Season 4 Episode 1: 2022 Franchise M&A Trends



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Welcome to the Restaurant Boiler Room Season Four, Episode One. I'm your host, Rick Ormsby, Managing Director at Unbridled Capital. Today in the Boiler Room after a win sprint to the finish line in 2021, we're ready to start 2022 with a bang. Today, we will talk about franchise M&A trends anticipated in our industry in the first quarter of 2022 and beyond.

The Restaurant Boiler Room is a one-stop shop for multimillion dollar merger and acquisition activity and financial complexities affecting the franchise restaurant industry. We talk money deals, valuations and risk delivered to the front door of franchisees, private equity firms, family offices, large investors and franchisees on a monthly basis. Feel free to find our content at Unbridled Capital's website at

Now, let's enter the Boiler Room. Well, Hey, everybody. Happy New Year for 2022. Goodness gracious, I kind of feel like a hibernating bear here. I don't know how you all feel. I mean, we did to kind of have a favorable placement of days over the holidays to be able to have maybe a little bit of an elongated Christmas break. I needed it, man. Whoo. I don't know about 2021, I guess it was an incredible year for business, but it was also incredibly challenging year too. I'm sure you all feel the same way.

I kind of feel like a little bit of of a hangover effect in early 2022, especially with this kind of Omicron thing going on. I don't know if you guys and gals have friends and family who have gotten sick, but goodness gracious. It feels like half the people I know are sick or various types of things flu or COVID or whatever it would be. So I expect we're going to have a little bit of a slow start to 2022. In many ways doesn't it feel like a little bit like 2021 started off too? I'll talk a little bit more about that as we go forward. It kind of feels like 2021 over again.

Let's see if some of the trends and things that we saw play out in 2021 kind of come to fruition again this year or not. I just hope you guys had a nice new year as I get back into it, I'll share one little quick story with you. I like write a letter to myself every year and then I open it up the next year on New Year's Eve. And then I read it and then kind of read all the past letters from the last 20 years, which takes a while now actually because I try to make these letters long. And then I write another letter to myself that same night and then open it up the following year, if that makes sense.

And in those letters I talk about family and faith and work and silly predictions about sports teams and economy, and all kinds of crazy things about my kids and all kinds of stuff like that. And that's been a real joy though over the years to keep up with. And just kind of watch how fickle this world is and how our decisions change. And how even between one year to another, but certainly over the course of five or six or seven or 10 years how your life takes a path that you totally wouldn't have projected. In many ways you could see God's hand on your life in a way that you couldn't have ever have predicted if you looked backwards 10 years and tried to predict what your life would look like.

So that's kind of a neat little thing that I do. I encourage you to maybe pick that up if you have the time to do that over the holidays. There's usually a day in there between Christmas and New Year's that it's kind of slow, family's kind of wrapped up and you're just sitting around watching football. And I just sit there on a laptop for about two hours and write these letters. So enough rambling, I suppose.

First thing I guess I would say I've got like an 18-point checklist here is I'm just looking at it of items that kind of pop into my head for franchise M&A trends for 2022 that I'd like to share with you as we get started on the year. And like all things, I express a lot of opinions. I'm not sure that all of them are right, but it's kind of how I'm seeing the industry right now and we'll see it play out in the first quarter, in the second quarter I'm sure.

The first thing I would kind of say is what a year it was for M&A activity. Goodness gracious. I mean, from every type of franchise deal you could imagine we saw large franchise ordeals. We saw small franchise ordeals. We saw acquisitions of all kinds. I'm just going to name a couple of them just to come off the top of my head RBI Restaurant Brands who owns Burger King, Tim Horton's and Popeyes, they bought Firehouse Subs towards the end of the year. We had Jack in the Box bought Del Taco. You had FAT Brands come in and buy a bunch of concepts like Fazoli's and Twin Peaks, all kinds of other ones. You even had private equity groups come in High Bluff Capital bought Church's Chicken.

