ex per t advice
Pete DiFilippo | Partner | C Squared Advisors
Restaurant Franchise Lending
as Market Emerges from the Thick of COVID-19 As we live through the partial postpandemic phase, we must realize that the “new normal” impacts on the franchising, restaurant and lending sectors are here for the foreseeable future.
From operations to finance, marketing and human resources, those working in these industries have learned several lessons. The ‘normal’ modes of operation have changed for good, which has opened the door for transformative change, and the emergence of fresh opportunities for ambitious brands and savvy investors. During the early days of the crisis, the pandemic posed many challenges impacting the market hard and fast. In response, banks had to respond to clients who were most effected swiftly and deftly. The priority was to secure PPP loans for struggling clients. Industry leaders encountered many roadblocks due to the ever-changing rules for PPP eligibility. They were forced to learn on the fly as standards fluctuated. The next step included securing principal and interest relief for three to six months for most clients, ensuring temporary stability. After this initial round of capital was distributed, the lending industry took a wait-and-see approach, putting a pause on financial support as they hoped for improving market. Currently, a return to normalcy is within our grasp. Franchisees whose concepts have stayed resilient and strong throughout the past year will see a direct reward for their perseverance during the worst of the pandemic. Lending institutions are once again eager to support business needs and provide clients with ample access to financing. However, even though capital may be more freeflowing, franchisees must seek the right lending partner who is committed to their business concept.
Concept Survival - A Case Study from the Restaurant Industry In the thick of the pandemic, several banks in the restaurant franchise space stopped lending altogether. However, institutions that chose to remain active in their lending were primarily funding quick service restaurant (QSR) concepts, as well as clients who had not been as hard-hit by the pandemic. Concepts with a drive-thru, advanced technological allowing for contact-less purchase and delivery that stayed resilient as take-out became necessary in the locked-down world were a sure-fire opportunity for lenders to support. The pandemic enabled those adaptable
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