Food is one of the biggest and most lucrative sectors within franchising. There are many different types of food products sold in a variety of manners, and franchisees across the country are filling the gaps in a £104.7bn economy that is food. Whilst setting up and operating a food business is hard work and can be very expensive (for example McDonalds, which franchise owners can expect to pay seven figures total investment). There are actually many food franchises out there available for under £20K. If you’re looking to get involved within the food sector and run your own business, why not discover franchising?
What is a Food Franchise?
Franchising is a method of business expansion and a route to self employment. A food franchise collectively refers to the business being franchised, as well as individual franchised units.
As a method of business expansion, franchising is where a brand owner makes their business model available to third parties. These partners invest (purchase) the rights to trade as that business in their own exclusive area. Operating under the franchisor’s brand and system of operation, franchisees deliver streamlined, consistent products and services. A good example is McDonalds. Each unit is a franchisee delivering the same products, services and branding.
The franchise partner that invests in the rights to trade is called a franchisee. In exchange for the investment, the franchisor will grant the franchisee exclusivity within their territory to run the business under the franchise brand. The franchise investment will vary considerably depending on what’s included for the investment. Higher end restaurant and storefront franchises will usually be six figure initial investment, because it will often include store fitout as well as training, marketing and assets. But there are actually many food franchises you can run for less than £20K. It is these we’ll have a look at in this article.
Food Franchises You Can Run For Less Than £20,000
An important thing to remember is that you don’t necessarily need £20K in your own funds to set up and get into business ownership with one of these food franchises. It is good to have the money, but it’s also good to use the funding available to you such as via banks. Utilising the bank funding available to you means you can set aside more of your own funds as working capital.
Working capital is money set aside to keep the business running after you’ve invested and set up. Once you’ve got the business running, marketing and stock won’t pay for itself. This working capital keeps you going until you break even, and your turnover starts paying for these purchases.
Many banks favour franchising and are members of the British Franchise Association. As a result, they’re eager to work with those looking to get into franchising, often able to lend half – if not more – of the initial franchise figure. These business loans can usually be repaid over a number of years, integrating sustainably with your business turnover. In conjunction, many franchisees also lease or purchase their vehicle on a monthly basis too. Remember that getting into business ownership through franchising is referred to as “investing”, not “buying”, and you can later sell your business as a franchise resale – often for more than what you initially invested.
Let’s take a look at some of the top types of franchises that can be invested in for less than £20K.
1. Corporate Catering Franchises
Operating a business which services food to business events and parties is known as corporate catering, or just catering. Offering the potential to expand into multi staff operation, corporate catering franchises have the potential to net owners a sizeable income.
Corporate catering is very lucrative and most catering franchises offer customers a diverse range of services. Most catering company franchises provide:
- Delivered food and buffets – for parties and events for both domestic and business clients
- Repeat business catering – regular supply of business kitchen and staff cafeteria food
- Event catering – buffets for events such as weddings
Being able to offer services on a repeat business and one off, to both domestic and commercial catering clients is ideal for franchisees because it not only enables them to maximise the use of their territory, but it also offers the potential to expand within it. Quite often franchisees will find the workload exceeds their capabilities, therefore the prospect of recruiting more staff and maximising business turnover is not only attractive, its achievable too. So whilst corporate catering can be run owner-operated, it can be built up into a strong, multi person business.
Franchises: Jaspers Catering (£POA), Corporate Caterers (£50K although with up to 70% bank finance this can be under £20K), see also hog roast corporate catering below.
Pros:
- Both business and domestic clients / events
- Potential for repeat business from B2B clients
Cons:
- There aren’t many corporate catering franchises for sale in the UK. Depending on which way you want to look at it, this could also be seen as a gap in the market waiting to be filled.
2. Mobile Coffee Van Franchises
Also partly corporate catering, mobile coffee van franchises primarily focus on hot drinks and small refreshments. But if you’re looking to run a coffee shop under £20K personal investment, mobile cafes are the way to go. Almost every coffee van franchise is available for under £40K, with some franchises less than half of that. What’s more, with a variety of funding options available – both for the vehicle and for the franchise investment – you can allocate more of your own investment into working capital, whilst staying under the £20K budget.