You saw a lot of large franchisees in the space kind of change private equity hands, especially there's several of them in Taco Bell, but in other brands too like Planet Fitness where you had new financial partners come in to buy or acquire these gigantic franchise businesses and place equity into them. And kind of take out the old equity partner that might have been, I'm not sure, but might have had LPs forcing them out of the business after a five to seven-year window. And we're trying to effectuate a year end 2021 sale for tax purposes or timing reasons.

So you saw that. And then of course you saw it even at the mid scale franchisee level. You saw a lot of the older franchisees or the first and second generation franchisees of various sizes now, not just small ones, medium sized, large ones sell their businesses this year too. We saw 2021 start off brisk, but it really kind of hit its stride between like March and June and then really July as well where people were either selling for a number of reasons. One was performance-related, their business had been strong both sales and profits.

And labor last year at this time was difficult just like it is now in restaurants. And so that's something that weighs on the mind of these operators and these business owners. And it's not just in franchising. It's all over the industry all over the world really and all kinds of small business owners of various kinds feel the same way I know. People are getting a year older. The threat of increased taxes kind of got the engine moving and made the deals briskly close with kind of a big brick wall on December 31st.

So that kept our little firm busy law. I'm blessed to tell you that we had a banner year. I mean, the best year ever at Unbridled, it was the most difficult too. I mean, we worked our buns off, but we had 15 closings, businesses that we sold in November and December alone and eight of which, get this, eight of which happened in the final two weeks of the year. Obviously, there's big companies that can do that kind of volume every day, but for our firm that's busy. And when you have those year end pressures and I'll talk a little bit more about what I saw in those eight deals in the final two weeks of the year.

But when you have those year end pressures and you can't delay past December 31st, it certainly does force not only long hours, but sometimes difficult decisions too. And you know I'm proud to say that I think we had 16 deals and 15 of them closed. So only one of them and it's a very small one hasn't closed and has gotten postponed indefinitely. It was my viewpoint when we were going into the fourth quarter of this year that because as we went along we were feeling like the tax changes might not happen in 2021 at all, that we would see deals stretch into 2022.

When I was out at restaurant finance in November, I mean, a lot of people were saying that their deals will stretch into 2022, but very few of ours have. Most of ours did get accelerated and pushed into November-December. And I'd like to kind of give a shout-out to all the different advisors and service providers and M&A advisors and lenders and real estate folks and attorneys and appraisers and surveyors, and all these people who kind of come alongside the aspect of selling a company or refinancing a company that kind of quietly come alongside. And they're usually down the path a bit like you don't see appraisers getting involved or sometimes attorneys getting involved at the front end of deals, but they're very busy in the middle and end of deals.

So those folks are probably fatigued right now and really kind of busted it in the last four to six weeks of the year. And so my hat's off to all you guys and gals who were part of that effort. It was a busy end of the year. And like I said earlier, I think there will be some sort of a hangover effect for the first three or four weeks of 2022. I mean, frankly, it's just try to thaw after a stressful year end. I think you're going to see lenders, attorneys and advisors kind of start the year slow, but I do think it will pick up.

I mentioned a little bit about Senator Manchin's refusal to agree, or maybe I didn't say it exactly this way, but Senator Manchin of at the last 11th hour in 2021 kind of came out and said he refused to sign the Build Back Better spending legislation. And I just saw him on Fox News just yesterday saying it's tabled and he's not in any active discussions. I'm sure everybody's going to get back after the hangover here in Washington and pile together. And do their usual incompetent get togethers and try to reinvigorate some of this tax and spend legislation.

But I do think there is a little bit of renewed optimism for some of us that tax policies may not change substantially before midterm elections this year. I think that's something that we'll just kind of continue to watch. But I mean maybe the Democrats will try to slam through some egregious tax legislation, but it doesn't look like they got the votes from Manchin and others potentially to do it. So my guess is you see any kind of legislation get scaled back. And it's hopeful that taxes won't change materially, especially capital gains taxes that we all fear so much when we buy and sell things, especially when we sell things.

