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Europe‘s Top 99 Restaurant Operators New Ranking and Analysis

Gretel Weiss FoodService Europe & Middle East

Presentation: Juliane Schaper

17th European Foodservice Summit

2015: Europe & Foodservice

Top 99 Restaurant Companies • Intro • Segment & country analysis • Value added strategies • Unit economics

• Brand distribution • Case study

• Final

Franchising

Part of the DNA of the quick service world:

Growth in partnership

→ It is a need, not just an option

Going into Partnership

Formerly: motivated by financial aspects Today: motivated by operational aspects (closer to customers / local needs)

Franchising = a vertical system

Picking a partner: win-win or lose-lose

Economics of Franchising

Franchisor:

top line driven. Sales!

Franchisee:

bottom line driven. Margin! (sales – costs = profit)

Most Popular Single Products

Pizza Italy - Europe

Burger USA - America

Sushi Japan - Asia

→ Ambassadors / Universal bestsellers

Pizza Burger Shushi

Ethnic Pyramid

Made by

European entrepreneurs

Large companies

Immigrants

Global by

Tastes

Brands

Products

Pizza Burger Shushi

Product Character

• Pizza – family food, perfect for sharing

• Burgers – hand-held food

• Sushi – to go, delivery

Europe: Selected Market Halls

• Amsterdam, Foodhallen • Barcelona, El Mercat Princesa • Berlin, Markthalle Neun • Copenhagen, Torvehallerne • Lisbon, Mercado da Ribeira • London, Borough Market • Madrid, Platea • Rotterdam, Markthal • Stockholm, Östermalms Saluhall

• Final

Europe 2015 (`14): Away-From-Home - Spendings

-1,0% 0,0% 1,0% 2,0% 3,0% 4,0%

Quelle: CRESTonline Deutschland, npdgroup Deutschland GmbH, Nürnberg

(+2.5%)

(-2.0%)

(+0.1%)

(+0.5%)

(-1.1%)

(+2.0%)

Germany

Ø Big 5

Russia

(+4.1%)

France

Europe 1HY/16 (1HY/15): Away-From-Home - Spendings

Russia

France

ø Big 5

Germany

(3.2%)

(2.0%)

(0.8%)

(1.2%)

(-1.1%)

(-0.1%)

(-0.6%)

Europe 1HY/16 (1HY/15): Away-From-Home - Visits

Russia

France

ø Big 5

Germany

UK (1.0%)

(0.0%)

(-0.6%)

(0.3%)

(-0.3%)

(0.0%)

-3.0% (-7.4%)

Europe: 1HY/16 (1HY/15): Away-From-Home – Average Eater Check

0,0% 0,5% 1,0% 1,5% 2,0% 2,5%

Russia

France

ø Big 5

Germany (3.1%)

(1.2%)

(0.9%)

(0.4%)

(0.0%)

(6.9%)

Research and Ranking

• Company performance • Segment performance • System sales incl. franchise activities

Net turnover, without VAT • Growth rate in constant currency

• UK pubs: managed houses only • Overlapping activities are disregarded

Rules: 2015 Top 99

Figures as reported, otherwise estimated Categorized by main business field

6 segments

1. QSR 2. Contract Catering 3. Travel 4. Restaurants 5. Pubs 6. In-store

2015: Currency Fluctuations

• Very strong rise for: • the Swiss Franc • the British Pound • the American Dollar

• much weaker Russian Rubel

2015: Currency £ 100m - €

€117m €115m

€123m €118m

€124m

€138m

2010 2011 2012 2013 2014 2015

Top 99 Foodservice Operators In Europe:

€107.5bn turnover in 2015 (+6.3%) 2014 (+5.0%)

2013 (+ 3.4%) 2012 (+ 4.6%) 2011 (+ 5.5%) 2010 (+ 4.5%) 2009 (+ 1.7%)

2008 (+ 6.0%) 2007 (+ 8.3%)

17 countries of origin

2015 – Top 99: New Names

• BackWerk from Germany

• Carluccio‘s from UK

• Jamie Oliver Restaurant Group from UK

*estimated/vs. 2014 in constant currency Source: FoodService Europe & Middle East

