Chicago, Illinois | info@kinetic12.com
Private Equity - Market Assessment
Market Assessment & Strategic Positioning
Helping a private equity firm understand the local market environment and strategic positioning of a potential investment
Client Challenge
A private equity firm had initiated due diligence in support of a potential acquisition of a leading franchisee of a major QSR restaurant chain. The franchisee was showing very strong unit economics as compared to the total chain unit averages. The PE firm wanted to get a better understanding of the marketplace in which the franchisee operates, the drivers behind the favorable unit economics, and growth potential for the future.
How Kinetic12 Helped
Kinetic12 conducted the following analyses to assist the private equity firm in better assessing the potential acquisition target:
- Competitive Landscape – Identified all of the direct and indirect competitors within a 1-mile and 3 miles of each unit and developed competitive profiles for all the major competitors in the markets in which the franchisee operates.
- Market Trends – Created an analysis of the consumer demographics and the business climate for each of the units. This analysis was also supplemented by market visits for selected units and competitors.
- Unit Benchmarking – Conducted unit benchmarking against the franchisee averages and the corporate averages across multiple factors.
- Unit Segmentation – Created a unit segmentation based on current performance and unit potential based on market position.
Results
Kinetic12 identified the top drivers of the franchisee performance that provided key insight on the overall concept, the market in which the franchisee operates, and opportunities to replicate best practices across all of the units.
We created a summary of current unit level performance and opportunities to increase the ROI of the potential investment including pricing, operational efficiencies, and new store growth.
Kinetic12 developed a summary of future potential growth in the current markets where the franchisee operates today as well as in adjacent markets that could be the focus of further acquisitions.
PE firm utilized the output to sharpen their offer to the franchisee owner as well as adjusted their thinking and approach to potential future investments in similar QSR concepts.
