The Global Market & Its Effect on Restaurants

December 5, 2022

Welcome to Dana Delivers by Aprio podcasts, the podcast that helps restaurant owners and operators learn from industry experts about trends and opportunities. On every episode, Dana Zukofsky, the leader of Aprio’s restaurant advisory team, explores a topic impacting our industry in a candid conversation. And now, let’s hear what Dana is serving up on this episode.

Well, on today’s podcast, we have John Goldasich from Lazard with us. John, thanks for joining.

Thank you, Dana. Thanks for having me. Excited to be here.

Thank you. So Lazard is new to you, so why don’t you tell our listeners a little bit about you, the firm and what you’re doing there?

Absolutely. Yeah, thrilled to be with Lazard. Lazard is a 175 year old global investment bank. They have 41 offices in 25 countries around the globe and have just widely been considered one of the leading advisory firms to companies on Wall Street. They are an independent advisor, they don’t have a balance sheet, and have just always been focused on really specific strategic M&A for leading companies around the globe. I joined back in July to lead the firm’s efforts in the restaurant space and in franchising and multi-unit consumer services. Prior to Lazard, I was with a boutique consumer focused investment bank for the last 16 years where I focused and led efforts in M&A in the restaurant space as well. Very excited to be a part of Lazard platform and have a broader global reach and depth and bring what Lazard can bring to other industries to the restaurant industry.

That’s amazing. And you just hit on the global reach. So before a little more national, now a little global as well. What are you seeing in the marketplace? We’re seeing a lot of slowdown in our M&A practice, right? A lot less QV is going on. Everyone’s taking a beat, they’re waiting for the election cycle. You’re on the other side, you’re the one who’s seeing it before we do. So talk a little bit about what you’re seeing in the market. 

Yeah, we’re seeing the same thing. I mean, I was in London earlier this week, and was pitching on a new opportunity and took the time to meet with some European-based sponsors. And they’ve completely ground to a halt. And they have a much more negative view of the deal environment than we do in the US at the moment. And I think that’s the key term, is that it’s at the moment, it’s momentarily. In the US, I think there’s still pockets of activity, but not in the traditional sense where you have institutional private equity groups that are driving a lot of the deal volume. You’re still seeing some select growth equity financings getting done, you’re seeing family office and high net worth individual investments in the emerging brands. There has been some select strategic M&A. But for the most part, what has driven M&A in the US for over a decade has been private equity volume and at the moment, nobody in the private equity world wants to be the individual that goes to their investment committee pitching a restaurant deal at the moment, just with labor pressures and supply chain pressures and macroeconomic pressures. But I think it’s temporary. And I think everybody that I’m talking to is prepping to get something launched by early to mid next year. But people want to see some visibility into future cash flows in some way, shape or form. And right now, there’s just a lot of uncertainty. And we haven’t even talked about the slowdown in the debt markets yet. But I think that things will pick up and everybody’s eager to deploy capital and eager to continue to support the restaurant industry. It’s just a momentary slowdown.

Right. And I guess with deployed capital, some of the conversations we’ve been having is people want to put it to work really bad, but with interest rates where they are, sometimes putting it in the bank might just be a better idea.

Yeah, that’s right. That’s right.

That’s not the fun part for us.

Yeah, as with my new role at Lazard, I get access to so much macroeconomic data, and we have economists on staff, and it’s something that I’ve really been following more than I ever have in my career. Nobody has a crystal ball. But we don’t think this is going to be a slow down for years. It’s going to be a slow down for months. And I think it’ll be really interesting. You and I are talking right now, and I’ll see you in a couple of days at our RFDC. But it’ll be very interesting. We have a full slate of conversations at the Restaurant Finance Conference, and it’ll be interesting to see what people’s view on the deal environment and just what the next 12 to 24 months are gonna hold for the restaurant industry.

Yeah, for sure. And I think what you said before about who was looking to buy, how there are strategic acquisitions or strategic mergers going on, that’s what we’re seeing the most of, is someone owns 60 in a brand, they buy 60 more. Are you guys seeing that as well, globally, and through other brands?

Yeah, I think it’s opportunistic. I mean, just recently MTY has been acquisitive. They bought Wetzel’s and Barbecue Holdings. You’ve got a handful of other strategic deals. And look, there’s been a lot of activity within the franchisee community. Franchisees buying other franchisees. I think that’s slowing down a little bit as well, because so much of that is fueled by the debt markets, and the debt markets are really tightened up in certain areas, including the restaurant space at the moment.

Right. What do you think happens there? You think those are going to start to loosen? Or do we think that’s going to be a little longer?

Gosh, that’s the billion dollar question. I think people want visibility in the future. They want visibility in the future cash flows in some way, shape, or form, whether it’s the labor pressures loosening, supply chain pressures loosening. 

Combat any prices.

Yeah, exactly. I read an article where this is actually pro-restaurant industry at the moment. But it said that for the average US family, it would be cheaper for them to actually go to the restaurant and eat Thanksgiving dinner instead of cooking at their house right now, because of inflationary pressures.