So let's hope that that stays pretty much status quo in 2022. We'll see. And so we have that going on in our business. We see a lot of folks, like I said earlier, are sick with Omicron COVID variant right now. I mean, goodness gracious just here in the Panhandle of Florida, I think half the people in the town I live in have it. So I'm sure this is going to because a short-term pinch on labor availability for some franchisees. I was talking to a franchisee just yesterday and he told me, he said, "the drive-thrus going to continue to be king. Drive-thru and delivery and if you can staff your restaurant, you're going to be able to do about as much in sales as you want to do, every bit as is that you want to do for the next couple of weeks and maybe months."

I thought that was kind of an interesting comment. So seems like sky's the limit for sales if you can keep the stores staffed. I know it's an issue though. I mean, look at the news talking about travel delays and travel cancellations because there aren't enough people in airplanes and airports. So keep a watch on that. Let's hope we get through that with minimal hospitalizations and deaths, but I know it's going to be weighing on our minds in the early part of January here. Another reason why we might have a little bit of a hangover for the first few weeks.

So as we look at sales trends, probably being strong. I mean, January traditionally in the restaurant in the franchise business is a time to be talking about value with new promotions. It was when I used to work at Yum! Brands that was always the time we talked about value. You always wanted to talk about six of this for whatever price or eight of this for whatever price, or two of this for whatever price. We're not seeing as much focus on value now, obviously because pricing has come up quite a bit and folks are looking to offset inflationary pressures.

And so I just noticed that KFC is an example instead of coming out with a value message is coming out with a pretty, a cool message for beyond meat. So they're going to have like a beyond meat chicken substitute bucket of chicken in a green bucket that's coming out I believe on Monday, which would be like Monday the 10th of January. That'll cause a lot of buzz. A limited time offer type of menu item that's not permanently in the stores. Any type of new news brings what we hope to be and we call trial. And trial is where either elapsed or existing or new customers come just because they see and hear about it and want to give it a try. And then when you get new trial you hope you can keep them, wow them and keep them coming back more often. And if they do come back more often, you want to upsell them and get them to increase their check average that's why the restaurant companies do the new promotions, but typically you do see more value orientation.

I mean, think about New Year's Eve when you watch the ball drop. If you stayed up that late, I did make it till, yay, till midnight Eastern Time down here on the Panhandle. We're on central time so I didn't make it to midnight Central, but I made it to midnight Eastern. And obviously when you watch the ball drop in New York you see all the Planet Fitness signs everywhere. They're a big sponsor. And of course they're doing their $0 entrance fee or whatever and initiation fee, then $10 a month. So value, value, value is typically kind of communicated.

But this year we do see some food cost inflationary pressures and they're at record levels. I mean, there really are. We've seen pricing come down a little bit in some of the construction areas of our country, but I mean goodness for food. Wing prices are remarkably high. I've confidentially seen, heard of a couple of comments from franchisors saying that they expect major food inflation in their companies and with their franchise businesses, and with their delivery models for 2022. And I think we're going to see some big instead of value, which will be a theme, it always is. I think we're going to see some big pricing initiatives in most brands at the start of the year.

If you assume that most of your pricing sticks every time you just add pricing, you're really kind of adding for every dollar you increase your products. You should be getting 90% profit because it doesn't cost any money. The only thing you have to pay is royalties and advertising fees. Everything else should flow straight to the bottom line. But at some point when your prices get too high, you see demand fall. So I personally I've talked about this recently, the prices and it's not the operator's fault. Inflation has been incredible and it's hard to get labor, but prices going through the drive-thru window are expensive. So let's watch that for 2022.

