The Future is Franchised
Before we get started, I am speaking on a panel at The Chef Conference in Philadelphia today and at the conference for a couple days. If you’re there, I’d love to connect. As always, you can email at eli@shybird.com.
Audio by Eleven Labs can be a little wonky
TL;DR
If you had asked me even 6 months ago if I would ever consider franchising as a growth model for our restaurant Shy Bird, I would have immediately said no. It’s still not our chosen path but I would definitely no longer rule it out of hand. So here’s the thesis.
Over the next 5-10 years we will see the largest boom in franchising since the post WWII period. It’s driven by a few major forces:
The Impact of AI and Automation:
Increased entrepreneurial supply from displaced professionals
New entrants into a labor marketplace shrunken by AI and automation
Chat based knowledge bases, agentic tools, and computer vision all embedded in operations
The durability of restaurants in the face of these forces as evidenced by trends in food consumption away from home and retail leasing
Evolving, fractional ownership structures built on blockchain
Let’s get into it…
Paul Virilio famously observed that every technology brings its own disaster: "When you invent the ship, you also invent the shipwreck; when you invent the plane you also invent the plane crash." But with AI and automation, we're witnessing something more complex than technological determinism.
Yes, when you automate at scale, you displace those whose work is being automated. But you simultaneously create a surplus of talent and ingenuity. And crucially, you create tools that allow this talent to apply itself in new ways—accessing processes and knowledge powered by the very same technologies that displaced them in the first place.
The Goldman Sachs Research team estimated in 2023 that "generative AI could expose the equivalent of 300 million full-time jobs to automation," with office work and administrative support facing the highest exposure. Legal and architectural positions—long considered bastions of professional security—show automation potential of 44% and 37% respectively.
This displacement comes at a particularly critical moment for those entering the workforce, especially recent college graduates. Many recent graduates are underemployed or working in fields unrelated to their degrees. Recent data from the New York Fed, see above, shows that unemployment of recent college graduates is 85% higher than for college graduates of all ages. It’s anecdotal but I sense our restaurants are already seeing some of the early impacts of this. We opened a new (non-franchised) Shy Bird last month and saw over 1000 applicants for service team roles, far in excess of what we expected. AI's coming impact on entry-level professional positions will push many young professionals toward entrepreneurship out of necessity in addition to choice.
Ok, maybe but why restaurants?
Restaurants have demonstrated remarkable durability through multiple technological revolutions. From industrialization to the internet, restaurants have thrived. While technological advancement has eliminated many roles across manufacturing, retail, and now white-collar professions, restaurants have become more central to American life and the economy. This durability is the result of biological, social and cultural forces.
First, restaurants fulfill biological and social necessities that cannot be digitized—we have to eat, we tend to do it in restaurants and it also apparently makes us happier when we do it with other people. The USDA Economic Research Service shows food-away-from-home spending has consistently outpaced food-at-home spending for years, reaching 53.8% of total food expenditures. This is expected to rise to 61% by 2030.
Second, restaurants provide a social context for consumption that screens cannot replicate. As socialization generally decreases and loneliness and isolation increase, restaurants become even more important as spaces for human connection.
This enduring appeal is further evidenced by our cultural evolution into a nation of food enthusiasts. Food content dominates social media, with restaurant visits serving as cultural currency. Multiple generations of young people have been, and will continue to be, shaped by restaurant and food culture. This will inevitably also shape how they navigate the tenuous, ever-evolving professional landscape they’re entering.
Then there’s the real estate piece. Restaurants already dominate ground-floor retail, making up 19.1% of all commercial leases in 2023, according to CBRE research. This percentage has increased 15% over the past seven years and it’s hard to see that trend changing. As commercial real estate recalibrates and looks to combat Work from Home realities, restaurants—particularly concepts that have a degree of proven viability —will fill these spaces, benefiting from favorable lease terms and built-out locations from shuttered retailers.
Got it, there’s a lot of restaurants and restaurant focused stuff hitting people. Still doesn’t explain the franchising part.
I see four main drivers leading to franchise growth:
1. AI-Enhanced Operations for Smaller Players
Large chains have long held big advantages in operational efficiency, training standardization, and purchasing power. AI and automation will democratize many of these capabilities.
