Global restaurant consultancy, Aaron Allen & Associates, provides here a roundup of Q1 2017 restaurant industry investment activity.

1. MAY 2017
$40m
$525m
$765m
$780m
$1.8b
$7.5b
FOODSERVICE
INVESTMENT
ACTIVITY

2. 2© 2017 Aaron Allen & Associates
MERGERS & ACQUISITIONS
Restaurant stocks are up more than eight
percent over the past three months — a
good sign for the industry at large, and a
sign that the market is receptive to
restaurants (and restaurant deals)
moving forward.
Though 2016 brought fears of a
restaurant recession and a slew of
high-profile bankruptcies throughout
the industry, the news is looking
positive for foodservice investment
activity. If the M&A deals of the first
quarter are any indication, 2017 will be
a big year for the space.
IMAGE SOURCE: Flickr (Chris Campbell & htmvalerio)

3. 3© 2017 Aaron Allen & Associates
RECENT & POTENTIAL RESTAURANT M&A ACTIVITY
There were at least ten high-profile restaurant acquisitions in the first quarter of 2017. Arguably the most notable was
the sale of Panera to private European company HAB Holdings Co, whose portfolio includes Keurig Green Mountain,
Caribou Coffee Co. and Peet’s Coffee & Tea. In April, JAB confirmed it had acquired Panera Bread Co. for $7.5 billion, a
deal some analysts warned could trigger a slowdown in restaurant mergers.
Another of the most widely-reported deals was the Darden (Olive Garden, LongHorn, etc.) acquisition of Cheddar’s
Scratch Kitchen for $780 million. In a statement, Darden CEO Gene Lee called Cheddar’s “an undisputed casual dining
value leader with broad appeal and strong average restaurant volumes.” Darden shares popped upon news of the
deal, the company’s first since purchasing Yard House in 2012.
Source: Aaron Allen & Associates, public data

4. © 2017 Aaron Allen & Associates
In January, it was reported that Argosy
Private Equity and MTN Capital Partners
LLC had acquired a controlling stake in
Italian ice chain Rita’s Franchise Co.
Terms of the deal were not disclosed.
Cereberus Capital Management
announced it would acquire salad
chains Souplantation and Sweet
Tomatoes after other potential buyers
backed out.
Less than a month after agreeing to sell
off more than 2,000 locations in China
and Hong Kong (to The Carlyle Group
and CITIC Group), McDonald’s is
currently soliciting private equity bids
for an up-to a 33% stake in its Japan
operations.
Restaurant Brands International Inc. —
the parent company of Burger King and
Tim Hortons — acquired Popeyes
Louisiana Kitchen Inc. for $1.8 billion in
February.
Chuck E. Cheese’s is reportedly
considering either an IPO (which could
value the company at more than $1
billion) or a sale.
In March, Yelp announced it had
acquired Nowait, a restaurant tech
company that offers a waitlist system
and seating tool, for $40 million in a
cash transaction. The company plans to
integrate the waitlist experience into the
Yelp app.
Fast-food chain Checker’s was acquired
in a $525 million transaction between a
pair of PE firms in March. Oak Hill
Capital Partners bought the chain from
Sentinel Capital Partners.
Fishbowl, a customer engagement
platform for the restaurant industry, was
acquired by PE firm Symphony
Technology Group in January.
A SUMMARY OF Q1 & POTENTIAL FOODSERVICE ACTIVITY

5. 5© 2017 Aaron Allen & Associates
21.1
18.3
11.1
0x
5x
10x
15x
20x
25x
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EV/EBITDA
Popeyes Panera Bread Bob Evans
THE THREE PUBLICLY TRADED TARGETS ACQUIRED IN 2017
WERE AT THEIR HIGHEST VALUATIONS IN TEN YEARS
Source: Aaron Allen & Associates, public data
*Notes: 2017 data collected as of April
ACQUISITIONS AT HIGH VALUATIONS
In February, Restaurant Brands International Inc. acquired Popeyes Louisiana Kitchen Inc. for $1.8 billion for an
EV/EBITDA multiple of 21x, the chain’s highest valuation in the last 12 years. Panera Bread was sold to JAB
Holding Company for $7.5 billion. Panera’s valuation (in April) was also at its highest level, close to a multiple
of 18x. Bob Evans Restaurants on the other hand, sold to Golden Gate Capital for $565 million plus liabilities,
has its second highest valuation (in April) in the last twelve years.

6. 6© 2017 Aaron Allen & Associates
0x
5x
10x
15x
20x
25x
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
EV/EBITDA
VALUATION MULTIPLES IN THE RESTAURANT INDUSTRY
HAVE REACHED PEAK LEVELS IN EARLY 2017
Source: Aaron Allen & Associates, Bloomberg
*Notes: Panera Excluded from 2017 transaction multiple
Averages
Transaction
Trading
96% Above
Average
29% Above
Average
RESTAURANTS REACH PEAK VALUATION MULTIPLES
Transaction multiples peaked in the last two years. Just four months into 2017, they are already almost
twice the historical average (from 2000-on). Trading multiples, though lower than their transaction
counterparts, are also above the historical average (nearly 30% above-average). Struggling sales are
likely to worsen trading multiples.