2015: Top 10 Groups in Europe R. ('15) Group Sector Origin No of C. Sales € m vs. '14

1 (1) McDonald's* QSR USA 39 20,500 4.0%

2 (3) Compass* CC UK 21 7,580 2.0%

3 (2) Sodexo CC France 29 7,518 3.2%

4 (4) Elior CC France 13 5,674 6.2%

5 (5) Yum! Rest. Int. QSR USA 39 4,288 6.9%

6 (6) Burger King* QSR USA 27 3,800 14.6%

7 (7) Mitchells & B. P UK 2 2,896 6.6%

8 (15) Greene King P UK 1 2,327 68.7%

9 (9) Whitbread QSR UK 14 2,295 11.4%

10 (11) Wetherspoon P UK 1 2,087 7.4%

Total (10) 58,965 6.8%

2015: Top 99

… only 1 country

… 2-5 countries

… 6-10 countries

… 11-20 countries

Companies operating in… … 21-40 countries

Source: FoodService Europe & Middle East

Travel (12)

- Europe 2015: share of Top 99 sales -

( ) = no. of companies Source: FoodService Europe & Middle East

Restaurants (27)

Other (14)

Contract Catering (17)

QSR (29)

Other: Pubs 8.9% In-store 3.2%

Which Sectors?

Ø CC Travel In-St. Pubs QSR

7.0% 6.3% 4.7% 4.3% 3.9%

2.0% Rest.

2015: Growth by Sector

Other: Germany 3.4% Switzerl. 2.7% Spain 2.0% Finland 1.6% Sweden 1.5% Netherl. 0.9% Others 4.3%

USA (8)

UK (25)

Other (43)

Italy (5)

( ) = no. of companies Source: FoodService Europe & Middle East

France (18)

Which Countries of Origin?

33.2% 16.4%

Which Countries of Origin?

Other:

Germany 3.4% Switzerl. 2.7% Spain 2.0% Finland 1.6% Sweden 1.5% Netherl. 0.9% Others 4.3%

2015: Top 1-5 by % Growth

22.0% 18.0% 17.0%

) €2,

2) €

1) €

ino‘

3) €

do‘s

6) €

- 2015 vs. 2014 sales in sonstant surrency -

* estimated Source: FoodService Europe & Middle East

2015: Top 6-10 by % Growth

15.8% 14.9% 14.7% 14.6% 14.6%

4) €

(6) €

* estimated Source: FoodService Europe & Middle East

- 2015 vs. 2014 Sales in Constant Currency -

2015: Growth Champions

Buying Market Share

• Greene King – Acquisition of Spirit Pubs • Lagardère – Bought Airest • Le Duff – Now majority owner of Kamps • Domino‘s – Takeover Pizza Sprint

2015: Europe Top 99

22 Double-digit growth

16 Declining

sales 2014: 27 - 18 2013: 19 - 28 2012: 21 - 24 2011: 21 - 18 2010: 18 - 22 2009: 11 - 52 2008: 29 - 15

Segment Analysis

What and where are the drivers

of development?

2015: QSR Segment

• Groups: 29 out of 99 • Origin: 6 x USA, 5 x France, 4 x UK • Sales: €45,327bn (out of 107bn) • Growth: +7.0% (14: +5.5%)

QSR = Pacemaker Most … new openings

… innovation … profitable … chained … industrialized

… systematized … branded … travelled … globalized … recession resistant

*estimated/vs. ’14 in constant currency Source: FoodService Europe & Middle East

2015: Top 10 QSR by Sales

R. ('99) Group Origin No of C. Sales € m vs. '14

1 (1) McDonald's* USA 39 20,500 4.0%

2 (5) Yum! Rest. Int USA 39 4,288 6.9%

3 (6) Burger King* USA 27 3,800 14.6%

4 (9) Whitbread UK 14 2,295 11.4%

5 (13) Domino's Pizza* USA 20 1,900 18.0%

6 (14) Starbucks* USA 24 1,700 14.0%

7 (15) Subway USA 35 1,620 9.9%

8 (19) Greggs UK 1 1,152 5.2%

9 (20) Quick France 3 977 -5.1%

10 (27) AmRest Poland 11 825 12.7%

Total (29) 45,327 7.0%

McDonald‘s Globally: 4 Categories

1. Home market of the brand: USA 2. International lead markets:

Canada, Australia, UK, France & Germany 3. High growth markets:

for example China and Russia 4. Foundational markets:

many, mostly smaller countries

McD: Criteria for Global Restructuring

• Maximum similarity in: • Market penetration • Chances • Challenges

Effectiveness has yet to prove itself.

