Fast-Food & Home-Delivery Outlets

Market Report Plus 2012

26th Edition October 2012 Edited by Leah Tutt

ISBN 978-1-84729-918-5

Fast-Food & Home-Delivery Outlets Fast-Food & Home-Delivery Outlets Foreword

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Contents

Executive Summary 1

1. Market Definition 2

REPORT COVERAGE...... 2 MARKET SECTORS...... 2 Sandwiches ...... 3 Burgers ...... 3 Pizza ...... 3 Fish and Chips ...... 3 Chicken ...... 4 Other Fast Food/Takeaway ...... 4 MARKET TRENDS...... 4 Economic Crisis...... 4 Demand for Convenience ...... 4 Innovation ...... 5 Nutrition and Healthier Products...... 5 ECONOMIC TRENDS...... 6 Table 1.1: UK Economic Trends (000, £m, %, million and £), 2007 2011...... 7 MARKET POSITION...... 9 The UK...... 9 Table 1.2: The UK Fast-Food Market in Relation to Household Final Consumption Expenditure on Restaurants, Cafés, Canteens, etc. by Value (£m and %), 2007-2011...... 9 Overseas...... 9

2. Market Size 11

THE TOTAL MARKET...... 11 Table 2.1: The Total UK Fast-Food, Takeaway and Home-Delivery Market by Sector by Value at Current Prices (£m at rsp), 2007-2011...... 11 Figure 2.1: The Total UK Fast-Food, Takeaway and Home-Delivery Market by Sector Share (%), 2011...... 12 BY MARKET SECTOR...... 12 Sandwiches ...... 12 Table 2.2: The UK Sandwiches Sector by Value at Current Prices (£m at rsp and %), 2007-2011...... 13 Burgers...... 13 Table 2.3: The UK Burgers Sector by Value at Current Prices (£m at rsp and %), 2007-2011...... 14 Pizza...... 14 Table 2.4: The UK Pizza Sector by Value at Current Prices (£m at rsp and %), 2007-2011...... 15 Fish and Chips...... 15 Table 2.5: The UK Fish and Chips Sector by Value at Current Prices (£m at rsp and %), 2007-2011...... 16 Chicken...... 17 Table 2.6: The UK Chicken Sector by Value at Current Prices (£m at rsp and %), 2007-2011...... 17 Other Fast-Food and Takeaway Outlets ...... 18 Table 2.7: The UK Other Fast-Food and Takeaway Outlets Sector by Value at Current Prices (£m at rsp and %), 2007-2011...... 18

3. Industry Background 19

RECENT HISTORY...... 19 NUMBER OF COMPANIES...... 19 Table 3.1: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants, Cafés and Takeaways by Turnover Sizeband (£000, number and %), 2010 and 2011...... 20 EMPLOYMENT...... 20 Table 3.2: Number of Employees in the Restaurant Industry in Great Britain (000), 2007-2011...... 21 Table 3.3: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants, Cafés and Takeaways by Employment Sizeband (number and %), 2010 and 2011...... 21

REGIONAL VARIATIONS IN THE MARKETPLACE...... 22 Table 3.4: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants, Cafés and Takeaways by Government Office Region (number and %), 2011...... 23 Table 3.5: Adults Who Have Eaten Takeaway Foods and Adults Who Have Eaten Fast Foods in Outlets in the Last 12 Months by Region (% of adults), 2012...... 24 DISTRIBUTION...... 24 Table 3.6: Selected UK Fast-Food and Takeaway Chains by Sector and Estimated Number of Outlets, 2011...... 25 HOW ROBUST IS THE MARKET?...... 25 Table 3.7: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants and Takeaways by Age of Business (number and %), 2011...... 26 LEGISLATION...... 26 KEY TRADE ASSOCIATIONS...... 27 British Hospitality Association ...... 27 Hotels, Restaurants and Cafés in Europe...... 27 The Pizza, Pasta and Italian Food Association...... 27

4. Competitor Analysis 28

THE MARKETPLACE...... 28 MARKET LEADERS...... 28 Burger King (UK) Ltd ...... 28 Domino’s Pizza Group PLC...... 30 Greggs PLC...... 31 Kentucky Fried Chicken (GB) Ltd ...... 32 McDonald’s Restaurants Ltd ...... 34 Pizza Hut (UK) Ltd...... 35 Select Service Partner UK Ltd ...... 36 Subway Realty Ltd ...... 37 Other Companies...... 38 OUTSIDE SUPPLIERS...... 39 MARKETING ACTIVITY...... 39 Table 4.1: Main Media Advertising Expenditure by Fast-Food Chains (£000), Years Ending March 2008-2012...... 39 Figure 4.1: Main Media Advertising Expenditure by Fast-Food Chains (£000), Year Ending March 2012...... 40

5. Brand Strategy 41

INTRODUCTION...... 41 COMPANIES’ BRANDS...... 41 Burger King...... 41 Domino’s Pizza...... 42 KFC...... 42 McDonald’s ...... 43 Pizza Hut...... 43 Subway...... 44 MAIN MEDIA ADVERTISING EXPENDITURE ...... 44 Table 5.1: Main Media Advertising Expenditure on Leading Fast-Food Brands (£000 and %), Years Ending March 2011 and March 2012...... 44

6. Strengths, Weaknesses, Opportunities and Threats 48

STRENGTHS...... 48 WEAKNESSES...... 48 OPPORTUNITIES...... 49 THREATS...... 49

7. Buying Behaviour 51

INTRODUCTION ...... 51 VALUE...... 51 Table 7.1: Adults Who Agreed That Major Fast-Food and Home-Delivery Outlets Offer Good Value for Money (% of adults), August 2012...... 52 Table 7.2: Adults Who Agreed That They Tend to Eat Fast Food to Save Money During the Recession (% of adults), August 2012...... 55 CONVENIENCE ...... 57 Table 7.3: Adults Who Agreed That They Tend to Eat Fast Food and Takeaways to Save Time and Effort (% of adults), August 2012...... 58 NUTRITION...... 61 Table 7.4: Adults Who Think About Calories When They Order Fast Food and Takeaways (% of adults), August 2012 ...... 62 Table 7.5: Adults Who Agreed That They Try to Avoid Fast Food and Takeaways Because They Consider Them Unhealthy (% of adults), August 2012...... 65 Table 7.6: Adults Who Agreed That They Would Eat More Fast Food If There Were More Healthy Options on the Menu (% of adults), August 2012...... 69

Table 7.7: Adults Who Agreed That Fast-Food Restaurants and Home-Delivery Outlets Now Offer Healthier Options Than 5 Years Ago (% of adults), August 2012...... 72 Table 7.8: Adults Who Consider the Food on Offer Better Quality than 5 Years Ago (% of adults), August 2012...... 75

8. Current Issues 78

TECHNOLOGY ...... 78 Contactless Payments...... 78 Wi-Fi Access...... 78 Social Media Advertising Campaigns...... 79 Electronic Menu Boards and Other Digital Gadgets...... 80 POLITICAL ISSUES ...... 81 Public Health Responsibility Deal ...... 81 Fast-food Employers Abandon Jobless Work Experience ...... 81 Pasty Tax ...... 82 CORPORATE SOCIAL RESPONSIBILITY ...... 82 Social Causes ...... 82 Environmental and Animal Welfare Concerns ...... 83 Ethical Sourcing and Supporting British Trade ...... 84 CORPORATE ACTIVITY...... 85 Burger King (UK) Ltd...... 85 Domino’s Pizza Group PLC ...... 85 KFC (GB) Ltd...... 85 Pizza Hut (UK) Ltd...... 86 Select Service Partner UK Ltd ...... 86

9. The Global Market 87

INTRODUCTION...... 87 GLOBAL CORPORATIONS...... 87 McDonald’s Corporation...... 87 Table 9.1: McDonald’s Corporation — Number of Restaurants by Type, Years Ending 31st December 2009-2011...... 87 Table 9.2: McDonald’s Corporation — Number of Restaurants by Region, Years Ending 31st December 2009-2011...... 88 Table 9.3: McDonald’s Corporation Revenues by Type ($m), Years Ending 31st December 2009-2011...... 89 Yum! Brands Inc...... 89 Table 9.4: Yum! Brands Inc — Number of System Restaurants by Type of Ownership, 2009-2011...... 89 Table 9.5: Number of Yum! Brands Inc System Restaurants by Brand, 2011...... 90

Table 9.6: Yum! Brands Inc — Revenues by Company and Franchised Sales ($m), 2009-2011...... 91 Burger King Worldwide...... 91 Table 9.7: Burger King Holdings Inc — Number of Restaurants by Type, Years Ending 30th June 2009-2011...... 92 Table 9.8: Burger King Holdings Inc — Revenues by Source ($m), Year Ending 30th June 2009-2011...... 93 Table 9.9: Burger King Holdings Inc — Revenues by Region ($m), Years Ending 30th June 2009-2011...... 93

10. Forecasts 94

INTRODUCTION...... 94 General Economic Forecasts...... 94 Table 10.1: Economic Forecasts (000, % and million), 2012-2016...... 94 FORECASTS 2012 TO 2016...... 95 Table 10.2: The Forecast UK Fast-Food, Takeaway and Home-Delivery Market by Sector by Value at Current Prices (£m at rsp), 2012-2016...... 95 Figure 10.1: The Forecast UK Fast-Food, Takeaway and Home-Delivery Market by Sector by value at Current Prices (£m at rsp), 2012-2016...... 97 MARKET GROWTH...... 97 Figure 10.2: Growth in the UK Fast-Food, Takeaway and Home-Delivery Market by Valye at Current Prices (£m at rsp), 2007-2016...... 98 FUTURE TRENDS...... 98 Social Media Campaigns...... 98 Exotic Flavours and Innovative Products...... 99 Healthier Options ...... 99 Greater Use of Quality Ingredients...... 99 Value...... 99

11. Company Profiles 100

BURGER KING (UK) LTD...... 101 DOMINO’S PIZZA GROUP PLC...... 103 GREGGS PLC...... 105 KENTUCKY FRIED CHICKEN (GB) LTD...... 107 MCDONALD’S RESTAURANTS LTD...... 109 PIZZA HUT (UK) LTD...... 111 SUBWAY REALTY LTD...... 113

12. Company Financials 115

13. Further Sources 117

Publications...... 117 General Sources...... 118 Government Publications ...... 119 Other Sources...... 119 Key Note Sources ...... 120

Understanding Consumer Survey Data 122

Number, Profile, Penetration...... 122 Social Grade...... 123 Standard Region...... 123

Key Note Research 124

The Key Note Range of Reports 125

• “The recession and the subsequent squeeze on disposable income has encouraged millions of families to cut back on spending on luxuries, especially on meals in restaurants. This has encouraged many to trade down to cheaper meals, especially burgers and fried chicken.”

(The Telegraph, 15th January 2012)

• “Over the past few years, we’ve worked hard to open up our business, both online and offline. However, there are still lots of myths out there about McDonald’s, and lots of things that people simply don’t know about us.”

Alastair Macrow, Vice-President of Marketing at McDonald’s UK

(Marketing Magazine, 15th May 2012)

• “A recent survey by the consumer group Which? found that two out of three adults would like to see the calorie information clearly displayed on all fast-food products.”

(Pizza News, 22nd September 2011)

• “Increasingly, people are contacting brands through Facebook and Twitter instead of making a phone call.”

Rick Maynard, KFC spokesperson

(http://www.thedrum.co.uk, 21st February 2012)

Executive Summary

This Key Note Market Report Plus analyses the fast-food and home-delivery industry in the UK. Key Note calculates that the market grew by 6% in 2011.

It divides the market into six principle categories by type of food: sandwiches, burgers, pizza, fish and chips, chicken, and other fast food or takeaway. The segment for sandwiches is the largest subsector and accounted for 31.3% of the market in 2011, followed by the burgers sector (23%). In 2011, the share of the fish and chips sector stood at 10.5%, while the share of the pizza stood at 11.6%. Although the smallest sector overall, chicken has undergone the fastest growth since 2007, increasing its market share by 0.4 percentage points to 7.3% of the market. The sector for other fast-food and takeaway outlets, which encompasses all other cuisines — from sushi to kebabs — increased by 8.9% in 2011 to account for 16.3% of the market.

There are three different types of enterprises that are active in the market: branded fast-food restaurants, independently owned businesses and traditional takeaway outlets. The major chains in the UK are Greggs, McDonald’s, Burger King, Subway, Domino’s Pizza, Kentucky Fried Chicken (KFC) and Pizza Hut.

In spite of the economic crisis, the overall fast-food and home-delivery industry has remained resilient. The good value and convenience that this type of restaurant offers makes it popular among consumers in the UK. When eating out, Britons are increasingly opting to eat more fast food. Its inexpensiveness has been a key factor in this trend. Moreover, consumers lead increasingly fast-paced lifestyles, and as a result, they are eating their meals on-the-go, as well as looking for hassle-free solutions, which are prepared easily and quickly — two defining traits of fast food and takeaways. These factors are giving the total industry an advantage over competitors. Moreover, an influx in innovative flavours and healthier products in the market has helped to boost companies’ sales, by bringing new excitement to menus, offering more choice to consumers than ever before and appealing to a broader consumer base.

Still, the negative association between fast food and poor quality and unhealthy foods continues to plague the industry. Companies are often criticised and blamed for their contributory role to the obesity epidemic in the UK. As a result, chains are taking a proactive role to combat this image, by taking part in the Government’s Public Health Responsibility Deal, committing themselves to social and environmental causes and placing calorie counts on menu boards, as well as launching media campaigns that attempt to improve the reputation of the industry.

Key Note expects that the fast-food and home-delivery industry will continue to increase over the next 5 years. Value, flavour and the development of healthier fast-food products, as well as interactive social media campaigns, will be at the core of future growth. The persistence of the economic crisis and consumers’ hectic schedules will continue to drive demand in the fast-food and home-delivery industry, which is expected to grow by 24.5% between 2012 and 2016.

1. Market Definition

REPORT COVERAGE

This Market Report Plus separates the fast-food and home-delivery industry into the following categories:

• Branded fast-food restaurants — these sell both hot and cold food that can be eaten either in restaurants or taken away. Well-known fast-food chains include McDonald’s, Kentucky Fried Chicken (KFC) and Domino’s Pizza.

• Independently owned businesses — companies that are classified under this heading are cafés, takeaways, kiosks and counters that sell eat-in or takeaway foods in conjunction with hot and cold beverages, with the exception of alcohol. Of the foods covered by the fast-food and home- delivery market, sandwiches are the primary products sold by these businesses. These include paninis, baguettes and bagels. Other foods commonly found in these types of outlets are muffins, cakes and doughnuts. Tea rooms and ice cream parlours fall into this category.

• Traditional takeaway outlets — fish and chips, Chinese and kebab shops are common in this category. The sector also includes venues that sell products such as sandwiches, pizza, chicken and jacket potatoes. Ethnic variety is abundant in the segment. Many of these businesses are independent operations. Some of these restaurants also offer home-delivery services, but those with eat-in areas are not covered in this report.

The industry is dominated by fast-food chains and independent takeaway outlets. These can be found on the high street and in various other locations, including shopping malls, transport stations and terminals, leisure parks and petrol stations. The businesses form part of the hospitality industry, a pillar in the UK’s economy.

