Speaker 1: Welcome to Chopping it Up. I'm your host, Mike Hallin,
Speaker 1: Senior Restaurant and Food Service Analyst at Bloomberg Intelligence. I'm
Speaker 1: excited to introduce my guests, Mike gott Leeb. He's the
Speaker 1: managing director National Hospitality Advisory at khne Resnick. Thanks for
Speaker 1: doing this, Mike, Thank you for having me. Mike, you
Speaker 1: used to being introduced as a member of cone Resnick.
Speaker 1: Yet it's it's syncing in and it's it's hitting the
Speaker 1: ground running, and it's been a fun transition and a
Speaker 1: lot of excitement around it. I've I've really enjoyed the transition,
Speaker 1: very cool. How long has it been now? So I
Speaker 1: started with kne Resnick in November as a as a
Speaker 1: conference circuit, started with Restaurant Finance and Development, and I
Speaker 1: was initiated into kone Resnick by being given a cape
Speaker 1: that has cone resinck on it. And I was told
Speaker 1: that I was a superhero coming on to kone Resin
Speaker 1: and stepping out into new territory. So I had my
Speaker 1: capeon at Restaurant Finance and we are firmly in grain
Speaker 1: now within the restaurant industry that I am with kne Resinic.
Speaker 1: No longer an auDA partner focused on advisory and helping
Speaker 1: restaurants in their growth and strategic initiatives and really enjoying it.
Speaker 1: So it's it's been a great transition. Yeah, it's exciting.
Speaker 1: You are a superhero and you're joining a great team.
Speaker 1: Gary and Cindy are are great. I'm very close to
Speaker 1: both of them, and so I think this is a
Speaker 1: great fit for both, for both you and the team.
Speaker 1: And I'm excited for you guys. Yeah, I am too.
Speaker 1: It really it really brings me back to my roots
Speaker 1: back in the days that I started with Ey, you know,
Speaker 1: working with emerging growth restaurant companies, those that are looking
Speaker 1: to either grow in units, grow in concept or in
Speaker 1: geographic location, or marching towards a strategic transaction. When when
Speaker 1: I was younger in my career with Ernst and Young,
Speaker 1: I've worked with restaurants that are four or five six
Speaker 1: units and help them grow to a level to where
Speaker 1: they can first do a private equity transaction and then
Speaker 1: and then assist them and in their initial public offering.
Speaker 1: So it's it's very similar to that. You know, Cone
Speaker 1: Resinic has over six hundred restaurant clients, which I found
Speaker 1: very surprising and interesting because I didn't realize they had
Speaker 1: that breadth within the restaurant industry. But it really is impressive.
Speaker 1: And when you talk to folks within the restaurant industry,
Speaker 1: most of not all know Cone Resnic well for sure.
Speaker 1: They definitely have been good partners to me and to
Speaker 1: Bloomergant Intelligence. M All right, so let's let's dive in here. Man,
Speaker 1: what can you give us an update on the M
Speaker 1: and A market for US restaurants. How does the twenty
Speaker 1: twenty three deal flow stack up to last year? Yeah,
Speaker 1: as has been evident in the marketplace, the deal flow
Speaker 1: is significantly down from from last year. There's been some
Speaker 1: deals that have taken place, but it's it's not very many,
Speaker 1: and they've been mostly smaller restaurant companies tuck ins and
Speaker 1: add ons as opposed to larger transactions. As far as
Speaker 1: in the strategic marketplace, there have been you know, there's
Speaker 1: a number of players now that have multiple concepts, and
Speaker 1: there's a number that have indicated that they're looking at
Speaker 1: perhaps another transaction to add on to their existing brand.
