Franchising in Ukraine. News. Statistic and Trends
Franchising in Ukraine
In this article, we would like to talk about Franchising in Ukrainian. Restaurant news. Hospitality statistics and trends.
The restaurant market in Ukraine is growing and with it the franchise offers. For owners of an already successful business, franchising is a way to scale a business and generate additional income. For entrepreneurs and their funds, starting a franchise business is a good alternative to a deposit as a tool to generate an extra income.
In Ukraine, there are at least 5 online catalogs of franchises both in the retail and consumer services sectors and in the restaurant business. “The restaurant business sets the pace for the development of franchising in Ukraine,” says Kyryll Ushakov, founder of the Proriat Franchise Group. “If 3-5 franchise restaurant projects have not appeared in a year, then there is an opportunity on the market and some potential for players who should start working in this direction.”
Among all franchises on the Ukrainian market, about 40% are offered in the restaurant business. Interest in developing a franchise business is growing: in 2019, about 30% of restaurants in Ukraine were their own points, while in 2020 this figure dropped to 17%. But, as Proriat experts note, such a leap is due to the fact that some franchises have existed for about a year and have only one unite or even only a concept, but are already selling a franchise.
Restaurant. Franchising in Ukraine
In 2019, there were about 65 offers of catering franchises on the market, and now, according to the Hospitality Group, there are about 80 offers on the market. According to Mikhail Zubrovski, the co-founder of Restaurant consulting, investments in the opening of a popular catering outlet under a franchise range from UAH 230,000 (mini-bakeries, food trucks, mini-coffee shops, and islets) to UAH 3-4 million. “The attractiveness of investing in opening your own café or restaurant under a franchise is gradually growing. Despite the fact that over the past three years, Ukrainians have been spending less than 4% of their income on restaurants and cafés, starting from 2019 this figure starts to grow slowly, says Mikhail.
Ukrainian restaurant statistic
The turnover of the Ukrainian public catering market in 2020 amounted to $ 2.0 billion, in 2019 – $ 1.7 billion. The total number of franchises in Ukraine has grown: in 2019, according to the Proriat Hospitality Partners there were 428 franchises, now, according to Proriat Real Estate, the indicator increased to 525, of which only 20% are actively working. The number of franchise projects in the restaurant business is also growing. According to the Proriat Franchise Development, the figure grew by 15% from 2019 to 2020: from 3,727 to 4,270 franchised properties. For many, a franchise business is becoming an alternative to deposits as a means of saving money. “If you find a successful format, then 20% per annum is the least you can count on after the return on investment,” Ushakov emphasizes. As Alexandr Babic, one of the founders of the Restaurant investment group and hotel chains said, their company is registering an increase in interest in franchises. The Restaurant concept development department usually holds a meeting for the franchisee once a month, and in November we had to hold two such meetings because of the increased demand for Franchising in Ukraine.
Restaurant trends
As for the trends in the restaurant business, the annual analysis of the Proriat Franchise Development market shows that burgers pancake shops, steakhouses are in trend now. Also gaining popularity are “the third wave” coffee houses, that is, small private coffee shops or coffee shops with an individual approach to the preparation and serving of coffee. “In the regions, coffee shops are also in great demand, which also sells croissants or panini. Many believe that the market is already oversaturated with such establishments, but the situation is only in cities with a population of over one million, Kyryll notes, “but the breakfast to go niche has not been mastered at all, although there is already a demand for such a format on the market”.
Franchisor advantages
Franchising is a fairly simple way to expand your business. As Proriat notes, franchising can be included in the top twenty promising business areas in Ukraine for the coming years.
Among the main advantages of developing a franchise for a franchisor are the following.
- Fast and non-personal investment in the development of your restaurant chain. “Development according to the franchising system allows you to develop quickly enough without attracting your own investments and large resources,” says Vasiliy Derkach, Franchising Director of Burger Franchise. The franchisee is fully responsible for the investment.
- Simplification of management routine. The franchisor is not responsible for the day-to-day management of individual franchise units and should not take calls from every staff member who decides to report illness or complain about a colleague.
- Simplified process for entering new markets. Franchising allows you to minimize the risks for the franchisor when entering new markets, because the partner in the local market understands the situation much better.
- Trademark recognition. The simplified process of entering new markets makes the brand more famous and strengthens its position. It also helps directly expand the franchise and attract new franchisees.
- Additional income. When paying for the franchise, the franchisee makes an initial contribution, then he constantly pays royalties to the franchisor, where part of the funds goes to help the franchisee in development, for example, for consultation, and part can be spent on further expansion of the business.
Franchise or business from scratch?
According to Proriat HoReCa Real Estate, a franchise business (franchise in Ukraine) can be considered safer, since the end consumer is already familiar with a particular brand, and the franchise owners have tested all business processes. “In exchange for royalties and a lump-sum fee, the franchise buyer gets a turnkey solution without the bureaucratic fuss and risks of starting a business from scratch.”
Benefits of franchise development
- Work under a brand already known to the consumer. “There is no guarantee that your own restaurant will be successful and that the business model created by the entrepreneur will really work. But when working on a franchise, there is a guarantee that you will not become bankrupt tomorrow.”
- Franchisor experience. “There is a certain algorithm of actions when starting a business, and it is provided by the franchisor “
- Maintaining independence. The restaurant that the franchisee develops is legally and economically independent from the entire chain, which means that the franchisee does not depend on the crisis that may overtake other restaurants of the same chain.
- Additional protection. The franchisor provides guidance on starting and running a business and also supports the franchisee at all stages of doing business.
- Economic sense and ROI. Starting a franchise business reduces the initial investment. A strong franchise brand can guarantee a high probability of return on investment, now it is about 9 – 24 months.
See our franchise listing, development, and consulting services.
Categories: