From Nation's Restaurant News · · 1m 30s
Restaurant Deals Stalled, Traffic Down Since 2018
Restaurant deals in holding pattern as traffic drops 21% since 2018.
In brief
Restaurant deals in holding pattern as traffic drops 21% since 2018. Restaurant deals are stalled due to private equity shifts and traffic down 21% since 2018. Originally reported by Nation's Restaurant News.
Deals aren’t getting done
Restaurant deals appear in holding pattern as private equity firms shift focus.
“Fewer private-equity firms have been interested in the restaurant space because they’re getting outsized gains in other areas”
Traffic down 21% since 2018
Restaurant traffic has dropped 21% since 2018 with same-store sales up 1.7% for the year.
“That’s a lot”
Value definition changing
Consumers now prioritize experience over price for restaurant value.
“It’s no longer just product. It’s not just price point. It’s experience and that includes QSR”
Convenience stores compete
Convenience stores like Casey's are increasingly difficult competitors to restaurants.
“Convenience stores are competing directly with fast-food chains like McDonald’s”
Customer base growth key
Growth in customer count drives sales more than frequency of visits.
“Traffic largely tracks the size of your customer base”
Buyer base shrinking
50-60% of restaurant buyers have evaporated due to portfolio constraints.
“50%, 60% of the buyer base has just evaporated”
Private equity shift
Private equity firms focus on other sectors due to higher returns.
“Fewer private-equity firms have been interested in the restaurant space because they’re getting outsized gains in other areas”
Sellers need realism
Sellers must be realistic about valuations for deals to happen.
“Sellers need to be 'realistic' about the valuations they can expect”
Traffic decline impact
Lost visits add up over years with industry expanding beyond demand.
“That’s a lot”
Value focus shift
Experience and quality drive consumer value perception.
“It’s no longer just product. It’s not just price point. It’s experience and that includes QSR”
Supermarkets as competitors
Supermarkets compete with restaurants as consumers dine at home more.
“consumers became more comfortable dining at home during the pandemic”
Independent restaurants up
Independent restaurants see higher sales due to better value proposition.
“Independent restaurant sales are also up, thanks to their better value proposition and higher perceived quality”
Chili’s growth
Chili’s grew customer count by 17% since 2017 with same visit growth.
“Chili’s grew customer count by about 17% since 2017”
Market for deals
Some buyers remain but market for deals is shrinking.
“There are some buyers out there, like Savory Fund or Garnett Station Partners”
What matters most
Restaurant deals are stalled due to private equity shifts and traffic down 21% since 2018.
