NEW YORK —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
That’s what operators boldly stated during last month’s various investment conferences in New York, California and points in between. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
While admitting the U.S. recession has in some cases demolished investments in the industry, operators said foodservice would return to its previous heights once the consumer starts spending. Some operators even said they would be taking market share from the weaker players during this downtime, so investors should sit tight. Even more, some professed that the corporate cost cutting and operational efficiencies companies have employed to offset sales slumps actually make restaurants an attractive buy. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
Financial types didn’t bite. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
To call investor sentiment toward the industry negative would be a gross understatement. Equity investors are shorting stocks, private-equity investors are sitting on the sidelines and debt investors are just waiting it out. They are all trying to define the new rules of the game in this new economic environment. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
One private-equity investor told me last month I should write a column with the simple headline of “It’s over.” Another said he has a list of about 75 restaurants that he believes will likely go belly up. One young deal maker was upset that he had recently moved into the consumer space because “deal flow is just dead, and I’m bored,” he said. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
Admittedly, veteran investors in the restaurant segment aren’t as fazed by the industry’s recent downfall. There will be attractive deals in the pipeline as companies file for bankruptcy, they say, although the best of deals won’t be available until 2010 or beyond. Restaurant brands that have thus far survived better than most will indeed only get stronger, others say, making for attractive investments. Quick-service and fast-casual chains are the future, I’ve been told. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
Attending an investment conference is sometimes like agreeing to a date with Doctor Death. But amid the mounds of negative data, the jokes about certain restaurant companies and the betting on the next bankruptcy, there is usually one obvious takeaway that can’t be ignored. This round, something spoke loud and clear: Restaurant guys and gals mostly do not care what the investment community thinks. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
The two worlds co-existed, and very well, for years as both experienced a boom cycle together. Now, not so much. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
During last month’s conferences, it didn’t take a trained eye to observe restaurant executives, smirking at financial players with a combination of disdain and sympathy. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
They just don’t get the restaurant industry, operators say. It can’t be distilled to spreadsheets, financial modeling and leverage ratios. The industry shouldn’t exist to create deal flow for Wall Street; it shouldn’t be there for financial engineers to play with. It is about much more than that, namely, hospitality and people, and those are two intangibles that can’t be quantified. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
It is those assets, not the real estate over which investors are salivating, that will bring the industry back from death’s door. Operators that work day in and day out to serve customers with a smile, to deliver hot food hot and cold food cold, and to keep their restaurants clean will not just survive but will thrive. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
Operators say the Grim Reaper will be met head-on with hospitality and the industry will win. —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
As a collector of life lessons, mostly learned the hard way, this one I will hold close: When the Reaper comes knocking, I will smile and ask, “Would you like fries with that?” —Investors may not buy it, but restaurant operators are convinced that the Grim Reaper stalking the industry can be killed with kindness.