Small-scale catering units, such as motor vans, that can be found at festivals and along roadsides are excluded from the analysis. It is important to note that Key Note changed its definition of the market in 2010. Coffee shops and sandwich sales from retail outlets and chemists are no longer covered by the report. Details on these can be found in Key Note’s Coffee & Sandwich Shops Market Assessment.

MARKET SECTORS

Key Note classifies the fast-food and home-delivery market according to the type of food primarily sold by companies in the industry. These are:

• sandwiches

• burgers

• pizza

• fish and chips

• chicken

• other fast food or takeaway.

Sandwiches

The sector for sandwiches is the largest in the fast-food and home-delivery industry. An array of sandwiches make up the segment. Traditional variants remain popular though innovative and original filling flavours, as well as alternative breads, are increasingly present in the section. The primary companies active in the category in the UK are Greggs and Subway. Sales in the subsector are being driven by the demand for on-the-go products, including the rise of the on-the-go breakfast occasion.

Burgers

Burgers are traditionally associated with US fast-food joints, particularly McDonald’s and Burger King. Although the category is not the dominant sector in the UK, the presence of the products is nevertheless important. Moreover, the market is actually saturated with burgers. As a result, companies are increasingly giving traditional burgers innovative twists to remain competitive: offering various meats, introducing exciting flavours and adding different buns.

Pizza

Pizza is the most commonly delivered food in the fast-food and home-delivery industry in the UK. This feature caters well to the demand for convenience in the UK, as consumers can now place orders online or via their mobiles wherever they may be and have the pizza delivered straight to their home, making the mealtime solution hassle-free. Moreover, innovation has boosted sales in the category. Companies are introducing lighter versions, premium pizza and innovative crusts and flavours to maximise sales. Two major chains are active in the segment, Domino’s Pizza and Pizza Hut, as well as a series of independent operators in towns and cities across the UK.

Fish and Chips

Fish and chips is an iconic dish in the UK. Although a national symbol, the sector has struggled in recent times compared with other categories in the market. Independent businesses account for the majority of the segment. These companies are struggling to cope with the economic crisis and some are being forced out of business. Moreover, not only do firms have to deal with rising operational and production costs, but the issue of sustainability, which is now at the core of the fishing industry, is putting an even greater strain on the section.

Chicken

Chicken is increasingly being used in the fast-food and home-delivery industry as a healthier alternative to red meat. KFC is the major chain that specialises in the product, though other companies also use poultry for meals including salads, pizzas, sandwiches, burgers and wraps.

Other Fast Food/Takeaway

The other fast food/takeaway category covers a broad range of products from different ethnic backgrounds. This subsector is increasingly popular in the UK, as consumers are becoming more adventurous in their food choices. Chinese, Indian and kebab shops traditionally dominate the segment, but Mexican, Caribbean and Thai, among others, are gaining importance in the sector.

MARKET TRENDS

Economic Crisis

The fast-food and home-delivery industry is benefitting from the economic crisis. The value it offers means that consumers are increasingly opting for this type of restaurant when eating out, as an economical mealtime solution. On 15th January 2012, in The Telegraph it was written that:

“The recession, and the subsequent squeeze on disposable income, has encouraged millions of families to cut back on spending on luxuries, especially on meals in restaurants. This has encouraged many to trade down to cheaper meals, especially burgers and fried chicken.”

Fast-food now makes up more than half of all meals eaten out of the home. The article quotes figures by the NPD Group, a market research company that tracks consumer spending, which found that, in 2011, 5.54 billion visits to restaurants were made to fast-food and takeaway chains out of a total 11 billion. Thus, although consumers are eating out less frequently than prior to the recession in 2008, when they do dine out, more and more are opting for fast food instead of other types of restaurants.

Demand for Convenience

Britons are leading increasingly fast-paced lifestyles. With busier schedules, consumers have less time to prepare and eat meals from scratch. Not only do they not have the time, but many do not want to put in the effort required in the process, especially after a hard-working day. In addition, an increasing percentage of the population is eating food on-the-go, instead of sitting down and having a proper meal, as they no longer have the time to do so.

The fast-food and home-delivery industry is in a prime position to benefit from the rising demand for convenient meal solutions due to consumers’ increasingly hectic lives. Not only do these restaurants offer good value, but consumers hardly have to wait for the food to be ready. Moreover, they can decide whether to eat the meal in the venue or take it away. Furthermore, certain businesses offer delivery services, meaning that consumers can even enjoy the food from the comfort of their home without having to put in any effort. This phenomenon is one of the primary reasons for the industry’s success in the UK.

Innovation

Although there is a strong demand for fast food and takeaways in the UK, the market is saturated with products and restaurants. In order to differentiate themselves, companies are increasingly resorting to innovation to maintain dynamism in the industry. Moreover, consumers are becoming more and more adventurous when it comes to food and there is a growing demand for exciting and original flavours that tickle the palate in the industry in the UK. Examples that support this trend include Burger King’s Angus XT Ploughman’s and lamb burger and KFC’s Reggae Reggae Box Meal. There has also been a surge in premium products, such as Domino’s Pizza Gourmet and Pizza Hut’s Posh ranges. This innovation marks an attempt by chains not only to push the value of the industry, but also to break away from the association of fast food with poor quality. In addition, companies are trying to appeal to a broader consumer base by offering more variety on their menus. Healthier recipes are also being developed, as explained below.

Nutrition and Healthier Products

Britons are increasingly conscious of the importance of leading a healthy lifestyle, both in terms of food and exercise, due to efforts by the media, the Government and organisations to raise awareness. In the process, the fast-food industry is often blamed for playing a contributory role in the obesity epidemic that is affecting the nation. Food in the market is often fried and high in fat, salt and sugar. In response, companies are making a conscious effort to break away from this stereotype by limiting the number of calories in recipes, playing an active role in campaigns that promote healthier lifestyles and by stressing their achievements to consumers.

Menu boards that display calorie content, salads and smoothies are increasingly being found in fast-food restaurants, and the trend has been a key component of innovation in the industry. McDonald’s Deli Choices, Pizza Hut’s Pizzetta range and Subway’s Low Fat Subs are all designed to offer consumers an alternative to traditional fast food. Companies are catering for consumers’ growing demand for healthier options by widening their product portfolio to offer these types of products, which were not originally present in the market.

The main chains in the industry have also signed up to the Government’s Public Health Responsibility Deal. In addition to promoting exercise, such as Burger King’s Be Active campaign, companies are highlighting their participation in the removal of unhealthy ingredients from the recipes. For example, on 7th September 2011, Subway published a press release that described its contribution to the healthier foods initiative. It removed artificial trans fat from all of its products in 2009, as well as making a conscious effort to reduce salt levels in its food. Furthermore, the company has signed up to the Government’s 2012 salt target. According to the article, Subway supports the display of calories on menu boards across the UK. In addition, on 5th March 2012, KFC announced its decision to stop using palm oil. This is not only to improve its environmental impact, but also to ameliorate the nutritional content of its food by reducing the levels of saturated fats in the products. It plans to gradually replace it with rapeseed oil instead.

Fast-food and home-delivery companies have been keen to emphasise their achievements in the domain. For example, McDonald’s has been stressing the fact that its innovative drink, Fruitizz, contains no added sugar, artificial colours or flavours, and also contributes to one of children’s 5-a-day. Subway’s London 2012 advertisement features the number of calories per sandwich to highlight how healthy they are. Pizza Hut’s website states, in text that stands out, that salad at the restaurant is free all day, every day. Businesses hope that this strategy will improve the reputation of the industry, as one which offers not just value and convenience, but also good quality and nutritious products.

ECONOMIC TRENDS

In addition to market trends, economic factors affect the fast-food and home-delivery industry in the UK. Table 1.1 summarises population levels and the state of the economy over the past 5 years. Population, gross domestic product (GDP), inflation, unemployment and household disposable income help to determine the state of the environment within which companies operate.

The population in the UK is growing exponentially. Between 2007 and 2011, it increased by 2.9% to 62.7 million. The rise is due to a combination of both immigration and natural births. A growing population is favourable for the fast-food and home-delivery industry, as it augments its potential consumer base. This is further boosted by the fact that the restaurants are considered to be family friendly with family deals and meals, play areas and toys for children.

The economic crisis struck the UK in 2008 at the start of the recession. In spite of Government efforts, the downturn is persisting. In 2011, GDP growth slowed, inflation increased and unemployment deteriorated by 2% to 1.53 million. Although household disposable income has risen year-on-year since 2007, consumers are facing their biggest spending squeeze since 1982, according to a Retail Economics article published on 25th October 2011. This is due to the simultaneous increase in food, living and energy costs in the UK.

Table 1.1: UK Economic Trends (000, £m, %, million and £), 2007 2011

2007 2008 2009 2010 2011 Resident Population Estimates (000) Mid-Years Female 31,068 31,244 31,418 31,619 31,833 Male 29,918 30,154 30,374 30,643 30,902

Total population 60,986 61,398 61,792 62,262 62,735 % change year-on-year - 0.7 0.6 0.8 0.8

Gross Domestic Product (£m) Current prices 1,412,119 1,440,931 1,401,863 1,466,569 1,516,153 % change year-on-year - 2.0 -2.7 4.6 3.4

Annual chain-linked GDP 1,474,153 1,459,885 1,401,863 1,427,087 1,437,909 % change year-on-year - -1.0 -4.0 1.8 0.8

Rate of Inflation (%) Inflation 4.3 4.0 -0.5 4.6 5.2 Percentage point change year-on-year - -0.3 -4.5 5.1 0.6

Actual Number of Unemployed Persons in the UK (million) Actual number of claimants 0.86 0.91 1.53 1.50 1.53 % change year-on-year - 5.8 68.1 -2.0 2.0

Table continues...

Table 1.1: UK Economic Trends (000, £m, %, million and £), 2007 2011

...table continued

2007 2008 2009 2010 2011 Household Disposable Income Per Capita (£) Household disposable income 14,305 14,733 15,109 15,619 16,042 % change year-on-year - 3.0 2.6 3.4 2.7 % change year-on-year - 3.0 2.4 3.1 1.9

GDP — gross domestic product Note: inflation is at retail price index (RPI); inflation data shown are annual average changes; claimant count measures the number of people claiming Jobseeker’s Allowance.

Source: Population Estimates for UK, England and Wales, Scotland and Northern Ireland — Population Estimates Timeseries 1971 to Current Year, December 2011/ National Population Projections, 2010-based projections/United Kingdom Economic Accounts, July 2012/Consumer Price Indices, July 2012/Labour Market Statistics, August 2012, National Statistics website © Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queen’s Printer for Scotland)

Hard times and tightened consumer purse strings have actually benefitted the fast-food and home-delivery industry. The ability of the restaurants to offer Britons good value has boosted sales and profit for companies in the market. This trend is evidenced by the fact that there is a growing number of fast-food and home-delivery venues in the UK. Still, the smaller businesses in the industry are more likely to be struggling with the tough climate and rising production and operational costs. As a result, chains are increasing their presence in the market, as they are better able to offer cheap deals and have the economic resources to weather the storm.

MARKET POSITION

The UK

The amount households spend on fast-food, takeaways and home-delivery meals represents approximately 13.3% of their overall expenditure on restaurants, cafés, canteens and other types of restaurants in the UK in 2011. The industry has increased its market share by 1.5 percentage points since 2007. These figures support the fact that Britons are increasingly opting to eat value fast food when dining out during the economic crisis, as well as choosing takeaways and home deliveries as convenient mealtime solutions, since they are hassle-free.

Table 1.2: The UK Fast-Food Market in Relation to Household Final Consumption Expenditure on Restaurants, Cafés, Canteens, etc. by Value (£m and %), 2007-2011

2007 2008 2009 2010 2011

Household expenditure on restaurants, cafés, canteens, etc. (£m) 73,003 73,991 70,778 75,363 77,577 Total fast-food, takeaway and home-delivery market (£m) 8,592 8,925 9,263 9,702 10,283 Fast-food, takeaway and home-delivery market as a % of household expenditure on restaurants, cafés, canteens, etc. 11.8 12.1 13.1 12.9 13.3

Note: figures are at current prices and are not seasonally adjusted.

Source: Consumer Trends Quarter 1 2012, National Statistics © Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

Overseas

The US and the UK were the two original markets for the fast-food and home-delivery industry. Although these markets remain important, they are becoming saturated with products and venues. Moreover, competition in these markets is intense.

However, fast-food and home-delivery chains are pinning their hopes for future growth on emerging economies, particularly the People’s Republic of China (PRC), as well as Latin America, the Middle East and Eastern Europe regions, in addition to France and Germany in the West. The fast-expanding middle class in newly industrialised states is driving a demand for fast-food and takeaways, as consumers want to spend their newfound wealth.

In spite of a general global demand for fast food, companies still have to modify their menus to suit local culture and preferences. For example, in Japan, McDonald’s sells Ebi Filet-O, which is made with shrimps, lettuce and a Thousand Island sauce in a steamed bun; while in Germany, the company sells Big Rösti, a beef patty with a crispy potato pancake, bacon, cheese and cheese sauce in a bacon-and-cheese bun. In India, Taco Bell sells a Fajita and Paneer Grilled Stuffed Burrito that comes with paneer, beans, rice, fajita, vegetables, cheese sauce, salsa and cheese. In France, Domino’s sells a Kebaba pizza, which is inspired by kebabs and includes jalapeños, crème fraiche and garlic, as well as a Savoyarde version that is made with crème fraiche , mozzarella, potatoes and Reblochon cheese.

2. Market Size

THE TOTAL MARKET

Key Note calculates that the fast-food, takeaway and home-delivery market is presently worth £10.28bn after growing by 6% in 2011. The industry has experienced year-on-year growth since 2007. Overall, its value has risen by 19.7% over the covered period. Moreover, with the exception of 2009, when the rate slowed by 0.1 percentage points, its momentum increased as the years went by. All subsectors increased in value during the time period.

Table 2.1: The Total UK Fast-Food, Takeaway and Home-Delivery Market by Sector by Value at Current Prices (£m at rsp), 2007-2011

2007 2008 2009 2010 2011

Sandwiches 2,678 2,800 2,903 3,045 3,217 Burgers 2,015 2,065 2,140 2,230 2,368 Pizza 1,020 1,055 1,090 1,124 1,192 Fish and chips 989 1,015 1,040 1,061 1,077 Chicken 590 625 660 700 749 Other fast-food/ takeaway outlets 1,300 1,365 1,430 1,542 1,680

Total 8,592 8,925 9,263 9,702 10,283 % change year-on-year - 3.9 3.8 4.7 6.0

rsp — retail selling prices

Source: Key Note

In spite of the economic crisis, the fast-food, takeaway and home-delivery industry has gained in value over the past 5 years. Furthermore, the market has actually benefitted from the downturn. Tighter purse strings mean that consumers are opting for good value when eating out. This has given fast-food restaurants an advantage over other types of restaurants.

According to a report by the British Hospitality Association (BHA) entitled British Hospitality: Trends & Developments 2011, the quick-service sector is the sole category to have experienced year-on-year growth since 2007. Consumers’ increasingly hectic lifestyles has also worked to the industry’s advantage, as customers opt for easy and hassle-free mealtime solutions by popping into fast-food joints and ordering takeaways and home deliveries. The market share of the different sectors, as estimated by Key Note, is depicted in Figure 2.1, below.

