In a recent Secured Research survey of more than 400 restaurant owners and 200 restaurant equipment vendors, we learned that when compared to 2022 levels, restaurant equipment vendors reported:
- Average revenues were up more than 37%
- Profit per service transaction was 26% higher.
- Cost per sale was up 11%.
- Average capex needs exceeded $17,000 annually per location.
- New locations require an average capex investment of $202,000.
In addition, the survey found:
- 75% of restaurant equipment vendors planned to purchase equipment in the next 60 days.
- 80% would prefer to seek funding for capex outside their primary bank relationship.
- First choice financing options were overwhelmingly (76%) from the equipment seller.
- 72% if vendors couldn’t recall being contacted by a non-bank finance company for equipment finance needs.
- 58% would explore a working capital solution outside their primary bank relationship.
Restaurants are well-positioned for a more challenging economic climate than they have been in past cycles for the following reasons:
- Consumers are more loyal to eating out than at any time in history.
- The transformation of the takeout sector during the COVID-19 pandemic has lowered the labor cost required to fulfill more orders at higher margin.
- Restaurant square footage has plummeted more than 40% since 2017, further lowering the cost of doing business with no material reduction in volume.
- Menu prices have outpaced inflation. Most survey restaurateurs have increased prices by more than 30% since 2019, while inflation data tracks cost increases in the low 20% levels.
Historically, Traditional lending tightens the grip on restaurants in times of economic distress. But today is a new day, and restaurants are becoming more resilient.
