Changing M&A Trends in the Restaurant Industry

By Rick Ormsby
Managing Director
502-252-6422
[email protected]

Here are two (of many) changing valuation trends in the restaurant M&A industry as seen repeatedly in several deals in which I’m engaged:

  1. The valuation gap between the sale of very large and small restaurant companies has lessened significantly.  This trend is particularly favorable for small and mid-scale operators considering a sale of their restaurants.  Long term, I would not expect this trend to continue.
  2. I am receiving calls from large operators considering a sale of a small portion of their restaurants – i.e. a smaller-sized spin-off in a separate DMA, non-core brand, poorer-performers, etc…. Larger operators are apparently taking note of point #1 above.  Why continue to operate non-core assets if they can be sold at a high price and on-par with the overall company valuation?

Perhaps this trend continues, but a longer-term look at the industry would indicate that it could be short-lived.

Rick Ormsby
Managing Director
502-252-6422
[email protected]