10 Must-Know Insights Reshaping U.S. Restaurant Franchising in 2025

Franchising in the U.S. is evolving rapidly in 2025. Some news are good (AI automation, marketing opportunities, concrete growth), others will affect the way we do business in the future. High inflation, wage hikes, political changes... However, franchising in the United States continues to be a robust growth vehicle and restaurants are showing resilience.

Food trends, quantitative data, market context... Whether you're a brand scaling via franchising or an investor looking to enter the market, here are the 10 most important trends and figures you need to understand to make top-tier business decisions. 

The Franchise Restaurant Industry at a glance

Key Figures for 2025

Growth and Margins Pressures

1. Franchise Industry Output Will Reach $893.9 Billion

In 2025, the franchise sector is projected to grow faster than the overall U.S. GDP.

According to the International Franchise Association (IFA) and Oxford Economics, total franchise economic output will grow 5.4%, reaching $893.9 billion, compared to national GDP growth projected at 1.9% (Source).

What it means: This confirms franchising is outpacing the broader economy (1.9% GDP growth). Franchising remains a safe harbor for growth-focused entrepreneurs even during macroeconomic uncertainty.

However, not all segments are performing equally, especially in the food industry. Growth is highly skewed toward service-oriented and convenience-driven models.

2. QSRs (Quick-Service Restaurants) Still Lead the Way in Growth

In 2025, this hasn't changed: Fast food remains a low-risk, high-reward franchise category due to convenience demand and scalable ops.

QSRs (Quick-service restaurant) franchises are expected to grow by 2.2% in 2025, reaching over 204,000 units. This sector alone will account for $321.8 billion in output. While that’s slightly slower than 2023’s 2.5%, it's still outpacing all other foodservice sectors. Full-service restaurants, in contrast, are expected to grow at 1.3%, totaling 34,557 units.

Brands leading this charge include:

• McDonald’s with over 13,500 U.S. locations, with average unit volumes (AUVs) around $3.97M for franchised stores and $4.79M for corporate.
• Chick-fil-A: AUV estimated at $6–8M, despite a conservative expansion model.

Yes, QSRs are resilient due to operational efficiency, adaptability, and off-premise readiness. However, success hinges on footprint design, labor model, and digital ordering execution.

3. The Southeast and Southwest Are Dominating Franchise Expansion

According to QSR Magazine, the fastest-growing states by franchise unit growth in 2025 are:

• South Carolina: +5.2%
• Georgia: +4.6%
• Maryland: +4.3%
• Florida and North Carolina: +4.0%
• Tennessee: +3.5%

In contrast, California (-4.2%) and Washington (-2.3%) are experiencing negative growth, driven by regulatory pressures such as mandatory minimum wage increases ($20/hour for QSRs in California).

New franchisors should prioritize expansion in markets with lower regulatory friction, favorable labor pools, and high consumer migration patterns. Data from U-Haul and Census Bureau also shows strong net migration to the Southeast and Texas.

4. Texas Remains the Top Franchise State by Unit Volume

With over 82,463 franchise units, Texas continues to be the largest franchise state in the country for the third consecutive year, followed closely by Florida and Georgia.

The reason? Texas benefits from a pro-business tax structure, minimal zoning friction, high real estate availability, and population growth, especially in metro areas like Dallas, Houston, and Austin.

5. Franchise Employment Will Exceed 4 Million in 2025 But Labor Shortages Remains

The franchise sector is set to add 221,000+ jobs this year, a 2.6% rise, pushing total jobs in franchised establishments past 4 million, with QSRs making up the majority share. Full-service restaurants alone are projected to add 16,100 jobs.

Also according to a 2024 QSR Operator Survey, 91% of quick-service operators and 87% of full-service operators cite ongoing labor challenges as a primary growth obstacle.

Like we mentioned, States with wage mandates like California ($20/hour for QSRs) are seeing stagnation or retreat in unit growth.

Yes, Franchising continues to be a major driver of U.S. job creation. However, labor-shortage issues are still very much real in hospitality, which is why HR and online marketing strategies remain key. Multi-location operators are now exploring hybrid scheduling, AI-driven labor forecasting, and self-service tech to reduce dependency on traditional staffing models.

