2010 Restaurant Finance and Development Conference: Zors Still in Demand
I just returned from the 2010 Restaurant Finance and Development Conference. I will compose a longer, more detailed blog post. I wanted to quickly highlight a few themes first.
The conference was bigger and more diverse than last year. It seemed that the number of franchisees showing off their brands had multiplied by a factor of four from 2008/2009 levels.
The bankers and PE firms were present in force... they say money is available...and they are all looking for primo investments--above $5-10M EBITDA, 5 years of operation or more, multi markets etc. It raises the specter though: if no one wants to lend to slowly growing small chains, how will they ever become bigger chains?
On the merger and acquisitions front, there was considerable self marketing by the M&A advisory firms...to justify "higher" price multiples paid in 2010. Money avaialble for lending and number of lenders competing is up and has a relationship to selling price.
P&L squeezing continues: restaurants are looking for every way possible to find cost savings...and cost effective sales and marketing strategies.
Restaurant Chains that franchise still have a "premium" and highly valued...interesting that franchisors are more highly valued publicly than bigger franchisees that are publicly traded...large franchisees have territory limitations.
About the author: John A. Gordon, Pacific Management Consulting Group
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