Speaker 1: So it's going to be interesting because that that marketplace
Speaker 1: seems like that's a more likely area where there could
Speaker 1: be transactions when when you look at the overall economic
Speaker 1: environment today, you see higher interest rates, the bank crisis
Speaker 1: which we are currently going through, and all of those
Speaker 1: items point to it being more difficult vote for a
Speaker 1: private equity firm to be able to obtain appropriate financing
Speaker 1: and return on a deal. So that allows the strategics
Speaker 1: that may have cash on their balance sheet to invest
Speaker 1: that cash without having to incur significant debt, which which
Speaker 1: you know would would result in a better pricing model
Speaker 1: for the strategic and also for the target. So it's uh,
Speaker 1: it's it's rough seas and it's uh, I think going
Speaker 1: to continue a little bit longer because of the financial
Speaker 1: crisis that that um, we just have that we're going
Speaker 1: through at this point. Yeah. Um. And it's interesting with
Speaker 1: the strategics, right, you make a great point, um, the
Speaker 1: fact that that this may enable to give them more
Speaker 1: opportunities with private equity more on the sidelines. But valuations
Speaker 1: are still pretty high for restaurants stocks, so it makes
Speaker 1: for for a unique situation. Yeah, it really does. I
Speaker 1: mean it's restaurants have held up pretty well, um as
Speaker 1: it relates to their value as um and and you know,
Speaker 1: entering this uncertain time go forward where um, some believe
Speaker 1: it's going to be recessionary, and it's a matter of
Speaker 1: how recessionary is it going to be. What's that impact
Speaker 1: going to have on restaurants and what's that going to
Speaker 1: have on on valuations? But but certainly it is an
Speaker 1: interesting time when you see the valuations out there, and
Speaker 1: if if those types of acquisitions where the strategics take place,
Speaker 1: the pricing is going to be going to be quite interesting. Yeah,
Speaker 1: for sure. UM. You know, let's talk a little bit
Speaker 1: about you know, some of the companies that are looking
Speaker 1: to get an IPO done right Like, it's no secret
Speaker 1: that Full with the shown and CoV are looking to
Speaker 1: get something done. Are there other companies waiting in the
Speaker 1: wings right now? Yeah, there are several companies that are
Speaker 1: waiting in the wings where we've got a number of
Speaker 1: them that we're working with. UM. I would say somewhere
Speaker 1: in the five to seven company range. Are they're all
Speaker 1: looking rightfully so at a dual path right there. They're
Speaker 1: looking at setting themselves up to be ready to go
Speaker 1: public of the markets open, but they're also looking at
Speaker 1: having private equity and strategics come in and and uh,
Speaker 1: provide whatever opportunity they may have. So UM, the challenges
Speaker 1: and your right Kabbat and fog Chaw are both UM
Speaker 1: sitting there and they both have fantastic results, and that's
Speaker 1: what you need in this public market. However, with with
Speaker 1: the financial crisis, I think that put us back some.
Speaker 1: I was thinking that the markets were going to open
Speaker 1: up closer to the second quarter. Uh. Don't think that's
Speaker 1: probably going to be the case. But but you know,
Speaker 1: all it's going to take is one to come out.
Speaker 1: I'm I'm of a strong view that UM, once one
Speaker 1: brick gets taken out of the dam and that water
Speaker 1: starts flowing, I think the pressure of that water and
Speaker 1: the concepts that are out there that are strong concepts,
Speaker 1: and I think you know that that we could see
Speaker 1: some activities still this year, but but I think it's
Speaker 1: gonna be later in the year than it was. Um.
Speaker 1: Uh it originally projected to be. Also the most recent
Speaker 1: IPOs it took place a couple three years ago. You know,
Speaker 1: their valuations aren't as good, so everybody kind of looks
Speaker 1: to that as most recent activity and that that as
Speaker 1: additional angst to UM whether companies are able to come
Speaker 1: out during this unsettling time frame. Yeah. Sorry, Are you
Speaker 1: seeing maybe a different type of company in terms of
Speaker 1: maybe maturity and size versus some of the things that
Speaker 1: we saw called public a few years ago. Yeah, I
Speaker 1: think you certainly have to have more maturity, more size,
Speaker 1: demonstrate that you've had the opportunity and success opening in
Speaker 1: new markets on a fairly consistent basis UM, and that
Speaker 1: your your numbers, you're you're hitting it out out of
Speaker 1: the park as it relates to your numbers and having
Speaker 1: some good trends. So it's it's UM. It's definitely a
Speaker 1: different UM market now and a different expectation from the
Speaker 1: public markets for sure. So what what can some the
Speaker 1: companies that you're you're speaking to some of your clients,
Speaker 1: what can they do to prepare so they're ready when
Speaker 1: transactions do pick up? Yeah? I think that's that's the
Speaker 1: key right now, is that the preparation, because there's a
Speaker 1: little bit of a lull, you really need to I
Speaker 1: would say preparing what i'd call two broad mega areas.
