Damien Sanders recently graduated college with an economics degree, and now he works at Restaurant Research LLC. However, he didn’t start out as a hot shot Analyst – rather, he cut his teeth working at Zaxby’s & Bojangles during college, learning many life lessons along the way. In this Q&A, Damien explains why the fast-food industry provides such a good launching pad for young people prepping for a career…
Powell’s recent speech suggests that rate hikes are still on the table even though the Philadelphia Fed’s economic projections suggest that a rate cut may make more sense. Powell further indicated that there is generally a lag to the effects of monetary tightening, suggesting that these projections could be optimistic.
The restaurant franchise finance asset class currently benefits from strong unit-level sales and food cost deflation. Loan collateral has held up well generally speaking and the economy & capital markets are certainly stronger than the Great Recession that started around 2008. In this post, we conduct a Q&A with the head of a prominent franchise finance group & present some supporting data about why it may be time for lenders to jump back into the pool.
We had never heard of BIGGBY® COFFEE until a team member’s spouse declared: “BIGGBY® COFFEE is going to be the next Starbucks!” Naturally, that got our attention as this is not something you hear every day. We pressed Julie our “source” – why would she say this about Biggby’s?
Wally just got back from Vegas where he attended the Restaurant Finance Monitor conference to escape the tyranny of raising his young children, get to a warm climate, shmooze, lose some money at the Casinos, and also take the pulse of the state of restaurant finance which he outlines in this post.
Hardee’s, a regional chain which is generally oriented towards rural, lower-income markets in the Southeast & Midwest, is well known for its made from scratch biscuits (breakfast drives almost half of sales); 100% Angus charbroiled burgers; and hand-breaded chicken sandwich & tender options. While Hardee’s strategy is well conceived to leverage its core competencies, the chain remains challenged by its value equation and geographic market/demo positioning during a period of significant stress on lower-income consumers.
Del Taco is the 2nd largest Mexican QSR, positioned around a wide variety of better-quality food (use of fresh ingredients represents a competitive distinction) offered for reasonable prices with convenient drive-thru access. While Del Taco enjoys strong concept fundamentals, the chain remains challenged to drive needed AUV growth especially at a time when its core low-income customers remain stressed by unfavorable economic conditions.
The average number of units operated by franchisees of the $1B+ Chains has increased from 5.4 in 2018 to 6.1 in 2022 which reflects the need for scale in the current high-cost operating environment.
During October, the S&P 500 declined -2.2% & the Russell 2000 (small caps) was down nearly -7%. The good news is that Bitcoin was up almost +30%! There is a lot to worry about given all the war mongering around the world, with a growing number of hotspots that adds the Middle East to the Ukraine & Taiwan. There is also growing consternation about the porous U.S. southern border and we got a new Speaker of the House who has got right to work on lining-up billions to ship overseas. Did we forget to mention that the 10-year yield made a big move higher during October & actually had the temerity to test the forbidden 5% red line.