Figure 2.1: The Total UK Fast-Food, Takeaway and Home-Delivery Market by Sector Share (%), 2011

Other fast- food/takea way outlets 16.3% Sandwiches 31.3% Chicken 7.3%

Fish and chips 10.5%

Pizza 11.6% Burgers 23.0%

Source: Key Note

BY MARKET SECTOR

Sandwiches

The sandwiches sector is valued at £3.22bn after growing by 5.6% in 2011. In spite of this growth, the segment lost 0.1 percentage points from its market share over the course of the year. Still, it remains 0.1 percentage points above 2007 levels. Since 2007, the category has increased by 20.1%. Sandwiches represent the largest market share in the fast-food, takeaway and home-delivery market, accounting for almost a third of the market (31.3%).

Table 2.2: The UK Sandwiches Sector by Value at Current Prices (£m at rsp and %), 2007-2011

2007 2008 2009 2010 2011

Sandwiches 2,678 2,800 2,903 3,045 3,217 % change year-on-year - 4.6 3.7 4.9 5.6

Share of total fast-food, takeaway and home-delivery market (%) 31.2 31.4 31.3 31.4 31.3

rsp — retail selling prices

Source: Key Note

Sandwiches are popular with consumers. They are convenient and can be eaten on-the-go. Moreover, the rise of premium sandwiches with exciting fillings and made using alternative breads, such as wraps, has boosted sales in the category. Furthermore, sandwiches are perceived by consumers to be healthier than other products in the industry, including burgers and pizza, and are therefore more favourable among health-conscious consumers.

However, cash-strained consumers are finding ways to save money during the economic crisis. As a result, an increasing proportion of consumers are opting to make their own sandwiches at home, instead of purchasing them from outlets. The effect of this trend is evident in the slight fall in the category’s overall market share in 2011.

Burgers

The burgers category increased by 6.2% in 2011 to £2.37bn. Its growth rate has grown steadily every year since 2007, indicating the popularity of the sector. Nevertheless, its market share fell by 0.5 percentage points during the 5-year period. Key Note accredits the growing presence of alternative meals for its decline. Products, such as Burger King’s Sweet Chilli Chicken Wrap and Veggie Wrap, as well as McDonald’s Deli Choices range, are eating into the market share of the burgers sector.

Table 2.3: The UK Burgers Sector by Value at Current Prices (£m at rsp and %), 2007-2011

2007 2008 2009 2010 2011

Burgers 2,015 2,065 2,140 2,230 2,368 % change year-on-year - 2.5 3.6 4.2 6.2

Share of total fast-food, takeaway and home-delivery market (%) 23.5 23.1 23.1 23.0 23.0

rsp — retail selling prices

Source: Key Note

Burgers presently account for 23% of the total fast-food, takeaway and home-delivery market. McDonald’s, alone, is responsible for roughly half the burgers market in the UK. The days of the ordinary burgers are over. Chains are adding new ingredients or using replacements to differentiate their burgers from competitors. Examples include The M at McDonald’s, which has ingredients, such as Emmental cheese and a dressing, and is surrounded by a stone-baked Ciabatta-style roll instead of a bun; as well as Burger King’s Angus XT Ploughman’s, which comes with Irish cheddar and Red Leicester cheeses, in addition to a sweet vegetable pickle, white onions, iceberg lettuce, tomato and mayonnaise. These products additionally aim to add value to the category.

Pizza

In 2011, the pizza subsector rose by 6% to £1.19bn in the UK. Its growth rate nearly doubled compared to previous years. Since 2007, the category has increased its value by 16.9%. However, its market share has declined by 0.3 percentage points. As with burgers, Key Note attributes this to consumers’ expanding sensitivity to calories, fat and salt content in fast food. Still, its growth rate demonstrates that the products remain popular.

Table 2.4: The UK Pizza Sector by Value at Current Prices (£m at rsp and %), 2007-2011

2007 2008 2009 2010 2011

Pizza 1,020 1,055 1,090 1,124 1,192 % change year-on-year - 3.4 3.3 3.1 6.0

Share of total fast-food, takeaway and home-delivery market (%) 11.9 11.8 11.8 11.6 11.6

rsp — retail selling prices

Source: Key Note

With the financial strain of the economic crisis, pizzas are an economical solution for consumers, who are staying at home in an effort to save money. Whether they are relaxing or entertaining, consumers are ordering takeaway and home-delivery pizzas due to their convenience. Moreover, innovation in the category and the introduction of healthier and premium versions has helped to boost sales.

In order to compete with chilled and frozen pizzas sold in supermarkets, companies are utilising online and smartphone ordering services. This gives consumers the extra practicality of not having to take time out of their busy day to go to the store. Papa John’s allows customers to make orders via its online website, while Domino’s has been at the forefront of applications (‘apps’) in the fast-food, takeaway and home-delivery industry in the UK.

Fish and Chips

Fish and chips is the sole sector whose growth rate slowed in 2011. The category’s value rose by 1.5% to £1.08bn. Moreover, its market share has fallen more than any other sector in the market since 2007 — by 1 percentage point. Still, its value has increased by 8.9% during the covered period.

Table 2.5: The UK Fish and Chips Sector by Value at Current Prices (£m at rsp and %), 2007-2011

2007 2008 2009 2010 2011

Fish and chips 989 1,015 1,040 1,061 1,077 % change year-on-year - 2.6 2.5 2.0 1.5

Share of total-fast food, takeaway and home-delivery market (%) 11.5 11.4 11.2 10.9 10.5

rsp — retail selling prices

Source: Key Note

The fish and chips sector has suffered more than any other category in the fast-food, takeaway and home-delivery industry as a result of the economic crisis. Fish and chip shops have always benefitted from consumers’ nights out in the UK. Following an evening of drinking, dancing and socialising, it is common to stop by the ‘chippy’ on the way home for some food. However, consumers are now limiting the frequency of their outings and this has taken its toll on the sector. Moreover, many independent operators are present in the category. These smaller companies do not have the financial resources to juggle the downturn with rising operational costs and are being forced out of business.

Overfishing and EU quotas are increasing the value of fish in general, driving up fish and chips shop owners’ production costs. Sustainability has become a key issue in the fishing industry in the UK. In his plea to save fish and chips, His Royal Highness (HRH) the Prince of Wales is quoted in The Telegraph on 8th May 2012 as saying:

“The simple fact is that fish and chip shops rely on there being plenty more fish in the sea, and that is only going to be the case if we take care of fish stocks now and plan for them to be there long into the future. If their businesses are to remain viable in the long term, fisheries management, accompanied by sound science, really matters to them too.”

Although inevitable, sustainable fishing, however, is expensive and is hindering the sector’s value.

Chicken

Key Note estimates that the chicken sector grew by 7% to £749m in the UK in 2011. This growth reflects the popularity of the product among consumers in the UK. On 25th July 2012, the Daily Mail reported the findings of a study commissioned by Food Network UK, which found that chicken was the nation’s favourite food after bacon. Moreover, the category has increased its market share by 0.4 percentage points since 2007, following year-on-year growth. Overall, its value increased by 26.9% during the 5-year period.

Table 2.6: The UK Chicken Sector by Value at Current Prices (£m at rsp and %), 2007-2011

2007 2008 2009 2010 2011

Chicken 590 625 660 700 749 % change year-on-year - 5.9 5.6 6.1 7.0

Share of total fast-food, takeaway and home-delivery market (%) 6.9 7.0 7.1 7.2 7.3

rsp — retail selling prices

Source: Key Note

White meat is viewed as a better option compared to red meat in the UK, in terms of both fat and potential health concerns. This phenomenon has resulted in an influx in chicken-based products in the fast-food, takeaway and home-delivery market, as companies offer consumers alternative meals. Examples include McDonald’s Chicken Legend and Burger King’s Flamed Grilled Chicken Salad. Furthermore, Pizza Hut’s new Pizzetta lighter range features Chicken Delight but no red meat variants. The same is true for its Posh range.

Other Fast-Food and Takeaway Outlets

An array of restaurants are covered by the other fast-food and takeaway outlets category. In 2011, the sector increased by 8.9% to £1.68bn. Since 2007, the segment has increased its market share by 1.2 percentage points, more than any other sector in the industry. Consumers’ progressively adventurous palates for exotic cuisines and spicy foods is behind the success of the section in the UK. Types of foods that are in demand include sushi, Thai, Caribbean and Mexican meals. In addition, the rise of the breakfast occasion has also boosted sales. An increasing number of consumers are opting to eat breakfast on-the-go, as their hectic schedules mean that they no longer have time for leisurely breakfasts. Although they are limiting their spending due to the economic crisis, the demand for convenience has sustained sales in the category. Since 2007, the value of the other fast-food and takeaway outlets sector has risen by 29.2%. The sector now accounts for 16.3% of the total market.

Table 2.7: The UK Other Fast-Food and Takeaway Outlets Sector by Value at Current Prices (£m at rsp and %), 2007-2011

2007 2008 2009 2010 2011

Other fast-food/ takeaway outlets 1,300 1,365 1,430 1,542 1,680 % change year-on-year - 5.0 4.8 7.8 8.9

Share of total fast-food, takeaway and home-delivery market (%) 15.1 15.3 15.4 15.9 16.3

rsp — retail selling prices

Source: Key Note

3. Industry Background

RECENT HISTORY

In spite of the economic crisis, the fast-food and home-delivery industry has remained resilient in recent times. Moreover, it has actually benefitted from the downturn, as consumers are opting for good value over quality when they dine out. Furthermore, consumers lead increasingly hectic lifestyles and seek to buy convenient mealtime solutions, including fast food, when they are pressed for time or cannot be bothered to prepare and cook dinner.

In addition, companies have been responding to consumers’ growing health concerns by introducing lighter versions and healthier menu options, including salads and wraps. Still, evidence shows that, although consumers are concerned about calories and unnutritious ingredients, these factors only affect consumers’ fast-food choices in a minority of cases. Chains are also launching premium ranges in order to boost sales and increase market value. These two trends mark an attempt by the industry break away from the perception that fast food is unhealthy and that products are made using poor quality ingredients.

In spite of the industry’s overall success, small and independent operators are struggling to cope with the economic downturn. Fewer customers, fierce market competition and rising production and operational costs are forcing these companies out of business. The size of these enterprises means that they are unable to keep up with large businesses that dominate the market and which have the necessary resources to weather the storm by enhancing their presence in the UK, by offering consumers appealing deals and by engaging in marketing activity to promote their brands and products. As a result, the industry’s top companies — Greggs, Subway, McDonald’s, Kentucky Fried Chicken (KFC), Pizza Hut, Domino’s Pizza and Burger King — are increasing their presence at the expense of smaller businesses in the market.

NUMBER OF COMPANIES

In 2011, there were 61,365 companies engaged as restaurants and takeaways in the UK. This figure was down by 1% compared with 2010, reflecting tough market conditions, as a result of the economic crisis and fierce competition within the industry. The majority of restaurants and takeaways earn between £50,000 and £500,000 a year. The number of businesses with a turnover of £50,000 or less declined by 13.5% in 2011. This reflects the fact that smaller restaurants and takeaways are finding it difficult to survive the economic crisis. Still, the number of companies earning £1m or more increased by 2.1% over the course of the year. This figure reveals the buoyancy of the industry and reinforces the fact that companies are actually benefitting from the crisis.

Table 3.1: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants, Cafés and Takeaways by Turnover Sizeband (£000, number and %), 2010 and 2011

2010 2011 % of 2011 Total Turnover Sizeband (£000) 0-49 3,185 2,755 4.5 50-99 19,650 19,250 31.4 100-249 25,480 25,750 42.0 250-499 8,165 8,150 13.3 500-999 3,350 3,275 5.3 1,000-4,999 1,830 1,865 3.0 5,000+ 310 320 0.5

Total 61,970 61,365 100.0

Note: figures include licensed and unlicensed restaurants plus fast-food and takeaway outlets.

Source: UK Business: Activity, Size and Location 2010 and 2011, National Statistics website © Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queen’s Printer for Scotland)

EMPLOYMENT

The number of workers employed in the restaurant industry in the UK has fallen by 5.8% between 2007 and 2011. The figure grew until 2009, when it stalled and began to decline. In 2011, it fell by 6.2%, more than any other year during the time period. In total, 604,000 employees worked in the restaurant industry in 2011.

Table 3.2: Number of Employees in the Restaurant Industry in Great Britain (000), 2007-2011

2007 2008 2009 2010 2011

Employees 641 660 662 644 604 % change year-on-year - 3.0 0.3 -2.7 -6.2

Source: Employee Jobs by Industry, July 2012, National Statistics website © Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queen’s Printer for Scotland)

Key Note estimates that roughly one third of these workers were hired by fast-food companies. Based on their latest financial statements, the biggest employers in the industry are McDonald’s (39,296), Greggs (19,504) and Pizza Hut (16,247). However, it is important to note that the workers covered by these figures are solely the ones hired directly by the companies and excludes those who work under franchises.

Table 3.3 shows that the majority of enterprises engaged as restaurants and takeaways employ 4 workers or fewer (59%). Few companies employ 50 workers or more. This reflects the fact that businesses can boost profit by keeping operational costs, including labour forces, low. Moreover, the number of companies that employ 4 workers or fewer declined by 3.3% during the course of the year. This supports the fact that smaller enterprises are struggling within the market. The employee sizebands that recorded the highest rise in the number of restaurants and takeaways in 2011 were those which employed 50 to 99 workers (9.2%), 250 or more workers (6.7%) and those which employed 5 to 9 workers (4%).

Table 3.3: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants, Cafés and Takeaways by Employment Sizeband (number and %), 2010 and 2011

2010 2011 % of 2011 Total Number of Employees 0-4 37,415 36,180 59.0 5-9 15,315 15,925 26.0 10-19 5,955 5,970 9.7

Table continues...

Table 3.3: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants, Cafés and Takeaways by Employment Sizeband (number and %), 2010 and 2011

...table continued

2010 2011 % of 2011 Total

20-49 2,405 2,375 3.9 50-99 490 535 0.9 100-249 240 220 0.4 250+ 150 160 0.3

Total 61,970 61,365 †100.0

† — does not sum due to rounding Note: figures include licensed and unlicensed restaurants plus fast-food and takeaway outlets.

REGIONAL VARIATIONS IN THE MARKETPLACE

There are more restaurants and takeaways in London than any other region in the UK, with the region accounting for 18.3% of such companies in 2011, the equivalent of 11,205 firms. This reflects the fact that more people live in the metropolis than elsewhere in the UK. After London, there are more businesses in the South East (13.3%), followed by the North West (9.6%). In 2011, the regions with the fewest restaurants and takeaways were Northern Ireland and the North East, with these regions accounting for 3.4% and 3.5% of all enterprises involved in the industry in the UK, respectively.

Table 3.4: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants, Cafés and Takeaways by Government Office Region (number and %), 2011

2011 % of Total Government Office Region North East 2,120 3.5 North West 5,900 9.6 Yorkshire and Humberside 4,445 7.2 East Midlands 3,585 5.8 West Midlands 4,500 7.3 East 5,380 8.8 Greater London 11,205 18.3 South East 8,175 13.3 South West 5,595 9.1 Wales 2,880 4.7 Scotland 5,490 8.9 Northern Ireland 2,090 3.4

Total 61,365 †100.0

† — does not sum due to rounding at source Note: figures include licensed and unlicensed restaurants plus fast-food and takeaway outlets.