Mobile coffee and food franchises typically serve both commercial and domestic clients. You might find yourself serving customers at a local train station or transport hub one morning, whilst booked on to attend a wedding or party the next. Personal hire by advertising in local media is a fantastic way to generate revenue by local business from both commercial and domestic clients.
Franchises: Really Awesome Coffee, Coffee Blue, Triple Two Coffee, all of which are under £40K, with finance requiring less than £20K personal investment.
Pros:
- A low cost alternative to coffee shops, travelling to the buyer means you’ll be in prominent situation for high footfall
- A generous handful of franchise opportunities, all of which are reasonably priced
- Coffee is in seriously high demand
Cons:
- Requires a lot of your own marketing to stand out from local independent competition, but hard work means better results
- Investment doesn’t always include the cost of vehicle conversion, and overheads through monthly payments can eat into your turnover
3. Bubble Tea Franchises
Since becoming a thing, bubble tea hasn’t really boomed in the UK until the most recent decades. First established in Taiwan in the early 1980s. But now, head to your local shopping district today and you’re guaranteed to find at least one bubble tea shop or kiosk. Today, bubble tea is a staple in almost every coffee shop and special bubble tea franchise units are popping up across the world. Buying a franchise and opening a bubble tea shop certainly won’t cost you less than £20K – at least not unless you already own a cafe. So how do you go about buying a bubble tea shop for less than £20K?
Kiosks are a popular type of bubble tea franchise which enjoy high footfall from busy areas, combined with average overheads (rent, etc) but from a small footprint of a store. These kiosk units are affordable to run and benefit from fantastic turnover potential, meaning it isn’t too difficult to secure finance and premises.
The franchise fee is usually separate from the set up costs of a kiosk but if you shop around there are many bubble tea franchises out there. If you have a good business plan and financial background, banks can lend up to 70% of the franchise investment, meaning you can put more of your own money into building a business you can be proud of.
Franchises: Ding Tea (£20K), CUPP Bubble Tea (£15K) – License Fees only
Pros:
- If a shop is out of your budget, many kiosk franchises can be run for less than £50K, and with funding this can be under £20K personal investment
Cons:
- Not as popular as coffee and units need to be placed in high footfall areas which may be expensive to rent
- A growing trend now, but what the future holds is anyone’s guess
4. Vending Machine Franchises
Often considered an excellent entry point into franchising, vending machine franchises are affordable and scalable. Generally requiring little initial investment, there are a range of vending machine franchises for sale. From sweets to hot drinks, the business models generally allow franchisees to invest on a range of different options. Starting small with a part time business, or leasing out many machines, the scalable nature of a vending franchise means business owners can run the business at their own pace. If you don’t have any past experience in owning or managing a business, this is a great starting point. Overheads and initial investment are low, and you can run the business alongside other commitments – whether its a paid job or spending time with family.
Vending machine franchises work by placing machines in prominent locations – like supermarkets, restaurants and transport hubs. The franchisee buys stock from the franchisor (who makes a small profit), and the franchisee then sells the stock via the machines at a higher price. Benefitting from this profit, the more machines the franchisee has, the greater their turnover. As a “silent salesman”, vending machines enable franchisees to run the business part time.
Franchises: You shouldn’t expect to pay more than £10K for a vending machine franchise, at least getting started. Tubz vending is one of the most affordable at under £5K entry point. Snack box franchises are also very affordable.
Pros:
- An excellent food franchise to enter the world of business ownership. Low investment, low risk, opportunity to grow at your own pace
- Flexible business model requiring minimal involvement from the franchisee
- Minimal ongoing overheads, franchisor usually takes commission from stock bought rather than royalties
Cons:
- Although profitable, not as lucrative as some types of franchises, the less machines you have the less money you make.
