According to a recent article in
Nation's Restaurant News
, a potent mixture of excess capital and demand for borrowing has investors taking a hard look at the foodservice industry.
The article features Bob Bielinski, Managing Director of the Restaurant Industry Practice, CIT Corporate Finance, and Rick Henderson, Vice President of Franchise Financing at Direct Capital Corporation, a CIT Company, discussing how many investors and lenders are now focusing on restaurants. Most notably, the fast-casual and quick-service segments are viewed as desirable and competition for their business has created a very favorable environment for restaurateurs.
"It's a borrower's market, and that's driving competition among lenders," says Henderson. "These companies want access to capital to be simple. So if the process gets difficult, borrowers will walk away and find a lender that's easier to deal with."
Also of note, large, mature chains need capital to shore up their market positions by updating their restaurants' look, equipment and technology offerings. Franchisees are also looking for capital to fund acquisitions of stores that are being sold by other franchisees and by their corporate franchisors.
Bielinski adds, "Over the past few years, several chains have divested corporate-owned stores through refranchising programs. Yum! Brands and Dine Equity have already finished refranchising, but other chains, including Wendy's, Carl's Jr., Hardee's, and T.G.I. Friday's are currently selling units to large, well-capitalized franchisees as well as smaller franchisees looking to grow their store bases."
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