6. Smaller Footprints and Drive-Thru-Only Formats Are the New Norm

Real estate inflation and higher build-out costs are leading brands to reduce square footage.

‍FRANdata's 2023 New Concept Report revealed that 21% of all new franchise concepts were quick-service models with smaller or modular footprints. Many QSRs are now being developed with initial investment costs under $500,000, which is a a major shift from the previous $750K–$1.2M average.

Examples:

• Starbird Chicken and Sweetgreen are now testing drive-thru-only locations.
• Burger King has announced $400M toward remodels prioritizing tech-forward, smaller formats.

Should you consider investing in smaller models and ghost kitchens? Yes, this can be a way to minimize CAPEX. But other solutions work wonders, like maximizing square footage and attractiveness : showing your space on Instagram, use Insta-baits like selfie spots, making sure all your Google Business Profile attributes are listed and highlighted to attract customers, etc.

7. Bankruptcy Rates Up 50% from 2023

Despite topline growth, unit-level margins are under pressure. Rising labor costs, commodity inflation (food costs up 29% since 2019), and debt servicing challenges are causing a wave of distress, particularly among over-leveraged operators. (Source)

While growth is strong, margin compression is real. Rising food costs (up 29% since 2019) and wage hikes are pushing weaker franchisees into distress.

Franchise success today demands financial rigor, marketing excellence and operational efficiency, not just sales. According to Harvard, an additional Star on Yelp = +9% revenue. At Malou, our clients get on average +174 new customers/month per location and +4.7% average revenue uplift.

Make sure you are investing in what brings real customers and foot-traffic long-term.

According to a 2024 QSR Operator Survey, 91% of quick-service operators and 87% of full-service operators cite ongoing labor challenges as a primary growth obstacle. States with wage mandates like California ($20/hour for QSRs) are seeing stagnation or retreat in unit growth.

9. AI and Automation Are No Longer Optional for Growth

From AI voice ordering (e.g., Panera’s voice assistant pilot) to robotic kitchen assistants, leading franchises are investing in automation to reduce labor dependency and improve speed of service. in White Castle and Chipotle, top brands are implementing automation to enhance labor efficiency and customer throughput.

AI also helps with operational excellence. By using semantical analysis on online reviews, for instance, franchises can immediately pinpoint any problem among their locations, as well as give constructive feebacks to franchisees.

Operators who fail to invest in digital ordering, loyalty apps, AI recommendations, and automation risk being outpaced in both revenue and margins. But that's not all.

Clients are also using AI to chose restaurants online. ChatGPT, Perplexity, Gemini... Google is no longer the only research tool in town.

To make sure your locations are retrieved by LLM (AI), you need to work on GEO (or AIO), to put your restaurants at the top of AI answers. In a nutshell, AI is not only about "robotics". It's about making sure people using ChatGPT find your restaurants online on any keywords.

It's also about using AI automation for direct growth : making tasks faster or more efficients, using prompts to gather business insights, using tool like Malou to manage online reputation, respond to reviews, create top-tier social media content, etc.

10. Regulatory Transparency Is Reshaping Franchise Agreements

The FTC’s updated guidelines in 2025 now require franchisors to disclose all “non-essential” or “non-negotiated” fees upfront in the Franchise Disclosure Document (FDD). This includes tech fees, marketing co-op assessments, and mandatory vendor rebates.

Transparency is now a brand value. Clear, data-supported agreements with franchisees build stronger systems and reduce litigation risk. Which is why creating an enrich tech ecosystem, using data-based and AI-fueled marketing softwares are key strategies for franchisors

Final Takeaway

Franchising in 2025 is resilient, but more complex and competitive than ever. Growth is there for those who operate with precision, transparency, and adaptability.

Whether you're launching your first location or scaling to 500, understanding these trends can be the difference between growth and stagnation. Most franchises now use AI-fueled tools like Malou to centralize and automate online marketing, or follow KPI from 10 to 100 locations. Run a free restaurant diagnosis or call one of our franchise experts at +1 929 494 52 10

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