Restaurant finance on the table

Fast food casual chains are set to eat up the biggest chunk out of the restaurant sector and are taking custom away from quick serve outlets, according to the latest market intelligence report served up by CIT’s Executive Insights, which predicts this trend will cook up growing finance demand.

“Fast casual chains are changing the landscape of the restaurant sector through customization and better food quality, and by creating more comfortable environments,” said Bob Bielinski managing director of the restaurant industry practice for CIT corporate finance. “These chains are seeing growth because they are rewriting the rules of the business and are adept at meeting consumer needs, while continuing to add units and grow sales.”

CIT says many quick serve chains and casual dining restaurants are reacting by remodeling restaurants, improving the quality of their food and utilizing new technology. As a result, these companies will likely seek financing to invest in their restaurants and improve their overall value proposition.

Looking ahead, CIT predicts as private equity firms look to divest their portfolio companies, activity is likely to accelerate in 2015 if the capital markets are strong and the economy continues to improve.

CIT says bank regulations could put added pressure on restaurant companies’ ability to build their businesses, as they traditionally rely heavily on debt and need capital for remodels, new units, and acquisitions. There is also a growing requirement for funding for technology purchases, with more casual dining chains rolling out tablets so customers can use them to place orders, play games and get entertainment while waiting for their meal, and pay their check at the end.