Home services? Just 20% fail in year one. 

That’s not a guarantee, but it’s a hell of a better place to start.

3 scenarios where a food franchise might make sense

These reasons are enough to keep me personally out of food franchising, but I’m not a zealot about it. 

Because of course there are situations where food can work — otherwise McDonalds wouldn’t be the most famous franchise in the world.

Here are three situations where you might actually be well-suited to a food franchise:

1. You hate sales

Food is frictionless. People walk in, point at a menu, hand you money.

No sales funnels. No proposals. No follow-up.

If the idea of “selling” makes you break out in hives, food is about as simple as it gets.

→ Related read: Picking a franchise that fits your personality

2. You want to scale uniformly

Running a service business in Nashville vs. Denver can look very different. But a burger is a burger.

Food franchises can be easier to replicate across markets, and often support more standardized ops teams. 

That’s why some empire builders pick food — and those thin profit margins start to make more sense if you’re buying a ton of units.

3. You’re playing the real estate game

McDonald’s isn’t a burger company. It’s a real estate empire that happens to sell fries.

If you own the land and lease it back to the franchise, that’s a completely different financial story. 

Some operators do both. But if I had to choose, I’d rather be the landlord than the line cook.

So should you buy one? 

Maybe.

But only if you know what you’re getting into — and you’re not just buying one because “everyone’s gotta eat.”

Because that business model has to serve your goals, whether that’s cash flow, flexibility, or empire-building. 

If you’re looking for alternatives, I’ve got a breakdown of my favorite franchise categories right here.

I’m also happy to chat. If you’re serious about buying a franchise, I offer a free 30-minute strategy call to talk through your goals and offer my advice. No strings attached. Book a time here.

Talk soon,
Connor

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