"One positive outcome of this brutal environment is that pricing and leverage multiples will be more reasonable, placing less emphasis on growth and cost cutting." --Mark Saltzgaber

Give us an idea of sentiment among private-equity players.

There’s clearly a negative bias and overall wait-and-see stance, but also some very different perspectives. Some believe that the worst is yet to come and are simply out of the game. Others believe, while times are tough, the public markets have essentially priced in the bad news, and, if private valuations have recalibrated sufficiently, they remain very interested. A recent phenomenon has been the interest of new players who seek out distressed situations.

What’s been private equity’s contribution to the restaurant space?

Private-equity buyers and minority investors can be very legitimate sources of capital and liquidity, especially given the fact that the [initial public offering] market is essentially closed and lenders have retrenched dramatically. They still have hoards of committed capital, which they are being paid to put to work.

What’s the risk environment now for such capital?

The greatest risk to investors and buyers is the combination of negative operating results and overleveraged balance sheets. As seen with Buffets and Ryan’s [which filed for bankruptcy in January], the result can become lethal very quickly.

Can we expect to see more such distressed situations?

In the foreseeable future, you are going to continue to have poor operating results and additional bankruptcies, both of which will impact the mentality of private-equity firms and lenders.

As for new transactions, given the decimation of the public stocks, there will likely be high-profile attempts to take companies private. Landry’s, for instance, whose stock has dropped by more than 50 percent from its 52-week high.

Don’t falling valuations make private-equity guys eager to own something?

The key question is, have sellers’ expectations adjusted accordingly? After a dramatic correction, there’s typically a time lag where buyers and sellers don’t see eye to eye. And given the sky-high valuations not too long ago and what private-equity buyers are probably willing to pay today, which is two-times EBITDA less than several months ago, it’s safe to assume you won’t see the level of activity in coming months that we saw through last summer.

Still, something good must come eventually.

One positive outcome of this brutal environment is that pricing and leverage multiples will be more reasonable, placing less emphasis on growth and cost cutting, which have taken the focus away from day-to-day operations and concept evolution.

Any current robust opportunities?

Quality QSR operators and franchisors will continue to garner the most attention given their positioning, free cash-flow generation and the relative stability of their royalty fees.

Second-tier concepts in casual or family dining have no shot of attracting interest without a significant real-estate portfolio. Even then, as was the case with Smokey Bones, the price paid will reflect asset value and nothing more.