NEW YORK, December 4, 2020 / PRNewswire / – Funding for restaurant franchise operators in the high and mid-range segments has mostly rebounded to what it was before the start of the COVID-19 pandemic, according to Brian Geraghty, responsible for restaurant financing at Mitsubishi UFJ Financial Group (MUFG).
A resurgence of adjusted rent leverage
“In the United States, we are seeing lending terms and prices as aggressive as they were before the widespread health crisis that emerged at the end of March,” Geraghty said, adding that banks have returned to accepting more leverage. raised. profile among borrowers for financing. “We are seeing the adjusted franchisee rent leverage ratios return to 5.75 after tightening by about three-quarters of a turn – to 5.0 – in the spring of 2020.”
Rent-Adjusted Leverage (RAL), also known as Lease-Adjusted Leverage, is the ratio of debt to EBITDAR (or earnings before interest, taxes, depreciation, amortization, and rental costs) . Restaurant lenders assess the RAL of their borrowers, many of whom do not own their properties but rather rent them out.
Increase in mergers and acquisitions and franchise purchases
Mr Geraghty cites the recent momentum of merger and acquisition (M&A) activity in the quick-serve and quick-serve market categories of the restaurant industry, which are defined as establishments offering quick and inexpensive meals. with limited preparation and customization, without seating. hosts, and no alcoholic drinks.
“Recent restaurant acquisitions in these market categories highlight the substantial amount of capital readily available for deployment,” he says. “Financial buyers, in particular, see investment opportunities in large and medium-sized restaurants that survive the pandemic, proving the resilience of their business models and able to diversify their portfolios as consumer amenities.”
Mr. Geraghty also points to an increase in reviews and the frequency with which franchised stores are changing hands. “In the medium-sized business segment, we see a greater number of franchisee purchases at high prices, which indicates to us the willingness of owners to enter this space or to expand their establishment,” he explains. he.
Lessons learned from the pandemic
Mr Geraghty notes that restaurants have emerged from the pandemic with valuable learning experiences that help them improve efficiency, improve customer service and save money.
“The changing economy of quick and quick service restaurants has led many people to focus on drive-thru and take-out offerings, and to invest in the technological infrastructure that allows them to process orders on the go. line, ”he said. “Still, casual, family-friendly and gourmet dining establishments, which rely more on table service, face greater challenges.”
MUFG is one of the largest financial institutions in the world in terms of assets, with approximately $ 3.3 trillion.1
About the U.S. operations of Mitsubishi UFJ Financial Group, Inc., including MUFG Americas Holdings Corporation
The US operations of Mitsubishi UFJ Financial Group, Inc. (MUFG), one of the world’s leading financial groups, have total assets of $ 339 billion To September 30, 2020. As part of this total, MUFG Americas Holdings Corporation (MUAH), a financial holding company, a banking holding company and an intermediary holding company, has total assets of 164 billion dollars To September 30, 2020. The main subsidiaries of MUAH are MUFG Union Bank, NA and MUFG Securities Americas Inc. MUFG Union Bank, NA provides a wide range of financial services to consumers, small businesses, mid-market businesses and large corporations. From September 30, 2020, MUFG Union Bank, NA operated 348 branches, primarily retail bank branches in the West Coast states, as well as commercial branches in Texas, Illinois, new York, and Georgia. MUFG Securities Americas Inc. is a registered securities brokerage firm engaged in origination transactions in the capital markets, domestic and foreign debt and equity transactions, private placements, guaranteed financings and securities borrowing and lending transactions. MUAH is owned by MUFG Bank, Ltd. and Mitsubishi UFJ Financial Group, Inc. MUFG Bank, Ltd., a wholly owned subsidiary of Mitsubishi UFJ Financial Group, Inc., has offices in Argentina, Brazil, Chile, Colombia, Peru, Mexico, and Canada. Visit www.unionbank.com Where www.mufgamericas.com for more information.
Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Based at Tokyo and with over 360 years of history, MUFG has a global network with over 2,700 locations in over 50 countries. The Group has more than 180,000 employees and offers services such as commercial banking, fiduciary banking, securities, credit cards, consumer credit, asset management and leasing. The Group aims to “be the most reliable financial group in the world” through close collaboration between our operating companies and to respond flexibly to all the financial needs of our clients, at the service of society and by fostering shared growth. and sustainable for a better world. MUFG shares trade on the Tokyo, Nagoya, and new York scholarships.
Visit https://www.mufg.jp/english for more information.
1 From September 30, 2020, at the exchange rate of USD = ¥ 105.8
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