Advice for Buying a Restaurant and Selling a Restaurant

Restaurant Brokers Analyze Top Ten Restaurant Brands

Posted by Robin Gagnon on Mar 21, 2018 9:58:17 AM

The Ten Most Valuable Restaurant Brands Report is Published. The Restaurant Brokers at We Sell Restaurant Review and in some cases, challenge the findings

Brand Finance has released their annual report on the world’s most valuable restaurants brands. The restaurant brokers are sharing their views on the top ten as reported by the group with our own insight. The full report can be downloaded at this link.

Brand Finance, the authors of the report, established their index over twenty years ago, in 1996. They state that their findings “put thousands of the world’s biggest brands to the test every year, evaluating which are the strongest and most valuable.”

How To Get More Instagram Followers iPhone Layout.png

Do you agree with their assessment of the best brands? They view brand strength on a series of intangible measure relative to competitors. The criteria for making the list include metrics important to understand if you’re buying a restaurant. The Brand Value component is made up:

Enterprise Value – the value of the entire enterprise, made up of multiple branded businesses. Multi-unit brands like Yum go to the top of this category.

Branded Business Value – Defined by the group as the “value of a single branded business operating under the subject brand.” This is a key metric if you’re buying an existing franchise for sale like many of those offered by the restaurant brokers.

Brand Contribution – This is defined as the overall uplift in shareholder value that the business derives from owning the brand rather than operating a generic brand. Again, this is the difference between owning an independent restaurant for sale versus an existing franchise for sale unit.

What are the top ten most valuable brands? Here they are ranked in order by Brand Finance.

  1. Starbucks
  2. McDonalds
  3. Subway
  4. KFC
  5. Tim Hortons
  6. Domino’s
  7. Burger King
  8. Pizza Hut
  9. Dunkin Donuts
  10. Chipotle

Do the restaurant brokers agree with these rankings? While we don’t have access to the underlying data points and we do concede that it is a robust methodology. However, these restaurant brokers would challenge a few rankings based on what we are seeing in the industry.

For example, Subway retained the same rank on this list from 2017 to 2018. This is despite a number of issues we are seeing on the streets which include year over year sales declines at the unit level. This is due to increased competitive pressure in the fast casual world. In addition, the franchisee issues and actions taken in 2017, in these restaurant broker’s opinions, should have affected the overall brand measure. For Subway, we disagree with a number three rank, unchanged from the prior year.

For similar reasons, we struggle with the ranking for Chipotle. The chain has been plagued with a series of missteps and shut downs for reasons integral to their entire business model – their “clean” supply chain. For this reason, in a study of a brand where intangibles are part of the measure, we feel this should have moved them out of the top ten instead of having them retain the prior year performance.

Other overall observations from the restaurant brokers on this list include a notable exception of any of the brands pushing a clean eating or healthy lifestyle. Despite all the media push to make us believe that these concepts are winners, the brands on this list are deep fried basics or fat laden comfort food providers like KFC, Tim Hortons and of course, everyone’s guilty pleasure, pizza.

Should it impact your perspective in buying a restaurant? From a restaurant broker’s standpoint, many of these brands do not often come onto the market so this does support the study’s “best of” findings. Outside of Subway, most of these are only available for new development with existing franchises for sale being bought and sold internally among existing franchisees.

The desire to rank restaurant brands is a never ending pursuit, particularly with so many individuals interested in buying a restaurant. The restaurant brokers recommend you heed this advice like any other and weigh it against all other information when buying a restaurant. Whether a brand is “ranked” #2 or #3 by another survey is not a true measure of a single store operating in your market. It is one of the data points to consider along with store performance, location, and your overall customer experience with the brand.

For more information on existing franchise restaurants for sale, visit this link at wesellrestaurants.com

Topics: restaurant brokers