The appetite for food and beverage M&A remains strong. Valuations are high, but significant capital is ready to be put to work alongside debt from lenders looking for transactions. Thus, it’s likely dealmakers will continue to search for opportunities, both high and low, and buyers will continue to look downstream more and more, considering smaller franchisees, emerging brands and new ideas.
Industry trends may help shape buyer activity. Many consumers are looking for more than just organic and there is specific demand for items such as “plant-based” goods, and more tailored or unique items. Such “emerging brands” historically were difficult for investors to consider; however, large food and beverage companies have formed their own venture capital and/or private equity funds to consider these opportunities.
Looking at restaurant M&A by itself, buyers are looking for brands and concepts that provide growth. A concept with 10 or fewer units may sound small, but if the concept can be easily repeated in new markets, expect buyers to consider it.