Sep 30, 2022 - Blog, Franchise Articles by |

The Franchise Times recently released its Top 500 for 2022. While the top of the list is still dominated by some of the world’s most well-known franchised brands (i.e., McDonald’s, 7-Eleven and KFC), the list also provides some key insights into the COVID-19 pandemic’s effects on the franchise industry.

As the Franchise Times explains, the Top 500 is a ranking of “the 500 largest franchise systems in the United States by global systemwide sales, based on the previous year’s performance.” So, for 2022, the list reflects sales from 2021. Lockdowns and restrictions remained in effect across the country for much of the year, and the U.S. Food and Drug Administration (FDA) did not approve the first of the COVID-19 vaccines until August of 2021. Thus, franchise sales remained significantly impacted by the pandemic for much of the year—with certain segments of the industry hit much harder than others.

With this in mind, here are some of the highlights from the Franchise Times Top 500 for 2022:

Quick-Service Food Franchises Saw Significant Sales Growth in 2021

Despite the ongoing economic impacts of the COVID-19 pandemic, many quick-service food franchises experienced growth in 2021. There is also an argument to be made that this growth was because of the pandemic, as the combination of unemployment and people choosing not to eat out fueled consumer demand for cheap take-out meals. For example, according to the Franchise Times:

  • McDonald’s saw an increase in sales from $93.3 billion in 2020 to $112.5 billion in 2021. The fast food giant’s 2021 sales figure also exceeded its pre-pandemic revenue of $100.1 billion from 2019.
  • Burger King climbed to fourth on the Top 500 after increasing its sales by 17 percent in 2021—from $20 billion during the first year of the pandemic to $23.4 billion last year.
  • Despite increasing its sales by 7.3 percent (to $5.5 billion) in 2021, Popeyes dropped four places in the Top 500, from 19th to 23rd.
  • Overall, the quick-service food industry saw an 18.3 percent growth in sales in 2021 compared to 2020, with the segment’s total sales of $176 billion also topping 2019’s total of $157.2 billion.

Sit-Down Restaurants Weren’t Yet Back To Their Pre-Pandemic Levels Last Year

While many quick-service food franchises were already doing better than ever in 2021, the same can’t be said for the sit-down side of the restaurant industry. According to the Franchise Times, while several well-known sit-down restaurant chains (including IHOP and Denney’s) beat their 2020 sales figures in 2021, their 2021 figures were still below their pre-pandemic levels.

The Hospitality and Travel Industries Are On Their Way Back

The hospitality and travel industries are also on their way back. The Franchise Times reports that after these industries saw a staggering 47.9 drop in sales in 2020, their revenue rebounded by 49.1 percent in 2021—to roughly 75 percent of their pre-pandemic level. The publication writes that there were “big gains were across the board . . . with every hotel brand in the Top 500 list increasing sales by double-digit percentages in 2021.” Travel agency franchises and other hospitality and travel concepts saw their sales begin to rebound in 2021 as well.

Personal and Automotive Services Show Strength Despite the Pandemic’s Economic Impacts

The personal and automotive services categories saw strong growth in 2021 as well, perhaps signaling that these are priority areas for consumers even during tough economic times. The Franchise Times reports that the “beauty, fitness, massage, pet and kid’s education and entertainment” niches saw an overall increase in sales of 32.6 percent in 2021, while the automotive aftermarket category saw year-over-year growth of 17.3 percent—after increasing by 1.3 percent in 2020.

The Pandemic-Fueled Real Estate Boom Has Propped Up Brokerage and Home Services Franchises

While the pandemic-fueled real estate boom has presented significant challenges for homebuyers, those within the real estate industry seem to be doing quite well. The Franchise Times reports that real estate was “another hot category in 2021,” with sales exceeding their 2019 levels. Home services saw an increase in sales of 23.2 percent last year as well.

Are You Considering a Franchise Opportunity in 2022?

If you are considering a franchise opportunity in 2022, there are several factors you need to consider. Attorney Jeffrey M. Goldstein, who has more than 30 years’ experience in the franchise industry, can help you make an informed buying decision. To schedule a free initial consultation and learn about our fixed-fee franchise business review programs for prospective franchisees, please call 202-293-3947 or tell us how we can reach you online today.

This article is provided for informational purposes. Goldstein Law Firm does not recommend or endorse any individual franchise opportunities.

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