US Foodservice: State of Play Analysis of U.S. Trends and Potential Impact on UK Foodservice Chicago, IL USA April 13, 2011
Session Objectives The World Around Us Focus on 2010 Results Consumer Outlook Trends to Watch Where Do We Go From Here 1
About Technomic Leading strategic consulting and research firm dedicated to the food industry Over 40 years of food industry focus Wide range of experience Broad contact network Professional staff with direct industry experience Unparalleled resource center 2
The World Around Us 3
One in Six Americans Either Unemployed or Underemployed 20% Feb 2011 16% 12% 18.0% Unemployment + Underemployment 8% 9.5% Unemployment 4% 0% M a r ' J u n S e p t D e c M a r ' J u n S e p t D e c M a r ' J u n S e p t D e c M a r ' J u n S e p D e c Source: Bureau of Labor Statistics 4
Fuel Prices U.S. Jan 2004 $1.61 Gasoline Costs per Gallon in Dollars June 2008 $4.11 Feb 2011 $3.22 Source: Energy Information Administration 5
Restaurant Sales Real Growth 12-month moving average, U.S. Feb 2011 2.2% Source: U.S. Census Bureau; Technomic, Inc. 6
Same Store Sales % Change Vs. Prior Year Continuing to Rebound Same-Store Sales Change vs. Year Ago Q4 2010 Source: Public Company Reports, Technomic 7
The Winning Restaurant Formula 8
Growth Concepts Apply the Winning Restaurant Formula Service -Deliver the fundamentals -Team approach Food Consistently Solid Basics -Solid flavor profile, taste, quality, and presentation -Executed every customer visit Unit Appearance -Influences guests perception of overall satisfaction -Complements consumers emotional experience Manager Presence -Impacts customers & employees + Resonating Points of Differentiation Customer Lifestyle Integration -Concept attributes align with daily demands/desires of consumers Hospitality -More than just a meal and generic server/customer interaction Menu Desirability -Craveable -Positive impact on consumers perceived Quality of Life Atmosphere -Relevant energy Emotional Connection -What do you mean to customers? Source: Technomic Concepts 2015 Study 9
Resonating Point of Difference: Customer Lifestyle Integration Wide Variety 130+ Draft Beer on Tap Yard House Small Plates, Small Prices Cheesecake Factory Technology Integration ipad Menu & Wine Lists Source: Technomic Concepts 2015 Study 10
Resonating Point of Difference: Hospitality Server Interaction Artisan skill sets Server training Concept approachability and acceptance Friendly service with a smile Source: Technomic Concepts 2015 Study 11
Resonating Point of Difference: Menu Desirability Providing Demand Balance Heart Attack Grill Quadruple Bypass Burger Rustic Veggie Plate Healthfullness versus Indulgence Source: Technomic Concepts 2015 Study 12
Resonating Point of Difference: Atmosphere Relevant Energy Communal Dining Open Kitchen Integration Chef Preparation & Interaction Source: Technomic Concepts 2015 Study 13
Resonating Point of Difference: Emotional Connection Shares values that are similar to my own Maintains involvement in the local community Supports charitable efforts Source: Technomic Concepts 2015 Study 14
Who s Succeeding in the US? 15
Fastest Growing Fast Food Chains have Unique Positioning Chain 10 Sales ($MM) 10 Sales Growth 10 Unit Growth Positioning/Resonating Point of Difference $625 38% 35% Better Burger 735 22 20 Gourmet Sandwich Shop 1,832 21 14 Fast Casual Mexican 235 14 8 Fireman Themed 261 14 11 Ethnic Noodles Source: Technomic Leading Chain Database, Top 500 Report Chain Estimates 16
Fastest Growing Fast Food Chains Fast Casual Positioning Chain 10 Sales ($MM) 00 Sales ($MM) 10-Year CGR Positioning/Resonating Point of Difference $310 $6 48.6% Fast Casual Asian 1,832 145 28.9 Fast Casual Mexican 261 28 24.8 Fast Casual Noodle 2,916 529 18.6 Fast Casual Bakery Café 443 96 16.6 Quick Service Donut Source: Technomic Leading Chain Database, Top 500 Report Chain Estimates 17
