You want to sell your cafeteria/lunchroom? Then it's good to know what the takeover market in the field of cafeterias/lunchrooms looks like. With growing consumer spending, the demand for eateries is also increasing. However, margins are under pressure from new entrants, so the number of mergers and acquisitions is expected to increase in the coming years.
Over the past four years, the number of cafeterias/lunchrooms being acquired has skyrocketed. The year 2019 stands out head and shoulders above the rest, but just after the global pandemic, the acquisition market was running at full speed, making 2022 a new record year, with the acquisition of 215 cafeterias/lunchrooms.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
In the hospitality, tourism and recreation sector, the sector to which cafeterias/lunchrooms belong, an indicative range of EBITDA multiple of 2.7 to 3.8 is currently used, according to the Brookz Takeover Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Do you want to buy a business or sell a business in the Hospitality, Tourism & Recreation sector? With this Brookz Sector Monitor we want to present buyers and sellers with facts, figures and an outlook that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in the Hospitality, Tourism & Recreation sector. Because in any buying or selling process, thorough preparation provides peace of mind, overview and structure.
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The Dutch hospitality sector grew substantially between 2008 and 2018. According to industry association Koninklijke Horeca Nederland (KHC), almost five thousand businesses were added in those ten years; 1.3 per day. The number of lunchrooms, cafeterias and other eateries increased by three thousand.
In figures, the number of cafeterias/lunchrooms in 2024 looked as follows(CBS):
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A number of trends and developments will inevitably cause changes in the coming years, but also offer cafeterias/lunchrooms many growth and acquisition opportunities:
In 2020 and 2021, the entire hospitality industry was "on hold. Now that the market has a chance to recover, there is a huge staff shortage. 'Reconstruction is hampered by a shortage of skilled personnel,' the UWV said.
There is far-reaching chain formation in the sector, with new entrants from food (retail) as well. These chains will be able to compete on price, among other things, through purchasing advantages, which will put pressure on margins.
In this regard, the revenue of providers of a quick bite usually falls less than that in the rest of the hospitality industry, according to ING. And even in corona times, the business model of delivery and takeout restaurants proved more crisis-resistant, as consumers who stay at home ordered more often. Despite the fact that the pandemic seems to be on the wane for now, no decline in home delivery is expected.
Cafeterias/lunchrooms are increasingly dependent on review platforms. This development is impacting the margins of eateries because sea pay for the services of these types of sites. In addition, consumers no longer have direct contact with the eatery at the time of ordering or reservation, which can lead to less loyalty.
Technology is playing an increasingly important role in the hospitality industry. Just think about the menus, which you reach through a QR code, or the reservation systems built during the pandemic. It is essential that different systems and apps connect, so that should become a priority for cafeterias and lunchrooms, Rabobank said.
