This post is part of the On the Margin blog.
Any time I tell people that I write about restaurants for a living, their response is almost always the same: “Oh, are you a food critic?”
No, I tell them. I don’t care how the food tastes. I only care how it sells.
Which is a fitting description for my new blog, On the Margin. In this space, I’ll follow the money in the restaurant industry, analyzing an industry that generates $700 billion in annual sales and employs one out of every 10 Americans.
It’s a fascinating time to cover restaurants. Lenders and financiers are pouring money into the industry, providing operators with expansion opportunities and fueling a merger and acquisition wave that’s not expected to slow down anytime soon.
This is taking valuations in the industry to historic levels. Stock prices for publicly traded restaurants are high. Investors are buying up growth concepts. Or they’re buying stock in them at IPO, giving restaurant entrepreneurs a path to riches they’ve not had since the days of Ray Kroc and Col. Sanders.
And yet the industry faces unprecedented challenges. Business in the industry is shifting from old-line concepts to new ones with different business models that question the status quo.
The industry is just recovering from its worst period in modern history, only to face an onslaught of commodity headwinds, and now that those are dying down labor costs are rising.
Many operators have to spend money on technology upgrades and long-awaited remodels, but with margins as thin as they’ve ever been, older operators are selling locations.
I’ll look at these trends and more with a critical eye and an irreverent style. I’ll take a deep look at the numbers, and will parse comments from executives and industry insiders to get the real story. I’ll speculate a little. I might even make a prediction or two. I won’t always be right, not by a long shot, but hopefully my posts will make you think, and will generate discussion.
So, welcome to On the Margin.