Agentic AI systems—autonomous tools that can reason, plan, and act independently without constant human oversight—will transform operations. These systems learn from previous interactions to improve performance and combine data, information and insight to drive near real-time responsiveness and action. For smaller operators this will mean access to operational benefits previously available only to large chains.
Computer vision applications are going to be particularly revolutionary. Scaled operators can now implement real-time quality control systems that monitor food preparation consistency, analyze customer flow patterns to optimize space utilization, and automatically track inventory levels. These systems can even verify compliance with safety and cleanliness standards—tasks that previously required constant owner presence or extensive management teams. Over the next five years AI will find its way into food and beverage cost management, labor, operating expenses, real estate decisions and, for better or worse, guest experience…there won’t be a line item on the restaurant profit and loss unimpacted.
2. The Portfolio Career of Side Hustles
For both professionals displaced by AI and those whose early employment opportunities are impacted, franchising will offer something increasingly valuable: the ability to build a portfolio of income streams rather than replacing one full-time job with another.
A franchise can be operated alongside consulting work, part-time professional engagements, or other entrepreneurial ventures. This aligns with broader workforce trends showing growth in multiple income streams and the "slash career" phenomenon (lawyer/restaurateur, accountant/franchise owner).
The International Franchise Association reports that 36% of franchise owners maintain other professional activities alongside their franchise operations—a number likely to grow as AI tools make remote management and oversight increasingly effective.
3. Closing the Operational Know-How Gap
The franchise model has always bridged experience gaps through standardized operations. The thick franchise manual will give way to Agentic AI assistants, computer vision systems, and RAG (retrieval augmented generation) interfaces serving as always-available mentors, providing contextual guidance during service, inventory management, or staff training.
For displaced mid-career professionals, transferable skills in project management, team leadership, and financial oversight provide a foundation, while AI systems fill restaurant-specific knowledge gaps. Simultaneously, younger entrepreneurs with digital fluency but limited business experience can leverage these same AI tools to compensate for what traditionally would have required years of management experience.
This democratization of operational expertise creates a formula for success that works across generational and experience divides, making franchise ownership viable for a much broader population of potential entrepreneurs.
4. Evolving Ownership Structures
While blockchain technology currently sits in what Gartner calls the "trough of disillusionment" in its hype cycle, the underlying concept of decentralized, fractional ownership models will inevitably reemerge with practical applications for franchising.
As blockchain matures, we'll likely see new ownership structures that enable multiple investors to hold fractional stakes in restaurant franchises. This democratization of ownership could:
Lower the barrier to entry for potential franchisees by reducing initial capital requirements
Enable community investment in local franchise locations, creating deeper neighborhood connections
Allow successful operators to scale more quickly by tapping into distributed capital sources
Create liquidity for franchise investments that historically have been highly illiquid
These ownership innovations would be particularly valuable for micro-franchising concepts, potentially enabling franchise ownership for those with industry expertise but limited access to capital. Just as crowdfunding transformed early-stage investing, blockchain-enabled fractional ownership could reshape how restaurant franchises are funded and owned.
The growth will be particularly strong in 2-10 unit operations—large enough to achieve economies of scale with suppliers and marketing, but small enough to maintain local market relevance and resonance. While McDonald's pioneered the modern franchise model, the coming boom will extend far beyond traditional quick-service concepts into every niche of the industry.
Restaurant franchising has always been about accelerating growth because you’ve got a defined, successful operating system. We’re fast approaching a time where that operating system is far more self-implementing and reinforcing.
The rise of AI and automation represents not just a threat to traditional employment but an opportunity to reimagine work, entrepreneurship, and the restaurant industry itself. As professionals displaced by technology seek meaningful work and financial security, many will find it in franchise ownership—leveraging the very technologies that disrupted their careers to build successful new ventures.
What's particularly interesting is how franchising echoes the American dream in every era of economic transformation. Just as post-WWII franchising provided opportunities for returning veterans, today's franchise model offers a path forward for professionals navigating technological disruption. In both cases, franchising provides what Americans have always sought: independence with support, opportunity with structure, and the chance to build something meaningful.