What About Millennial Operators??

Lower Corporate Taxes = Higher Unit Valuations

QSR Continues to Gain Share

• QSR's 80%+ share of total restaurant traffic continues to increase and the major chains have outperformed the independents over the last 3 years. Within QSR, the hamburger category owns the largest portion of traffic share which reflects that 9 out of 10 consumers eat at least 1 hamburger a month. Given increasing food & labor costs, scale is required to make requisite tech investments & marketing initiatives to reach consumers across channels.

Source: Wendy's 4Q17 Presentation

Consumer Tax Relief = Sales Bump

• The model below assumes a 10% to 15% consumer tax savings from new legislation and ~5% after-tax HH income spend on food-away-from-home.
• This suggests an extra $6 - $9B in annual restaurant industry sales driven by ~$140B to $211B in annual consumer tax savings.
• With total food-away-from-home sales of $577B in 2016, this would represent a +1.3% sales bump.
• Employee bonuses and wage increases funded by lower corporate taxes could drive actual industry sales bump even higher. 

Predicting Store Closures