I mean, given some of the trends I've talked about like taxes haven't increased. Omicron being out there, that's going to pinch labor a little bit. Food inflation costs, but sales trends probably going to be strong, especially with concepts that have delivery and drive-thru sales. I mean, just kind of like those four trends along with the operators maybe looking at their peers and their brethren that sold in 2021 and kind of thinking, "Ah, I want to do it too maybe. I miss the boat, but maybe the party's still going to go."

I think we should see a fair number of deals in 2022. I mean, at the time of me talking to you now it's the 5th of January. I've gotten like three phone calls so far from fairly decent sized companies, first and second generation franchisees looking to sell in 2022. So it is slow. It's quiet for the first couple weeks. And we have a fairly big push in December too. I think we had five or six, maybe seven businesses that we had on the market in December, which is somewhat high given the fact that we were in closing mode trying to get deals closed, not introducing as many new deals.

So I think I expect this trend to continue, especially as we head into February, which is traditionally the busiest time of year for engaging in new assignments. February, April, and March, people dust off their year end P&Ls and then they start get going. So I expect it'll be a good start from what I've seen in December with new deals that we have. And then in January with the phone calls I've gotten already in the first five days, really four days of the year I suspect it'll be a decent start to 2022 once we thaw out a little bit. And maybe then it does look a little bit to me and remind me a little bit of the start of 2021 from an M&A perspective.

I mean, think about some of the similarities. Think back to January 1st, 2021, drive-thru and delivery were still king. I mean, we had kind of regulations and dining room mandates were just coming out. Most people were still fearful and afraid to go into dine-in restaurants. I mean, I think that has changed a little bit. Our perceptions have changed. Our level of comfort has changed, but that's still a concern. COVID is still in play. Just yesterday they said over what? 1,000,001 cases just yesterday. To my knowledge like two or three times higher than what it ever was in any single day throughout the pandemic. So COVID is still in play unfortunately. I didn't know that we'd be dealing with it like this at this time in 2022.

Labor is difficult to find, but you know it difficult to find last year at this same time. Taxes have not increased, but are looming. I mean, that's what we were talking about in early January. Sales are still fairly strong. The interest rates are fairly low, are fairly very low. There's still a lot of capital in the marketplace. Asset prices are still somewhat inflated. Capital availability is there. The lending market is pretty strong, maybe tightening a bit. So we have kind of the same type of drivers in place for 2022 that we had in 2021. So I'm not sure exactly how it plays out. I don't think it'll be as a robust of a year for maybe anybody in 2022 as it was in 2021, but I might be wrong about that.

And if we don't get any geopolitical kind of things, kind of rolling down the pipe that smack us in the head or any massive session area issues or wars or whatever it would be. I kind of feel like 2022 might be a junior league version of 2021. So we'll see how that plays out. Valuations for 2022 I think will remain strong. I do think they might subside a little bit in certain brands as EBITDA's challenged and lending is tightened a little bit. Valuations are largely built on what your EBITDA is and what the EBITDA multiple is. Take the EBITDA times the multiple simply put and you get a general price. It's way more complicated than that, but that's kind of an overview.

So there's two questions what's going to happen to pricing? Like what's going to happen to EBITDA and going to happen to the EBITDA multiple? It's all over the board. And some brands you're seeing EBITDA going to drop and I think that's definitely going to happen and it may not happen until P3, P4. Maybe start of the second quarter, some brands are just continuing to take off and sales are killing it. Some already have sales down. And if your sales are down with cost pressures being so high, you would be sure that your EBITDA is going to be down.

So EBITDA is kind of all over the board. The EBITDA multiple I do believe is going to be pretty constant. It may drop in some brands. I'm going to talk about that in a little bit more detail here in just a minute. In essence, the EBITDA multiple is basically what someone's willing to pay on the EBIDA itself. So let's say EBIDA and this is a crazy thing to say, but let's just say EBIDA is not changing. In this darn environment it's changing every day, but let's say EBIDA is not changing. Then the EBIDA multiple is kind of how you kind of look at the EBIDA multiple going up or going down as a factor of supply and demand.