Source: UK Business: Activity, Size and Location 2011, National Statistics website © Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queen’s Printer for Scotland)

Table 3.5 shows that the majority of adult consumers in the UK ate fast food or takeaways in the 12 months ending March 2012. However, consumers in all regions are more likely to have eaten take-away foods than having eaten in a fast-food restaurant during the time period. The difference between the two categories is 24 percentage points. Those living in Greater London are more likely to have purchased food in these outlets than other residents in the UK (80.1% and 60.4%, respectively), followed by those in East Anglia (79.4% and 59.2%). Consumers who live in the North West are the least likely to have eaten takeaway and fast foods in the year to March 2012 (76.8% and 53.7%, respectively). Those in the West Midlands were the least likely to have eaten fast food in a restaurant during the same time period (49%).

Table 3.5: Adults Who Have Eaten Takeaway Foods and Adults Who Have Eaten Fast Foods in Outlets in the Last 12 Months by Region (% of adults), 2012

Takeaway Foods Fast Foods (Eat-In)

All adults 77.9 53.9

Scotland 77.4 54.1 North West 76.8 53.7 North 77.5 52.9 Yorkshire Humberside 77.6 49.8 East Midlands 78.7 54.0 East Anglia 79.4 59.2 South East 78.5 56.1 Greater London 80.1 60.4 South West 77.1 49.8 Wales 74.2 49.2 West Midlands 77.2 49.0

Source: Target Group Index (TGI) © Kantar Media, Quarter 3 (April 2011-March 2012) 2012

DISTRIBUTION

There are more sandwich shops than any other type of fast-food and takeaway outlet in the UK. Moreover, in 2011, Greggs overtook Subway in terms of venues. It now owns 1,600 bakeries across the UK, 200 more premises than its competitor. Burger King trails behind McDonald’s when it comes to restaurant count in the UK. There are more than twice as many McDonald’s outlets than those of Burger Kings.

Although the company has struggled in recent times, there are still more Pizza Huts than any other pizza restaurant in the UK. Still, Domino’s Pizza narrowed the gap between the companies over the course of 2011 and is likely to surpass its rival in 2012. The number of Pizza Perfect venues has declined by 37.5% during the equivalent period, further demonstrating the difficulties being experienced by smaller companies in the industry in the UK. With Subway, it is the only major chain to have declined in terms of the number of venues in 2011.

Table 3.6: Selected UK Fast-Food and Takeaway Chains by Sector and Estimated Number of Outlets, 2011

Number of Outlets Sandwiches Greggs 1,600 Subway† 1,400

Burgers McDonald’s 1,200 Burger King 500

Pizza Pizza Hut 700 Domino’s Pizza 690 Papa John’s 120 Perfect Pizza 80

Chicken KFC† 800

† — includes the Republic of Ireland KFC — Kentucky Fried Chicken

Source: Key Note

HOW ROBUST IS THE MARKET?

The majority of restaurants and takeaways are well-established in the UK. Not only are chains recognised nationwide, but Table 3.7 shows that the majority of companies are 4 years old or more (64.3%), resulting in strong foundations in the industry. Restaurants and takeaways presently account for 2.9% of all businesses in the UK.

Table 3.7: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as Restaurants and Takeaways by Age of Business (number and %), 2011

Number of % of All Outlets % of Total Industries

Less than 2 years 11,585 18.9 3.8 2 to 3 years 10,300 16.8 3.8 4 to 9 years 21,190 34.5 3.7 10 or more years 18,290 29.8 2.0

Total 61,365 100.0 2.9

Note: figures include licensed and unlicensed restaurants plus fast-food and takeaway outlets.

The fast-food and home deliveries market is robust. In spite of health concerns associated with the industry, demand and sales remain strong. The industry has continued to grow in spite of the economic crisis, demonstrating its strong roots and resilience. Moreover, in spite of the downturn, entrepreneurs have continued to invest in the market, as this type of business accounts for a larger percentage of all enterprises that are 3 years old and under in the UK than the industry’s overall average in the economy. This means that companies have recently opened restaurants and takeaways, demonstrating their faith in the industry for now and in the future.

LEGISLATION

Companies in the fast-food and home-delivery industry must abide by a number of laws in the UK that regulate different issues, including health and safety, product quality and employment laws. The primary document is the Food Safety Act 1990, which holds companies responsible if their products are injurious to consumers’ health. It additionally states that it is illegal to inaccurately describe or present food that misleads consumers in terms of the nature, substance and quality of food.

In 2012, the Government amended the Food Hygiene Regulations (England) 2006, with effect from 30th July 2012. The law was updated to comply with article 9 of Regulation (EC) No. 178/2002, which lays down procedures in matters of food safety. Other laws that apply to the industry include EU Working Time Directive; National Minimum Wage; Immigration, Asylum and Nationality Act 2006; and Waste Controls (England and Wales) Regulation 2009. These aim to protect both customers and employees by detailing specific requirements and holding companies accountable, as well as providing a framework for businesses to follow.

KEY TRADE ASSOCIATIONS

British Hospitality Association

The British Hospitality Association (BHA) is the leading representative organisation in the hospitality industry in the UK. Members include fast-food and home-delivery companies, as well as hotels, foodservice providers and other types of restaurants. The Association acts on behalf of the industry and deals with the Government, as well as other associations and organisations. In 2010, the BHA identified five key issues at its core: economy, employment, intelligent regulation, sustainability and health.

Hotels, Restaurants and Cafés in Europe

Hotels, Restaurants and Cafés in Europe (HOTREC) is an umbrella association that unites national trade associations in the hospitality industry within the EU. HOTREC speaks and acts on behalf of the overall business vis-à-vis the EU institutions. It is registered under Belgian law as a non-profit organisation. According to its website, its primary objectives are: ‘the promotion and defence of the interests of the hospitality industry towards the EU institutions’ and ‘the enhancement of the cooperation between the national hospitality associations.’ Its main task is to monitor and analyse the effect of policy development, at EU level, on the hospitality industry within the community.

The Pizza, Pasta and Italian Food Association

The Pizza, Pasta and Italian Food Association (PAPA) is the only formal trade body that represents the general pizza, pasta and Italian food and drink industry in the UK. It undertakes various commercial activities on behalf of its members under the name J&M Group Ltd. This company is solely liable for the management and financial administration of the business. In addition, PAPA offers its members specialist advice based on their particular problems and organises support activities to boost their businesses. Finally, it keeps members informed about changes in legislation and other issues that could potentially affect the industry.

4. Competitor Analysis

THE MARKETPLACE

The fast-foods and home-delivery industry is highly competitive. It is dominated by chains, although independent operators do exist. The latter have struggled in recent times as a result of the economic crisis, rising commodity prices and pressure from other companies in the market. Still, overall, the industry has remained resilient as restaurants offer good value for cash-strapped consumers.

The market can be separated into three principle categories:

• multinational brand and outlet operators, e.g. Burger King, Kentucky Fried Chicken (KFC) and Pizza Hut

• national brand and outlet operators, such as Greggs

• small local brands or unbranded operators, including fish and chips shops.

Subway is the biggest fast-food and home-delivery franchise in the UK, followed by McDonald’s. It operates roughly 1,400 outlets across the country. Most chains in the fast-food and home-delivery industry operate using the franchise system.

MARKET LEADERS

Burger King (UK) Ltd

Company Structure

Burger King Ltd is the UK subsidiary of the global fast-food chain Burger King Worldwide. The US enterprise was founded in 1953 under the name Insta-Burger King. In 2010, the Burger King franchise was purchased for $3.26bn (£2.1bn) by 3G Capital, a private-equity firm backed by three of Brazil’s leading businessmen. In June 2012, the company merged with Justice Holdings Ltd, a London investment firm, in order to create a single Delaware-based holding company following a deal made that April. The business is trading on the New York Stock Exchange (NYSE) under the name Burger King Worldwide. The fast-food chain is most famous for its Whopper burger.

Overall, Burger King has approximately 12,700 restaurants dispersed across 73 countries. The majority of these are privately owned and operate under company licences through franchise agreements. The first Burger King in the UK was opened in Coventry Street, London, in 1977. With over 500 outlets, it is the UK’s second-largest burger brand after McDonald’s.

Current and Future Developments

In March 2012, the fast-food chain debuted Lamb Flatbread burgers in the UK, for a limited time only, to coincide with Easter. The burgers were served on a rosemary flatbread and topped with spices, salad, chilli ketchup and mint yoghurt sauce. The launch was supported by a marketing campaign with the slogan ‘Hungry like the wolf?’. In its press release, Burger King Ltd’s Marketing Director UK, Jo Blundell, commented:

“The launch of the Lamb Flatbread is a really exciting moment for the Burger King Ltd brand. Not only does this prove that we are continuously leading the way when it comes to product innovation, it also underscores our commitment to premium and fresh food.”

In April 2012, Burger King introduced a new customer feedback tool in 489 outlets in the UK. Guest Trac was developed by customer insight agency SMG and assesses food quality, cleanliness and speed of service. Consumers were asked to follow the instructions printed on the back of their Burger King receipts and fill out a web-based survey. They were given free fries and drinks for their participation. This reflects the company’s commitment to ameliorating customer experience in an attempt to revive the fast-food chain and increase sales.

To celebrate the Queen’s Diamond Jubilee, Burger King rolled out its Coronation Chicken Royale on 1st June 2012. The product consists of a 100% chicken breast coated and cooked in crumbs in a toasted sesame-seeded bun and is a variation of the Burger King classic. It comes with iceberg lettuce and is topped with a curry-style sauce. The addition is a first of a series for its temporary British-inspired summer menu that seeks to capitalise on the UK’s major events during the season. Other additions include a fish finger sandwich, ploughman’s burger, and jelly and ice cream. The menu is called ‘Summer is Served’.

In June, Burger King began introducing Coke’s Freestyle drink dispensing system to selected restaurants in the UK, following an endorsement in December. The touch-screen machines allow consumers to select one of Coca-Cola’s soft drink brands, such as Sprite or Fanta, and mix it with an array of new flavours including cherry, vanilla, raspberry and peach. They were designed in collaboration with the Italian automotive company Pininfarina and have already proven successful in the US. Their introduction in Burger King outlets is a trial run and will test consumer reaction to the innovation in the UK.

Financial Results

Burger King (UK) Ltd has been struggling to cope with falling sales in recent times. In its latest financial report, covering the year ending 30th June 2010, the company reported a decline in sales of 17.5% to £7.1m. Since 2007, this figure has shrunk by 26.8%. Profit dropped by 15.9% during the equivalent period. In 2010, however, it rose by 20.9% to £491m. It is important to note that only restaurants run directly by the company (roughly 10% of outlets) are covered by these figures, due to the nature of Burger King’s franchising system.

On 1st August 2012, Burger King Corporation published a press release reporting a total rise in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of 29% to $585m for the year ending 31st December 2011.

Domino’s Pizza Group PLC

Company Structure

Domino’s Pizza UK & Ireland Ltd changed its name to Domino’s Pizza Group PLC on 1st May 2012. The business consists of restaurants in the UK and the Republic of Ireland and, since April 2011, Germany’s 6 outlets. As of 25th March 2012, Domino’s Pizza had 732 stores in the three countries combined. The company is listed on the London Stock Exchange (LSE). Domino’s Pizza Group PLC is part of Domino’s Pizza, Incorporated, a global enterprise that is headquartered in Ann Arbor, Michigan, in the US. The original Domino’s Pizza was established in 1960 and is now made up of more than 9,700 corporate and franchised restaurants in 70 countries.

The first Domino’s Pizza in the UK was opened in 1985 in Luton. It has grown to become the leading pizza home-delivery and takeaway company in the country. Over 90% of its restaurants in the UK are franchised. Domino’s Pizza employs more than 21,000 workers in both the UK and the Republic of Ireland.

Current and Future Developments

As part of its strategy to focus on quality, Domino’s Pizza introduced a Gourmet range in August 2011. The three-strong range is made with a thin crust base and variants are topped with a sundried tomato and garlic sauce, as well as 100% mozzarella cheese. The first pizza is made using chicken breast strips, naturally smoked bacon rashers, baby spinach and sun-blushed baby plum tomatoes. The second consists of Ventricina salami, pepperoni and Peruvian roquito peppers. Greek feta cheese, baby spinach and sun-blushed baby plum tomatoes make up the third pizza. A fourth version was introduced in October 2011: Quattro Fromaggio. It combines mozzarella, Greek feta cheese, Bavarian Blue and Gran Moravia cheeses.

October also saw the release of the Meatilicious pizza by Domino’s. It is made with pepperoni, ham, chicken breast strips, smoked bacon rashers and Cumberland sausage. The sauce uses vine-ripened tomatoes and the cheese is 100% mozzarella. A crust which is stuffed with mozzarella cheese, garlic and herbs was additionally introduced.

In February 2012, Domino’s Pizza introduced two new products. The first is Saucy BBQ Crust, which is made like Domino’s other stuffed crusts, with mozzarella cheese, garlic and herbs, as well as Domino’s classic Texas BBQ sauce. The second is a spicy side order: Boneless Ribs. These are also served with a BBQ dip.

In June 2012, Domino’s unrolled a Mexico pizza range in the UK. It is available in chicken, beef and vegetarian flavours. The meat variants include chorizo, red and green chillies, tomatoes, onions, a vine-ripened tomato sauce and 100% mozzarella cheese. Instead of chorizo, the vegetarian option comes with sweetcorn and spinach. All three versions are topped with a drizzle of cool sour cream. Consumers can also opt for the Mexicano Stuffed Crust, which is filled with green and red chillies, mozzarella and garlic and herbs. In its press release on 21st June 2012, Domino’s Sales and Marketing Director Simon Wallis commented: ‘We wanted to inject a bit of Mexican sunshine and bring a bit of heat to pizza lovers.’ He added: ‘There is a strong trend for Mexican food at the moment.’

Financial Results

In the year ending 25th December 2011, Domino’s Pizza Group PLC recorded a turnover of £209.9m, an increase of 11.5% on the £188.1m generated in the previous year. The company’s pre-tax profit also increased, rising by 10.2% to £38.8m in 2011.

Greggs PLC

Company Structure

Greggs PLC traces its roots back to the 1930s when John Gregg began delivering eggs and yeast on his pushbike to homes in Newcastle Upon Tyne. The first bakery was opened in 1951. The business grew in 1970s with the acquisition of regional bakery retailers across the UK. By 1984, the company, which by now had 260 shops scattered throughout the country, was listed on the LSE. Nowadays, Greggs owns almost 1,600 branches in the UK and is continuing to expand. Products, which include sandwiches, pastries and pasties, are baked in local bakeries. Greggs is the largest specialist retail bakery chain and the biggest food chain in terms of number of stores in the UK. It is classified under the takeaway outlets category.

Current and Future Developments

In September 2011, the company opened its first coffee shop, Greggs Moment, in its hometown of Newcastle. Unlike at its bakeries, consumers will be able to decide their own sandwich fillings and can choose from a variety of breads, including focaccias, paninis and wraps, in the café. Other products include a range of Gourmet Square Pies, porridge, and yoghurt and fruit. Moreover, the concept has a darker colour scheme and a new coffee cup logo and targets the premium market, while still offering good value. Outdoor seating and free Wi-Fi is available in store. If the trial shop is successful, Greggs plans to open other outlets across the UK.

