Is selling French fries a profitable business?

. 7 min read
Is selling French fries a profitable business?

A decade ago, getting french fries with a burger was a party meal in India, that you had the luxury of having perhaps a few times in a year.

Today, it is a snack in almost every restaurant, be it locally or globally. If you ask a group of people today about their favourite food, often the unanimous answer is french fries. Just like chocolate, french fries are more than just food. They are indulgent and are an easy side-dish as well as the main snack in almost every cuisine now. French fries are now the most sought-after snack food that can be ordered not just in chain restaurants but also in local eateries. In recent years, the french fries industry has seen consistent growth in business with an annual rise of 30%.

Potatoes are an essential ingredient in every cuisine and are consumed by every household in large numbers. French fries are one of the fastest growing snacks not just in KFC or McDonalds, but also in the frozen food markets and retailers. It is an easy snack, side-dish to every big dish, and a major favourite across all age groups. The reason that french fries are a profitable snack for fast food chains is due to their low-cost high-profit business model. This is also the reason why french fries have now found themselves in every local restaurant.

French fries work equally well in low volume as well as large volume setups. For a local restaurant, the investment cost is low, as the buyer has to invest in just potatoes, oil, seasoning, and fryers. Potatoes across the world cost an average of 1.16 $ per kilo which makes it economical to source. For a low volume, the cost of producing french fries is minimal and therefore the profits are almost even. For fast-food chains, the investment is in resourcing frozen french fries from frozen french fries retailers. Due to high demand, the fast-food chains end up making humongous profits at a minimal investment that involves just frying bags of frozen french fries.

french fries served on a wooden plank

Starting a French Fries business

The french fries market is largely profitable mainly for its low cost in sourcing. A french fries production can be easily amped up at minimal investment owing to how cheap potatoes cost across the world. The following factors must be considered while starting a french fries business:

  1. Location: Demographics play a huge part in the setting up of this business. Fortunately, french fries have now become a globally consumed snack that has also found its way into homes. The location should be selected to ensure people of all age groups can have access to the spot where you plan to sell french fries.
  2. Strategy: Whether you’re setting up a local restaurant or a franchise of the big food chains like McDonald's, it's important to be updated with the competitive market. Set up exclusive services or offers on menu items with french fries being the major selling point. Campaigning in a way that can lure customers for combo meal plans or offers can amp up the sales.
  3. Equipment: The most important aspect while sourcing french fries is the equipment to fry them. These would include frying machines, cutting machines, oil filters, etc, as well as sourcing of good quality potatoes. Other raw materials would include salt seasonings, sauces, etc. Vendors are open to negotiating and these materials can be sourced at a bargain rate without having to compromise on the quality.
  4. Quality control: Food business and hygiene are two sides of the same coin. The hygiene aspect in a french fries business is very important and cannot be compromised. You must take extra efforts to ensure the equipment for preparing french fries and the raw materials are clean and maintained regularly. Keep a constant check on the cleanliness and quality of the material. Consistency is the key here in maintaining good quality.
  5. Flavours: French fries are the most versatile product that can be added as a side-dish or can be served as a main dish with a variety of toppings. Cheese, mayonnaise, sauces, veggies, etc, go well with french fries.

Cost of starting a french fries business

French fries are a universally appealing snack. Right from kids to adults, everyone loves this versatile snack, and rightfully so. Let's take a look at the actual cost of starting a french fries business.

  1. Cost of different outputs: Depending on the volume of the french fries required, the production line needs to be selected. For a large demand, the mechanical production scale is high. So the larger the demand, the larger the machine, and therefore the cost is also high.
  2. Material cost: A commercial french fries line is composed of stainless steel. So again if you invest in a higher quality machine, which makes the cost go higher, and therefore the price of french fries will also be higher.
  3. Labour cost: A high-quality machine will have a long service life, which requires more labour.
  4. Time cost: Manufacturing of the french fries production line is time-consuming, which can increase the cost.
  5. Technical cost: High-tech machines need more technical support for their processing and tech maintenance. This can elevate the costs.
  6. Transportation cost: The mode of transport and the country of the customer usually define the cost of transportation.

Highlights of french fries business in the Indian Market

  • The french fries market in India is seeing a steady growth of 30% annually. It has the potential to accommodate giant MNCs as well as Indian startups
  • McCain foods that currently holds a high stake in the frozen food market, claimed that they estimate the growth of 15-20% in urban households.
  • McCain foods along with medium business owners currently plan to expand the french fries selling outlets in over 80 cities to a whopping number of 50,000.
  • Potatoes in India cost an average of 7-30 ₹ per Kg, companies spend around 50-60 ₹ for a kg of fries. These are sold to large companies for 80 ₹ per kg and urban consumers buy them for 200 ₹ per kg. The french fries business is therefore extremely lucrative.
  • Consumers have a high awareness of the processed foods, and therefore markets have a high demand for a steady supply of such foods. Frozen french fries have now become a staple in every home. Even in restaurants, french fries are now viewed as a commodity rather than just another dish. It is a mandatory food item on every menu irrespective of the cuisine the restaurant serves.
  • Even if there is a possible radical change in the tastes of the consumers, french fries will remain the most reliable, versatile product in the market.

Whether a business is aiming at serving hot french fries or supplying them as frozen french fries suppliers, the profit margins in both these lines are huge.

A small-scale french fries production line is highly efficient even with a low investment. It is fully equipped to manage the complete end-to-end process from washing potatoes to end packaging.

For a high-volume mass producing production line, the machines are highly automatic and need minimal human intervention. Frozen french fries can be served to a wider variety of consumers like quick eateries, bars, pubs, flight caterers, luxury hotels, etc. The huge market that french fries offer is quite favourable to tap into and make a huge profit.

french fries served on wooden plank with tomato ketchup and mayonnaise

In the 1940s, J.R. Simplot company started the production of frozen french fries and commercialised them for use. It was this company that also helped McDonald's from having consistency issues. McDonald's profit margins after this rose and it became one of the most popular food chains especially for its serving of piping hot french fries.

Right from the 1940s when french fries became a commercial food item, up until the 2000s and now, there has been a steep rise in consumption. Even in India, right from KFC and McDonalds to Big Bazaar, Spencers and McCain have claimed that french fries are among their top three billing items all around the year.

The french fry has become a global snack and has now seeped its way into every culture. The versatile potato was already part of every dish right from hash browns, mashed lumps to vada pavs and parathas. However, it is the 12mm long piping hot fries that has made it a truly global commodity.

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Q. How much is the annual profit of french fries businesses in recent years?

Ans. The annual profit for french fries businesses in recent years has been 30%.

Q. How did McDonalds tackle the consistency issue regarding french fries?

Ans. McDonalds started importing frozen french fries from J.R. Simplot and eventually became popular in selling consistent and sumptuous french fries all over the world.

Q. What are the major factors to consider before setting up a french fries business?

Ans. The major factors to consider before setting up french fries are: Location, Strategy, Equipment, Quality Control and Flavours.

Q. What are the key highlights of french fries in the Indian market?

Ans. At an average cost of 7-30 ₹ per kg can lead to 200 ₹ per kg for a packet of french fries. The urban households have led to a humongous rise in the demand of french fries at fast food restaurants as well as frozen foods markets.

Q. What are the different costs involved in setting up the french fries production line?

Ans. Cost of different outputs, Material costs, Labour cost, technical cost, Time cost and Transportation cost.