McDonald‘s 2014: By Regions

Operating Inc.

System Sales Restaurants

Worldwide $87.8bn Europe $26.2bn

Worldwide 36,258 Europe 7,855

Worldwide $7.9bn Europe $3.3bn

USA 39.6%

Europe 21.7%

APMEA**

Other 10.2% USA

Europe 29.8%

APMEA**

20.0% Other 9.8%

USA 44.3%

Europe 41.2%

APMEA**

13.5% Other 1.0%

Europe - units: +3.3%, sales: +2.0%

McDonald‘s 2015: By Market Categories

Operating Inc.

System Sales Restaurants

Worldwide $87.2bn Worldwide 36,525 Worldwide $7.5bn

High Growth Markets

Foundational Markets

Int. Lead Markets 43%

12% 19%

Int. Lead Markets

Foundational Markets

High Growth Markets

Int. Lead Markets

High Growth Markets

McDonald‘s 2015 (14) - Comparable

Market Categories 2015 2014 2015 2014

U.S. 0.5% -2.1% -3.0% -4.1%

International Lead Markets 3.4% 0.8% 1.0% -1.2%

High Growth Markets 1.8% -2.8% -2.2% -2.9%

Foundational Markets & Corp. 0.7% -0.1% -3.7% -4.8%

Total 1.5% -1.0% -2.3% -3.6%

Comparable SalesComparable Guest

Counts

McDonald‘s in Europe

Country markets lead for example… • France: design & digital tools • UK & Scandinavia: non-cash payment &

social media • Austria: individualization of the burger • Turkey: delivery

FSE 5/15 M4 Handys

Burger King & France

• Master partner: Groupe Bertrand

• Goal: 600 stores in 2020

• For 15 years no brand presence, new start in 2012

• 2015+: very high average sales per unit

• French people love bread, meat and fries

BK Logo

2015: Top 10 QSR by Growth

R. ('99) Group Origin No of C. Sales € m vs. '14

12 (41) Le Duff* France 9 500 22.0%

5 (13) Domino's Pizza* USA 20 1,900 18.0%

3 (6) Burger King* USA 27 3,800 14.6%

13 (46) Groupe Bertand France 1 480 14.3%

6 (14) Starbucks* USA 24 1,700 14.0%

26 (86) Ibersol Portugal 2 214 14.0%

24 (82) Shokoladnitsa* Russia 4 224 14.0%

21 (78) Max Sweden 3 250 13.5%

10 (27) AmRest Poland 11 825 12.7%

4 (9) Whitbread UK 14 2,295 11.4%

Total (29) 45,327 7.0%

Le Duff: 40 Years Overlook

1976: 1st Brioche Dorée in Brest (France) 1983: 1st pizzeria in Rennes (France) 1996: acquisition of Del Arte (France) 2002: acquisition of La Madeleine (US) 2011: acquisition of Bruegger‘s (US) 2013: acquisition of Mimi‘s Cafe (US) 2015: acquisition of Kamps (Germany)

Total sales worldwide: €2.0bn

Kamps GW

2015: Travel Segment

• Groups: 12 out of 99 • Origin: 3x UK, 2x Germany, Italy

and France • Sales: € 10,354 bn (out of 107 bn) • Growth: +4.7% (14: +3.4%)