5. Hog Roast Franchises
Hog roast franchises can also be considered corporate catering, but beneficially for franchisees you can also serve domestic clients too. Weddings, parties and community events as well as equipment hire all contribute generous revenue to the business model. No porkies here, hog roast is one of the best food franchises you can own because each event can net you £500 upwards. You only need three or four events a week to be seeing a fantastic turnover.
What’s more, hog roast catering franchises are typically under £20K investment. Spitting Pig, Gourmet Hog Roast Franchise and The Fat Pig Co. are all sitting nicely under £20K as of when this article was published. Hog roasts cater for vegetarians too.
Pros:
- Each client can turn over a fantastic figure
- Both domestic and commercial clients. Building relationships with commercial clients can result in repeat business such as council events and yearly parties
- No past experience of working with food is necessary as full training and support is provided
Cons:
- Working capital above the £20K is strongly recommended as food is not usually included for the investment. Luckily some franchises like Spitting Pig do not charge monthly fees.
6. Pub and Café Franchises
If you already own a premises, you’ve already got a sizeable amount of the franchise costs sorted already. One of the biggest costs involved with buying a food franchise is the premises. While many fast food franchises cost six – even seven figures to invest, pub franchises are amongst some of the more affordable. Even pub franchises with an investment of £50K, there are many franchise funding options out there such as from bfa approved banks, that can lend up to 70% of the franchise investment. Thereby making the investment well under £20K. Pubs aren’t the most profitable of businesses, but by using a proven brand name and business model that has an existing positive reputation, you can expect to win customers over the independent pub counterpart.
If running a pub isn’t your scene but getting involved with beer and drinks is, beer line cleaning franchises like Clear Brew also tend to be under £20K investment.
Pros:
- Repeat business from local customers
- An opportunity to get involved with food in a traditional manner
- Although not franchising, Weatherspoons shows just how well an established and recognised brand name can be for pubs and restaurants. Could your pub franchise be the next Weatherspoons?
Cons:
- Territory may be severely limited with pubs and cafes, customers being only those in a local vicinity
7. Pet Food Franchises
In what can loosely be called a food franchise, pet related is fantastic for anyone looking to get involved with a booming sector but not actively working with food. More than half of households own a pet (around 60% in fact), so even if your territory size was just 100,000, you’d already have 50,000 prospective clients. Generally pet food franchises will offer services to cats, dogs and more diverse animals such as horses and farmyard animals. Regardless of whether your territory be urban or rural, you can expect generous volume of business. And because pet food franchises are lightweight, requiring just a van and basic storage like a garage, overheads are minimal too. Pet food delivery franchises under £20K will often include starting stock as well, minimising your need for working capital.
Franchises: Almost every pet food delivery franchise is available for less than £20K total investment. Despite this, you should still consider utilising bank finance, so you can set aside more of your own funds for the lease or once off purchase of a vehicle. All three of Husse’s franchise packages are under £20K, whilst OSCAR and Trophy Pet Foods are also under £20K excluding van.
Most van user franchisees pay around £250-£300 per month for their vehicle, equivalent to just one day’s turnover per month. Of course if you already own a van or wish to purchase one second hand, the franchise investment usually covers vehicle livery application anyway.
Pros:
- High demand sector, approximately 50%+ of your territory are already prospective clients! Most franchises will provide free samples to attract their business
- Nutritional qualifications are usually provided upon completion of included training
- Repeat business clients so you spend more time visiting your valued customers and less time finding them
Cons:
- Probably not for someone who already has strong catering background
8. Food Ordering and Delivery Franchises
The Covid pandemic sparked an increase in demand for food ordering and delivery. It also fuelled the acceleration in growth of many food ordering franchises. True, some food delivery franchises cost more than £20K, but many are available under this figure. Whilst the likes of Wiltshire Farm Foods for example have sold most of their territories and are only offering resales, there are similar opportunities available for less. Oakhouse Foods is similar to Wiltshire Farm Foods, available for £30K but with funding from banks this can be less than £20K. But food delivery services isn’t the only type of food ordering business model out there. Food ordering apps have also skyrocketed and are taking advantage of franchising. An untapped sector, many franchised brands are rivalling Just Eat and Deliveroo to become more affordable for both diners and restaurants, with bespoke services that cater for both parties.