Speaker 1: One is focused on your operations. You know, figure out
Speaker 1: how you're going to drive sales, figure out how you're
Speaker 1: going to cut costs, and really be able to find
Speaker 1: tune your operations and be able to put up the
Speaker 1: numbers that you would would need to do for a
Speaker 1: public offering. You need to act like a public company,
Speaker 1: so you need to close your books on a quarterly basis.
Speaker 1: You need to be able to do the things that
Speaker 1: a public company would do almost in a dry run.
Speaker 1: So those would be the ones that are on the
Speaker 1: sidelines right now that are ready to go. They've been,
Speaker 1: you know, thinking about doing an offering for probably twelve
Speaker 1: to twenty four months, so they've done a lot of
Speaker 1: the blocking and tackling. So the other restaurant companies, once
Speaker 1: the market opens up a little bit, you know, they
Speaker 1: need to take advantage of making sure that they are
Speaker 1: ready to become a public company. So make sure your
Speaker 1: financial statements are all on a gap basis, and make
Speaker 1: sure that you have the appropriate capital structure and corporate
Speaker 1: structure to go forward as a public company. That means
Speaker 1: looking at your people, making sure you have the right
Speaker 1: people on board from all different disciplines, whether it's in
Speaker 1: the finance accounting team to the IT group to the
Speaker 1: HR make sure you have those people that are that
Speaker 1: are going to be able to take you into a
Speaker 1: public arena. Make sure that you have your technology and
Speaker 1: your processes are all in good working order to be
Speaker 1: able to sustain growth and produce the results, produce the
Speaker 1: numbers on a timely basis, and that you have good
Speaker 1: controls in place to be able to ensure that there's
Speaker 1: not going to be a hiccup because the market's not
Speaker 1: forgiving if if if you miss earnings or if you
Speaker 1: are not able to produce the information and timely basis.
Speaker 1: And you know, it takes some time to do that.
Speaker 1: So I think this is the ample time to really
Speaker 1: make those investments into the organization that are necessary in
Speaker 1: order to have a successful offering. That's great, and you
Speaker 1: mentioned you know, it's time for these companies, emerging brands,
Speaker 1: people that want to go public to to really focus
Speaker 1: on improving their operations and cutting their costs. So is
Speaker 1: there any types of technology maybe that that um, you know,
Speaker 1: you're you're suggesting your clients maybe invest in to kind
Speaker 1: of help them along that path. Yeah, as we've seen
Speaker 1: as a result of COVID, the restaurant industry is finally
Speaker 1: investing into technology. Yeah, you know, restaurants are not one
Speaker 1: to be on the cutting edge on the front end,
Speaker 1: but they were, you know, very very late bloomers to
Speaker 1: invest in COVID really cause the restaurant industry to take
Speaker 1: note and invest in technology. I've always been a big believer,
Speaker 1: and I think the restaurant industry has demonstrated this that
Speaker 1: you've got to look outside of the four walls of
Speaker 1: your industry and look at what other industries have done
Speaker 1: to be successful embracing technology, and certainly as it relates
Speaker 1: to digital, restaurants have looked at the airline industry the
Speaker 1: hotel industry to be able to look at how they've
Speaker 1: done as it relates to digital. Loyalty programs certainly are
Speaker 1: prolific within the airline and hotel and now we're starting
Speaker 1: to see or not starting to see, but we're seeing
Speaker 1: much more robust loyalty programs with restaurants. But embracing technology
Speaker 1: to maximize the customer's experience, that's key these days. The
Speaker 1: customer really expects that and in order to grow your
Speaker 1: top line, whether that be when you walk into a restaurant,
Speaker 1: embracing technology as it relates to ordering, or if it's
Speaker 1: related to payment, if it's related to looking at the
Speaker 1: menu and offerings. There's a number of things that you
Speaker 1: could do from a technology standpoint to enhance and maximize
Speaker 1: that customer's experience. And because of the no touch and
Speaker 1: COVID rules that were put into place, a lot of
Speaker 1: that now is common. Course. Then you look at technology
Speaker 1: that you can have in the back of the house,
Speaker 1: and I think that a lot of that technology can
Speaker 1: help with improving your employees experience. So you can automate
Speaker 1: a number of the functions back of the house that
Speaker 1: will allow a employee that's doing a mundane task not
Speaker 1: do that task, but have technology do it and put
Speaker 1: that employee doing something that would be more interesting. So
Speaker 1: you're improving your labor there, and you're also can embrace
Speaker 1: technology as it relates to your labor scheduling, laboral staffing
Speaker 1: to be able to best maximize the technology to minimize
Speaker 1: your So I think technology can both you know, expand
Speaker 1: on the customer's experience and improve on your employees morale
Speaker 1: and retention. Yeah, which is so important right now. Obviously
Speaker 1: with with you know, the issues a lot of the
Speaker 1: restaurants have faced in terms of staffing. Obviously it's improved,
Speaker 1: but there are still parts of the day, especially late night,
Speaker 1: that um chains are struggling to you know, find employees
Speaker 1: for Yeah, yeah, it's and the employee you know, labor
Speaker 1: is is the largest line on a restaurant's P and L.
