What has changed is not the model, but the cost environment. In Canada today, the economics that once favoured food have shifted decisively toward services.
Yet one misconception remains deeply entrenched: food equals success. A busy restaurant feels successful. A visible storefront creates confidence. Service businesses, by contrast, often appear understated. But when you strip away emotion and compare like-for-like investments that are properly capitalised, the numbers tell a very different story.
Start with launch costs. In 2024–2025, the true all-in cost to open a mainstream QSR or fast-casual franchise in Canada typically sits between CAD 850,000 and CAD 1.2 million. In major urban markets, it is increasingly common for total exposure to exceed CAD 1.3 million once fit-out inflation, equipment, landlord guarantees, pre-opening payroll, and adequate working capital are included.
A properly funded service-based franchise, entered with a growth mindset rather than a survival mindset, typically requires CAD 140,000 to CAD 220,000. Even at the top end, service models demand roughly 75 to 85 percent less capital to launch correctly.
Revenue is “the flame that many a moth are drawn to.” A strong food franchise may generate CAD 1.3 to CAD 1.6 million in annual turnover, while a service unit may generate CAD 600,000 to CAD 900,000. On the surface, food appears to outperform by 40 to 55 percent. But revenue is not profit.
Food franchises in Canada typically operate at EBITDA margins of 8 to 14 percent, producing CAD 110,000 to CAD 220,000 in annual operating profit. Service franchises, free from fixed rent and excess staffing, commonly achieve EBITDA margins of 22 to 30 percent. On CAD 750,000 of revenue, that equates to CAD 165,000 to CAD 225,000 in profit, often matching or exceeding food outlets with far higher turnover.
The real divergence appears over time. A food franchise absorbing CAD 1 million in capital may generate CAD 450,000 to CAD 550,000 in cumulative operating profit over three years, often without fully recovering the original investment. A service franchise launched with CAD 180,000 can generate CAD 500,000 to CAD 600,000 over the same period, achieving breakeven far earlier and delivering a three-year cash return of 280 to 330 percent.
Where services truly dominate is in multi-unit scalability. A second restaurant requires another lease, another build-out, and another seven-figure risk stack. A second service unit often plugs into existing infrastructure. Revenue may double while overhead rises by less than half, allowing profit to accelerate rather than reset.
This is why experienced operators who enter service franchises well financed consistently outperform. They think like platform builders from day one. Private equity understands this instinctively. Capital flows to businesses that return cash quickly, scale efficiently, and avoid rebuilding risk with every new unit.
Food franchises can be excellent businesses, but the belief that food automatically equals success is outdated. In Canada’s high-cost environment, success belongs to models that prioritise capital efficiency, speed of payback, and scalable infrastructure.
Service franchises were never the new kid on the block. They were simply quieter. And while many were watching the front counter, they were winning where it matters most: on the balance sheet.
