Investing in restaurants can provide stable returns despite economic downturns. With large restaurant chains like Restaurant Brands International (RBI) showing continued growth amid inflation and recession worries, the food service industry remains resilient. This article explores options like buying restaurant stocks and franchises, investing through private equity firms focused on restaurants, and more.
Investing in publicly traded restaurant stocks provides portfolio diversification
Buying stocks in restaurant chains like RBI, which owns Burger King and Tim Hortons, offers a way to invest in restaurants. RBI’s Q3 2022 earnings release showed strong sales growth as consumers continued to engage with its brands despite rising costs. Restaurant stocks can provide continued dividends, like RBI’s 40 years of consecutive dividend growth. Diversifying into restaurant stocks brings balance to an investment portfolio.
Becoming a franchise owner taps into established restaurant brands and concepts
Restaurant franchising allows individual investors to leverage popular brands. RBI supports its franchisees amid inflation through pricing strategies and leveraging scale for procurement. Its franchise model generates steady cash flow from royalties while operators benefit from branding and operational direction. However, being a franchise owner requires hands-on effort compared to purchasing stocks.
Investment vehicles like private equity provide alternate restaurant investment
Beyond direct stock picks or franchise ownership, investors can consider private equity funds focused on the restaurant space, such as Teak Wood Capital Partners and TriSpan. These provide exposure to concepts across fast food, fast casual, and full service. While more passive in nature than operating franchises, these alternatives come with higher minimum investments and less liquidity compared to public stocks.
Restaurant investment takes many forms spanning stocks, franchises and alternative vehicles. The resilience of food service, despite inflation and other headwinds, allows those investing in restaurants through diverse options to tap into stable long-term returns.