Blog: Overaggressive deals lead to disaster
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This post is part of the On the Margin blog.
The restaurant industry is a difficult one. The country is saturated with restaurants. Consumers are fickle. It cost a lot of money to build units, which often results in heavy indebtedness and questionable financial deals.
Add to this the pressure on company executives to expand, and you have a recipe for disaster when it comes to acquisitions.
The past 15 years have seen a lot of very bad restaurant deals — so much so, that we struggled to limit this list to just five, gave up and listed six.
We focused on larger deals, because smaller investments are inherently riskier and thus some problems can be expected. And some people might perceive a deal to be a bad one, when it really isn’t — you’d be shocked, for instance, how much money a private-equity group can make off of a seemingly bad restaurant deal.
Now for the big deals.
Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.
Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze
