Archive for June, 2018

Restaurant Margins are Shrinking in the Middle East. Here’s How to Respond.

The foodservice industry is a game of inches. With average restaurant margins falling between 3% and 5% profitability, chain leaders face incredible pressure to increase revenue, optimize costs, and make their operations more efficient. This is a skill GCC foodservice companies will soon have to master. Even though these foodservice markets are some of the fastest growing in the world,…read more →Read more...

Restaurants Are Investing Less in CAPEX

Two of the more important metrics in understanding how a restaurant operation functions are the CAPEX-to-revenue and CAPEX-to-operating cash flow (Op.CF) ratios. These figures allow us to compare companies regardless of size, determine their long-term growth potential, and recognize their spending priorities. Capital expenditures, which describe any one-time cost, from property and equipment purchases to remodeling initiatives and the expense of…read more →Read more...

Foodservice Companies Prioritizing Stock Buybacks over CAPEX Investments

Ten years after the global financial crisis, America’s restaurant companies continue to sit on large sums of cash. Yum! Brands, to name just one, had a stockpile of $1.5 billion in 2017. Restaurants chains with capital reserves this large have a few options: they can buy back shares (which increases the value of the outstanding stock), boost dividend payouts to…read more →Read more...

How Multi-Brand Portfolios Compare to Single-Concept Companies

One of the easiest ways for foodservice groups to increase revenue is to make new acquisitions, but our analysis shows that restaurant portfolios with fewer than four brands tend to reach higher total sales growth than those with four or more. Data for the top 100 foodservice groups in the US shows that those with up to three brands have…read more →Read more...

Middle-Market Restaurants Should Take on Investors to Expand

Even a decade after the Great Recession, restaurant commercial lending remains tight, but there’s still a tremendous amount of eager capital around the globe. Foodservice companies are increasingly turning to different sources to fund their restaurant expansions. Restaurants have proved particularly intriguing to private equity (PE) firms, and we’ve been approached by $3b–$4b in capital from institutional investors, earmarked for deployment…read more →Read more...

Stunning Examples of Restaurant Enterprise Value Enhancements

Restaurant enterprise value (EV) is easy to calculate: market cap + debt – cash.  It’s much harder to understand what causes EV to rise and fall. To help unravel this mystery, we examined EV enhancements among publicly traded restaurants over the past 20 years, looking for trends that produced long- and short-term gains. We found that most of the big,…read more →Read more...

European Fast Food: Where to Grow and Where to Be Cautious

The European fast food landscape is being affected by many of the same trends as the North American segment, but important differences in projected growth, chain penetration, size of the economy, and nation-specific consumer preferences call for tailor-made strategies for each market. Consumers across Europe cite feeling too time constrained to prepare food at home or to sit down for…read more →Read more...

How Domino’s Turnaround Gained Nearly $12b in Enterprise Value

Any pizzeria owner or chain executives who keeps up with the business news is likely more than a little green with envy (by now, probably emerald). The reason: Domino’s is killing it online. While over 75% of the US restaurant industry is still struggling to get its act together and launch an app that actually works, Domino’s has leapfrogged the…read more →Read more...

May 2018 US Jobs Report: Foodservice Adding Jobs But Wage Growth Slowing

The May 2018 US jobs report revealed that wage growth is slowing down in the foodservice and hospitality sector and now sits 40% lower than the private-sector average. Below, we take a further look at where employment and wages stand as of May 2018, along with how they’ll shape the industry and impact restaurant companies, investors, and operators in the…read more →Read more...

Starbucks Racial Bias Training: Why It’s So Important

On Tuesday, May 29, Starbucks locations all over the United States closed for a mandatory, all-hands training. The company distributed multiple iPads to each store, which, along with a personal notebook for recording reactions to the training and a team guidebook, took small groups through the four-hour training. The iPads came loaded with videos that included messages from high-ranking Starbucks…read more →Read more...
12