October 16, 2013
Bob Coleman: We’re talking with Bob Bielinski, CIT, the Managing Director of the restaurant and retail sector. Bob, thank you for joining us.
Bob Bielinski: Bob, happy to be here. Thanks for having me.
Bob Coleman: Bob, you and I’ve known each other for awhile and your specialty is telling lenders, telling the community what’s going on in the restaurant business. We’ve got your report, it’s attached to this video. What’s the takeaway? Are we bullish about the restaurant business?
Bob Bielinski: Well, I am. I think what you see in the industry in 2013 is more of the same. We’ve had steady sales growth, but not little bumps in the road. In 2013 we started slow, we had the resumption of the full payroll tax. That had an impact, gasoline prices were pretty high. And then sort of March, April, sales came back and everybody was feeling good and then we slowed down again in the summer. I’m not sure exactly the cause of it. Some are suggesting that the consumer is so confident that they’re buying cars and they’re realizing they don’t have enough money for dining out now, but bold steady performance is what you’ve seen this year.
Bob Coleman: Let me give you a softball. Are we better off today than we were four years ago?
Bob Bielinski: Oh, I think that’s an easy one. Yes, of course. I think you’re seeing people come back to the industry.
Bob Coleman: Bob, I know you tend to focus on middle market, little larger acquisitions. The people who are seeing this are going to be primarily Main Street bankers. Do me a favor, give us some quick definitions that you refer to these people and just how are those sectors doing?
Bob Bielinski: Yeah, so the different sectors that I look at in the industry, quick serve, QSR, that’s traditional fast food, that’s McDonalds and the other burger chains and Subway and the like. Fast casual which is the new niche, really sort of the growth niche right now, Chipotle and Panera are sort of the followers there. But some of the new folks on the block like Noodles & Company, an up and comer in fast casual. And then casual dining and family dining, those are the Applebee’s and the Chili’s and the IHOP’s and the Denny’s of the world where you sit down, you have waitress service in a traditional way. Fine dining, everybody knows what that is, that’s the high-end steak houses and a much smaller portion of the industry.
Bob Coleman: So when you say the fast casual is still of the four, is that the sector performing the best?
Bob Bielinski: Yeah, I think fast casual is going to continue to perform well. It really meets the needs of consumers. There’s a quality there that’s missing often times in fast food and while it’s not necessarily the least expensive option, consumers see the value there that they get and they get to control their dining experience, take as much time as they want. They can linger in a Panera or they can get their food, take it to go, or eat it quickly there, so it’s really on trend.
Bob Coleman: Great, great. I notice in your report, I like this. It says customization equates to success, specifically, fast casual. We call that also riches and niches. Expand on that, what’s the takeaway for the Main Street banker?
Bob Bielinski: Well, the consumer has shown a desire to have control not only over the dining experience, but what he’s eating and so you see that in a couple of real specific areas. Obviously, fast casual, you think about making your own burrito at Chipotle, you think about picking the toppings on your burger at Five Guys, or if you go to Noodles you design your pasta dish. But think about a couple of niches now that are really hopping on the scene, fast casual pizza, where you can get a pizza custom designed in under 5 minutes, so that opens up a whole broad array of dining opportunities. And then self serve yogurt is really hot right now. Why is it hot? Because people get to pick their flavors, they get to pick their toppings and people like that.
Bob Coleman: Bob Bielinski, out of Chicago for CIT, thank you very much.
Bob Bielinski: Bob, always a pleasure, good to see you.