Proving durability, consistency and scalability can earn buyer confidence
Executive summary
Restaurant M&A today is placing increased weight on clear, data-backed resilience signals that go far beyond sales growth. Buyers want durability, scalability and consistency, and they’re quick to discount concepts that can’t credibly demonstrate these traits. Our insights reveal where restaurant operators preparing their exit strategy misjudge market expectations, and how more transparent financials, disciplined commercial and financial due diligence and evidence of scalable performance can elevate valuations for sellers.
Restaurant deal-making today has become a referendum on operational resilience. Macroeconomic pressures, rising costs and shifting consumer expectations have intensified buyer scrutiny in M&A. Growth narratives once taken at face value now require proof of durability, scalability and consistency. Strong unit economics and disciplined operations matter as much as brand strength or category momentum.
Competitive intensity is amplifying this dynamic. As Grant Thornton Transaction Advisory Partner Michael Joseph observes, today’s restaurant buyers and sellers are sophisticated, and their expectations for data accuracy, transparency and operational clarity have risen. At a recent conference presentation, Joseph noted that no matter the market conditions, restaurant owners should always be prepared for change and opportunity.
0:50 | Transcript (PDF - 20 KB)
Strategic commercial due diligence has become one of the most important tools for identifying and validating resilient targets. Beyond the typical unit economics, a deeper assessment of the concept’s alignment with evolving consumer behaviors enables buyers to determine whether a concept can sustain cash flow under varied conditions. Following the M&A lifecycle, from target identification to valuation to investor expectations, resilience is shaping restaurant M&A more than ever.
Validating growth potential of targets through commercial due diligence
Commercial due diligence increasingly tests whether a restaurant concept is built for resilience and positioned to deliver anticipated value post-close. Buyers want more than a compelling growth story; they want credible evidence that the concept can scale, retain customers and withstand competition. Grant Thornton | Stax Managing Director Sameer Tejani said many sellers assume early momentum signals long-term durability, but investors are justified in being skeptical of trend-driven concepts such as yogurt, cupcakes or snack-forward formats.
Tejani sees this disconnect most clearly in emerging brands built around niche health trends, experiential dining or novelty formats. “Operators show strong recent growth and assume it proves staying power,” he said. “But buyers have seen many of these cycles before. They want to know whether the concept will still resonate in three to five years, not just whether it performed well in the last several quarters.”
Structural shifts in dining behavior also matter. Off-premise dining has sustained a 10% to 20% post-pandemic share increase. Tejani said many restaurant brands still struggle to translate this shift into product mix, off-premise customer segments or operational models such as takeout-only locations or virtual kitchens. Buyers want to see a thoughtful strategy — proof that operators are adapting intentionally while still achieving solid revenue numbers.
In our experience, resilient concepts differentiate through disciplined focus on two main areas:
- Sustained superior performance, demonstrated through data-driven metrics around unit economics, customer retention, competitive KPIs, operational efficiency, etc.
- Continued future viability, achieved through ongoing menu innovation, business model evolution, marketing effectiveness and ultimately, evidence-based expansion plans
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How to be truly ‘sale-ready’
Many restaurant operators misjudge their sale readiness when their back offices are disorganized or performance drivers can’t be clearly explained. Joseph emphasizes that diligence now involves complex data requests. “Winging it and hoping for the best isn’t going to cut it,” Joseph said. He likened unprepared sellers to “packing for your trip while the plane is already in the air.”
Joseph said consistency, transparency and data fluency distinguish truly ready sellers. Buyers will ask about every revenue and expense line, from food costs spikes to shipping expense changes or why a menu item drove margin volatility. Responses must be specific and supported by evidence. High-level or anecdotal explanations can signal operational gaps and raise buyer doubts.
Early behavioral cues also reveal how diligence will unfold. Joseph said evasive or vague answers can undermine buyer confidence. “Transparency is not only about data quality; it’s about tone. Your ability to explain how you grew, how you responded to market shifts, and how you’re positioned for the next disruption matters as much as the numbers themselves,” Joseph said.
Operators should get their financial and operational “house in order” before entering a dealmaking process. That includes reconciling financials, providing clear unit economics documentation and proving operational consistency. Without this discipline, even strong concepts risk value erosion.
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Valuation drivers
Valuation premiums increasingly reward restaurants that can show sustained profitability, predictable growth and disciplined risk management. Grant Thornton Transaction Advisory Partner Todd Patrick describes valuation as a balance of three forces: profitability, growth and risk — adding that risk is where operators frequently underestimate exposure.
“The biggest spread in valuation multiples comes from the risk that a concept may not be truly scalable,” Patrick said. While market and cost pressures affect all operators, the ability to replicate performance across geographies — scalability — distinguishes top-tier concepts. Concepts that demonstrate strong revenue growth, dependable unit margins and credible expansion plans will earn higher multiples; those that don’t see lower valuations.
In this video clip from the same conference event, Patrick discusses how the cost of capital and higher interest rates also present underappreciated valuation challenges.
1:21 | Transcript (PDF - 45 KB)
For early-stage concepts, Patrick said revenue growth is the primary multiple to consider. EBITDA matters more once units mature. Investors underwrite growth and want proof each new location can deliver predictable returns, Patrick said. Metrics such as average unit volume (AUV), store-level EBITDA and payback periods are central to valuation.
Patrick also said competition has intensified dramatically. In crowded markets with thin margins, only the most resilient concepts maintain strong traffic and brand relevance. “The really good concepts can crush it,” Patrick said, “but there’s a huge difference between being a market leader and everyone else.”
Recalibrating investment criteria
Private equity’s engagement in restaurant M&A has heightened buyer expectations of clarity, scalability and operational discipline. Investors assess future ROI through metrics such as,
- Asset-light franchising
- Consistent AUV performance
- Disciplined and healthy expansion
Joseph said PE firms increasingly seek clearly defined models from restaurant operators — franchisors, operators or hybrids — rather than ambiguous structures that dilute value. Tejani said expansion narratives must be grounded in market realities. Many sellers claim nationwide scalability but lack a vigorous, localized growth strategy.
Regional density often signals a stronger path to scale than rapid national expansion. “It’s easy to talk about taking a brand to 50 states,” Tejani said, “but much harder to prove you can build awareness at the local level.” Modern consumers rely heavily on digital searches to choose restaurants, so effective localized marketing is critical.
Across all perspectives, PE investment criteria are converging around resilience through consistent unit-level returns, operational strength, customer relevance and growth without model erosion.
Conclusion
Restaurant deal-making no longer relies on traditional formulas. Buyers are prioritizing resilience —the ability to endure competition, adapt to consumer preference shifts and scale predictably. Sellers who underestimate this shift risk presenting a growth narrative that lacks the depth buyers demand.
Capital for restaurant M&A is available, but investors will award it only for concepts that prove they can deliver resilient performance. Operators eyeing a sale or exploring strategic acquisitions must understand the markers of credibility, scalability and durability. Restaurants that embrace these expectations are best positioned to grow and maximize valuations.
Contacts:
Partner, Transaction Advisory Services
Grant Thornton Advisors LLC
Todd Patrick is a partner in the Valuation & Modeling practice of Grant Thornton.
Dallas, Texas
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