In Restaurant Glut, Strategic Buyers Keep Bankrupt Chains Afloat

Decreased foot traffic, competitive marketing strategies and rising debt loads have choked the restaurant industry and led to a flurry of bankruptcy filings -- but strategic buyers haven’t shied away from chains in distressed situations.

Strategic buyers, usually restaurant groups that already own other brands, often get a good deal when purchasing a failing chain because they have existing operations like restaurant management to run additional locations. Private equity firms, on the other hand, often have to carry that overhead themselves, meaning the risk is higher and reasoning behind the purchase has to be stronger, said David Bagley, managing director ...