In October, Greggs signed a deal with Moto Hospitality to open shops in motorway service stations. The Grocer revealed the company’s plans to open two trial shops on the M6 near Lymm in Cheshire in December in an article on 19th October 2011. If the pilot is successful, a further 30 stores will be added to the Moto network. These outlets will charge slightly more than Greggs bakeries on the high street.

In July 2012, Greggs opened a new concept store: Greggs the Bakery. The pilot site was opened in Newcastle, not far from where the original bakery was founded in the 1951. The shop carries 75 new lines, including rustic bread loaves, a new range of cakes, giant cupcakes, deli-style sandwiches and pizzas. The company’s Chief Executive Officer (CEO), Ken McMeikan, commented in an article published by The Grocer on 30th June 2012: ‘Our latest concept shop showcases Greggs’ bakery credentials, and gives customers a traditional bakery shopping experience’.

In August, it was revealed that Greggs’ frozen retail products would only be available in branches of the supermarket retailer Iceland, at least until April 2013. Since its launch in July 2011, the sales of Greggs’ ‘at home’ range have far exceeded its expectations to the company’s delight, according to McMeikan on 11th August 2012 in The Grocer. The range originally consisted of nine products, including its famous sausage rolls. By April 2012, the company planned to extend the collection with eight new lines, as a result of its success. Additions include a dessert range, chicken bakes and cheese and onion pasties.

Financial Results

Greggs PLC reported a rise in sales by 5.9% to £701.1m for the financial year ending 31st December 2011. The company’s sales have risen by 11.6% since 2008. Pre-tax profit rose by 15.2% during the 52 weeks. However, like-for-like sales fell by 2.3% in the first half of 2012 reported, The Guardian on 7th August 2012. Moreover, Greggs’ pre-tax profit dropped by 4.6% to £16.5m. It blamed poor weather for the results.

Kentucky Fried Chicken (GB) Ltd

Company Structure

Kentucky Fried Chicken (GB) Ltd is part of the global fast-food chain that is based in Louisville, Kentucky, in the US. The business dates back to 1930 when Harland Sanders began selling fried chicken from his roadside restaurant in Corbin, Kentucky. Although the company was sold to investors in 1964, Sanders continues to represent the brand and is referred to the as ‘The Colonel’. In 1971, KFC was sold to Heublein, a US producer and distributor of food and alcoholic beverages, which was, in turn, acquired by RJ Reynolds, a tobacco company, in 1982. In 1986, KFC was purchased by PepsiCo for $850m. It continues to be owned by the corporation, under its restaurants division, which changed its name from Tricon Global Restaurants to Yum! Brands in 2002. As a result, the fast-food chain is a subsidiary of one of the largest restaurant companies in the world.

In 1952, the first KFC franchise was opened in Utah. Since then, the company has continued to grow and expand both nationally and overseas. As of December 2011, KFC boasted 17,000 outlets in 105 countries and territories. Its two major markets are the US and the People’s Republic of China (PRC). The first overseas franchise was set up in England in 1964. KFC was the first US fast-food chain to reach the country’s shores. There are now more than 800 restaurants dispersed across the UK and the Republic of Ireland, employing 23,000 workers. Restaurant ownership in the UK is split 40% equity and 60% franchised. According to a Daily Mail article on 1st October 2011, the most popular KFC products in the UK are the mini fillet burger (with annual sales of over 19 billion), the snack box popcorn chicken (14 million) and the boneless meal for one (over 12 million).

Current and Future Developments

In May 2012, KFC partnered up with Levi Roots in the UK to launch the Reggae Reggae Box Meal for a limited time only. The meal consists of a fillet burger with Reggae Reggae sauce and is accompanied by fries, a drink, a side and a dipping sauce. The innovation was supported by a marketing campaign.

On 4th June 2012, KFC released the Colonel’s autobiography, which is also a cookbook. Said to have been written in 1966 and discovered in November 2011, the book is available for free and can be downloaded via Facebook. It is titled Colonel Harland Sanders: The Autobiography of the Original Celebrity Chef. The book consists of 33 never-before-seen recipes, including The Colonel’s Special Omelette and Upside-Down Peach Cobblier, as well as stories of his life.

In July 2012, KFC began to offer a BA honours degree in business management, in conjunction with De Montfort University Leicester. On 23rd July 2012, The Guardian reported that the fast-food chain had invested £600,000 to fund half of the 3-year degree for 60 restaurant managers over the next 5 years. Students will continue to work full time for the company when they commence classes in January 2013. In the article, Martin Shuker, Managing Director of KFC UK & Ireland, commented:

“KFC degrees give us an opportunity to reward some of our best performers, who never had the chance to go to university when they were younger. Our employees gain a meaningful and respected qualification while still earning money, and we reap the benefits of their improved skills and confidence in the business.”

The company has already set up two levels of apprenticeships with City & Guilds.

Financial Results

Kentucky Fried Chicken (GB) Ltd registered a rise in sales by 3.1% to £371.2m for the 52 weeks ending 28th November 2010. However, its pre-tax profit fell by 8.6% to £38.4m. In 2011, Yum! Brands reported a rise in sales by 11% to $10.89bn (approximately £6.94bn). Its net income increased by 14% to $1.32bn (roughly £841.3m).

McDonald’s Restaurants Ltd

Company Structure

McDonald’s Restaurants Ltd is the British subsidiary of the McDonald’s Corporation. The US fast-food chain specialises in hamburgers. The company was founded in 1940 by Richard and Maurice McDonald as a barbecue restaurant in San Bernardino, California. The business was reorganised using the production line principles in 1948, under the ‘Speedee Service System’, as was already being done by the White Castle hamburger chain. Ronald McDonald was trademarked in the US in1967, while the current double-arched ‘M’ symbol logo was trademarked the following year.

McDonald’s now operates over 31,000 restaurants worldwide, employing 1.5 million workers across the globe. Roughly 15% of restaurants are owned by the corporation itself. The remaining outlets are operated by franchisees and via joint ventures with affiliates. In the UK, approximately 65% of the 1,200 McDonald’s are franchises. The company employs 87,500 workers at the national level.

Current and Future Developments

In September 2011, McDonald’s disclosed plans to provide calorie information on its menu boards, as part of the Government’s Public Health Responsibility Deal, with effect from 7th September 2011. The decision follows a pilot in 125 restaurants, customer interviews and the use of eye-tracking technology to observe how consumers absorb menu information when choosing food and placing an order. On the meal boards, calorie boxes are now featured next to products’ names, alongside their picture, to help consumers make a clear and conscious choice when selecting their food.

On 26th January 2012, Popsop reported that McDonald’s had unveiled a new concept restaurant design in the UK with a focus on children. Milton Keynes has been chosen as the trial site. If successful, the new visual approach, which includes the latest technology facilities, will be rolled out across in all McDonald’s venues in the country. In addition to the chain’s usual children’s eating area and menu, iPads, digitally projected games, children’s play areas and mini climbing walls will be introduced. The articled quoted a spokesperson for the company, who said:

“…this restaurant is only a pilot. It represents the evolution of the eating-out experience for the family, which is very important to us as we are a very family-oriented organization.”

McDonald’s announced a partnership with the book publisher HarperCollins, also in January, to hand out Mudpuddle Farm books by Michael Morpurgo as part of its Happy Meals for children. The companies agreed to give away around 9 million books, which were accompanied by finger puppets to help parents animate the story. The promotion aimed to encourage parents to read to their children. The books were available between 11th January and 7th February 2012.

In May 2012, the company launched a new fizzy drink for kids. Fruitizz contains one portion of fruit, no added sugars and is free from artificial colours or flavours. It blends fruit juice concentrates from grapes, apples and raspberries with natural sparkling water. McDonald’s hopes to increase its health credentials by portraying the drink as a healthier, more nutritious solution than other fizzy drinks, such as Coca-Cola.

McDonald’s was the official restaurant of the London 2012 Olympic and Paralympic Games. In addition to sponsoring the event, the fast-food chain built the largest restaurant ever, though it was only available for 6 weeks. It was one of four McDonald’s at the Olympic Park. The venue had the capacity to seat up to 1,500 customers as reported The Guardian on 25th June 2012. Only two venues were for public use, the others were located in the Athletes’ Village and in the Media Centre, respectively. Once the Games were over, the sustainable buildings took approximately 4 weeks to dismantle. Parts of the restaurants, including highchairs, air conditioning units and bulbs, will be reused by other McDonald’s in the UK; while other items, including those made from plastic, will be recycled. Roughly 75% of the outlets will be either reused or recycled. The company plans to remain a top-level Olympic sponsor until at least the 2020 Summer Games.

Financial Results

For the financial year ending 31st December 2010, McDonald’s Restaurants Ltd reported a rise in sales by 4.8% to £1.18bn. Its pre-tax profit increased by 37.9% to £157.2m. According to The Telegraph on 24th January 2012, the overall corporation hit a record turnover in 2011 of $24bn (£17.19bn). This marks the ninth consecutive year that sales have increased for the company.

Pizza Hut (UK) Ltd

Company Structure

Pizza Hut (UK) Ltd is part of Pizza Hut Inc, a US restaurant chain that also offers takeaway and delivery services. The company is a subsidiary of Yum! Brands Inc, the restaurant division of PepsiCo Inc. The first Pizza Hut was opened in1958 in Wichita, Kansas, by Frank and Dan Carney. In 1977, it was acquired by PepsiCo. 15 years after it first opened, the company went international with restaurants in Japan and Canada, as well as in Islington, London. There are nearly 700 venues in the UK. Roughly 22% are franchises. In total, Pizza Hut owns over 13,000 restaurants in 97 countries worldwide. Approximately 15% are company-operated. The company is now headquartered in Plano, Texas.

Current and Future Developments

Pizza Hut has struggled in the UK in recent times. The company’s Marketing Director of Brand Development, Jaclyn Schnau, admitted this in a Marketing Week article on 19th August 2011. She commented:

“We haven’t kept up with the times. We put the blinders on and said ’customers will still come’ and you know what, they didn’t. We had some real soul searching to do and fundamentally we’ve realised that we have to move from a product-based to an experience-based offer.”

As a result, in August 2011, Pizza Hut announced that it would be overhauling its business in the UK, trialling a number of initiatives, including four ‘Alpha Hut’ concept stores. These are inspired by upmarket Argentinean restaurants, where waiters bring trays to customers’ tables, instead of having to get up and go to the buffet themselves in order to collect food. If the trial is successful, the company will roll out the concept nationwide at some point this year.

Pizza Hut first began stuffing its crust in 1995. In April 2012, the Hot Dog Crust was introduced for a limited time only. It came with a free mustard drizzle and was only available for its largest pizza size. In June, the company brought out the Crown Crust pizza in the UK to celebrate the Queen’s Diamond Jubilee. This crust is stuffed with burgers. Its famous Stuffed Crust is now available for smaller 11-inch pizzas, in addition to the original 14-inch format.

The company now offers consumers unlimited access to its salad bar and has recently unveiled a new menu. The former responds to consumers’ growing health awareness, while the latter aims to improve the quality credentials of the pizza restaurant chain, as well as tapping into the trend for healthier products. The Pizzetta range is a lighter option (under 500 calories) that it is served with rocket and tomatoes. Variants include Shrimply Delicious, which is made with king prawns, fresh spinach, mozzarella cheese and mixed peppers, and Virtuous Veg, which combines fresh spinach, mixed peppers, red onion, mushrooms and cherry tomatoes. Pizza Hut has additionally developed a Posh range. Pizzas include Creamy Blue, which is made using blue cheese, mozzarella and sliced mushrooms on a Béchamel base and with a sweet balsamic drizzle. Other products added to its menu include Salmon Pasta Bake, Classic Lasagne, two new pizzas — the BBQ Meat Feast and Country Classic — starters and a dessert. Calorie information is provided alongside the menu.

Financial Results

Sales for Pizza Hut (UK) Ltd fell by 4.4% for the 53-week period ending 4th December 2011 to £331m. This figure has fluctuated in recent times. The company has reported a pre-tax loss throughout the period. In 2011, it deteriorated further to a loss of £24.2m.

Select Service Partner UK Ltd

Company Structure

Select Service Partner UK Ltd (SSP Ltd) owns, operates and franchises food, beverage and other concessions at airports and railway stations. It operates in over 30 countries worldwide. Its brands in the UK include Caffè Ritazza, Upper Crust and Camden Food Company. Brands that are licensed to the company include Starbucks, Costa Coffee and Ben & Jerry’s. The company has been owned by EQT IV, a European private-equity group, since 2006.

Current and Future Developments

In February 2012, it was revealed that London City Airport had opened a new customer experience initiative in conjunction with SSP, its catering partner, and The Food Travel Experts. Customers can now partake in weekly wine tasting sessions, every Wednesday, with wine sommeliers who can offer advice, as well as knowledge on bottles’ origins and consistency. A dedicated website has additionally been created, enabling passengers to order the wines they tasted at the Airport, which are then delivered to their homes.

On 27th July 2012, it was announced that SSP would run an additional seven Starbucks coffee shops across the UK in different airports. Three will be opened at Heathrow, two at Glasgow Airport, one at Belfast International and one in Manchester. The new stores are expected to add a total of £10m to SSP’s sales annually.

Financial Results

For its financial year ending 30th September 2011, SSP Group, to which SSP Ltd belongs, reported a rise in sales by 5.7% to £1.72bn.

Subway Realty Ltd

Company Structure

Subway Realty Ltd is the UK branch of the US sandwich and salad franchise, Subway. Subway is the trading name under which Doctor’s Associates Inc, which is owned by Subway’s founders Fred DeLuca and Peter Buck, operates. The business dates back to 1965 in Bridgeport, Connecticut. In March 2011, Subway overtook McDonald’s as the world’s biggest restaurant chain, with 33,749 outlets in 95 countries. After opening three outlets, Subway began to operate its first franchise in 1974. The first Subway in the UK was established in Brighton in 1996. The chain operates over 1,400 outlets in the UK and the Republic of Ireland. The UK is Subway’s largest market after the US.

Current and Future Developments

In January 2012, John DeLuca announced the company’s ambition to create 600 new Subway outlets in the UK and the Republic of Ireland by 2015. If successful, there will be 2,000 restaurants dispersed across both countries.

In July 2012, it was revealed that Subway was in talks with Parrs Wood High School to open a concession at its Sixth Form College in Didsbury, Greater Manchester, where 370 students study. On 17th July 2012, The Telegraph quoted the school’s head teacher, Andy Shakos, who said: “At the moment we are at an early stage... Subway is one of the possibilities we are looking at.”

Subway has plans to treble its number of stores in the UK in the future. It hopes to achieve this by establishing shops in non-conventional places. This includes cinemas, hotels, convenience stores and railway stations. The flexibility of its business format and the minimal amount of space Subway requires to open an outlet gives the company the ability to achieve this ambition.

Financial Results

For the year ending 31st December 2011, sales for Subway Realty Ltd increased by 1.3% to £26.6m. Similarly, pre-tax profit rose by 3.5% to £1.5m.