Well, I did my FreshDirect order for Thanksgiving. And I compared it to last year’s FreshDirect order, just because it seems a little high. And it’s one and a half times what it was last year for the same stuff, like turkey. But I said, I thought this was cheaper last year.

That’s nuts.

Right. So yeah, what happens to people in other situations with big families and going out? We’ll figure it all out, I guess.

I mean, honestly, I think that’s the thing that unchartered waters, so to speak, in terms of, finance professionals. We’ve all lived through downturns and through economic softness, but none of us have been through economic softness where there’s been so much pressure on the US consumer, just with inflationary pressures. So you have a downturn in the economy mixed with inflation. I think that’s where there’s just so much uncertainty, because it’s something that we haven’t seen before. 


But all that being said, look, we’re focusing a little bit on the negative. I mean, the restaurant industry is extremely resilient. And I’ve always been a firm believer that really high quality assets, premium concepts, they’ll find a way to find capital, they’ll find a way to flourish. The consumer is not going away, they’re just picking their spots, and maybe they tighten their belts, in one way or another. But there’s some really interesting and innovating things going on in the restaurant space.

I guess that’s what I was just gonna ask. So you have access to all these things, right? Because you’re seeing a lot first. You’re seeing people who want to go out, sell, or do whatever they’re doing. What did you see that’s innovative, or fun or a little bit different? If you don’t want to give a brand, that’s okay. But any great ideas out there?

Yeah, no, there’s so much. I mean, I think that one of the great things, but also, a criticism of the restaurant space, is that there’s a lot of me toos, there’s a lot of knock offs, or, ‘Hey, this guy’s doing this, and we’re gonna do the same thing.’ But I think in this environment, people have had to get even more innovative and whether it’s around different ways to get product to the consumer, you have fast casual concepts that are exploring drive thru, you have QSR that are getting deeper into delivery and things of that nature. I really like limited format, what’s going on in the beverage space, I mean, concepts like Scooters and Big B and Swig out in Salt Lake City, what they’re doing on the beverage side with a drive thru only and a small labor force. I really like what’s going on on the experiential side and concepts like chicken and pickle and Puttshack and Popstroke. And I think everybody is realizing that they have to be on their game in this consumer environment in terms of quality and service, and you’re seeing concepts that focus on that really rise to the top.

Right. And as we said earlier, quality and service right now are just – quality we could do, but service is just so hard. 


But again, the people have to go back to work somewhere. We have to find them. So what else is going on? So we talked a little bit about what you’re doing, what you’re seeing. Any other words of wisdom or any other things you want to share with our listeners about what you’re seeing or going on more on the US side as opposed to global?

What I love about the restaurant industry, more than anything, is just the culture among operators and among vendors and capital sources. And I’m so excited to go to the Restaurant Finance Conference and see everybody in person, share ideas, and collaborate. And my advice would just be if you’re an operator, don’t operate in a vacuum. Talk to the market, talk to capital sources, talk to advisors, talk to service providers and vendors, because that’s where there’s a free sharing of ideas, where you see how other people have pivoted or been able to navigate a certain environment. And then, on the capital raising or M&A side, I think the back half of 2023, assuming that the Fed stops raising rates, or when they stop raising rates, and we start seeing more visibility and future macroeconomic conditions, that there’s going to be a lot of pent up demand. And we’re already hearing it from private equity groups and from operators who are saying, ‘Hey, we’re not going to do anything right now. But let’s prep, let’s get our house in order, so to speak, to be in a position where we can hit the market and get something done in the back half of 2023 or early 2024.’

I agree with all of that. With going to these conferences, sharing, I always do find it amazing that as a community, how much we all do share. I tell friends who work in other industries that people talk as much as we do, and they can’t believe it. ‘But what about proprietary information and all that, it doesn’t matter?’ We’re feeding people, we’re not saving the world here. So I will see you next week. I love talking to you. I appreciate your time. And in just closing remarks, thank you. And if anyone who is listening has questions, reach out to John. His information is in the bio.

Thank you, Dana. Big fan of yours and a big fan Aprio. And I really appreciate you letting me chat with your audience today.

Awesome. Thank you so much, and I’ll see you next week.

Thank you to all of our listeners to the Dana Delivers by Aprio podcast. If you liked today’s podcast, please hit the subscribe button. Dana Delivers is brought to you by Aprio, a premier accounting and business advisory firm with offices across the US and clients around the globe.

About John Goldasich:

John Goldasich is a Managing Director with Lazard Frères & Co, a global investment bank. He has over 18 years of experience in capital markets, merging, and acquisitions. He serves clients across the franchising, restaurant, and consumer services sector. Prior to joining Lazard, he was a partner at Arlington Capital Advisors, leading the franchising, restaurant, and consumer services practice.

John received his master’s degree in Management, Economics, & International Relations from the University of St. Andrew and his BA in political science from Lipscomb University.

Stay informed with Aprio.
Get industry news and leading insights delivered straight to your inbox.

Recent Articles

About the Author

Dana Zukofsky

Dana Zukofsky is the Restaurant, Franchise & Hospitality Practice Leader at Aprio, providing advisory, accounting and consulting services to help foster profitability and growth.