7. 7© 2017 Aaron Allen & Associates
18.8x
16.7x
14.2x
10.2x
8.8x 8.7x
7.6x 7.2x
Fast Casual Coffee,
Breakfast &
Snacks
Quick Service Specialty
Casual
Fine Dining Mass Casual Franchisees Polished
Casual
AverageEV/EBITDA(TTM)
Source: Aaron Allen & Associates, Public Company Data
POLISHED & MASS CASUAL ON LOWER END OF VALUATIONS
Restaurants in the fast causal category are leading EV/EBITDA valuation (on a trailing-twelve month
basis), while restaurants in the Mass Casual and Polished Casual categories are lagging behind on
EV/EBITDA performance.

8. 8© 2017 Aaron Allen & Associates
65
97 96
62
37 39
54 55
59
92
80 79
25
0
20
40
60
80
100
120
$0b
$2b
$4b
$6b
$8b
$10b
$12b
$14b
$16b
$18b
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
#ofDeals
DealValue
2017 RESTAURANT DEALS ARE ALREADY WORTH THREE TIMES THE VALUE
OF ALL 2015 AND 2016 DEALS COMBINED
Source: Aaron Allen & Associates, Bloomberg
*Notes: 2017 (January to April)
Average Value
Number of Deals
Value
2017 M&A total
value peaks due to
mega deals
2017 M&A ACTIVITY GREATER THAN 2015 & 2016 COMBINED
Thanks to the Panera and Popeyes acquisitions, 2017 deals already add up to three times the M&A
deals of 2015 and 2016, combined. With only a little more than a quarter of the year behind us, we are
only 35% below the peak reached in 2014.

9. 9© 2017 Aaron Allen & Associates
0x
10x
20x
30x
40x
50x
60x
70x
Chipotle
Wingstop
Domino's
ShakeShack
Popeyes
BiglariHoldings
Starbucks
Dunkin'
PapaJohn's
Yum!Brands
Zoe'sKitchen
Wendy's
RestaurantBrandsInt.
McDonald's
Noodles&Co
PaneraBread
Nathan's
Bojangles
Denny's
Dave&Buster's
Jamba
Chuy's
JackInTheBox
FamousDave's
TexasRoadhouse
CrackerBarrel
Darden
Sonic
DelTaco
TheCheesecakeFactory
ElPolloLoco
FogodeChao
BuffaloWildWings
DineEquity
Luby's
Carrols
Ruth's
PapaMurphy's
TheHabit
DelFrisco's
J.Alexander's
Potbelly
BrinkerInternational
KonaGrill
BJ&'s
Fiesta
RedRobin
Bloomin'
Diversified
RubyTuesday
Ignite
TheONEGroup
BravoBrio
EV/EBITDA(TTM)
POTENTIAL TARGETS FOR THE REST OF THE YEAR ARE
LIKELY TO BE UNDER-VALUED
Source: Aaron Allen & Associates, Duff & Phelps
*Notes: valuations for publicly traded companies, subject to data availability
12.5x Average
Q1 Targets
Potential Targets
Q1 ACQUISITIONS SKEWED TOWARD ABOVE-AVERAGE VALUE CHAINS
While Q1 targets (Shake Shack and Panera Bread) were above average in terms of trailing-twelve
month EV/EBITDA valuation, the rumored/potential targets for later in the year (including Ruby
Tuesday, Ignite, and Bravo-Brio Restaurant Group) are all performing significantly below average on
the same metric.

10. 10© 2017 Aaron Allen & Associates
109
124 123
109 111
131
119
114 116
126
108
84
130
92
0
20
40
60
80
100
120
140
$0b
$5b
$10b
$15b
$20b
$25b
$30b
$35b
Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17
#ofDeals
TotalDealValue
Total Deal Value Deal Volume
U.S. PRIVATE EQUITY ACTIVITY STARTED THE YEAR WITH LOW VALUES
Average Monthly Value
Source: Aaron Allen & Associates, FactSet
DEAL SIZE RECOVERS IN EARLY 2017
The total value of January deals was below the average of the previous 12 months. Value recovered in
February, however (68% growth in comparison to January), by means of a higher average deal size,
and is continuing this trend throughout Q1 and into Q2.

11. 11© 2017 Aaron Allen & Associates
Aaron Allen & Associates provides strategic marketing, concept
development and executive-level advisory services to leading
foodservice and hospitality companies worldwide. We identify and distill
the latest restaurant and hospitality marketing trends. We prepare
tailored presentations for executive management of growth-minded
companies, and then support the development and implementation of
innovative restaurant marketing initiatives within their system.
Collectively our clients post more than $100 billion in global sales and
span more than 100 countries across all six inhabited continents. We have
worked with a wide range of clients including high-volume independent
operators, multi-billion dollar restaurant chains, hotels, contract
foodservice providers, manufacturers, distributors and trade associations,
and prestigious private equity firms. We have direct consulting
experience in nearly all cuisine types and operating models.
ABOUT AARON ALLEN & associates

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