Other Companies

Gondola Group Ltd

The Gondola Group consists of Zizzi, ASK, Pizza Express, Kettner’s and Byron, which are all casual dining restaurant chains in the UK. With over 650 venues, the company employs roughly 15,000 workers domestically. In 2011, sales for the combined business rose by 4.5% to £569.5m.

Papa John’s GB Ltd

Papa John’s GB Ltd is a subsidiary of the US’ third-largest takeaway and delivery pizza restaurant. Its slogan is ‘Better Ingredients. Better Pizza’. There are over 120 Papa John’s on the high street in the UK. In July 2011, the company revealed plans to increase the figure to 500 over the following 4 years.

Perfect Pizza Ltd

Perfect Pizza Ltd is a British company that was founded 30 years ago. In 2006, Smartfirst Ltd purchased the company from Papa John’s UK. Smartfirst had been newly formed by Papa John’s UK former MD, Tony Sherriff. The sale was backed by Octopus Asset Management and the Royal Bank of Scotland (RBS) PLC. The enterprise specialises in online pizza delivery and takeaway services. The business consists of more than 80 stores nationwide. It operates using a franchise system.

Spudulike Group Ltd

Spudulike is a fast-food franchise that was established in Edinburgh in 1974. It started off as a takeaway but has grown to include in-store seating. As its name indicates, its products are baked potatoes with various fillings, including chicken tikka, chilli con carne and prawn cocktail. The company is owned by the British School of Motoring (BSM).

Wagamama Ltd

Wagamama is a restaurant chain that offers takeaway services, specialising in pan-fried Asian food. The first venue was opened in 1992. It is owned by management and venture capital investors Duke Street Capital and Hutton Collins. It operates under a franchise system.

OUTSIDE SUPPLIERS

Fast-food and home-delivery businesses rely on a network of outside suppliers to function properly. Poultry, meat, bakery and fruit and vegetables suppliers; equipment and packaging suppliers; logistics and transport companies; marketing agencies; and decorators and designers all play a critical role in the industry. Efficiency is key throughout the process in order to be effective and guarantee the consumption of quality food and drinks by customers.

Due to pressures from the public, media and organisations, chains in the industry are increasingly supplying their foods both ethically and domestically. In April 2012, Burger King became the first major fast-food chain to pledge that its eggs and pork would come from cage-free animals by 2017. In June 2011, KFC upped its environmental and animal welfare credentials by becoming the first fast-food chain in the UK to gain Red Tractor certification for its on-the-bone chicken. Moreover, the logo guarantees that the poultry is sourced in the UK. McDonald’s also agreed to buy more than 30,000 tonnes of chicken from British farmers for its four venues at the Olympic Park during the Games, following a campaign by the National Farmers Union (NFU) and animal rights charities. This reflects growing consumer awareness and demand for ethically and locally sourced products that support farmers and the economy.

MARKETING ACTIVITY

Burgers are the most advertised product by major companies in the fast-food and home-delivery industry. In the year ending March 2012, burger advertisements accounted for over half (52.3%) of all main media expenditure. This percentage has increased compared with 2008, when burgers accounted for 45.3% of marketing spending. Moreover, advertising expenditure on burgers has more than doubled over the past 5 years. This is more than any other category in the industry.

Table 4.1: Main Media Advertising Expenditure by Fast-Food Chains (£000), Years Ending March 2008-2012

2008 2009 2010 2011 2012

Burgers 39,131 44,395 52,479 58,363 60,693 Chicken 22,128 21,937 23,368 29,138 31,952 Pizza 16,337 11,330 12,000 16,431 11,722

Table continues...

Table 4.1: Main Media Advertising Expenditure by Fast-Food Chains (£000), Years Ending March 2008-2012

...table continued

2008 2009 2010 2011 2012

Sandwiches 8,597 8,231 5,569 7,967 11,040

Total 86,193 85,893 93,416 111,899 115,407 % change year-on-year - -0.3 8.8 19.8 3.1

Source: Nielsen

Main media advertising spending on chicken has increased year-on-year. Between 2008 and 2012, the rate rose by 44.4% to £32m. Overall, main media advertising expenditure on sandwiches augmented by 28.4% to £11m. However, in 2010, spending declined by 32.3%. The only category whose main media advertising expenditure was lower in 2012 than in 2008 was pizza. It fluctuated over the years and dropped by 28.7% in the year to March 2012. Still, overall, main media advertising expenditure rose by 3.1% during the 12-month period to £115.4m. Since 2008, it has increased by more than one third (33.9%).

Figure 4.1, below, illustrates the share of main media advertising expenditure of fast-food chains according to sector.

Figure 4.1: Main Media Advertising Expenditure by Fast-Food Chains (£000), Year Ending March 2012

Sandwiches 9.6%

Pizza 10.2%

Burgers 52.6%

Chicken 27.7%

Source: Nielsen/Key Note

5. Brand Strategy

INTRODUCTION

This chapter assesses the brand strategy of the top fast-food brands in the UK. Each company has developed its own strategy to drive sales and boost profit. This enables them to stand apart from their competitors. Still, certain trends are evident across the market. Fast-food and home-delivery chains have been keen to emphasise quality, are producing healthier menus and are using social media and technology to promote brand and product awareness, as well as to combat the negative image associated with these type of restaurants.

COMPANIES’ BRANDS

Burger King

In August 2011, Burger King hired Flavia Faugeres as Chief Marketing Officer (CMO); Leo Leon as Vice President of Marketing Innovation; and Andreas Barth as Senior Vice President of Global Brand Management, as part of its plan to re-launch its brand following a slump in sales. In the US, the company ditched its ‘king’ mascot to freshen up its image. Burger King’s new focus is improving the speed of service and ameliorating the quality of its food, both in terms of ingredients and healthier menus for consumers. It hopes that its latest brand strategy will improve its customer loyalty in the war against its major rival McDonald’s. José Cil, Europe, Middle East and Africa (EMEA) President for Burger King Corp, commented in a Marketing Week article on 18th April 2012 that ‘improving the customer experience in ‘each and every’ restaurant is a key aim for the business.’ The company is asking customers for feedback through an online survey using the Guest TracSM insight scheme to determine what steps to take for the next stages of its brand strategy.

Four key themes make up Burger King’s latest brand strategy: menu, operations, renovations and marketing, according to a Business Insider article on 10th August 2012. Following a 9-month self-assessment, the company has pinpointed these areas as its focus. It plans to increase the appeal of its menu to a broader consumer base by introducing healthier options, including smoothies, salads and wraps. It will set up liaisons and committees to get its franchises to work more closely together as a uniform business. Restaurants will receive a makeover. Renovations include digital menu boards, new uniforms and new packaging. Finally, the company is hiring celebrities to be the face of the brand, including David Beckham in the UK and Mary J Blige in the US.

Domino’s Pizza

The promotional strategy of Domino’s Pizza is centred around digital marketing. The company is at the forefront of technological revolution in the industry and has been using social media platforms and smartphone applications (‘apps’) to increase sales, including iPad, iPhone and Android app, as well as a mobile-optimised website. This strategy is proving successful. On 28th March 2012, Caterer Search reported that the company’s mobile sales had passed £1m in a single week for the first time. Moreover, e-commerce purchases accounted for 50.6% of all delivered sales in the UK in the 13 weeks to 25th March 2012, compared with 39.3% in 2011. Online sales rose by 44.5% to £59.3m during the covered period, 16.3% of which were ordered via Domino’s mobile services.

Marketing initiatives are also a critical component of its strategy. Domino’s is using emails, Twitter and Facebook to promote brands, products and deals. The benefits of its digital marketing strategy is that it is ‘relatively low cost’ according to the company in a Marketing Magazine article on 15th February 2012. Its main media advertising campaigns have included ‘It’s What We Do’ and ‘Get Stuffed!’. It has also sponsored the ITV family entertainment show Red or Black? and was the official eviction night partner with Coca-Cola for the Celebrity Big Brother series on Channel Five that started in August 2011.

New product development (NPD) to create better pizzas has also been at the core of the company’s promotional strategy. Its latest Mexican range, the launch of Gourmet pizzas, stuffed crust innovation and limited offers all reflect this strategy. It aims to add value by introducing original variants and makes an attempt to break the negative unhealthy connotations associated with both pizza and fast food, as well as to increase the quality of ingredients being used.

KFC

Following bad press, including accusations of animal cruelty and destroying the rainforest, Kentucky Fried Chicken (KFC) has strived to increase its credibility and social record by supporting various humanitarian and sustainable causes. Its website includes a ‘We Care’ section with links to the following: Food, Environment, Community and People topics, which detail its efforts and commitments. Moreover, in the News feed on its website, the primary stories it has reported on are its charitable contributions. On 3rd October 2011, it published an article stating that, in 2011, it had entered in a long-term partnership with Barnardo’s, the UK’s largest charity for children and young people. Then, on 19th December 2011, it revealed that, since 2007, KFC has raised £1.5m in the UK alone for the UN’s World Food programme. Every year it hosts the Hike for Hunger to raise money for the cause. Finally on 20th June 2012, it announced that its initiative to charge 5 pence (p) per plastic bags at its restaurants in Wales, which it commenced October 2011, had raised £16,000. The money was donated to local and national charities.

KFC’s latest brand strategy is to capitalise on social media forums, due to the growing number of consumers who are ‘contacting brands through Facebook and Twitter instead of making a phone call’, according to a spokesperson for the company, Rick Maynard, in The Drum on 21st February 2012. It commenced the campaign with a month-long initiative that consisted of random tweets and posts on Facebook leading to a secret KFC holding page, which allowed fans and followers to win gift vouchers. Customer service and quality remain important elements of its brand strategy.

McDonald’s

The belief that it is important to tailor business according to the preferences and demands of individual countries is at the heart of McDonald’s global brand strategy. It factors in which products are well-received; what price consumers are willing to pay; which television programmes, newspapers and advertising consumers read and view; and what restaurants are visited, as well as taking social, economic, legal and technological aspects into consideration, when devising its respective strategy.

In June 2011, McDonald’s launched an ethical campaign called ‘A to Z’. The initiative reflects a continuing attempt by the company, since 2007, to improve trust in the brand in the UK following negative headlines regarding McDonald’s and its products. In May 2012, the fast-food chain unveiled a new, social-media-friendly site that gives consumers a chance to go ‘behind-the scenes’ of the company. The public can find out information regarding McDonald’s food sourcing in the UK, environmental contributions and charitable activities. Alastair Macrow, Vice President of Marketing at McDonald’s UK, is quoted in an article by Marketing Week on 15th May 2012 as saying:

“as people engage more with brands through digital and social media, we’re confident that introducing a new direct channel for people to tell us what they think and ask us questions will bring us closer to our customers — a key aim of our overarching business strategy.”

Other key elements of McDonald’s UK brand strategy are modernising its venues and introducing healthier menu options.

Pizza Hut

Pizza Hut’s brand strategy is to become more in-tune with consumers’ changing lifestyles. In August 2011, the company acknowledged that it had neglected customer service in recent years and announced that it had laid out a plan to change that. Its latest tactic includes the introduction of a customer service programme called ‘the handshake’. It hopes that this will improve the brand’s engagement with customers and give them a more intuitive service. In addition, the company has updated its menu to reflect the times. Its new menu responds to consumers’ growing concern for healthier options and premium meals that are good value.

Subway

Subway’s brand strategy reflects its ambition to reach out to a broader potential consumer base. Subway’s UK Head of Marketing, Manaaz Akhtar, told PR Week on 27th January 2012:

“In the past, Subway has focused on the young male office worker and student consumer groups. But what we are looking to do with our new marketing programmes is to broaden the target and become more inclusive.”

In order to achieve this, it has devised a brand strategy which focuses on the chain’s health and value credentials. Its sponsorship of the weight-loss reality television show, The Biggest Loser, on ITV1 in 2012 and the £3 Subway Lunch campaign are both products of this tactic.

MAIN MEDIA ADVERTISING EXPENDITURE

With fierce competition in the industry, marketing activity is critical to fast-food and home-delivery chains and restaurants in the UK. Companies use advertisements to raise brand awareness, introduce new products and send certain messages to consumers. Table 4.1 shows that major businesses upped their spending on main media advertising by 3.1% between Q2 2011 and Q2 2012 to £115.4m.

Table 5.1: Main Media Advertising Expenditure on Leading Fast-Food Brands (£000 and %), Years Ending March 2011 and March 2012

2011 2012

McDonald’s Restaurant chain 47,872 52,195 Double Taste milkshake 612 - McDonald’s total 48,484 52,195

KFC† — restaurant chain 29,138 31,952

Subway Restaurant chain - 6,798 Sandwich franchise 7,967 4,242 Subway total 7,967 11,040

Table continues...

Table 5.1: Main Media Advertising Expenditure on Leading Fast-Food Brands (£000 and %), Years Ending March 2011 and March 2012

...table continued

2011 2012

Burger King — restaurant chain 9,879 8,498

Domino’s Pizza Restaurant chain 6,606 6,786 Generic 383 83 Domino’s Pizza total 6,989 6,869

Pizza Hut — restaurant chain 8,971 4,238 Papa John’s — pizza restaurant chain 471 615

Fast-food brands total 111,899 115,407 % change year-on-year - 3.1

† — Kentucky Fried Chicken

Source: Nielsen

McDonald’s spent the most promoting its products in the year ending Q2 2012. Moreover, it increased its main media advertising expenditure by 7.7% to £52.2m, compared with the equivalent period the previous year. Burger King, Domino’s and Pizza Hut are the sole companies that decreased their advertising budget between the years ending Q2 2011 and Q2 2012. Moreover, Pizza Hut slashed its spending by more than half, following poor year-on-year financial results.

Subway augmented its main media spending more than any other fast-food chain over the time period, reflecting the success of the business in the UK. In the year to Q2 2012, it increased its spending by 38.6% to £11m. Papa John’s also upped its main media advertising expenditure, by 30.6% to £615,000. This figure, however, is lower than any other fast-food chain in the industry, due to the smaller nature of its business.

Below are advertising campaigns recently launched by fast-food and home delivery brands in the UK.

• In April 2012, Greggs unveiled a £1m marketing campaign to promote its breakfast products and coffee. ‘Taste Rescue’ features Gregg T Bud, a ‘tastebudologist’. The campaign included sensory advertising boards at bus stops in London, Manchester and Glasgow, which gave consumers a waft of the smell of bacon roll and fresh coffee. The advertisement emphasised that the coffee is a British blend and made with Fairtrade beans.

• On 1st May 2012, McDonald’s commenced a 4-week advertising campaign to promote its Great Tastes of America products, which were each available for 1 week only during the time period. Each advertisement features a mother and her child strolling down the street, passing a shopkeeper. The camera then moves on to two police officers, followed by a dressed-up dog and an elderly lady in Chicago, New York and somewhere in Texas and Arizona, respectively. Each commercial gives consumers a taste for the different locations in the US based on the relevant burger that week.

• In May, Subway launched its London 2012 themed advertisement. The 30-second spot featured Olympians: boxer Anthony Ogogo and pole-vaulter Holly Bleasdale. Each state their personal best, followed by their favourite sandwich at Subway. The advertisement stresses the nutritional value of the products, including the calorie count, and states that they are one of the consumer’s 5-a-day. Another advertisement, as part of the same campaign, features gymnast Louis Smith and basketball player Pops Mensah Bonsu.

