The Food Revolution

fast food revolution

A new revolution is on its way and its final destination is your plate.  Parallel to changing macroeconomic conditions, eating habits have also seen a consequential change throughout the last decade. As a result of a recovering economy, which in turn has created consumers with a higher purchasing power and the ability to choose higher quality items, fast casual restaurants have surged in the restaurant industry. The fast casual segment offer products with higher quality and a slight higher ticket prices, thus it represents a minor upgrade from offerings within the fast food segment. The trend of fast casual restaurant outpacing all other segments of the restaurant industry is expected to continue, as outlined by all major key drivers. In the second quarter of 2013, fast casual experienced an increase in traffic of 8% compared with a year earlier. This growth meant the segment outperformed its closest competitor, the quick service (fast food) segment, which includes fast-food giants Burger King Worldwide and McDonald’s Corp., by 7% during the same period.[1]

Gonzalo Lopez Jordan, a managing partner at Patagonia Financial Holdings, a Miami based Private Equity Firm, stated “We are seeing an industry in its expansion stage, where new innovative firms are fighting for a huge restaurant uncharted market share with unlimited potential.” “Although, the industry already counts with huge players such as the 19 billion dollar worth Chipotle, there is still room for exponential growth specially taking into account that the segment only accounts less than 10 percent of the overall industry.” Added Santiago Steed, co-manager of Patagonia Financial Holdings.

Under the current tailwinds which the industry is experiencing, investor confidence is at an all-time high for this sector. One metric for measuring such confidence is the P/E ratio. This ratio is the price being paid for a company’s stock by how much it actually earns, with the higher ratio outlining a higher investor confidence over future cash flows.

In a quick comparison of the two major corporations in the fast casual (high growth) and fast food (mature) segments, this confidence becomes apparent. As of July 10, 2014, Chipotle boasts a P/E ratio of 56.35 in comparison to a much lower 18.28 by McDonalds. [2]

“Although P/E ratios are just one metric that should not be definitive in the analysis of a company, in combination with the proper due diligence and positive trends, this sector remains under the watchful eye of savvy investors” stated Gonzalo Lopez Jordan and Santiago Steed.

CONTACT:     Abraham Ceballos, 305.961.1698, aceballos@patagoniafinancial.com

[1] Bloomberg, TPG Said to Lean Against Airbnb Investment at $10B Value, accessed at: http://www.bloomberg.com/news/2014-04-03/tpg-said-to-lean-against-airbnb-investment-at-10b-value.html on April 18, 2014.
 ABOUT PATAGONIA FINANCIAL HOLDINGS

Patagonia Financial Holdings is a private equity firm headed by Gonzalo  Lopez Jordan and Santiago Steed .The firm has over $500 million of deployed capital, primarily focused on structuring value-oriented and special situation investments.

Based in Florida, American Regional Center Group LLC (ARCG) was founded in partnership with Patagonia Financial Holdings LLC (PFH) to provide sound and reliable EB-5 investment opportunities for foreign investors and their families who wish to obtain permanent residency in the United States.

Patagonia Financial Holdings is headquartered at 1200 Brickell Avenue, Suite 1950, in the heart of Miami’s Financial District.

For more information, please visit www.patagoniafinancial.com

Posted on July 24, 2014 in Hospitality, Protein, Restaurants, Seafood

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