Because these food ordering app franchises are usually hands-off, requiring minimal involvement from the franchisee, they’re not only perfect to run part time, but home based too.
Franchises: Local Eats (£6K), One Delivery (£1K), Oakhouse Foods (£30K). Remember, banks can often lend up to 70% of the investment. Visit the British Franchise Association and see which banks are active within franchising.
Pros:
- Resilient, demand having skyrocketed throughout the Covid pandemic and a service which will stay in constant demand
- Not all food outlets are fully utilising food delivery services, meaning there is still plenty of growth yet to see
Cons:
- Fierce competition between big name brands such as Just Eat and Deliveroo, means that due diligence is really important. Smaller delivery businesses may not get much of a look. But the more franchisees a brand has, the closer it gets to the bigger brands.
9. Kiosk Based Food Franchises
From crepes to ice creams, sushi to baked foods, kiosks are revolutionising the food sector with high footfall, low overhead retail units. Bubble tea isn’t the only type of food franchise to utilise kiosks. There are a wide range of food and beverage franchises that have adopted this design. Not only are they prominent, they are less expensive to set up than a bricks and mortar shop. Transport hubs, shopping malls and airports are all fantastic places to run a kiosk franchise.
Franchises: Cakes and Bakes (£15K), Dr Noodles (£25K), Coffee Republic (£25K)
Pros:
- Affordable entry point into top franchises like coffee, without having to spend six figures plus on a flagship store or storefront unit
- Many big name brands are offering small footprint units like kiosks including Triple Two Coffee and CUPP Bubble Tea
Cons:
- Lack of eat-in facilities can limit customers
- Premises owners may take advantage on utility and space rental costs, work with the franchisor to determine a suitable location
10. Smoothie and Juice Bar Franchises
More and more people in the UK are becoming health conscientious. Opting for healthier food and drink, juice bar franchises are well positioned to meet this demand. Many businesses are diversifying to support delivery and mobile ordering concepts and now is a fantastic time to get involved.
If you don’t have a premises, kiosk units are usually viable with smoothie and juice bar franchises. Similarly to bubble tea. According to Statista, almost 4 million people in the UK drink a fruit/vegetable juice or smoothie at least once a day. As more and more people choose the “healthier option”, more and more people are achieving a “healthy” income through franchising.
Franchises: Mooboo (£40K), Bubbleology (£40K), Booster Juice (£65K). Banks like HSBC may be able to lend up to 70% of the startup cost for established franchise networks taking the initial investment to less than £20K. You’ll be able to repay this over a number of years.
Pros:
- Most franchises offer both storefront and kiosk units to appeal to as many potential franchise investors as possible
- At face value, a healthier option compared to other types of drink franchises like bubble tea
Cons:
- Pricing of juices and smoothies tends to be higher than tea and coffee, potentially limiting customer base
Become a Business Owner with a Food Franchise For Sale
Many people dream of getting into business ownership, often getting put off by the costs involved or uncertainty of where to start. While some food franchises are expensive, like restaurants and premises based businesses, the reality is there are many that aren’t so pricey. Many of the types of catering businesses we’ve looked at here can be started for less than £20K of your own personal funds. Ultimately, food is no different to any other business model when it comes to being your own boss. What really matters is your commitment, enthusiasm and aspirations.
Regardless of how much they cost, all franchises are proven business models and expect franchisees to achieve a return on investment. How long that takes is up to the franchisee. If you’re looking to get into one of the best franchises in the UK, now is a fantastic time. With many food businesses now utilising food ordering and delivery service to maximise their revenue, you’ll benefit from the takeaway boom. Discover food franchises for sale and get into business ownership with franchising.
