SAZUN BLOG
December 23, 2019

Industry Insight HORECA – Trends Restaurants, System Catering and Food Delivery

“Before you go into festive mode, we would like to bring you a brief update on what is happening in the international food service market from an M&A perspective.
While the market is growing at a fast rate, M&A activity remains extraordinarily high as private equity investors show great appetite for brands in the system catering and restaurant markets – with double digit multiples being the norm rather than exception.
We wish you a relaxing holiday season and a great start into a successful and certainly exciting New Year!”

Market Size

Global Market for Food Services

European Market for Food Services

  • The global food services restaurant market is predominantly driven by increased global disposable income. This leads to an increase in expenditure of consumers on dine-out and take-home food services
  • Technological advancements, such as online payment and the launch of mobile apps in the food services market have made the ordering process hassle-free and more convenient for the customer
  • Overall, the European market is expected to grow by 3.1% pa. over the next few years, while the global market is expected to grow slightly faster at 4.3% pa

Major Trends in the Restaurant, Catering and Food Delivery Industries

As the number of single households increases all over Europe, demand for food delivery increases sharply. While direct delivery from restaurants remains important, tech-enabled third-party delivery companies take an ever growing share of the market and engage in fierce competition

Veganism and vegetarianism continue to gain importance with healthful options on the menu being a deciding factor for many restaurant goers or food delivery customers. This trend is also reflected in the current hype around plant based meat and the steadily growing number of cooperations between producers of such and large restaurant chains – such as for Burger King’s Impossible Burger and Mc Donald’s test runs with Beyond Meat

Placing orders online will provide restaurants with the opportunity to capture new clients. Also, it has been shown that consumers tend to spend more when placing orders online or through an app

There has been plenty of buzz around drone delivery for food. As such, in 2020 the first ambitious companies plan to roll out their technology, which could give some delivery firms a significant competitive edge over their competitors

While dark kitchens pop up all over Europe and VC funded start-ups open one kitchen after the other, food delivery companies such as bolt and deliveroo also hop on the trend and start to operate their own kitchens, profiting from cost savings due to cheaper real estate

M&A is the name of the game in food delivery: the largest players in the market have been buying up smaller players for years already. At the moment, the two oldest, Takeaway.com and Just Eat, are planning to merge to form the largest food delivery company outside of China. Simultaneously, Spain-based food delivery start-up Glovo has reportedly held discussions about a merger with Deliveroo and Uber

 Peer Group Analysis

Trading Multiples

EV/EBITDA (NTM)

EV/Sales (NTM)

Despite a moderate growth outlook, valuations have been consistently high across the board. These comparatively high valuations show sustained, strong investor interest in the market. While EV/EBITDA multiples range from 8x to 17x for most companies, especially young food delivery firms can boast valuations reaching into triple-digit-multiples on EBITDA, as can be observed for high-growth start-ups across all industries.

Note: The peer group is formed out of international stock-listed companies. For calculation purposes, two-year averages of consensus estimates on a next 12 months (NTM) basis were used; Source: Infront Analytics

Selected Recent Deals
In the food service industry, M&A activity is extraordinarily high as private equity investors look for established brands, which can be rolled out at a fast pace. The high competition among buyers also drives up valuations. We see double-digit multiples also for smaller companies, while the valuations of tech-enabled food delivery companies go even much higher.

Want to know more?

If you would like to learn more about the valuations and deals of your industry, the transaction mentioned above or generally our way of working, we would certainly be happy to demonstrate our m&a PLUS® principle in a confidential meeting.
Just get in touch and we will share our experience on how to grow businesses with long-lasting partnerships.

With passion for M&A,
Your SAZUN Team