Aaron Allen’s Post

Over the last decades, the restaurant industry has been very successful in the KSA (and in the Middle East in general). There’s been a diversification across growing segments, and also an increment in the sophistication level of operators as the penetration of chains has doubled over the last twenty years. If the brand is local there may be a struggle to set up SOPs, bring systems up to global standards, and gain traction for brand recognition. If the brand is international, there will be challenges to manage regional supply chains, achieve a successful brand translation, adapt marketing and technology, comply with customs and labor laws, and resonate with regional cultures and audiences. The hospitality business is complex, margins are shrinking, and customer loyalty is a struggle as it never was. But there’s also plenty of opportunity and paths to successfully operate in this ”new normal”. #restaurants #ksa #middleeast

During the first half of 2024, restaurant M&A activity remained at similar levels as the same period in 2023. This first half of the year there were numerous transactions in the fast-casual segment (including Tijuana Flats, Tropical Café, Veggie Grill, Clean Juice, and others) as well as franchisees changing hands (notably the acquisition of Carrols by RBI but also groups of between 20-70 units for QSR chains such as Wendy’s, KFC, Zaxby’s, and McDonalds). We expect consolidation to continue, and there is still a lot of opportunity to corner the market in certain segments, cuisines, and geographies and to innovate new ways of meeting customer demand.    If you are evaluating a foodservice acquisition target, we recommend you don’t skip due diligence. Without exception, the process reveals new perspective and insight across functional areas (from the efficacy of marketing and brand strength to how the P&L may change under different scenarios) that will contribute to improved business strength and performance during the holding period. #restaurants #investing #acquisitions

There are different ways to grow for restaurant chains and investment is required for it to pay off in the short and long term. For chains that are not growing via franchising (or that are doing so to an extent but still growing corporate stores), growth (and a high level of CAPEX to open new stores) requires building infrastructure to deploy the pipeline ahead of time, and that usually entails a higher SG&A percentage for some time until the stores are at their full revenue generating status. Two good examples are sweetgreen and Dutch Bros, both growing steadily over the last few years and with plans to continue to do so. Their CAPEX is considerably higher than the industry median, reflecting unit openings. SG&A for these companies is coming at the median or higher, supporting the corporate infrastructure needed to expand. Just as radar technology has improved dramatically for the weather industry, the same advancements can be made to corporate preparedness. The best and most successful companies (across sectors) worldwide are making investments into CAPEX, R&D, intelligence, and their own organizations (systems, processes, and organizational design) with a determination to win that can easily demoralize anyone half-heartedly standing up against it. #restaurants #investing #capex

There’s almost nowhere in the world that is experiencing contraction in terms of overall restaurant industry growth. As true as that is, it’s also true that there’s almost nowhere in the world where someone isn’t losing market share at someone else’s expense. In the U.S., Food Away From Home has been growing at a CAGR around 3% (inflation-adjusted, over the last five years), with some broad segments expanding faster than others — notably Limited-Service Restaurants slightly faster than Full-Service, but with other categories growing even faster, and several shrinking instead. Knowing where to play and when, identifying growth opportunities in terms of categories, cuisines, and geographies, and what that may mean for plans related to growth and expansion, performance improvement, and enterprise value enhancement is critical. Ask us how we can help you size and seize new growth opportunities domestically and globally. #restaurants #growth #strategy

In the U.S., the split of sales between full-service restaurants (FSR) and limited-service restaurants (LSR) has been close to 50-50 for a long time. However, LSR is dominating the landscape of the fastest-growing emerging concepts (based on the 2023 rank for the 50 fastest-growing emerging concepts) with a share of more than a 60% of sales. What are the best categories to get into: Asian, burger, chicken, coffee, Greek, healthy, etc.? What are the ones that will grow faster in the future? Should we create concepts or acquire or invest in existing ones? These are some of the questions we’re helping our clients all over the world answer. #restaurants #growth #strategy

In it’s most sincere form, this is consulting. Call it coaching or partnership or something else, but when someone really cares about your well-being and outcomes, they get involved like these people do. Coaches are common. Coaches that perform like these are rare. Can’t paint everyone with the same brush as there are distinctions. The best ones do it when the cameras aren’t rolling; these are rare glimpses of the authenticity captured by those focused on the outcomes and safety of those they are entrusted to take care of — they are hyper concerned with a purposeful and diligent intent. I could watch this a dozen times and not get tired of it. Helps remind me why I got into this profession in the first place. #consulting #restaurants #hospitality

Limited-Service Restaurants introduce new items with a cadence ranging between one new item (either LTOs or permanent) per week to one new item every 10 weeks (based on a sample of nearly 40 chains over the first 10 weeks of 2024). Coffee and Snack chains are among the most frequent innovators, with Krispy Kreme, Dutch Bros, Dunkin’, Starbucks, and Tim Hortons leading the pack — especially with focus on LTOs for beverages. Optimizing the menu can deliver great returns. When was the last time your brand undertook a menu engineering initiative? #restaurants #coffee #menu

I’ve been doing a lot of interviews lately on the state of the global restaurant industry in the context of recent closures. Here’s a new story/ interview with The Dispatch. We’re working on an update we will publish soon via our newsletter and blog (you can sign up at https://lnkd.in/ecCe3wR). There are going to be a lot of restructuring arrangements and announcements coming up as the dominos continue to fall in certain categories. The good news is that many brands are retooling and starting to apply CapEx in more creative and constructive ways to ensure more sustainable and long-term results. #restaurants #bankruptcies #investing

Here we explore how restaurant CEO priorities are shifting to keep up with how fast the economy and consumer are evolving. https://lnkd.in/df23YxRA #restaurants #CEO #innovation