The European restaurant chains market comprises businesses that own and/or operate multiple food service establishments. As chains vary in terms of pricing, quality of food offering and preparation, and level of service, we segmented the market into (i) fast food, (ii) fast casual, (iii) casual dining and (iv) fine dining.

The European food service market remains fragmented due to low entry barriers and the wide range of cuisines offered. However, industry executives note that COVID-19 triggered a consolidation wave in the market (interviews by Gain.pro). The restaurant chains operating at scale were better positioned to introduce multi-channel distribution and adapt to the new operating environment, consequently taking demand away from standalone establishments and taking over less efficient counterparts, often even forced out of business.

The sector attracts significant interest from financial buyers, with >50% of identified assets being sponsor-backed (September 2022). Investors predominantly pay attention to strong brand awareness, scalability potential, resilience and predictability of cash flows, and the ability to leverage technology in daily operations when looking for potential targets in the industry. Identified investors are most active in the fast food and casual dining segments of the European market, thereby attempting to capitalise on platform scalability (fast food franchises) and above-average market fragmentation (casual dining).

ESG issues predominantly revolve around environmental issues. In order to comply with increasingly demanding environmental standards, identified restaurant chains engage in various initiatives to lower their emissions, including local ingredient sourcing and the inclusion of meat-free alternatives on menus. In terms of social measures, players are starting to put more emphasis on salary levelling, introducing clearer career paths to workers and offering incentive programmes (e.g. attractive parental leave policies).