Hi,
What kind of financial/strategic analysis would you recommend for analyzing a Restaurant Chain? I want to expand my knowleedge regarding the analytic framework for this industry. It would be great if someone could provide some advice from a PE perspective.
Thank you.
Are you looking to open a franchise, or acquire a franchisor? Are the stores all company owned and you're looking to buy the company?
A good first place to start would be to find a publicly traded company that matches the model you're looking at, and review their statements / presentations to see the key metrics they look at. Then review some free articles on SeekingAlpha
Thank you for answering.
In my case, I work as a financial/business analyst for a company in the food industry. One of our business segments is the restaurant industry. We already own a restaurant chain and we are always on the look for new chains to acquire.
The head of the division is a really smart guy who used to work in PE. He has taught me a few metrics for analyzing restaurants. However, I would like to contribute more insights.
I’ll preface with never having worked on a restaurant deal. I’m sure others will be able to be more helpful but here are some quick initial thoughts. - Avg. customer per day / avg. meal price / avg creation cost per meal - median household income of surrounding area - population growth of surrounding area - personnel turnover at restaurant - rent or lease costs (is land owned, can you do a sale leaseback?) - standard valuation metrics (someone above mentioned) - focus on SG&A (is it high relative to peers? Is this because they deliver a better service or are they inefficient with their spending? Also applies to COGS where their server costs would likely be) - DD on buying process (can I consolidate buyer power with another asset I own in the area?) - local economy dynamics (Is the area dependent on an industry? Is that industry stable? Higher priced restaurants will likely be hit harder in a slowdown)
Others?
This person sounds like a retard.
His shit's all fucked up and he talks like a fag.
4 Wall EBITDA
Have done a fair bit of restaurant work on the sellside, and some key metrics you will want to look at (in addition to some of the more macro trends that taking a step back mentions). Most of these you will want to look at in the context of how they compare against peers.
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