QSR sector continues to attract investment, research reveals

Investment activity is set to continue within the Quick Service Restaurants (QSR) market, according to the latest research from a major corporate finance advisor.

International investment bank DC Advisory revealed the QSR segment is expected to reach a net worth of £150b in Europe in 2030 as a result of consumers seeking to ‘trade down’.

The cost of living crisis has fuelled the number of North American fast-casual chains cementing its presence in the UK over the past three years, including Popeyes, Wingstop, and more recently Dave’s Hot Chicken, which announced last month it has secured an agreement with Azzurri to open 60 restaurants.

Popeyes also revealed it received a £50m investment from private equity firm TDR Capital last year.

Fast-casual brands with an ‘authentic spin’ have also proven to be a “good entry-point” into international markets, with DC Advisory citing Japanese QSR chain Yoshinoya as an example, which is due to open its first restaurant in Edinburgh as part of its European expansion this year.

In its report on private equity deals within the restaurant sector, DC Advisory also recognised there are a number strategic trade buyers based in Japan that have been providing exit opportunities for private equity owners operating in Europe and the US.

For example, Zensho Holdings, a Tokyo-based operator of fast-food restaurants, acquired SnowFox Topico, the North American and UK-based sushi restaurant operator and manufacturer behind brands such as Yo!, which marked the largest consumer exit in the UK for 2023.

Last year, Toridoll, the Japanese operator of Wok to Walk and Marugame Udon, also acquired Fulham Shore, the UK-based operator of Franco Manca and the Real Greek. At the time of the deal, Takaya Awata, president and chief executive of Toridoll, said both brands had potential for “significant future growth” domestically and internationally.

The corporate advisor identified Czech Republic-based private investment firm McWin as “a very active and focused restaurant investor in Europe”, whose portfolio includes QSR franchises Burger King and Popeyes, as well as retail-aware brands such as Big Mamma Group and Gail’s, who received Bain Capital credit in 2021, advised by DC Advisory.  

The group added the European market is “heavily populated” by private equity-owned restaurants “nearing maturity”, who will likely become more active “once buyers observe a stability in the sector and have their faith renewed”.

DC Advisory said: “We believe the worst is over in the restaurant industry, and it is now a question of patience. Restaurants that have weathered the storm of the past few years have proven to be resilient, well-run and well-differentiated. The sector can prove to be attractive, providing high growth, strong cash generative characteristics, but it’s likely to be a sector for investors with an ‘acquired taste’.

“What is certain is that there are a number of chains held by private equity and lenders for some time that will want to transact as soon as circumstances allow them to do so.”