Speaker 1: And as we all know, restaurants are the second largest
Speaker 1: employer behind the US government. So it's it's a it's
Speaker 1: a big number and um it's it's had its challenges
Speaker 1: of recent times, but um, I think it's it's leveling
Speaker 1: lawf a little bit. I think that labor is now
Speaker 1: finally you know, leveled off. It's it's not climbing like
Speaker 1: it has been, which has really been a challenge, and
Speaker 1: that's resulted in significant menu pricing increases. So we've you know,
Speaker 1: we've seen the costs are wed, we've seen the menu
Speaker 1: prices go up. I think we've we've hit some elasticity
Speaker 1: within the environment where consumers are not willing to continue
Speaker 1: to pay more and more. But at least labor is
Speaker 1: leveling off a bit. And also costs are from a
Speaker 1: from a food cost standpoint, are are leveled off a
Speaker 1: bit and expected to reduce throughout the remainder of the year.
Speaker 1: So there's been two big tail winds that have really
Speaker 1: been pressing the restaurant industry, and those are lightning up
Speaker 1: a little bit now. Granted they're much more, they're much
Speaker 1: higher than they have been, and inflations cause to go up,
Speaker 1: but I think there's going to be at least, you know,
Speaker 1: some reprieve there, and hopefully that will allow restaurant companies
Speaker 1: to be able to focus on those costs, managing them
Speaker 1: a little bit better with things that will be in
Speaker 1: their control. Yeah, for sure that the inflations expected to
Speaker 1: be more like mid single digits um for both commodity
Speaker 1: and labor this year versus you know, high single digits
Speaker 1: and low teams last year year. So it'll give them
Speaker 1: a chance to close that gap, right because they haven't
Speaker 1: been able to there's a gap between how much they've
Speaker 1: raised prices and how much inflation they've seen for the
Speaker 1: last couple of years. So they'll be able to close
Speaker 1: that gap, hopefully a little bit this year and help
Speaker 1: those margins that were hit pretty good in twenty twenty two. Yeah, yep, yep.
Speaker 1: You know, one of the things that I tell our
Speaker 1: restaurant clients all the time, especially in this environment, is
Speaker 1: you've got to crush the basics, you know, crush the basics,
Speaker 1: just focus on the key items that are your basics
Speaker 1: of operation, and during this time you've just got to
Speaker 1: nail it because if you don't, then then you're not
Speaker 1: going to be able to do it during more difficult
Speaker 1: times come forward. So I think this time, where where
Speaker 1: markets are a little bit slower as it rates to transactions,
Speaker 1: you really just need to focus on your basics. Yeah,
Speaker 1: it's great advice. And to your point about labor, Yeah,
Speaker 1: we've seen some loosening up of the labor market here.
Speaker 1: For the restaurant companies recover. We get some data from
Speaker 1: black Box Intelligence and a year over year there was
Speaker 1: pretty significant improvement in management and non management turnover for
Speaker 1: the casual dining chains in their index, But would um
Speaker 1: not so much for Quick Service, which was interesting. Quick
Speaker 1: Service continues to struggle a little bit more. And my
Speaker 1: guess that that part of that is that late night,
Speaker 1: part day part that Quick Service tends to compete in
Speaker 1: a lot more heavily. Yeah. I think that's that's right.
Speaker 1: And it's also for whatever reason, you know, when when
Speaker 1: all the stimuluts was provided to to a number of people,
Speaker 1: the employees that were in Quick Service, they didn't want
Speaker 1: to go back to Quick Service they they didn't feel
Speaker 1: that that was the position that they wanted to be in.