So that being said, I do think we're going to have a little bit of a change in dynamic in supply and demand in 2022. I mean, we had a lot of deals in 2021 and there's only so many players in our industry. The bigger players are sitting on several big acquisitions in 2021. They borrowed a lot of money. They've got new equity partners. They're digesting new acquisitions. I just think there's only so much demand from the existing franchise base and so we're going to have to find more demand from things like new private equity entrants, new family office entrants, and maybe dependent sponsors too. And I'll talk a bit about independent sponsors in a minute.

Really something you might not be surprised to hear as we get to the latter stages of an up cycle of selling any kind of asset. It maybe starts with the neighboring franchisee buying the other franchisee. Then the second cycle is the larger franchisee decides to buy non-contiguous franchisee. Then you see kind of existing private equity folks get involved in other brands. You see franchisors acquire other franchisors, but you see in the kind of the later stages I think you see more of the financial types of buyers entering the space as the deal sizes, the deal prices, just the latter nature of the run here makes it such that there's more potentially sellers than buyers in these markets. That's just a quick commentary.

Like I said, I think we expect so several interest rate hikes this year. So borrowing costs are going to increase. That's going to affect how much someone's willing to pay for an asset. I hope the borrowing costs increase in a somewhat of a muted fashion and kind of slowly over time. I mean, the Fed is already, we already got all kinds of guesses about how many times they'll raise and when they'll do it, but clearly borrowing costs are going to have to come up to tame some of the inflationary pressures in our country. So expect that to affect our industry and the lenders in certain ways. And I do expect lending to tighten up and I think you start to see it a little bit.

We had one particular deal at the end of the year. I mean, to tell you like it was December 28th and the lender backed away and was a no-show at closing, and it was a huge deal. And it ended up happening because the seller and buyer worked out a seller financing note for a short amount of time. And it was a big number, but the lender didn't show. I do think we're going to have a little bit more scrutiny in the banking community, unity, especially with the risk folks.

And so be careful as you walk into 2022. If you're borrowing money, I might ask your bank rep if you're doing a deal, "How many deals did they do in 2021 and how many did they back away from once they issued term sheets?" Those are reasonable questions to ask. Like people always ask Unbridled like, "How many deals do you take and how many have you closed?" And I'm honored to say that we keep right at a 90% success rate, which like you've heard me say before is incredible, unheard of, best in the industry type of number. Ask that of your lender to see what their performance has been, especially going into 2022 and maybe a little scrutinous as you ask about kind of their risk departments and kind of how they're structured and what they're feeling is for this year.

So there's a pretty good balance at the moment between supply and demand between buyers and sellers. That's a good thing. So I'm happy about that in this general principle of apply and demand of buyers and sellers should keep valuations mostly in line as long as financial performance stays the same. Remember what I said earlier like as long as EBITDA stays the same, valuations should mostly be in line because the EBITDA multiples stay relatively in line if we have kind of an equilibrium of buyers and sellers in the markets. Is it macroeconomics 101? Yeah. So keep that principle in mind.

It is true that perhaps because of a high number of deals for sale in 2021, we at Unbridled started to notice fewer offers on individual deals as the year went on. And so that's a little bit concerning and I guess we'll see if this trend continues. It's not the same for every single brand. It's very difficult to make a broad comment when all these brands operate so differently from one another. And I don't have any data here, but if I had to kind of give you a bit of a view, an opinion of how it started. Like in April, our average business we had for sale may have 10 to 11 offers on it.

And then businesses we had for sale in November, in December might have had six offers on them. Does that make sense? That's totally not the same for any particular brand. I mean, it's just like a broad comment. So if you're a seller of a company, I mean, the comment I would say is six offers if that's the number of offers, given this example, is still plenty to make a market at the same price as always for your business. But if it's in a brand that's kind of not doing well, a brand that may have had mediocre performance during the last couple of years certainly. Or a brand that was boosted by COVID temporarily in sales and profits, but did so without really any change to its business approach who just kind of hit the rising tide of COVID, and basically didn't do anything about it to change the way they were doing business.

