February 2019

RR's Franchise Finance Report Highlights 


  • The growth rate for the franchise financing needs of $1B+ chains continues to decline as refranchising programs wind-down.
  • However, the M&A market continues to generate healthy financing demand as operators pursue consolidation to offset unit-level cost pressures. 

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January 2019

Keeping An Eye on Grubhub 


  • 3rd party delivery is clearly gaining share in the restaurant industry, with Grubhub generating $3.7B of gross sales during the YTD period through 3Q18.
  • The surprising stat below is that Grubhub's average ticket is north of $32 (including fees which boost actual food costs by close to +20%).
  • How does delivery of low ticket coffee and QSR burger orders fit into this model?
  • In any case, it is notable that with Grubhub's operating margin of just over 12% there is probably not much room for restaurants to negotiate lower fees. Also, this suggests that there is probably not much appetite from Grubhub to pursue a lower ticket business which is especially unprofitable for its drivers who work for tips. 

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December 2018

Value Wars?


  • Investors see a lot to like about restaurant stocks as indicated by a steady climb in public market valuations according to data from Hedgeye. 
  • While this maybe partially attributable to a steady stream of private equity buyouts over the last couple of years with valuations as high as 19x, certainly public stock investors don't believe that all remaining stocks will receive such rich bids?

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November 2018

Development Headwinds


  • Rising building costs and declining new build AUVs continue to pressure sales to investment ratios and new unit development for the $1B+ chains (+2.9% projected 2018 gross unit growth would represent the slowest rate in at least 16 years).

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October 2018

RR's 2018 Remodeling Report Recap


  • A large number of new remodel programs were introduced in 2018 and, after putting previous reimages on hold in anticipation of these new programs, the average system % at the current image has fallen to a 5-year low. This suggests that the tailwind provided by remodeling sales bumps is also at a 5-year low

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