Speaker 1: So it was it was difficult to find employees to
Speaker 1: be able to fill those spots because there wasn't the
Speaker 1: demand that used to be there for those people working
Speaker 1: in those types of position. So I think we're still
Speaker 1: struggling a little bit and have the um the hangover
Speaker 1: effect of the stimulus impact on quick service. Yeah, for sure,
Speaker 1: it's um. It looks like it's stimulus is coming to
Speaker 1: an end though, right, I mean, we have a we
Speaker 1: have a split Congress now. I guess one of the
Speaker 1: final stimulus UM policies was the halting of the student
Speaker 1: loan payments, right, and I think that's that's ending next month.
Speaker 1: So um, you know, with without all the stimulus that
Speaker 1: that you know, us consumers have had over the last
Speaker 1: few years, you know, it could be a bad omen
Speaker 1: for restaurant spending here in twenty twenty three. Your thoughts, Yeah,
Speaker 1: I think that it's going to be challenging with without
Speaker 1: a doubt, just uh, we're seeing, you know, there being
Speaker 1: a number of consumers that are stepping down, uh to
Speaker 1: the next level that the consumers spending. The concern over
Speaker 1: inflation and the concern over was sessionary times go forward. Um,
Speaker 1: people are are spending less, not only with restaurants, but
Speaker 1: you know throughout the economy, and I think that trend's
Speaker 1: going to continue. So I think, you know, the winners
Speaker 1: are certainly going to be fast casual and QSR because
Speaker 1: you'll get those that are in upper casual or casual
Speaker 1: stepping down too Fast casual and QSRUM. So it's it's
Speaker 1: it's going to be you know, top line is going
Speaker 1: to be going to be more challenging. That's why, you know,
Speaker 1: like I said, getting back to the basics and crushing
Speaker 1: the basics, to really focus on costs and make sure
Speaker 1: you're looking at your cost structure and especially discretionary costs.
Speaker 1: I think those are going to be difficult to fund prospectively.
Speaker 1: Going to have to really focus on the key areas maybe, um,
Speaker 1: you know, look at look at the operations, pull the
Speaker 1: operations in a little bit. Don't expand your menu, but
Speaker 1: contract your menu. Focus on the right products that are
Speaker 1: providing the right return. Making sure you've got your supplier
Speaker 1: network and in place to ensure that you're going to
Speaker 1: get adequate supply at the appropriate cost. So you know,
Speaker 1: a lot of things that the restaurant industry focused on
Speaker 1: during COVID, I think are things that need to be
Speaker 1: focused on here and go forward in this future economic times. Yeah,
Speaker 1: that makes a lot of sense. You know, there's been
Speaker 1: some restructuring in the news recently. McDonald's and Wendy's are
Speaker 1: two of the names that have been in the news
Speaker 1: McDonald's this week. What do you think is motivating these
Speaker 1: moves and could we see more companies do the same,
Speaker 1: maybe lay off some employees. It seems like maybe now
Speaker 1: is the time for them because they have cover, right
Speaker 1: do we have as a lot of other tech companies
Speaker 1: and different companies like that in the news that are
Speaker 1: laying off employees. And so even though McDonald's sales haven't
Speaker 1: fall fell off yet, maybe they're seeing this as an
Speaker 1: opportunity because there's cover. Yeah, I mean, this is kind
Speaker 1: of what has been predicted that there was going to
Speaker 1: be some some some layoffs. We saw it first in
Speaker 1: tech than in financial services and UM and restaurants usually
Speaker 1: aren't on the forefront of that. They're usually the tailwind.
Speaker 1: And I think that's where we're at now, and that's
Speaker 1: what you're seeing with McDonald's and Windy's and I think
Speaker 1: you're going to see that with others. I think when
Speaker 1: they look out and the future and look at what
Speaker 1: their demand is and what their sales are going to
Speaker 1: be and what their cost structure is, UM, there's certainly
Speaker 1: going to be more more layoffs and it's going to
Speaker 1: be UM. You know. I don't think it's going to
Speaker 1: be as deep as it has been in the past,
Speaker 1: but I think it's gonna, you know, certainly make the
Speaker 1: news because again, we're the second largest employer. So if
Speaker 1: layoffs are happening in other industries and across the country,
Speaker 1: and you're starting to see a little bit less consumer
Speaker 1: demand for uh, for products and for restaurants, you're you're
Speaker 1: going to have a little bit of a blip. Yeah.