If that average of 11 to six and you're in a brand that's kind of mediocre or temporarily COVID popped, you might have been like six and now you're at three offers. You see what I mean? And at some level if the interest in the brand drops to only a couple of offers, then you have quick changes in valuation because the demand is lower than the supply. And those types of drops in valuation are somewhat unpredictable and they can happen very, very quickly.

They can happen like at the, I mean, literally at the drop of a dime. I'm not kidding. I've seen it. In December, we saw it on one particular deal. We saw a maybe a 10% drop in valuation, bam, like that. Not because of anything other than there wasn't as much demand. And we weren't sure why there wasn't as much demand. It was likely because there were more deals in the market and people were just busy as we got to year end, but we got to watch and see if this trend continues at all. The basic premise is still the same. If you have an awesome business that's kicking butt, you're going to find buyers at good prices in this market. Lending is still cheap. A lot of the conditions are still the same that they've been over the last couple years.

So I'm not worried about that, but if you're a mediocre business and your sales aren't up or you've just had temporary increases, be wary. And it may change your strategies as you think through trying to sell a company in 2022. If I'm right and we start picking up in February in March and we get a big increase in supply, and I'm not sure about demand, but let's just say that the year end push left a lot of people on the sidelines for 2022 because they're just full of debt and swallowing the acquisitions that they made.

If all of that is true, then as we move forward we're going to progressively have more of a supply-demand issue. And that would mean if it's true and there's a lot of ifs, ifs and ands. If that's true, then that would mean that valuations could drop progressively as we move forward in supply increases, which I just told you supply typically increases in February, March, April and then even May. As you think through this, what does this mean? I think it means that if you were going to sell a business, you would want to sell it early in 2022 and not wait until the second quarter or the third quarter because of a fear of greater supply than demand.

Again, I don't know if I'm right about that. I mean, I've been doing this a long time, but I've been wrong a lot too, but that's kind of just some commentary, some thoughts to noodle with. Here's an example that may make sense to you. We've got some friends around here in Florida that are realtors. And a lot of them are telling me now like prices have run up a lot for these homes around here. Everyone wanted to come to Florida and buy second home, move their business down here, all the things they wanted to do. And now prices had a huge run up and there was like one day and you had 10 offers on these homes.

But a lot of my friends and colleagues down here that delve into real estate are now telling me that homes are sitting without the multiple offers and homeowners are having to kind of reprice their houses and drop the prices a little bit, either in small chunks or are in one big chunk to make the sale happen at this current time. The question is is that because we're just in January and December and it's at the end of the year, or will that trend continue? I mean, if you can visualize the real estate market in your hometown operating that way, then be thinking about the valuations of these restaurant businesses, these large deals, middle sized deals, all kinds of deals, kind of operating in the same kind of fashion.

All right. I do expect a larger percentage of deals because of the supply and demand issue to go to new private equity and new family office entrants into the franchise space this year. We've started seeing them in December on several of our deals kind of as I said before, many of the existing operators have just had borrowed a lot of money and they were busy closing deals. We all talk about private equity, but in the mid-sized M&A market in franchising, there aren't really that many new private equity people that come in and out. And we're starting to see them now and I think we're going to see more of them.

The deals they do are subject to a lot more risk at first. So they typically pay high prices, but they go through what we call exploratory due diligence, which is like they make an offer, but they're not even sure about the brand or about the conditions of the stores that they make an offer on. And they have to do like month of exploratory diligence before they'll send an LOI and then subject to confirmatory diligence, which is more in line with the quality of earnings and inspection of the assets, and some of the things that work in this industry more traditionally used to. So just beware as the trend changes if more new private equity entrant and family office entrants come into the franchise space and come down range a little bit at the smaller platform investments like the 30, 40, 50, 60 unit deals.

