Nonprofit Blog

The future of the restaurant industry will be driven by consumers’ appetite for delivery, experience and speed. 

Restaurants sales continued to lag in 2016 as uncertainty around the U.S. economic and regulatory environments persisted. Overall, restaurant same-store sales were flat last year. This broader stagnation comes as restaurants report lower traffic counts, in part as a result of market saturation, increased menu prices and declining grocery costs. Restaurants also face challenges associated with evolving consumer preferences and market composition, as smaller chains, independents and chef‑driven concepts expand rapidly.

Do you own a brewery and have a question that you think may be outside of your CPA’s scope of knowledge? Do yourself a favor and just ask! From research and development (R&D) to trademarking advice, your CPA can provide insights into some tricky financial scenarios and help your business improve cash flow while finding savings.

Time may be running out for restaurant owners to take discounts on transfers to family members. On Aug. 2, 2016, the Department of the Treasury issued proposed regulations under IRC Section 2704 in response to perceived abuses in the use of valuation discounts. Currently, owners transferring non-controlling interests in privately held companies are able to consider discounts for lack of control and discounts for lack of marketability. Discounts for lack of control relate to the inability of non-controlling interest holders to impact the strategic direction of the entity. Discounts for lack of marketability account for the lack of a ready market to sell privately held interests.

Amid continuously increasing competition and growth within the restaurant industry, restaurant operators often find themselves actively searching for ways to boost average unit volume and same store sales. Offering gift cards has proven an effective strategy for attracting new customers and driving sales, as they’ve become an increasingly popular purchase for consumers. According to the NRF’s 2016 Mother’s Day Spending Survey, 43.2 percent of Americans said they planned to give a gift card for the holiday, averaging $2.2 billion.  Not only are gift cards convenient for both their purchasers and redeemers, but they essentially provide restaurants with free advertising via word-of-mouth and customer referrals.

The National Restaurant Association’s (NRA) 2016 Restaurant Industry Forecast predicts that restaurant industry sales will reach $783 billion this year. Although this number represents the seventh consecutive year of real growth in restaurant sales, the rate of growth remains only moderate for the nation’s second-largest private sector employer. 

Over the past year, private equity activity has heated up in the restaurant industry. Historically, investors wanted to see proof of concept in multiple markets, minimum revenues, EBITDA, number of units and a good story before they were willing to invest in a restaurant. But as the sector continues to evolve, investors are increasingly setting aside some of their more stringent standards as they seek to take advantage of emerging opportunities. And private equity firms are not the only ones looking to enter the space. Venture capitalists, other restaurant groups and even non-restaurant companies, such as Ford, are looking to enter the game. What has led to this change of heart?