It’s going on 2 years since our world was turned upside down with government lockdowns, mask mandates, social distancing, remote work & schools and eventually a steady diet of new tech vaxxes. In our opinion, there is an opportunity for our country to grow strong in unity so long as everyone is allowed to work towards their own version of the American Dream (life, liberty and the pursuit of happiness).
According to RR’s just released New Unit Investment Report, the sales-to-investment ratio for $1B+ chains declined dramatically in 2021 as higher construction costs (partially reflecting longer project completion times) more than off-set growth in new build AUVs.
Restaurant employees are likely burned-out and perhaps a little distrustful of their employers after working so long to compensate for sharply lower store headcounts.
Insights Journal: Marketing Spend Analysis; Retail Sales Pop in March; Chick-fil-A Continues to Amaze; Executive Summaries for Jack & Chili’s.
RR Insights Journal – January 2021: Manageable 2020 Closure Rates; Silver Lining for Restaurants = Lower Gas Prices; Executive Summaries for KFC & Pizza Hut.
We were curious what multi-unit operators thought about the use of lockdowns to manage COVID so we conducted a survey with the following questions:
1. Lockdown effectiveness?
2. Is there a better way than lockdowns?
3. What solutions would be better?
• 2020 new build ROIs continued a declining trend, reflecting: higher construction costs; moderating new build AUV growth; and store-level margin pressure.
• A ramping build vs. buy ratio reflects the above trends in addition to declining acquisition multiples.
• This suggests that growth minded operators are more likely to buy than build for the time being.
+ Restaurant Stock Performance Says it All
+ CDC’s Comorbidity Data is Very Helpful
+ Assessing the Lockdown’s Impact
+ Executive Summary for BK & Jersey Mike’s
Opinion: In the end, the industry’s mission must be to find a way back to normal, not accepting a “new normal”; While 1H:20 franchisee EBITDA valuation multiples declined, it is +7.4% higher than the 12-year low set in 2009; The average 2019 EBITDAR margin for the $1B+ chains improved slightly to 18.8% (but remains near the 17 year low); Popeyes’ eye-popping success with its chicken sandwich…; Taco Bell must wait for an eventual return of the Millennials and late-night.
The sit-down model is broken in the post-lockdown world, but all is not lost as this crisis has simply brought to light weaknesses in the dine-in foundation that were there all along. So it is time for operators to do what they do best – analyze, innovate & improve!
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