Convenience, Experience Are Must-Haves, Restaurant Investors Say
Anish Gandhi, far right, is joined by, from left to right, Henry Heinerscheid, Matt Perelman and Alex Sloane, during the Restaurant Finance & Development Conference.
Convenience, quality and experience. These are the three key drivers impacting not only how restaurants are evolving and investing in themselves but also “how the investor community is viewing where they want to place capital,” said Anish Gandhi, managing director at investment banking firm Brookwood Associates.
Speaking today at the Restaurant Finance & Development Conference in Las Vegas, Gandhi noted it's a balancing act, particularly with convenience and experience, as brands integrate delivery while also working to provide an experience so consumers “choose to get off the couch.” Potential investors want to see execution on both sides of the equation, he added.
Appeal—and positive sales—across varying geographic areas, is another indicator of a strong brand, said Henry Heinerscheid, managing director of PW Growth Equity. That varied geographic success stood out when PW Growth Equity invested in Black Bear Diner, which Heinerscheid said has a flexible real estate strategy that includes everything from neighborhood locations to truck stops and even restaurants in Silicon Valley. Plus, “a lot of people are trading up for breakfast,” said Heinerscheid, making Black Bear even more attractive.
There’s been “a lot of momentum and interest from the investor community” in the breakfast segment, added Gandhi. “Breakfast is a more profitable segment,” he said, and the labor model is attractive because most breakfast concepts close by 2 or 3 p.m., giving them an advantage, as employees increasingly want those hours. From a generational standpoint, he continued, millennials view this daypart as a social outing and a form of entertainment.
“Brunch can be categorized as an experience,” said Gandhi.
Casual dining, meanwhile, “isn’t going away,” said Gandhi, but investors want to see that casual dining brands are addressing the need for an enhanced experience.
“To me, casual dining now more than ever has to address the experience side of the equation,” he said. “You’re losing market share to fast casual and a lot of that is driven by the behavior of millennials and others, so how are you going to draw that crowd into your restaurant. It’s going to be food quality and experience.”
The Restaurant Finance & Development Conference continues through Wednesday at the Bellagio in Las Vegas, presented by Franchise Times’ sister publication the Restaurant Finance Monitor.