• In May, Burger King rolled out the ‘Mmmm’ advertisement to promote its new Angus XT Burger. It features a young businessman, its target audience, who takes a bite of the burger and finds it so delicious he ‘mmms’ throughout his whole day at the office, followed by the bus home, in the shower and still continues after he is in bed. The advertisement stresses that the burger is made with extra-thick 100% Aberdeen beef, steakhouse sauce and crispy salad. The strapline is ‘extra thick, extra tasty’.

• In June, KFC launched its ‘She’s a Lady’ advertisement to promote its BBQ Rancher range. It features a young woman who spends her day being side-stepped by men, until she passes KFC in the evening with a friend. At that moment, the voiceover comes in and says: ‘At least someone knows how to treat you right…’ and introduces the range, emphasising that it is freshly made.

• In July 2012, Domino’s unveiled a three-part satirical soap opera on its Facebook page titled Los Pasiones de la Familia Verduras to promote its new Mexican pizza range. The videos tell the story of the dramatic life of the Verduras vegetable family in Mexico, including lovers from rival families, family feuds and even a murder. Each episode ends with a cliff hanger and gives viewers multiple choice answers to decide what will happen next. In the final episode, Domino’s asks consumers to actually make their own film for the finale and gives them the opportunity to win a Nokia Lumia 800 smartphone. Domino’s has created a print-out sheet, which is free to download and enables consumers to create key characters and props.

• The ‘We All Make the Games’ campaign by McDonald’s was released to coincide with the London 2012 Olympic and Paralympic Games in July and August. The advertisements aim to capture the magic of the Olympic spirit by relaying the people, the moments and the emotions that make the event spectacular. They promote the McDonald’s brand instead of actual products by the fast-food chain.

6. Strengths, Weaknesses, Opportunities and Threats

STRENGTHS

• Fast food is popular in the UK and the majority of the population has eaten this type of food in the past 12 months.

• Fast-food and home-delivery businesses are one of the most important sectors in the restaurants industry in the UK.

• In spite of the economic crisis, the fast-food and home-delivery industry remains resilient.

• Fast food and takeaways tend to be good value. Their low cost is appealing to consumers whose finances are strained as a result of the economic crisis. The industry has actually benefitted from the downturn.

• Brands in the fast-food and home-delivery industry are well-established in the UK.

• Takeaways and home deliveries are in high demand as consumers stay at home in order to save money, but do not have the time or do not want to put in the effort required to cook from scratch.

• Evidence shows that when consumers eat fast food and takeaways, most do not count calories or take into account nutritious content.

• The fast-food and home-delivery industry is in a prime position to benefit from consumers’ increasingly busy schedules and the demand for convenient mealtime solutions.

• Major companies in the industry have the necessary resources to finance main media advertising campaigns.

WEAKNESSES

• Fast food is portrayed by the Government, the media and society as being unhealthy and poor quality. Fast food is associated with junk food.

• Fast food tends to be high in salt, calories and fat.

• Social pressures and consumer demand for healthy foods are contradictory to the nature of the fast-food and home-delivery industry, which has traditionally centred around mass-produced fried foods.

• Fast-food chains are being accused of poisoning consumers, being abusive towards animals and destroying the rainforest with their packaging.

• Competition in the fast-food and home-delivery industry is fierce.

• The fast-food and home-delivery market is saturated with restaurants and products.

• Innovation in the industry is temporary and limited.

OPPORTUNITIES

• Companies can diversify their menu portfolio by catering to consumer demand for healthier products.

• Fast-food chains can maximise value by introducing premium ranges that offer consumers something extra.

• Fast-food chains will increasingly use social media campaigns to promote their brand and products, as well as to interact with consumers on a new level.

• Consumers will increasingly order takeaways and home deliveries online and via smartphone applications (‘apps’).

• Contactless payments will gain prominence in the future in the fast-food industry to save consumers even more time.

• Consumers are becoming more and more adventurous when it comes to food and are open to trying exotic cuisines and innovative flavours in the fast-food and takeaway industry.

• Fast-food and home-delivery businesses can push sales during televised events, such as the Queen’s Diamond Jubilee and the Olympic and Paralympic Games.

• Fast-food chains have begun modernising their restaurants, renovating the venues and introducing a new era of gadgets, including electronic menu boards.

• Fast-food companies can launch marketing campaigns that appeal to a broader audience to maximise their potential consumer base.

THREATS

• It is impossible for fast-food companies to offer consumers genuinely healthy foods at a low cost.

• Small and independent fast-food and takeaway businesses are struggling to juggle market competition, the economic crisis and rising operational and production costs.

• The fish and chips subsector is threatened by overfishing and quotas.

• The fast-food industry is susceptible to backlashes, as was evidenced by McDonald’s Twitter account fiasco.

• Legislative demands regarding labelling could damage the fast-food and home-delivery industry, as companies are forced to expose ingredients and nutritional content in their foods and drinks.

• Rising food and energy prices, as well as general production and operational costs, are eating into companies’ profit.

• Meal deals and ready meals, plus chilled and frozen foods, in supermarkets are upping the ante by offering consumers higher quality, cheaper products and the equivalent convenience as fast foods and takeaways.

7. Buying Behaviour

INTRODUCTION

In August 2012, Key Note commissioned NEMS Market Research to interview adults in the UK, aged 16 years and older, for the purpose of this report. It surveyed 1,000 adults questioning them on their opinions on fast food and takeaways. This chapter analyses the results of this survey and its meaning for companies in the industry.

VALUE

In the face of the economic crisis, consumers are opting to eat in fast-food restaurants, which offer good value. This phenomenon is summarised in an article by Fast Food Nation on 29th March 2012, which states:

“As the recession starts to take effect on our bank balances, fast food is undergoing a renaissance with offers of cheap, filling food attracting people through the doors with the possibility of a meal for four for under £10 being the main motivator.”

Table 7.1 reveals that 54% of respondents agreed that major fast-food and home-delivery outlets were good value for money. Women were slightly more likely to agree with this statement than men. The difference between the two sexes was by 2.3 percentage points. Those aged 34 and under were significantly more likely to find fast food and takeaways good value for money than older generations. Moreover, the vast majority of respondents aged 16 to 19 believe that this type of restaurant is good value (89.5%).

Respondents who belong to social grade A are also more likely to find fast food good value for money (85.1%). By contrast, those in social grade E are not as likely to share this opinion (48.3%). Those not working for other reasons than being retired or invalid are more likely to have responded that they agreed with the statement that fast-food chains are good value (70.7%) than respondents with other working statuses, even though they have no source of income.

Larger households with more mouths to feed are more likely to believe that fast food and takeaways are good value than smaller households. This reflects the fact that this type of restaurant is family-friendly with deals, smaller children’s meals and activities that target children. This is supported by the fact that respondents living in households with no children were the least likely to find fast food and takeaways good value for money (51.2%).

Table 7.1: Adults Who Agreed That Major Fast-Food and Home-Delivery Outlets Offer Good Value for Money (% of adults), August 2012

Statement: “The major fast-food and home-delivery outlets offer good value for money.”

Sample Purchasing Penetration Profile (%) Profile (%) (%)

All adults 100.0 100.0 54.0 Sex Male 48.8 47.7 52.8 Female 51.2 52.3 55.1 Age 16 to 19 4.5 7.4 89.5 20 to 24 10.6 13.6 68.8 25 to 34 17.5 24.4 75.1 35 to 44 18.4 16.9 49.6 45 to 54 16.3 14.8 49.2 55 to 64 13.1 9.9 40.7 65+ 19.6 13.0 35.8 Social Grade A 1.7 2.6 85.1 B 20.0 19.4 52.4 C1 25.9 26.7 55.6 C2 26.3 26.5 54.4 D 15.9 15.6 53.0 E 10.2 9.2 48.3 Working Status Working full-time† 43.6 45.6 56.5 Part time 18.4 18.6 54.5 Not working (excluding retired/ invalid)‡ 15.5 20.3 70.7 Not working (retired/invalid) 22.4 15.5 37.2 Region North 4.7 4.6 53.0 Yorkshire and Humberside 10.9 11.1 54.8 East Midlands 6.1 5.7 51.0

Table continues...

Table 7.1: Adults Who Agreed That Major Fast-Food and Home-Delivery Outlets Offer Good Value for Money (% of adults), August 2012

...table continued

Statement: “The major fast-food and home-delivery outlets offer good value for money.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Region (cont.) West Midlands 6.3 4.9 41.8 East Anglia 8.9 8.6 52.3 South East 16.2 17.4 57.9 Greater London 12.4 12.8 55.8 South West 8.5 8.9 56.4 North West 12.0 12.5 56.3 Wales 5.1 4.7 49.7 Scotland 9.1 8.9 53.0 Size of Household One person 23.3 17.9 41.5 Two persons 30.6 27.6 48.5 Three person 16.9 18.6 59.4 Four persons 21.5 26.7 67.1 Five persons or more 7.3 8.9 66.0 Marital Status Married/living as married 47.1 47.3 54.3 Single 34.5 41.2 64.4 Divorced 7.1 4.5 34.0 Widowed 9.5 5.8 33.2 Separated 1.5 1.1 39.5 Presence of Children Aged 0-4 6.9 9.2 72.4 Aged 5-9 12.1 14.5 64.8 Aged 10-15 14.8 16.0 58.2 No children 74.4 70.6 51.2

Table continues...

Table 7.1: Adults Who Agreed That Major Fast-Food and Home-Delivery Outlets Offer Good Value for Money (% of adults), August 2012

...table continued

Statement: “The major fast-food and home-delivery outlets offer good value for money.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Tenure Own home outright 41.9 37.7 48.5 Buying home 33.4 37.0 59.7 Rent from the council 9.7 8.4 46.9 Rent rent privately 11.3 13.2 62.9 Rent-free occupancy 1.2 0.9 39.8

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

Although consumers are increasingly choosing fast-food and takeaway outlets over other types of restaurants when eating out, only 14.2% of respondents agreed that they tended to eat fast food in order to save money during the recession. Key Note argues that when consumers want to save money they are more likely to eat at home. They dine out for other reasons or to treat themselves. Still, when eating out consumers are increasingly choosing to visit low-cost restaurants.

Younger age groups are more likely to eat in a fast-food restaurant in order to save money during the recession than other age groups. While roughly half (50.9%) of those aged 16 to 19 agreed with the statement, only 4.6% of those 65 and over also concurred. No respondents in social grade A agreed that they tended to choose fast food in order to save money.

Without an income, those who were not working are more likely to be on a tight budget than those employed. More respondents with this working status agreed that they tend to eat fast food in order to save money than those who are either employed or retired/invalid (34.1% and 6.6%, respectively). After Tokyo, London is the second most expensive city in the world to eat in, according to Zagat statistics. This helps to explain why Londoners are more likely to agree that eating fast food saves money during the recession when compared with other restaurants in the capital (29.6%).

Table 7.2: Adults Who Agreed That They Tend to Eat Fast Food to Save Money During the Recession (% of adults), August 2012

Statement: “When eating out I tend to eat fast food to save money during the recession.”

Sample Profile Purchasing Penetration (%) Profile (%) (%)

All adults 100.0 100.0 14.2 Sex Male 48.8 51.6 15.0 Female 51.2 48.4 13.4 Age 16 to 19 4.5 16.1 50.9 20 to 24 10.6 24.0 32.0 25 to 34 17.5 19.9 16.1 35 to 44 18.4 16.5 12.7 45 to 54 16.3 11.6 10.1 55 to 64 13.1 5.4 5.9 65+ 19.6 6.4 4.6 Social Grade A 1.7 0.0 0.0 B 20.0 19.2 13.6 C1 25.9 25.0 13.7 C2 26.3 29.4 15.9 D 15.9 18.5 16.5 E 10.2 7.9 10.9 Working Status Working full-time† 43.6 31.7 10.3 Part time 18.4 20.7 15.9 Not working (excluding retired/ invalid)‡ 15.5 37.3 34.1 Not working (retired/ invalid) 22.4 10.4 6.6

Table continues...

Table 7.2: Adults Who Agreed That They Tend to Eat Fast Food to Save Money During the Recession (% of adults), August 2012

...table continued

Statement: “When eating out I tend to eat fast food to save money during the recession.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Region North 4.7 6.4 19.5 Yorkshire and Humberside 10.9 9.8 12.8 East Midlands 6.1 1.7 3.9 West Midlands 6.3 9.9 22.3 East Anglia 8.9 10.4 16.6 South East 16.2 12.9 11.3 Greater London 12.4 25.9 29.6 South West 8.5 7.1 11.9 North West 12.0 8.5 10.1 Wales 5.1 2.0 5.7 Scotland 9.1 5.4 8.4 Size of Household One person 23.3 17.3 10.5 Two persons 30.6 16.2 7.5 Three person 16.9 26.2 22.0 Four persons 21.5 27.1 17.9 Five persons or more 7.3 13.2 25.7 Marital Status Married/living as married 47.1 30.2 9.1 Single 34.5 60.7 25.0 Divorced 7.1 5.0 10.0 Widowed 9.5 3.5 5.3 Separated 1.5 0.5 4.5

Table continues...

Table 7.2: Adults Who Agreed That They Tend to Eat Fast Food to Save Money During the Recession (% of adults), August 2012

...table continued

Statement: “When eating out I tend to eat fast food to save money during the recession.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Presence of Children Aged 0-4 6.9 8.9 18.3 Aged 5-9 12.1 12.1 14.3 Aged 10-15 14.8 28.5 27.2 No children 74.4 60.6 11.5 Tenure Own home outright 41.9 30.8 10.4 Buying home 33.4 41.2 17.5 Rent from the council 9.7 13.6 20.0 Rent rent privately 11.3 11.7 14.7 Rent-free occupancy 1.2 0.0 0.0

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

CONVENIENCE

Another factor affecting consumers’ decision to eat fast food and takeaways is their convenience. This type of food provides a simple and hassle-free mealtime solution. It is prepared instantaneously, saving customers both time and effort. Moreover, it can be eaten at the restaurant, on-the-go and at home, making it compatible with consumers’ non-stop lifestyles. 39.9% of respondents said they tended to eat fast food to save time and effort.

Men are more likely to eat fast food and takeaway due to its convenience than women. The difference between the two sexes is 10.7 percentage points. Respondents aged between 16 and 19 years old tend to eat fast food and takeaways to save time and effort more than any other age group (74.6%). Furthermore, penetration percentage declined as consumers grew older. A similar trend is evident when respondents are organised according to social grade. While 71.6% of respondents in social grade A said that they tend to eat fast food and takeaways to save time and effort, only 17.6% of those in social grade E agreed with the statement.

As the capital, London is buzzing with people with busy schedules and fast-paced lifestyles. Consumers in the metropolis are more likely to opt for convenient on-the-go mealtime solutions than those elsewhere in the UK (64.2%). This is reflected in the fact that respondents that live in Greater London are more likely to eat fast food and takeaways than those that reside in any other region in the UK. Moreover, the difference with the nearest region, East Anglia, is a significant 17.7 percentage points.

Not only did respondents who live in larger households agree that they were more likely to eat this type of food since it was good value, but they additionally agreed with the statement that these meals save time and effort more than those in any other household size. The same is also true for households with older children aged between 10 and 15 (58.9%).

Table 7.3: Adults Who Agreed That They Tend to Eat Fast Food and Takeaways to Save Time and Effort (% of adults), August 2012

Statement: “I tend to eat fast food and takeaways to save time and effort.”

