For investors: how much do you have to invest to set up a fast food franchise?

Franchises are one of the most profitable businesses, due to their proven model, and because they have the support and proven experience of a brand. In the context of the current economy, the money laundering policies or tax benefits that some governments implement to encourage the repatriation of undeclared assets, represent a window of opportunity for those seeking to regularize their tax situation and, at the same time, explore new investment options.

According to the latest report prepared by the Argentine Association of Brands and Franchises (AAMF), in the country there are currently 44 franchising brands in different areas, with 14,400 active points of sale that generate more than 38,000 direct jobs.. The gastronomic sector, hand in hand with a sustained recovery in consumption after the pandemic, was also one of those that expanded the most in the world of franchises. And, within that universe, fast food expanded its presence with new establishments.

For case, The hamburger chain Mostaza and the Milanese sandwich chain Milanga are two clear examples of Argentine fast food chains that are in full expansion and tempting investors.

In the case of Mustard, according to the franchise guide, the initial disbursement, depending on the format, starts at around US$500,000 and they guarantee the return after 36 months.

As explained by Mostaza, an entrepreneur who invests in this format “is not only betting on a profitable and proven business, he is also strategically positioning himself to benefit from the trends of the gastronomic industry.” For the next 12 months, the fast food giant projects the opening of more than 25 stores under this business model.

The minimum size to install a hamburger chain store is 250 square meters and the number of employees ranges from 30 to 80, depending on the format chosen. Meanwhile, the average annual turnover per location is around $840 million. The franchise model is available in any city with more than 70 thousand inhabitants.

In this context, Mostaza currently has 190 stores and projects 10 new openings before the end of the year; currently 60% of its operation corresponds to the franchise model.

“A franchisee, in addition to betting on the country, generates formal job opportunities in places where these possibilities are scarce. Through the implementation of proven and supported business models, franchisees contribute to the decentralization of employment, bringing economic development to different parts of the country,” highlights Pablo De Marco Director of Expansion at Mostaza.

Another attractive option for investors is the chain Milanga, specialized in Milanese sandwiches, but also offers a cafeteria and desserts among other products. This 100% Argentine capital chain was born in 2019 and plans to reach 100 stores in the next 10 years.

Currently the company has 10 stores, one of its own and the rest franchises, and has an aggressive expansion plan with new openings in the short term.

As explained by the firm, To install a Milanga franchise, an investment between US$200,000 and US$350,000 is necessary. The company offers two models, one aimed at shopping malls and the other is local to the street from 150 square meters.

Between the decision to invest in a Milanga franchise and the opening of the premises, between 90 to 180 days should be considered, since in that period the staff is selected, the premises are conditioned and decorated, and the business plan is established. “Our franchise contract is for 10 years and the projection is that the franchisee will obtain an average return of 20% in dollars, two recovery cycles in those 10 years. The business model we offer is the constant support of franchisees, from staff training to the necessary works for the installation of the premises and its ambiance,” explained Pedro Corrado, one of the company’s leaders.