Coffee or Pizza?

Feb 06, 2025 • 10 min read

Is Coffee or Pizza the Better Franchise Investment? Franchisees weigh the pros and cons as two powerhouse segments evolve in a shifting landscape.

In 2025, franchise investors face a compelling question: Is pizza or coffee the better investment? Both industries have demonstrated long-term resilience, but the forces driving their success have changed dramatically. Pizza, a mainstay of the quick-service restaurant world, continues to dominate with its delivery-first model and steady demand. Meanwhile, coffee franchises have surged, capitalizing on habitual customer visits and tech-driven convenience.

But which investment offers the better return? And which aligns best with the realities of today’s restaurant industry? By analyzing the financials, operational demands, and consumer trends, we can break down which sector presents the more compelling opportunity.

A Tale of Two Business Models

While both coffee and pizza thrive in fast-casual settings, their revenue streams and customer behaviors differ significantly.

Coffee franchises rely on high-frequency, low-ticket transactions. Customers return daily, sometimes multiple times per day, leading to strong lifetime customer value (LTV). Speed of service is paramount—most successful coffee chains deliver drinks in under two minutes. According to Drinkit, a fast-growing coffee brand under Dodo Brands, its average ticket sits around $7 with a goal of processing transactions in less than 120 seconds.

By contrast, pizza franchises generate revenue through lower frequency but significantly higher average ticket sizes. Dodo Pizza, a mid-sized franchise chain, reports an average ticket of $18. Large orders from families, offices, and events drive these numbers. However, delivery logistics and fluctuating demand present unique challenges.

Investment and Profitability: Where’s the Money?

The cost to open a coffee or pizza franchise varies widely. Let’s compare the numbers:

• Pizza Franchises
  • Initial investment: $250,000 – $1,000,000+ (varies by brand)
  • Franchise fee: $5,000 – $25,000
  • Ongoing fees: 5-6% royalty, 4-6% marketing
  • Example: Domino’s requires $5,000 – $25,000 upfront but can exceed $1 million in total investment due to build-out costs.
• Coffee Franchises
  • Initial investment: $276,000 – $1,787,700
  • Franchise fee: $14,000 – $90,000
  • Ongoing fees: 6-8% royalties, marketing up to 4.9%
  • Example: Dunkin’ requires $40,000 – $90,000 in franchise fees with total startup costs ranging from $437,500 to $1.7 million.

Profitability is where things get interesting. Coffee chains typically operate at higher gross margins (60-70%) compared to pizza franchises, where food costs are closer to 30-40%. However, the labor and efficiency of a pizza business often make up for this discrepancy.

According to Franchise Business Review, average net margins for both coffee and pizza chains range between 12-18%, though top-performing units in each category can exceed 20% profitability.

Operational Challenges: Logistics vs. Speed

Running a pizza franchise often means managing delivery logistics, inventory, and fluctuating demand. A large portion of sales come from takeout and delivery, meaning real estate location is less important than kitchen efficiency. Supply chain management is key, as pizza ingredients have longer shelf lives but must be replenished at scale.

Coffee franchises, however, thrive on foot traffic. Drive-thrus, mobile ordering, and AI-powered service speeds (such as Sam’s Club’s AI checkout model) are game changers. Labor is more customer-facing in coffee chains, where friendly, efficient service boosts repeat visits.

“Speed is the name of the game in coffee,” says Christophe Poirier, an industry analyst specializing in beverage QSRs. “If you can’t serve a drink in under two minutes, you’re already behind.”

Which Franchise Aligns with Your Growth Strategy?

For franchisees already operating burger, chicken, or sandwich chains, a pizza franchise offers a familiar operational model and supply chain synergies. Pizza also has built-in meal versatility—serving both family orders and individual slices—making it a strong complement to existing QSR brands.

On the other hand, coffee excels in daypart versatility. A fast-food franchisee looking to expand morning and midday revenue could add coffee without cannibalizing existing lunch and dinner sales. McDonald’s did this with McCafé, and now Taco Bell is exploring a beverage-first model with Live Más Café.

Which is better? If you’re looking for lower labor costs, higher ticket sizes, and delivery-driven growth, pizza is your answer. If you want high-frequency visits, rapid tech adoption, and strong customer loyalty, coffee wins the race.

Final Verdict: No Clear Winner—But a Big Opportunity

Both coffee and pizza franchises present high-growth opportunities. The best choice depends on an investor’s market, experience, and ability to navigate either industry’s unique demands.

“We’re seeing franchisees double down on both categories,” says Mark Seidner, a franchise consultant specializing in fast casual. “The best operators aren’t choosing between coffee or pizza. They’re diversifying with both.”

As we head into 2025, one thing is clear: Americans will never stop drinking coffee or eating pizza. The question isn’t whether the markets are viable—it’s which path fits your investment strategy best.