Speaker 1: So outside of the economic slowdown and a potential recession,
Speaker 1: what's what are your clients most worried about right now? Uh, Well,
Speaker 1: they're just worried about making sure that they're able to
Speaker 1: drive margins. I think that's where their focus is, UM
Speaker 1: trying to drive sales because their constructures aren't going to
Speaker 1: come down a lot. So it's it's it's really UM
Speaker 1: driving sales. Depending on where what sector they're in I think,
Speaker 1: you know, more of the fine dining, the the casual
Speaker 1: sectors are more concerned than quick service and fast casual,
Speaker 1: just because of that trade down element that I had
Speaker 1: mentioned earlier, and um, you know, just just trying to
Speaker 1: make it through what I think most believe could be,
Speaker 1: you know, not a not a severe recession, but more
Speaker 1: of a mild recession and a shorter term recession. So
Speaker 1: get through those those those difficult times and getting back
Speaker 1: into growth mode. Most restaurant companies aren't aren't growing, They're
Speaker 1: not opening up nearly the number of stores that they
Speaker 1: had before. So there's some of the discretionary spend that
Speaker 1: I had mentioned that they have to keep an eye on, um,
Speaker 1: but it's really you know, trying to, like I said earlier,
Speaker 1: maximize a customer's experience so they get the return visits
Speaker 1: and keep the sales lineup. So sales I think is
Speaker 1: key today, not that that it is in other times,
Speaker 1: but I think it outweighs costs containment now because costs
Speaker 1: are starting to level off a little bit. Yeah, for sure.
Speaker 1: And it's interesting with the development piece, right, you mentioned
Speaker 1: that some companies are pulling back. You know, we have
Speaker 1: also companies that are going full steam ahead. But I
Speaker 1: think that the increased amount of telecommuting has kind of
Speaker 1: made that difficult, right, because we don't know, we still
Speaker 1: don't know what the long term run rate for these
Speaker 1: stores in you know, urban business center locations are going
Speaker 1: to be moving forward, right, and we're not really sure
Speaker 1: where these suburban stores are going to settle out right.
Speaker 1: They had the huge spike during COVID, and now they're
Speaker 1: kind of you know, sales or they're losing some sales
Speaker 1: back to maybe urban locations. But that that part has
Speaker 1: made development very difficult and interesting to watch. I think, yeah,
Speaker 1: it really has. Because now that there's the ability to
Speaker 1: work remotely, even if it's a couple of days a week,
Speaker 1: that's a couple of days a week, you don't have
Speaker 1: as many people in the urban locations and the office
Speaker 1: buildings and the areas that would generate a significant lunch,
Speaker 1: breakfast lunch traffic. And then the development of urban areas
Speaker 1: with housing a lot of the metro areas that really
Speaker 1: were expanding in housing in urban areas. And then with
Speaker 1: the safety issue, you coupled the safety issue with with
Speaker 1: a lot of the urban areas and the homeless situation.
Speaker 1: Those developments have slowed down quite a bit, and some
Speaker 1: are picking back up. I mean I'm hearing you know,
Speaker 1: on both sides. Some cities are doing better at rebounding.
Speaker 1: You know, kind of is a city by city basis
Speaker 1: and depending on how the government in the cities are
Speaker 1: focused on it. But there's just a lot of uncertainty
Speaker 1: about the urban environment. And I think you're right it's
Speaker 1: it's leveraging out or it's starting to level out a
Speaker 1: little bit in the suburbs. But we're still seeing a
Speaker 1: lot of restaurant companies very successful in expanding in the suburbs,
Speaker 1: and I think, you know, that's what we're seeing more
Speaker 1: of the expansion as opposed to urban expansion currently. Yeah,
Speaker 1: that makes a lot of sense, you know from what
Speaker 1: I'm here on Mondays and Fridays in New York City
Speaker 1: or have been tough, and Fridays are historically probably the
Speaker 1: best day of the week. Yeah. Yeah, Now that's and
Speaker 1: that's not only New York City. I think that's you know,
Speaker 1: you look at the top ten cities in the US
Speaker 1: of A. I would say that those all mirror of
Speaker 1: the same trend. Yeah, all right, So what are we
Speaker 1: looking for in terms of green shoots, whether it be
Speaker 1: the M and A market, the restaurant industry. What are
Speaker 1: we kind of looking for to see things maybe you know,
Speaker 1: turn around and improve. Whether it's in the second half
Speaker 1: of this year or early twenty twenty four, what are
Speaker 1: we looking for. Well, I think the macroeconomic environment hast
Speaker 1: got to stabilize and we're seeing inflation come down. I
Speaker 1: think we've got to still continue to see inflation come down.
