KFC Franchisee Bankruptcy Auction Outcome, Store level Sales, Profit Values Seen
110 US KFC units of Kazi Foods (NY, NJ, FL, MD, MI) have been sold at auction, for $56.2 in total consideration, primarily via debt assumption. Cash proceeds were only $2.8M. The filing gives a glimpse of KFC sales and EBITDA in these markets: AUV of $973K and a EBITDA margin of only 7.8%
30 KFC units in these markets had been closed earlier. Kazi was the 12th largest franchisee in the US but retains other KFCs and other concepts elsewhere. Such a low store level margin makes it almost impossible to service debt and provide funds for maintenance CAPEX, and required remodels/upgrades.
With the net consideration paid of $56.2M and EBITDA of $8.6M, this rerpresents a price to earnings multiple of 6.5X. On the surface, this was a healthy price. But we understand there was real estate involved, thereby making the transaction a bit more diffcult to benchmark as purely a restaurant transaction.
http://www.restfinance.com/content/story.php?=00777
- Content topic:
- Enter Your Own Tag:
About John Gordon
Public Profile
John A. Gordon is Principal and founder of Pacific Management Consulting Group, which provides chain restaurant sales, profitability, earnings and economics research and special analytical projects to those in, or who need to know about the restaurant sector. Among others, we support franchisees and those supporting franchisees.
Gordon has a long background in chain restaurant operations and financial management roles, such as cost analyst, financial analyst, manager of planning and analysis and CFO, and has been consulting since 2000.
He is passionate in providing independent, creative, detailed and useful perspective, with no conflicts of interest. Email him or call (619) 379-5561.
