Financial Edge – December 2017

Palate, Profit, and People
by David Ulrich, EVP/Partner Wray Executive Search

David Ulrich, EVP/Partner Wray Executive Search

The restaurant industry is an ever-changing and dynamic one that is mainly affected by palate, profit, and people. The trends of today’s food, unit size, and winners are much different than they were 10, 20, and even 30 years ago. Much of today’s chef driven menus and inspiration comes from the origins of the Food Network and its great success in creating a generation of “foodies” that believe food can both taste great and be healthy for you.

When you look at the evolution of the menus for many restaurant chains, you begin to see the pattern and influence that the Food Network really has had over the last fifteen years. Consumers today, for the most part, are far more aware about how the idea of “farm to fork” than ever before. This attention to palate and flavor profiles, combined with the desire to be a foodie has shaken up much of the “status quo” for many of the traditional players in the industry. Small regional and local concepts have sprung up at an impressive rate, which in turn keeps many of the big brands focusing on their menus development strategies and profit capabilities.

2017 has turned out to be a very active year for mergers and acquisitions with 33 brands up to this point having already changed hands. Giants like Panera Bread, Popeye’s, Buffalo Wild Wings, and even Back Yard Burgers have new ownership, which should enable them to have continued success in the coming years.

The underlying driver for much of the acquisitions over the past couple of years has been by private equity firms, both large and small, not only acquiring entire companies, but also large multi-unit franchisee systems that are for sale. The profitability of buying existing systems have been very attractive due to the underlying value of existing cash flow, combined with the “growth” that many of the legacy companies are seeking when selling to these groups.

On the people front, the executive pool for all industries continues to evaporate at an ever-increasing pace as many Baby Boomer executives prepare to head out into the sunset of their careers. The Gen-Xer’s over the next five years will become the most recruited and sought-after group because the next generation (the Millennials) are not perceived old enough or “seasoned” enough to be considered for the highest level of positions. I’m confident that the industry will not stay static, and will in fact continue to change because the consumer demands it. Happy Holidays!

Live well!

David Ulrich [EVP/Partner]                                                        
(813) 841-7287
Twitter: dulrich22

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