Robert Daniel followed a fairly typical path into finance with a business degree and a first job at NationsBank (now Bank of America) 25 years ago. But it was his desire to have knowledge that was more than "a mile wide and an inch deep" that set him on a course to specialize in restaurant finance.
"I was very interested in getting the type of knowledge and insight into one particular industry where you could have highly detailed, highly relevant conversations with a client versus just being a generalist," says Daniel. Early on, he soaked up that knowledge by doing store tours, walking through projects under construction and talking to restaurant owners about their operations.
At the time, he was working with smaller chains and owner- operators, which was ideal to gather that on-the ground intel. "When you get to spend time with those people you really get a sense of the ins and outs of the industry and the things they’re dealing with on a daily basis," he says.
Daniel spent 12 years at Nations/Bank of America and then another six years working in the franchise finance division at GE Capital before joining Regions Bank in 2012 as group head and managing director of the Restaurant Banking Group. The group has a current portfolio of approximately $3 billion in loans. "We are generally focused on working with larger operators," says Daniel. Regions serves franchisees, franchisors and operating companies across the country with an average loan commitment size of $20 million and up.
"It is still a good market to access capital and there is plenty of capital available," says Daniel. At the same time, the operating environment and the restaurant industry is as tough as it has been since during the financial crisis. Restaurants continue to battle labor and wage pressure, and certain segments of the industry also are facing added challenges related to growing or even maintaining same- store sales, he says.
The volume of capital moving into the restaurant industry over the last 10 years has contributed to an oversupply of restaurants in terms of locations, brands and number of concepts, says Daniel. "It’s a time where if you don’t have a really strong and compelling value proposition, you are probably struggling unless you are on the very high end," he says. In addition, those pressures on operations and revenue come at a time when the cost of capital is increasing from rising interest rates.
Operators with good trends are still having a fairly easy time finding debt in the current market. "If your trends are challenged, you really need to be leaning into your banking relationships and providing detail and insight into what’s going on with your company today, and where you expect your performance to be going forward," says Daniel.
It’s also a good time to be conservative as it relates to general capital needs and pulling capital out of the business. "A bit of a defensive posture given the environment right now is probably going to play well with your ability to weather the storm and maintain your relationships with your capital partners," he adds.