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Declining Sales to Investment Prompts More Franchisor Incentives


Sales to Investment Ratio Under Pressure

  • 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).
  • The sales to investment ratio for every segment declined with the coffee/bakery and chicken segments deteriorating the most.



Franchisors React with More Development Incentives

  • The percentage of franchisors offering some form of development incentive is at a 5 year high.
  • The vast majority of incentives are represented by reductions in initial/development fees and royalties although there are fewer cash incentives offered than in the past.



Source: RR's New Build Report (outline)


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Disclaimer of Liability: Although the information in this report has been obtained from sources Restaurant Research® LLC believes to be reliable, RR does not guarantee its accuracy. The views expressed herein are subject to change without notice and in no case can be considered as an offer or solicitation with regard to the purchase or sales of any securities. Restaurant Research’s analysis and opinions are not a guarantee of the future performance of any company or individual franchisee.  RR disclaims all liability for any misstatements or omissions that occur in the publication of this report. In making this report available, no client, advisory, fiduciary or professional relationship is implied or established. This report is intended to provide an overview of the restaurant industry, but cannot be used as a substitute for independent investigations and sound business judgment. Copyright 2018.



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