US RESTAURANT INDUSTRY 2014

TRENDS AND OUTLOOK FOR GROWTH

Presentedby:

Sept2014

GoodAfternoon welcometoChicago!
Thanksforhavingme
Objective:Provideoverviewofrestaurant
industrytrends
Willdiscuss:
Keythemes
LSR,FSR
Differentiation
Finalthoughts

RESTAURANT INDUSTRY HEADLINES

Fastcasualcontinuestogrowandevolve

MajorQSRburgerchainsstumble

Snackingboostsfrozendessert,coffeechains

HealthfocusedLSRsshowbroadappeal

FSRslosemarketshare;
somelooktotechnologyforrenewal

AdultbeveragefocusedFSRsseesalesrise

Finediningchainscontinuetoresonate

Asianconceptsdemonstratebroadappeal

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Slowerunitexpansionboostsperunitsales

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Inanincreasinglytwowayconversation,
Americansrewardpoliticizedrestaurants

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FOCUS ON

2013 RESULTSTOTAL INDUSTRY

13

U.S.Top500ChainBrandSalesPerformance
5YearTimeSeriesTop500ChainRestaurantUSSales($B)

$263.8
$254.1
$241.7
$234.0

$230.1

$230.0

AnnualGrowthRate

0.8%

1.8%

3.5%

4.9%

3.5%

2008

2009

2010

2011

2012

2013
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Source:Technomic Top500Report(s)

FranchisingHasPlayedAnImportantRolein
UnitGrowth
2013TotalTop500Units:213,862

Company
23.8%

2008TotalTop500Units:206,758

Company
27.3%
Franchised
76.2%

Franchised
72.7%

Top500companyownedunittotalshavedeclinedby9.8percentsince2008
Franchisedunittotalshaveincreasedby8.4percentinthatsameperiod
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Source:Technomic Top500Report(s)

FOCUS ON

2013 RESULTSFULL SERVICE

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Top500 13FullServiceMenuCategorySales
Growth
Steak

6.2%

VariedMenu

2.5%

Barbecue

1.6%

Asian

1.4%

FamilyStyle

1.3%

Seafood

1.2%

Italian

0.8%

Mexican

0.8%

Growthratesnominal.
Source:Technomic Top500Report 246FullServiceChains

2.4%
Top500FSR
GrowthRate

17

TraditionalCasualDining:CatchingUpto
PolishedGrowth
4.0%

PolishedCasual

4.0%

2.0%

CasualDining

FamilyStyle

0.6%

1.4%
0.8%

1YearGrowth:2013

5YearCAGR:20082013

FSRChains=246(Polished=58,Casual=126,FamilyStyle=39,FineDining=23)
Source:Technomic Top500Report(s) GrowthRatesNominal.

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FastestGrowingFSRChains
Chain

13Sales
($MM)

13Sales
Growth

13Unit
Growth Positioning

18%

35%

TRADITIONALCASUAL
MEXICAN

370

18

17

CONTEMPORARYBREWPUB

200

16

22

FINEDININGSTEAKHOUSE

613

14

16

CASUALCAF

2,778

13

10

WINGBAR&GRILL

$204

Growthratesnominal.
Source:Technomic Top500Report;Chains>$200MillionUSSales

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LIFESTYLE

20

MEMBERSHIP

21

BACON
22

CRAFT

23

AUTHENTIC

24

TECH

25

THEMED

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EXCLUSIVE

5PM

7PM

9PM

$215

$275

$255

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FEMALEFRIENDLY

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INDULGENT

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FOCUS ON

2013 RESULTSLIMITED SERVICE

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Top50013LimitedServiceMenuCategory
SalesGrowth
Asian/Noodle

10.3%

BakeryCaf

9.3%

CoffeeCaf

9.3%

Mexican

6.9%

AllOther

5.8%

Chicken

5.1%

FrozenDesserts

5.0%

OtherSandwich

4.5%

Pizza
Burger

Growthratesnominal.
Source:Technomic Top500Report

3.1%

3.9%
Top500LSR
GrowthRate

1.2%
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FastCasual:StilltheBrightSpotinthe
RestaurantIndustry
11.0%
11.2%

FastCasual
2.8%
2.6%

QuickService

4.0%
4.0%

PolishedCasual

2.0%
0.6%

CasualDining

FamilyStyle

1.4%
0.8%

1YearGrowth:2013
Growthratesnominal.
Source:Technomic Top500Report(s)

5YearCAGR:20082013
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ConsumersTradingUpAndDownToFast
Casual
2013TotalTop100:$219B

2003TotalTop100Sales:$135B

MSR
4.7%

MSR
6.9%

CDR
17.7%

FCR
8.6%

QSR
69.0%

CDR
17.8%

QSR
72.6%

FCR
2.7%

FCRsgain5.9percent
QSR,MSRandCDRlose3.6,2.2and0.1percentshare
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Source:Technomic Top500Report(s)

FastestGrowingLSRChains
Chain

13Sales
($MM)

13Sales
Growth

13Unit
Growth Positioning

$331

33%

30%

BARBECUEPIT

321

24

18

CHICKENFINGERS

406

21

22

JERSEYSTYLESUBS

540

20

11

MADETOORDERCHICKEN
WINGS

3,169

17

11

HEALTHYMEXICANGRILL

Growthratesnominal.
Source:Technomic Top500Report;Chains>$200MillionUSSales

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CRAVE
Fiery
Nacho

Cool
Ranch

BREAKFAST

Menu
Items

8
103

124

SIMPLE

CREATIVE

38

SAVVY

39

CUSTOM

40

COMMUNITY

41

CONCLUSIONS AND OUTLOOK

42

TotalRestaurantIndustryGrowth
NominalGrowth

0.4%

2008
2009
2010
2011
2012

2013IndustryOverview
Sales($B)

$449

3.2%
Units

1.8%
2.5%

AUVs(000s)

522,500
$860

5.2%

2013

3.2%

2014(F)

3.0%

Top500Share

59%

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Source:Technomic

Conclusion
FASTCASUALSEGMENTCONTINUESSTRONGGROWTH
PATTERN
ECONOMICINDICATORSPOINTTOWARD
LOWMODERATE14AND15RESULTS
OPERATORSCONTINUETOFACEBATTLEFORSHAREOF
STOMACH
UNITEXPANSIONWILLDRIVEMAJORITYOFSALES
VOLUMEGROWTH
UNDERSERVEDSEGMENTSWILLPROVIDEGREATEST
OPPORTUNITIES
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Adapttoevolvingneedsquickly

Engageyourcustomers

Findwhitespace

Takerisksininnovation

Leveragetrends

Beauthentic

Connecttothecommunity

Tellyourstory

Encouragefeedback

Whoareyou?

Questions?

DAVIDHENKES
VicePresident
3125063927
dhenkes@technomic.com
@davidhenkes

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