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Tuesday
Jul232019

Unit Economics

  • RR’s Industry Data Report on Unit Economics provides: (1) FYE 2018 unit level AUV along with COGS, labor, royalty, advertising, other operating and EBITDAR margin estimates for 46 chains; (2) a 5-year history of unit economic performance; (3) an analysis of food and labor cost drivers; and (4) aggregate G&A margins, rent margins and leverage ratios based on RR’s annual lender survey.
  • Report highlights: (1) Average 2018 EBITDAR margin for the $1B+ chains came in even with 2017 at 18.8% (the lowest level since 2008) and it is notable that lower COGS were fully off-set by higher labor costs; (2) at the EBITDA level, lower G&A expense helped to off-set higher rent based on our lender survey; (3) franchisee leverage levels remain elevated but coverage ratios are solid with lenders reporting minimal delinquencies; and (4) 2019 EBITDAR margin pressure reflects rising labor costs and slightly elevated commodity costs aggravated by increased industry discounting through 1H19, slightly off-set by modest same store sales growth prospects.

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