The Privatization of Publicly Held Restaurant Groups

Posted on January 04, 2018

In July 2017, a private investment firm acquired Panera Bread for approximately $7.5 billion and took the once publicly traded fast-casual restaurant chain private. In the Fall, both Ruby Tuesday and Bob Evans restaurant chains followed suit by agreeing to be acquired by private entities. This trend of public companies going private was one of the many topics discussed at the recent Restaurant Finance & Development Conference in Las Vegas attended by the Orion team.

At a time when many publicly traded sit-down restaurant chains are closing locations and slowing growth to combat weak sales, going private can provide them with several competitive advantages. For one, because they are no longer beholden to investors, they can avoid the pressure of meeting quarterly financial goals. They can turn their attention away from building shareholder value and instead focus on improving operations. When they are acquired by private firms with restaurant experience, they can potentially improve profits through economies of scale and develop cross pollination and expansion opportunities.

When restaurant chains go private, individuals who invest in their real estate holdings also benefit. As these brands work to become financially healthier, the underlying value of the real estate on which their units sit improves. Even if a brand does not survive, or if it closes a location, the value of the real estate and the potential rental income investors can demand will increase as long as the property is in a good location.

Commercial-property real estate investors should pay attention to the moves of these relevant companies and their real estate decisions. These business decisions can make real estate holdings more attractive, create opportunities for new real estate investments or make space for new tenants.

The team at Orion work with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

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