Speaker 1: We've got to, you know, make sure this banking situation
Speaker 1: is nipped and and there's no no further failures and
Speaker 1: that concern is UH is addressed. And then I think,
Speaker 1: you know, we're going to go through this period of
Speaker 1: a little bit of a m deceleration, layoffs and such.
Speaker 1: But you know, I think that towards the end of
Speaker 1: the year, I would expect that things are going to
Speaker 1: start stabilizing a little bit. I think we're going to
Speaker 1: start then to see a couple of transactions take place.
Speaker 1: I think once the financial markets start to be comfortable
Speaker 1: with with new transactions, whether it be restaurants or whether
Speaker 1: it be other industries, UM, I think that's going to
Speaker 1: be the catalyst that's going to be the foundation to
Speaker 1: build go forward, to be able to uh you know,
Speaker 1: hopefully have the have the end of the hockey stick
Speaker 1: and start going back up the other direction. Yeah, Cole.
Speaker 1: And and if we've nothing else from the last three years,
Speaker 1: it's that restaurant industry, the hospitality industry is very resilient.
Speaker 1: Figure figures away, figures away, right, very entrepreneurial and and
Speaker 1: um you know, always kind of figures a way out. Yeah,
Speaker 1: and and and you said it, well, it's very resilient.
Speaker 1: And because of the experience that was caused by covid
Speaker 1: I mean, covid is is the worst that could have
Speaker 1: ever happened to the restaurant industry. And to be able
Speaker 1: to survive that with with stronger players. Now, it did
Speaker 1: have a lot of um independence that that were impacted
Speaker 1: and weren't able to make it through, but the stronger performing,
Speaker 1: larger restaurant companies for the most part made it through.
Speaker 1: There is a few that didn't, but you know, it
Speaker 1: just made the industry I think stronger in a in
Speaker 1: a weird way, right, in a bad way. But when
Speaker 1: you when you look at the other side, the industry
Speaker 1: is stronger and much more nimble and extremely resilient to
Speaker 1: be able to deal with um hiccups that come in future,
Speaker 1: and these are I think more hiccups as opposed to
Speaker 1: something much more severe as we dealt with with COVID. Yeah,
Speaker 1: it was cool to see, you know, increasing sales channels.
Speaker 1: You know, companies that didn't really mess around with delivery
Speaker 1: and still don't, like Texas Roadhouse and Darting, but just
Speaker 1: increasing there to go sales and having additional sales channels.
Speaker 1: You look at a chain like Bloomin Brands whose margins
Speaker 1: are higher now than they were in twenty nineteen to
Speaker 1: despite all of the inflationary headwinds. So the adaptability is
Speaker 1: definitely impressive. I'd say the other thing I love about
Speaker 1: this industry is the people, and a lot of great people,
Speaker 1: including you. So I want to thank you for doing this. Man.
Speaker 1: I appreciate you. I know you're you're very busy. I
Speaker 1: appreciate your time. What's the best way for listeners to
Speaker 1: get in touch with you? Best way to get in
Speaker 1: touch with me is through email, which would be Michael
Speaker 1: dot Gottlieb at Cone Resnick dot com. Or you can
Speaker 1: always reach out and text or call me at nine
Speaker 1: for nine three two two two one two zero and
Speaker 1: be happy to talk strategy, happy to talk you know,
Speaker 1: future growth plans. That's that's my Baileywick. That's what I
Speaker 1: enjoy doing, and that's it's a win win for for
Speaker 1: for both the restaurant company myself. It's really satisfying. So
Speaker 1: I really appreciate you having me on today, Michael. It
Speaker 1: was a great discussion. I look forward to to more
Speaker 1: of these on a positive note, go forward. Yeah, it's
Speaker 1: always great to catch up. And yeah, hopefully next time
Speaker 1: I have you on here we can talk about a
Speaker 1: bunch of m and a deals will be a lot
Speaker 1: more fun, right, Yeah, no doubt. I'm looking forward to
Speaker 1: that and we know it's coming. It just a matter
Speaker 1: of when, right for sure? All Right, Thanks again, Mike
Speaker 1: uh and for the listeners, Thanks for listening in. If
Speaker 1: you liked the episode, please tap on the bell to subscribe,
Speaker 1: and don't be afraid to give us a review. Thanks,
Speaker 1: Thank you. Thie