KROLLINVESTMENTBANKINGIndustry InsiahtsRestaurant Industry2025Year in Review
Restaurant Sector Insiahts OverviewThe US. macroeconomic backdrop, heading into the end of 2025 continued to halenge the restaurant sector in bot the operating and deal environments.The FederalReservedelivered three 25bps interest rate cauts in 2025 (75 bps tota), with the last one signaling a tougher rough ahead" for further reductions. This limited monetary easing, coupledwith a softening labor market and rising unemployment, has stagnated growth in consumer discretionary income.Consumer spending patterns have consequenty shifed: moredollars are flowing toward travel and experiences at the expense of restaurant consumption, as over 60% of travelers report being more discerning on their discretionaryspendallocation to restaurants.M&A acivit in the US estaurant sector showed eartl momentum in 2025 but slowed markedly as the year progressed. Afer a strong deal pace in Q,1,transaction flow staledsto bause orrevist deals. Whil agregate deal value is up year-over-yearisameperiodof2024evs totaldealvaluerose 15%6. and in theate-17611ottno done but the marketis increasinaly bifurcated acquirerse"marainal" transactions.In parallel. refinancina activity has accelerated as privater fundamentals remained subdued in 2025. UsS. restaurant performance softened as consumerspulled back: a majority ofwith nearly two-thirds of restaurants seeina declines in customer traffic this vear.Manvseamentsposted flat or necativesual and quick-service brands strugled to boost sales amid cautious spending. Value-focused categories like casual dining managedsoia backdrop to sustain tafic In this environment investor focus and valuations have become increasinglydriven restaurant brands remain stronalv favored by buvers and continue to command oremium dealmultioles. Franchiseassetsare attractive fortheimodels and predictable cash flows, and investors are paying up for growth-oriented pla forms in reslent o culturall relevant niches. Ffor instance,CrumblHot Chicken, Shipley Donuts, and Pura Vida Miami, four high-growth concepts eacth secured sigifiant investments from high-caliber private equity fims tofuehationwide exoansion. In contrast. smallerindebendent operatorslackina scale, proven portability or differentiated positionina have faced amorecautious valuation environment.asacauirersprioritizeprovenconceptswithstrona uniteconomicshe last 12 months, performing below the S&P 500by48.6%spectrum of macro and sector-specific data into meaningful trends and insights, focusing on key themKROLLTMENTX
KevSectorThemesin2025Same-StoreSales GrowthTable ofPublicSectorPerformanceContentsPublicRestaurantValuationsKroll'sRestaurantM&.APracticeKROLLENT
Executive SummaryTightened consumer spending againstelevated price environment directlyExecutive Summaryimpacting restaurant trafficExecutiveSummaryRestaurant and grocery inflation costscontinue to moderateExecutive SummaryAlanddigitally-enabled concepts arewi...