2015: Top Travel R. ('99) Group Origin No of C. Sales € m vs. '14

1 (11) SSP UK 17 2,036 2.2%

2 (12) Autogrill Group Italy 17 2,034 1.2%

3 (17) LSG Sky Chefs Germany 15 1,215 4.5%

4 (23) Do & Co Austria 9 916 14.7%

5 (30) Gategroup Switzerl. 14 731 0.0%

6 (31) Servair* France 4 710 8.7%

7 (36) Tank & Rast* Germany 1 621 3.0%

8 (38) Newrest France 13 596 6.1%

9 (44) Cremonini Italy 7 511 3.4%

10 (52) Lagardère Travel France 17 426 28.0%

Total (12) 10,345 4.7%

Lufthansa Flieger

Travel Hubs/Locations • The real hotspots in mobile societies • The new high streets (airports, train stations)

Goals: less sameness of products better use of time for customers

Well established brands do best: right mix of local, national, worldwide

BackWerk Bahnhof

Travel Hubs/Locations

Early bird business

• Breakfast offers of high importance

• Coffee and bakery snacks: best-selling

• Example: BackWerk

2015: Top Travel by Growth R. ('99) Group Origin No of C. Sales € m vs. '14

1 (52) Lagardère Travel France 17 426 28.0%

2 (23) Do & Co Austria 9 916 14.7%

3 (31) Servair* France 4 710 8.7%

4 (72) Welcome Break UK 1 292 6.7%

5 (38) Newrest France 13 596 6.1%

6 (17) LSG Sky Chefs Germany 15 1,215 4.5%

7 (44) Cremonini Italy 7 511 3.4%

8 (36) Tank & Rast* Germany 1 621 3.0%

9 (11) SSP UK 17 2,036 2.2%

10 (12) Autogrill Group Italy 17 2,034 1.2%

Total (12) 10,345 4.7%

Do&Co belieferung

Travel Hubs/Locations

• Shift from local operators to national and multi-national players

• Portfolio of own brands and franchise concepts

• Landlords asking for a wide range of formulars High consumer footfall nearly guaranteed!

Value Added Strategies

• Fast Casual • The number 1 driver of the

chain restaurant industry • Throughout all product categories Pioneers: • Panera Bread (US) • Wagamama (UK) • Vapiano (Germany)

The Number 1 Driver

Fast Casual

Fast Food Casual Dining

Speed/Productivity New culinary products

Nice ambience

Upgrading Influence

Putting QSR under pressure

Fast Casual

• More: premium, transparency, regional, freshness, vegetarian, individual – less standardized

