Industry Data Report 1H:21 Valuation & Finance Update

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers

Industry Data Report

1H:21 Valuation & Finance Update

Report Highlights

➢ (1) 1H:21 EBITDA multiple estimates (post G&A) for 44 chains based on survey data from 7 leading appraisal

firms; (2) a comparison of public restaurant company and private franchisee valuation multiples; (3) a summary

of real estate cap rate trends based on data provided by Marcus & Millichap; and (4) an update on lending

availability, changes to underwriting standards, lending rates and borrower financial condition derived from a

survey of leading lenders.

Conclusions

➢ (1) Franchisee EBITDA valuation multiples continue to recover and are now only -2.9% below their 2H:16 peak

with QSR multiples at a new high and FSR multiples expanding at a faster pace than QSR (although still -13.7%

below the 1H:16 peak); (2) while large deal multiple premiums remain below the 1H:18 peak, premiums for deals

with $1M+ in aggregate EBITDA continue to rebound off the 1H:20 low; (3) the $1B+ chain public restaurant

company valuation multiple and premium declined sharply as normalizing EBITDA levels more than off-set

robust stock market appreciation, resulting in the convergence in QSR & FSR public company multiples to 28x;

(4) Marcus & Millichap data indicates aggregate cap rates for single-tenant net-leased restaurant properties

decreased slightly to 5.63% during 1H:21 from 5.73% in 2H:20 as strong demand and a reduced risk premium

more than off-set an increase in interest rates; (5) full year 2021 restaurant originations (excluding sale leaseback

financing) are expected to increase +19.1% compared to initial expectations in January; (6) only 37% of surveyed

financial institutions are currently lending to FSR borrowers; (7) borrower financial condition reflects current

sales trends (QSR outperforming FSR) with renewed concerns over a possible increase in dine-in restrictions

representing a headwind for FSR’s recovery.

Table of Contents Pages

Estimated Unit Level Franchisee Enterprise Valuations

➢ EBITDA Multiple Trends 2 - 3

➢ EBITDA Multiple Estimates by Chain 4

➢ Factors Impacting Valuation Trends 5

Public Restaurant Company Valuations

➢ Ratio of Public Stock Valuation Multiples to Private Franchisee Multiples 6

➢ Public vs. Private Multiples by Chain 7

Marcus & Millichap Real Estate Cap Rates

➢ National Chain Net Lease Cap Rate Trends 8

Valuation Methodology

➢ Valuation Methodology 9

Restaurant Finance Update

➢ Restaurant Finance Update 10 - 12

Data in spreadsheet form available at http://www.ChainRestaurantData.com

Copyright: This Restaurant Research LLC document is copyrighted material. Due to the No Electronic Theft (NET) Act of 1997,

electronic forwarding or other forms of redistribution, without the express permission of Restaurant Research LLC, are

violations of law and could be subject to fines of up to $250,000 and up to five years of imprisonment, even when no financial

gain or commercial advantage accrues to the forwarder/re-distributor. Copyright 2021 Restaurant Research® LLC. All rights

reserved.

Repor

t Outlin

e

http://www.chainrestaurantdata.com/


IDR: Valuation & Finance Source: RR Estimates Page 2

Estimated Franchise Enterprise Valuations

➢

➢

➢

➢

➢

➢

Repor

t Outlin

e



Repor

t Outlin

e



Repor

t Outlin

e



Summary of Valuation Comments

Availability

of Capital

➢

Financing

Terms

➢

Unit Level

Economics

Availability

of Units for

Sale

Survey Participant Contact Information Firm Contact Main Number Email

Advanced Restaurant Sales, LLC

FranBizNetwork

Main Street Florida Realty, Inc.

National Franchise Sales

Newmark

Praetorian Group

Trinity Capital, a division of Citizens Capital

Markets

Source: Restaurant Research LLC June 2021 Valuation Survey

Repor

t Outlin

e



Public Company Valuations (EV/EBITDA)

➢

➢

Repor

t Outlin

e



Repor

t Outlin

e



Marcus & Millichap Net Lease Real Estate Cap Rates

➢

➢

➢

➢

➢

About the Contributing Firm: Marcus & Millichap which specializes in representing institutional and

private companies in the disposition of multi-tenant and single tenant retail properties.

For more information, please contact Hank Wolfer of Marcus & Millichap at (425) 770-2495

Repor

t Outlin

e



Valuation Methodology

➢

➢

➢

➢

(1) Business Value is determined by using an appropriate multiple of adjusted EBITDA.

Some typical EBITDA adjustments include:

(2) Real Estate Value (land and building) is determined by:

-

Example - Fee Restaurant Property

Business Value Real Estate Value

Sales $1,000,000 Implied Rent/sales 7.5%

Adjusted EBITDAR $ 180,000 Implied Rental Income $75,000

Implied Rent $ 75,000 Cap Rate 6.00%

Adjusted EBITDA $ 105,000 Real Estate Value $1,250,000

Multiple 5.00

Business Value $525,000 Total Value $1,775,000

Repor

t Outlin

e



Restaurant Finance Update

➢

➢

➢

➢

1H:21 Underwriting Ratios

Adjusted

Leverage

Funded

Debt/EBITDA

FCCR

(Pre. Dist.)

Loan to Value

QSR FSR QSR FSR QSR FSR QSR FSR

Low

High

Average

Repor

t Outlin

e



➢

Repor

t Outlin

e



➢

➢

➢

Survey Participants

Industry Player Roster Changes New Entrants Expanded Business Exits

➢ ➢ ➢

Repor

t Outlin

e

Visit www.chainrestaurantdata.com or contact us at

(203) 829-9005 or [email protected] to:• Ask us about custom research projects

• Inquire about RR Thermometer email marketing opportunities

Copyright: This Restaurant Research LLC document is copyrighted material. Due to the No Electronic Theft (NET) Act of

1997, electronic forwarding or other forms of redistribution, without the express permission of Restaurant Research LLC, are

violations of law and could be subject to fines of up to $250,000 and up to five years of imprisonment, even when no financial

gain or commercial advantage accrues to the forwarder/re-distributor. Copyright 2021 Restaurant Research® LLC. All rights

reserved.

Sources: All data represents RR estimates which are derived from various private and public sources.

Disclosure: Restaurant Research LLC often sells report subscriptions to concepts under our coverage.

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 analyses 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.

Documents

Industry Data Report 1H:21 Valuation & Finance Update