In its 23rd annual review of the Chain Restaurant Industry, GE Capital, Franchise Finance said the U.S. restaurant industry is beginning to sizzle as merger and acquisition activity increased to $3.9 billion from $3.7 billion, and the total volume of syndicated leveraged loans in the restaurant space increased almost 21% last year.

In a sign that the American consumer was feeling more confident about disposable income levels, nominal restaurant sales rose 4.2% to $425.6 billion in 2012. Sales are projected to increase 3.8% to $441.9 billion this year.

GE Capital said the Top 100 restaurant chains’ system-wide sales were nearly $210 billion, representing more than half of all restaurant sales last year, and gaining 0.5% market share from 2011. Sales grew 4.7% year-over-year, outperforming both the foodservice and the restaurant industries, as well as nominal GDP. Total unit growth for the Top 100 at 1.8% was the highest since 2007. Franchised unit growth jumped 180 basis points to 77.3% of the total – the largest share since the survey’s inception 23 years ago.

Institutional investors were eager to get a piece of the pie. Private equity firms paid premium purchase prices – multiples of eight to 10 times revenues – for growth companies and franchisors. Non-sponsor deals jumped 46.0% to $11.2 billion in 2012, while sponsor deals declined 11.2%. Nearly three-quarters (73%) of the total volume was driven by refinancing activity.

To read GE Capital’s annual chain restaurant review: click here.