You're going to be seeing time to complete these deals is going to change, it's going to increase. And the knowledge of the specific brand is going to decrease and kind of the process will change a little bit. And so I think this is an opportunity for those folks listening who are existing operators, existing family office franchisees or franchisees, and existing private equity groups because you're going to shine if you're already in a brand and you're already operating in a brand. And you're already approved by a brand you've already negotiated and agreed to a relationship agreement and a development agreement with a brand, you're going to be much more favored across the spectrum of offers as opposed to somebody who is making an offer that's subject to exploratory due diligence if that makes sense.

Another trend, I'm on point like 16 here, we're seeing more independent sponsors are making offers on our businesses. This is kind of an interesting trend. And I've also seen more people, minority investors in equity, minority equity providers. And when I mean minority, I mean people who want to come in and take out a sliver of a deal like they want to be a passive investor with 20% of the equity into a deal don't want to control the operation or put in the majority of the equity.

So you're seeing a lot more of those types of people in our deal and I'm sure in the industry too. So you're seeing independent sponsors and minority equity providers. They're showing up more, progressively more, quite a bit more really in the last several months. And I think this trend is higher than what we've seen in the past and it could be noteworthy going forward. Just so you know, an independent sponsor is just kind of basically described as somebody who makes an offer on a business and they don't have all of the equity kind of identified when they make the offer, which is a little bit different. It's kind of like making an offer on a house and you don't have the down payment.

So these folks typically are seasoned professionals. Some of them are financial professionals coming out of big firms in New York. Some of them are operators. Some of them are a mixture of the two. There's all kinds of different types of, of independent sponsors. They typically have the wherewithal to operate a business or find operators, and they typically have relationships. They probably have some equity, but not all of it. So they make offers that are contingent on going to equity and finding the equity once they've gotten their offer accepted.

Now, from a seller's standpoint, that's typically not the type of financial and execution risk that you'd like to take unless you have to so, but as the supply-demand curve may change in 2022, sellers may take a flyer and decide to let an independent sponsor who is aggressive and impressive learn it, and all these things might give them three or four weeks to see if they can come up with the money and come up with the plan to get the deal done.

So that's something to watch for in 2022. I do think last couple of comments. I think I've said this a couple of times about lenders being a little bit more cautious in 2022, especially as comps and inflationary pressures need to be addressed. Finally, I think the last comment is just I do believe this is going to be the year that we see a big backlog of casual dining and fast casual deals enter the market. Let that settle for just a second.

They just haven't been around because they haven't been profitable enough. The sales haven't recovered enough. A lot of these types of operators operate decent-sized businesses and have been trying to do workouts with their landlords and workouts with their lenders. But their businesses have started to improve. Many of them are comping last year or close to comping last year for like four or five months right now, which means as they get into probably Q2 or Q3 they're going to be showing pretty close to a full year of hopefully improved sales and profitability. And that's really how these businesses typically trade not entirely, but typically trade on a trailing 12-month financial statement.

So I think you're going to start seeing a big backlog of those deals kind of start coming into the market in the second and third quarters of 2022. And they, frankly, these deals have been very, very thin over the past few years. So expect that to add to the supply-demand curve. I think overall I expect 2022 to be a good balanced year. Let's watch it and see what happens. It's always eventful and we'll continue to be aggressive and be out there. I do see 2021 and 2022 starting to look a little bit alike from a start of the year standpoint. So if that holds to fruition, we could be in for a bigger 2022 than maybe many people expect in all things. I hope you guys, everybody has a safe and awesome and healthy start to 2022. God bless and we'll catch up next time around.

Thanks so much for entering the Boiler Room today. You can find our podcast on iTunes, Google Play, Stitcher, TuneIn and Spotify. If you like these podcasts, please listen, rate and review. I also encourage you to visit our website at for the best franchise, M&A and financial resources in the industry. Our website includes webinars, podcasts, videos, whitepapers, and a list of our past M&A transactions.

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