Daily News: February 13, 2012

CIT Outlook: 2012 Funding Available for Restaurant Industry


The prolonged recovery of the U.S. economy has forced restaurateurs to adapt to a “new normal,” one in which they are now more efficient and innovative as they have learned to deal with a difficult sales and profit environment. This is one of many topics discussed in CIT’s “2012 U.S. Restaurant Industry Outlook,” featuring Bob Bielinski, managing director and head of the Restaurant Industry practice for CIT.

The outlook for 2012 is that funding will be readily available for restaurant companies and franchisees. “I think debt for large- and middle-market restaurant companies will be readily available in 2012, just like it was in 2011,” said Bielinski. “After a volatile fall and winter, the debt markets closed 2011 in very strong fashion. So long as there isn’t an economic downturn in 2012, lenders will continue to fund restaurant companies.”

According to Bielinski, as restaurant companies competed for market share during the prolonged recovery of the U.S. economy, they were forced to get more efficient and innovative as they dealt with the difficult sales and profit environment. “As a result, consumers saw improved quality on food, new product offerings, and value pricing,” said Bielinski. “In turn, customers are going to keep that better restaurant experience, and the company’s profit margins should be increased when business improves.”

“M&A activity was good in 2010 and accelerated in 2011, making it an extremely strong year,” said Bielinski. “For 2012 I think you are going to see a slower pace than you have over the past two years. There will be fewer headline transactions because of the dramatic turnover that’s already taken place in private equity portfolios.”

To read the full outlook, click here.