RESTAURANT INDUSTRY INSIGHTS

Restaurant Finance

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

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. In the U.S., companies have allocated $5.1 trillion to buybacks from 2008–2018, with 2018 being a record year for stock repurchases (authorizations reached $1.1 trillion, with some of those announcements being for

How Franchising Affects Restaurant Earnings Per Share and Revenue

Finding the ideal ratio of franchised to company-owned stores comes down to weighing the benefits and challenges of each path against an operation’s goals. Corporate locations increase revenue, as all sales go directly into the general coffers, but they come with lower margins and higher CAPEX costs. Franchising reduces owned

Understanding a Restaurant Cash Flow Statement

Although a restaurant company might sell assets or raise money with outside financing, the bulk of its cash should come from its operating cash flow: the money collected from food and beverage sales minus the funds spent on operating costs. A restaurant cash flow statement is an important tool for

Restaurant EBITDA

The restaurant industry can be mighty unforgiving, thanks to thin margins and high operating expenses. EBITDA (earnings before interest, taxes, depreciation and amortization) plays a crucial role, as it is designed to help owners and operators place a firm value on their restaurant company’s earning power by focusing on cash

Restaurant Debt Ratios

The restaurant industry is a diverse one — and with so many different types of companies (large, small, franchised, company-owned, etc.), the indebtedness of chains varies widely. Investors often monitor this indebtedness to navigate the risks (and, in many cases, rewards) associated with the chains themselves. Recent bankruptcies further highlight

Restaurant Food Commodities: Current Trends

Many restaurant chains have learned the importance of tracking food commodities the hard way, when disease or a shortage of a particular commodity have sent prices soaring. In 2013, for instance, Darden saw its food and beverage costs rise six percent (outpacing an increase in sales) in the wake of

Global Restaurant Commercial Lending Trends

Securing funding is a challenging pursuit for many restaurant chains, both small and large. Recently, though, we’ve seen a wave of lenders with specialized expertise in foodservice offer the ability to analyze a chain’s specific business challenges, maximizing the potential for the financing needed to grow. Business lending is slightly