• Mono product concepts – made for lunch & dinner

7 days a week

Strohballen Fahrrad

From Farming to Fine Dining

Farming

Farm Shops: emotional gap country – city

Supermarkets

Quick Service Restaurants

Albert Heijn to-go/Rewe to-go: you shop for foodservice not for food

Supermarkets

Fine Dining

Casual Fine Dining: weekly luxury

Casual Dining

From Farming to Fine Dining Fine Dining

Casual Fine Dining

Casual Dining

Fast Food

C.-stores to-go

Supermarkets

Farm Shops

Farming

Fast Casual

• Final

Europe: Top Brands by Units

R. Brand Units Europe

Units worldwide

European share

1 McDonald‘s 7,900 36,525 21.6%

2 Subway 4,969 44,445 11.2%

3 Burger King* 3,800 15,003 25.3%

4 Costa Coffee 2,384 3,200 74.5%

5 KFC 2,376 19,580 12.1%

6 Domino‘s* 2,200 12,119 18.2%

7 McCafe* 2,034 4,600 44.2%

8 Starbucks 2,016 23,043 8.7%

9 Greggs 1,698 1,698 100.0%

10 Pizza Hut 1,442 16,125 8.9%

Total (10) 30,819 176,338 17.5%

Source: FoodService Europe & Middle East; *estimated, As of: 12/2015

Europe: Top Brands by European Share

R. Brand Units Europe

Units worldwide

European share

1 Greggs 1,698 1,698 100.0%

2 Costa Coffee 2,384 3,200 74.5%

3 McCafe* 2,034 4,600 44.2%

4 Burger King* 3,800 15,003 25.3%

5 McDonald‘s 7,900 36,525 21.6%

6 Domino‘s* 2,200 12,119 18.2%

7 KFC 2,376 19,580 12.1%

8 Subway 4,969 44,445 11.2%

9 Pizza Hut 1,442 16,125 8.9%

10 Starbucks 2,016 23,043 8.7%

Total (10) 30,819 176,338 17.5%

Source: FoodService Europe & Middle East; *estimated, As of: 12/2015

Opening Trends

• Latest up-dates: best observed in free-standing flagship-restaurants

• Gearing up for more sales to go, to drive & to deliver

→ underlined by pre-ordering and online-payment

Concept

Fame & Popularity trust emotion

Knowledge & Ability staff goods technology

SYSTEM BRAND

Suppliers Customers

Multiplication

Pret A Manger, UK

• Home of modern sandwiches

• Europe: sales of £573m (+10.4%) 315 units (+16)

• Worldwide: sales of £676m

• Very high density in London

• Take-away sales prevail

Pret A Manger, UK

• Founded 1986 • Founders:

Sinclair Beecham and Julian Metcalfe

• Pioneers in: • using organic

ingredients • sustainibility and

charity in company culture

Pret A Manger 2006 – 2015 (Europe)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 10 years

Units Europe 151 185 196 200 221 236 253 283 299 315 +108,6%

Turnover £ in m 178 200 210 244 282 317 365 414 486 537 +201,7%

Turnover/Unit £ in m 1.24 1.19 1.10 1.23 1.34 1.38 1.49 1.54 1.67 1.75 +41,1%

1.24 1.19

1.23 1.34 1.38

1.49 1.54

1.67 1.75 Ø Turnover per European store in £ million

+41.1%

Pret A Manger – How to Get There

• Menu innovation: 14% of all sales from new items

• more demand for breakfast on-the-go • vegetarian sales – double-digit growth • Avocado – fastest growing ingredient (5m)

• 65% of card payments - contactless

• Menu innovation: 14% of all sales from new items

• more demand for breakfast on-the-go • vegetarian sales – double-digit growth • Avocado – fastest growing ingredient (5m)

• 65% of card payments - contactless

• Very strong company culture

• Training, Training, Training

Educating and developing people

„It‘s nearly impossible for the competition to steal employees from Pret.“

Pret A Manger

Growth

New openings

Existing units Same store sales!

2015: +7.5%

London 1079 Bine

Pret A Manger: Mission Statements

„Innovation is never easy and

the larger you get, the more difficult it is.“

„But if you want to stay the same,

you have to keep changing!“

Pret A Manger: CEO Statement

„10 years ago, our granary sandwiches made up nearly 30% of our sales –

in 2016 they will account for less than 10%.

Replaced by protein pots, grain salads, cold pressed juices, flat whites, macaroni cheese, porridge … and most recently, gluten and dairy free soups“

Pret sandwich

Avocado

• Turning existing or new recipes into options that are: • healthier • more modern • more valuable • more culinary

A picture book superfood! Challenging sourcing and food management!

Healthy and Tasty!

„In 2016, the avocado deserves an OSCAR for best supporting role in modern recipes.“ Rudi Kull, Munich

V.eggie Pret

• First vegetarian pop up-restaurant (veggies, vegan consumers, meat eaters)

„It‘s here to stay.“

• Will be multiplied as soon as possible

V.eggie Pret

• V.eggie: first name food to expect/from field to fork

• Pret: last name competence, trust & emotional energy of parent‘s brand

Seeding and harvesting at the same time

Pret A Manger

• Social media debates

• Asking how to create even more delicious food

• CEO blog – new things in the pipeline

Pret A Manger: CEO Statement

For a long time the company refused franchising. That has changed.

„We actually do now welcome franchising and have opened franchise shops with SSP, Welcome Break and Lagardère in train stations, airports and motor service locations.“

Pret A Manger – Example

• To continue a brand with feeling and skill • To adapt to current times over and over again

Evolution, not Revolution

• Final

Final Thoughts Winner companies are:

• highly efficient (system) • clearly profiled (brand) • stable and innovative • compatible and flexible • willing, able and eager to learn

New openings & keeping the existing network relevant

Final Thoughts The real strength:

• new technologies and workflows • value chain management • sales distribution systems • making use of different locations categories • boosting sales through day-part management

Fundamental requierment for new business oportunities

Thanks for Listening

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