How Gen Z Is Reshaping the Franchise Landscape

Restaurant franchising is undergoing a generational transformation powered by Gen Z’s estimated $360 billion in disposable income and their preferences for customization, digital convenience, and brand connection.

“Gen Z is driving real change in franchising,” said Prachi Keshap, who, alongside her father Ajay serves as Master Franchisee for Gong cha in the Pacific Northwest. “They’re not only customers but also trendsetters, and their choices are influencing the direction of entire categories. The brands winning with younger consumers are the ones that offer personalization, strong digital platforms, and an authentic social media presence.”

She added that authenticity and transparency are huge with Gen Z whether that’s in ingredients, sourcing, or brand values.

"They can tell right away if something feels off or forced. Where past generations may have focused more on convenience or price, Gen Z is looking for a real connection."

Ajay, a 20-year industry veteran who operates more than 50 restaurants across five brands, believes the stakes for franchising are high, but so are the possible returns making it crucial for legacy brands to adapt. 

“Gen Z grew up with endless options at their fingertips. That shapes how they approach food and drinks—it has to be customizable and shareable. Social media just amplifies it, making younger consumers even more influential.If brands adapt, the long-term upside is huge: you can lock in loyalty from a generation that’s just starting to form lifelong habits, and you build an operating model that’s more tech-enabled and resilient for the future. If they don’t adapt, the risk isn’t just losing Gen Z—it’s losing the generations that follow their lead."

Emerging brands can offer a financial advantage as they can be more operationally efficient than traditional quick service models, Ajay pointed out.

“Shops require only a moderate capital investment and minimal buildout,” he explained. “Equipment costs are low thanks to good use of space and limited food prep, and most ingredients have a long shelf life, which keeps waste down. With low cost of goods and high markups, the model supports strong profitability.”

Flexibility is another advantage, Ajay noted, adding that because the footprint is flexible, it can work in smaller spaces or scale up in larger ones, and because it’s beverage-first with limited equipment, it adapts easily to non-traditional venues like airports, malls, or campuses. 

“That flexibility, paired with lower product costs, helps drive stronger margins than many traditional restaurants. While there’s still upfront investment in systems and training, once those are in place, concepts like this are much easier to scale and replicate in new markets.”

Prachi first introduced Gong cha to her father after seeing its potential to engage with younger consumers in an authentic way.  

“I’d seen how much my friends and I connected with bubble tea, both as a customizable drink and a social experience, and how much potential there was to engage Gen Z audiences.”

She added that, while legacy brands have strong foundations to build on, they need to give guests fresh reasons to visit, keep their brand culturally relevant, and engage with Gen Z where they are, often through social media. Her suggestions include limited-time trending flavors, seasonal updates, or collaborations that connect to culture in meaningful ways. 

“Gong cha’s partnerships with Felix of Stray Kids, PEANUTS, and Final Fantasy XIV have all driven excitement among younger audiences,” Prachi said. “Just as important are value-driven entry points, with programs like $3 large teas helping lower the barrier for first-time guests and encouraging repeat visits. Nostalgia is also really popular right now, which puts legacy brands in a strong position to lean into their history, but they need to find fresh, creative ways to reintroduce it.”

On the operational side, Ajay added, Gen Z expects a seamless digital experience, from ordering to loyalty programs and meeting that expectation often requires significant investment in technology, training, and operations. 

“As someone who has operated legacy brands for decades, I know change can be difficult, but I’ve also seen firsthand how continuous evolution—both in offerings and in how you engage with guests—is essential for staying relevant.”

The pair believe the rise of Gen Z-friendly concepts is a structural shift in how franchising operates and hope to expand Gong cha’s footprint across the U.S. They have a development plan to open 50 stores over the next five years.  Systems that evolve now will be the ones still thriving 10 or 20 years down the road, Ajay said. 

Prachi agrees that Gen Z’s influence isn’t just about what they’re spending now—it’s about shaping the brands that will define the next generation of consumers.

"For operators, this means shifting portfolios beyond legacy names to capture a generation that has significant spending power and the potential for long-term loyalty.”