Fastest Growing Full Service Chains have Niche Appeal Chain 10 Sales ($MM) 10 Sales Growth 10 Unit Growth Positioning/Resonating Point of Difference $514 20% 10% Chicago Style Pizza 216 18% 16% Brew Pub 187 17 6 Upscale Italian 309 14 15 Large Affordable Portions 1,712 14 12 Chicken Wings Source: Technomic Leading Chain Database, Top 500 Report Chain Estimates 18
Fastest Growing Full Service Chains Have Grill Positioning Chain 10 Sales ($MM) 00 Sales ($MM) 10-Year CGR Positioning/Resonating Point of Difference $417 $22 34.2% Upscale Seafood Grill 514 65 23.0 Upscale Brew House 1,712 220 22.8 Wing Bar & Grill 177 27 20.4 Barbecue Bar & Grill 325 69 16.7 Italian Grill Source: Technomic Leading Chain Database, Top 500 Report Chain Estimates 19
Reasons Why Concepts Succeed Innovation Improving existing menu offering and quality of service Differentiation Distinguishing core offering from the competition Evolution Enhancing the customer experience - avoiding drift Adaptation Meeting today s changing consumer demands 20
Reasons Why Concepts Succeed Innovation Improving existing menu offering and quality of service Happy Hour Small Plates It s my pleasure! 21
Reasons Why Concepts Succeed Differentiation Distinguishing core offering from the competition 22
Reasons Why Concepts Succeed Evolution Enhancing the customer experience - avoiding drift 23
Reasons Why Concepts Succeed Adaptation Meeting today s changing consumer demands 24
Trends to Watch 25
Trends to Watch Brand Extension - Food Truck Phenomenon Independent Operators Shift Attention to Chain Development BYOF - Bring-Your-Own-Food Gluten-Free Menu Development Farm Brand Offerings Redefining Calorie Counting Source: Technomic Concepts 2015 Study 26
Brand Extension Food Trucks East Coast BLT Restaurant Group, NYC West Coast Burgerville, Oregon Nationwide Diary Queen Blizzard Mobile Source: Technomic Concepts 2015 Study 27
Independent Operators Innovation Goes Mainstream Innovators shift from upscale to mainstream Chain share of market on the upswing Economy shifting attention to lower price points Source: Technomic Concepts 2015 Study 28
Bring-Your-Own-Food Trend Originated in New York City Restaurants With Minimal or No Kitchen Capabilities Focused on Students and Budget-minded Consumers Source: Technomic Concepts 2015 Study 29
Farm Brand Offerings on the Rise Natural, Organic and Hormone-free Higher Quality Positioning Animal Welfare Focus Source: Technomic Concepts 2015 Study 30
Gluten-Free Offering Healthier way of eating Can benefit gluten-intolerance and gluten diets Wider availability of better, tastier gluten-free products Source: Technomic Concepts 2015 Study 31
Re-Defining Calorie Counting Calories will rise to the surface Consumers will have a culture-shock Normal behavior will likely resume Source: Technomic Concepts 2015 Study 32
Where Do We Go From Here? 33
The Industry As We See It Consumer Lifestyle Integration will be Essential Menu Innovation and Desirability Will Draw Attention and Traffic Concept Differentiation Is Required to Succeed The Industry Will Likely Continue to Tread Water 34
The Industry As We See It Value will be the Ultimate Weapon in Battle Brand Strength Will Provide Customers With the Answers Get Ready for the Long Haul by Continuing to Invest in Your Brand The Industry Will Likely Continue to Face Headwinds 35
For more information please contact: Darren Tristano Executive Vice President David Henkes Vice President 001-312-506-3850 dtristano@technomic.com 001-312-506-3927 dhenkes@technomic.com 36