Sample Profile Purchasing Penetration (%) Profile (%) (%)

All adults 100.0 100.0 39.9 Sex Male 48.8 55.5 45.4 Female 51.2 44.5 34.7 Age 16 to 19 4.5 8.4 74.6 20 to 24 10.6 16.2 60.7 25 to 34 17.5 22.9 52.0 35 to 44 18.4 18.7 40.6 45 to 54 16.3 15.5 38.0 55 to 64 13.1 9.7 29.6

Table continues...

Table 7.3: Adults Who Agreed That They Tend to Eat Fast Food and Takeaways to Save Time and Effort (% of adults), August 2012

...table continued

Statement: “I tend to eat fast food and takeaways to save time and effort.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Age (cont.) 65+ 19.6 8.6 17.6 Social Grade A 1.7 3.0 71.6 B 20.0 22.5 44.9 C1 25.9 28.1 43.3 C2 26.3 23.7 35.9 D 15.9 18.2 45.7 E 10.2 4.5 17.6 Working Status Working full-time† 43.6 48.8 44.7 Part time 18.4 19.3 41.9 Not working (excluding retired/ invalid)‡ 15.5 20.5 52.7 Not working (retired/ invalid) 22.4 11.4 20.2 Region North 4.7 4.8 41.4 Yorkshire and Humberside 10.9 10.3 37.5 East Midlands 6.1 5.3 34.6 West Midlands 6.3 6.5 41.3 East Anglia 8.9 10.3 46.5 South East 16.2 11.5 28.3 Greater London 12.4 19.9 64.2 South West 8.5 8.8 41.1 North West 12.0 10.1 33.5 Wales 5.1 4.7 36.7

Table continues...

Table 7.3: Adults Who Agreed That They Tend to Eat Fast Food and Takeaways to Save Time and Effort (% of adults), August 2012

...table continued

Statement: “I tend to eat fast food and takeaways to save time and effort.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Region (cont.) Scotland 9.1 7.9 34.8 Size of Household One person 23.3 19.9 34.1 Two persons 30.6 19.2 25.0 Three person 16.9 22.0 52.1 Four persons 21.5 29.8 55.4 Five persons or more 7.3 8.8 48.0 Marital Status Married/living as married 47.1 40.1 34.0 Single 34.5 48.7 56.2 Divorced 7.1 5.3 29.6 Widowed 9.5 5.4 22.5 Separated 1.5 0.6 14.3 Presence of Children Aged 0-4 6.9 7.3 42.4 Aged 5-9 12.1 13.5 44.7 Aged 10-15 14.8 21.9 58.9 No children 74.4 66.9 35.9

Table continues...

Table 7.3: Adults Who Agreed That They Tend to Eat Fast Food and Takeaways to Save Time and Effort (% of adults), August 2012

...table continued

Statement: “I tend to eat fast food and takeaways to save time and effort.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Tenure Own home outright 41.9 31.0 29.6 Buying home 33.4 42.2 50.4 Rent from the council 9.7 8.8 36.3 Rent rent privately 11.3 13.8 48.6 Rent-free occupancy 1.2 1.9 61.6

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

NUTRITION

Consumers in the UK are increasingly concerned about calories, fat, sugar and salt in their food. Not only are they cautious for their waistline, but they are increasingly aware of the importance of eating healthily for physical and mental well-being following a series of initiatives by the Government, the media and other organisations. Although consumers are concerned about nutrition in their daily life, when eating fast food and takeaways, a minority actually factor in calories. When respondents were asked if they agree with the statement: ‘I think about calories when I order fast food and takeaways’, only 29.4% of respondents agreed.

Women, who are more likely to be on a diet than men, are more likely to factor in calories when deciding what to eat at a fast-food and takeaway restaurant (36.2% and 22.2%, respectively). Those aged 65 and older are less likely to take calories into consideration when ordering fast food and takeaways than any other age group (21.1%). Key Not accredits the low penetration to the fact that, after a certain age, some consumers tend to care less about their health and appearance. Those aged 20 to 24 (33.5%), in social grade B (34.1%) and those who were working part time (37%) were the most likely to agree with the statement. Similarly, respondents living in Wales (39.3%), in households of three people (39.5%) and respondents who were divorced (31.7%) were also most likely to agree. Respondents living in households with the presence of children between 5 and 9 years old (35.5%) and in rent-free occupancy (54.6%) are more likely to factor in calories, according to the survey.

Table 7.4: Adults Who Think About Calories When They Order Fast Food and Takeaways (% of adults), August 2012

Statement: “I think about calories when I order fast food and takeaways.”

Sample Purchasing Penetration Profile (%) Profile (%) (%)

All adults 100.0 100.0 29.4 Sex Male 48.8 36.8 22.2 Female 51.2 63.2 36.2 Age 16 to 19 4.5 4.9 32.2 20 to 24 10.6 12.1 33.5 25 to 34 17.5 19.5 32.6 35 to 44 18.4 20.8 33.3 45 to 54 16.3 18.2 32.8 55 to 64 13.1 10.4 23.3 65+ 19.6 14.1 21.1 Social Grade A 1.7 1.1 19.2 B 20.0 23.2 34.1 C1 25.9 25.9 29.3 C2 26.3 25.3 28.3 D 15.9 17.2 31.8 E 10.2 7.3 20.9

Table continues...

Table 7.4: Adults Who Think About Calories When They Order Fast Food and Takeaways (% of adults), August 2012

...table continued

Statement: “I think about calories when I order fast food and takeaways.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Working Status Working full-time† 43.6 49.1 33.1 Part time 18.4 23.1 37.0 Not working (excluding retired/ invalid)‡ 15.5 11.1 21.0 Not working (retired/invalid) 22.4 16.5 21.6 Region North 4.7 5.9 37.0 Yorkshire and Humberside 10.9 10.3 27.6 East Midlands 6.1 5.6 27.3 West Midlands 6.3 5.0 23.3 East Anglia 8.9 10.4 34.4 South East 16.2 21.3 38.6 Greater London 12.4 7.8 18.6 South West 8.5 10.2 35.0 North West 12.0 10.9 26.7 Wales 5.1 6.8 39.3 Scotland 9.1 5.9 19.2 Size of Household One person 23.3 18.5 23.4 Two persons 30.6 27.9 26.8 Three person 16.9 22.7 39.5 Four persons 21.5 24.0 32.9 Five persons or more 7.3 6.2 25.0

Table continues...

Table 7.4: Adults Who Think About Calories When They Order Fast Food and Takeaways (% of adults), August 2012

...table continued

Statement: “I think about calories when I order fast food and takeaways.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Marital Status Married/living as married 47.1 46.5 29.0 Single 34.5 35.2 30.0 Divorced 7.1 7.7 31.7 Widowed 9.5 8.1 25.2 Separated 1.5 2.4 46.0 Presence of Children Aged 0-4 6.9 7.0 30.2 Aged 5-9 12.1 14.6 35.5 Aged 10-15 14.8 12.9 25.5 No children 74.4 72.3 28.6 Tenure Own home outright 41.9 39.8 27.9 Buying home 33.4 37.8 33.2 Rent from the council 9.7 7.5 22.8 Rent rent privately 11.3 9.1 23.6 Rent-free occupancy 1.2 2.3 54.6

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

Table 7.5 shows that, in spite of companies’ efforts to combat the association of fast food with poor nutrition, the stigma remains as 59.1% of respondents agreed that they tried to avoid fast food and food from home-delivery services because they considered them generally unhealthy. Women are more likely to have agreed with the statement than men (62.2% and 56%, respectively). This reflects the fact that women are more likely to pay attention to nutritional information and be conscious of their weight than men.

With the exception of those aged 16 to 19 and those aged 25 to 34, more than 60% of respondents said they avoided fast food because they felt it is generally unhealthy. Moreover, 83.7% of respondents in social grade A concurred with the statement.

Those who work part time (61.2%) or were not working (retired/invalid [61.9%]) were more likely to hold this view than those who were not working for other reasons or who were employed full time (59.8%) or not working (excluding retired/invalid [50.7%]). There was significant variation among regions; while 78.1% of respondents living in the East Midlands agreed with the statement, only 49.8% of those living in the South West held the same opinion.

Respondents who were single or divorced were the least likely to avoid fast food or home delivery because they considered the food generally unhealthy than any other marital status (55.4% and 57.7%, respectively), while those in households of five or more persons were also less likely to be deterred (49.8%). Households with the presence of children aged 10 to 15 were less likely to concur with the statement than other households (47.1%), as were those who were renting from the council (46.3%).

Table 7.5: Adults Who Agreed That They Try to Avoid Fast Food and Takeaways Because They Consider Them Unhealthy (% of adults), August 2012

Statement: “I try to avoid fast food and food for home delivery because I consider them generally unhealthy.”

Sample Profile Purchasing Penetration (%) Profile (%) (%)

All adults 100.0 100.0 59.1 Sex Male 48.8 46.2 56.0 Female 51.2 53.8 62.2 Age 16 to 19 4.5 2.5 32.3 20 to 24 10.6 11.6 64.6 25 to 34 17.5 15.0 50.7 35 to 44 18.4 19.8 63.7 45 to 54 16.3 16.9 61.3 55 to 64 13.1 13.8 62.5 65+ 19.6 20.4 61.6

Table continues...

Table 7.5: Adults Who Agreed That They Try to Avoid Fast Food and Takeaways Because They Consider Them Unhealthy (% of adults), August 2012

...table continued

Statement: “I try to avoid fast food and food for home delivery because I consider them generally unhealthy.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Social Grade A 1.7 2.4 83.7 B 20.0 18.8 55.7 C1 25.9 28.9 65.9 C2 26.3 25.9 58.1 D 15.9 14.0 52.3 E 10.2 10.0 57.9 Working Status Working full-time† 43.6 44.1 59.8 Part time 18.4 19.0 61.2 Not working (excluding retired/ invalid)‡ 15.5 13.3 50.7 Not working (retired/ invalid) 22.4 23.5 61.9 Region North 4.7 5.3 67.6 Yorkshire and Humberside 10.9 11.1 60.1 East Midlands 6.1 8.0 78.1 West Midlands 6.3 5.8 54.4 East Anglia 8.9 9.1 60.3 South East 16.2 16.4 59.9 Greater London 12.4 11.8 56.4 South West 8.5 7.2 49.8 North West 12.0 13.0 64.0 Wales 5.1 4.7 54.9 Scotland 9.1 7.7 50.2

Table continues...

Table 7.5: Adults Who Agreed That They Try to Avoid Fast Food and Takeaways Because They Consider Them Unhealthy (% of adults), August 2012

...table continued

Statement: “I try to avoid fast food and food for home delivery because I consider them generally unhealthy.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Size of Household One person 23.3 19.7 50.0 Two persons 30.6 32.5 62.6 Three person 16.9 18.1 63.5 Four persons 21.5 23.0 63.5 Five persons or more 7.3 6.2 49.8 Marital Status Married/living as married 47.1 47.8 60.0 Single 34.5 32.3 55.4 Divorced 7.1 7.0 57.7 Widowed 9.5 10.5 65.7 Separated 1.5 2.1 79.7 Presence of Children Aged 0-4 6.9 7.1 60.9 Aged 5-9 12.1 13.0 63.6 Aged 10-15 14.8 11.8 47.1 No children 74.4 75.9 60.4

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Table 7.5: Adults Who Agreed That They Try to Avoid Fast Food and Takeaways Because They Consider Them Unhealthy (% of adults), August 2012

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Statement: “I try to avoid fast food and food for home delivery because I consider them generally unhealthy.”

Sample Profile Purchasing Penetration (%) Profile (%) (%) Tenure Own home outright 41.9 45.9 64.8 Buying home 33.4 32.8 57.9 Rent from the council 9.7 7.6 46.3 Rent rent privately 11.3 10.5 55.0 Rent-free occupancy 1.2 1.1 53.6

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

In recent times, fast-food and takeaway chains have been expanding their menu selection to include healthier products in an attempt to appeal to a broader consumer base and to give consumers more choice and increase frequency of visit. In spite of these attempts, 43.1% of respondents believe that they would eat more fast food if there were more healthy options on the menu. This means that there remains a niche in the market for healthier meals in the fast-food and takeaway industry in the UK.

More women than men agreed that they would eat more often in fast-food restaurants if there were healthier options on the menu (45.7% compared with 40.4%). Women tend to be more diet-conscious than men and are thus more likely to count calories. Only 5% of respondents belonging to social grade A agreed with the statement.

Those not working for other reasons aside from being retired or invalid said they would eat more often in fast-food restaurants if there were more healthy options on the menu more than any other category when respondents are organised according to working status (57.8%). Penetration surpassed the 50% mark solely for respondents living in the North (58.5%), the East Midlands (56.2%) and Greater London (53.8%). Meanwhile, those who were single (50.9%) and aged between 20 and 24 (57.6%) registered the highest penetration.

Table 7.6: Adults Who Agreed That They Would Eat More Fast Food If There Were More Healthy Options on the Menu (% of adults), August 2012

Statement: “I would eat more fast food if there were more healthy options on the menu.”

Sample Purchasing Penetration Profile (%) Profile (%) (%)

All adults 100.0 100.0 43.1 Sex Male 48.8 45.7 40.4 Female 51.2 54.3 45.7 Age 16 to 19 4.5 4.4 42.5 20 to 24 10.6 14.2 57.6 25 to 34 17.5 18.7 45.8 35 to 44 18.4 19.2 45.0 45 to 54 16.3 19.3 51.2 55 to 64 13.1 11.5 38.0 65+ 19.6 12.6 27.8 Social Grade A 1.7 0.2 5.0 B 20.0 21.2 45.7 C1 25.9 27.3 45.4 C2 26.3 26.5 43.3 D 15.9 16.9 45.9 E 10.2 8.0 33.7 Working Status Working full-time† 43.6 43.9 43.4 Part time 18.4 19.9 46.8 Not working (excluding retired/ invalid)‡ 15.5 20.8 57.8 Not working (retired/invalid) 22.4 15.2 29.2

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Table 7.6: Adults Who Agreed That They Would Eat More Fast Food If There Were More Healthy Options on the Menu (% of adults), August 2012

...table continued

Statement: “I would eat more fast food if there were more healthy options on the menu.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Region North 4.7 6.3 58.5 Yorkshire and Humberside 10.9 11.1 43.7 East Midlands 6.1 7.9 56.2 West Midlands 6.3 5.1 35.2 East Anglia 8.9 8.1 39.4 South East 16.2 16.3 43.5 Greater London 12.4 15.4 53.8 South West 8.5 8.4 42.5 North West 12.0 9.2 32.9 Wales 5.1 4.5 38.6 Scotland 9.1 7.6 36.2 Size of Household One person 23.3 21.5 39.8 Two persons 30.6 28.6 40.2 Three person 16.9 21.5 55.0 Four persons 21.5 21.1 42.3 Five persons or more 7.3 7.1 42.1 Marital Status Married/living as married 47.1 45.4 41.6 Single 34.5 40.7 50.9 Divorced 7.1 6.2 37.1 Widowed 9.5 6.3 28.6 Separated 1.5 1.4 38.7 Presence of Children Aged 0-4 6.9 7.6 48.1 Aged 5-9 12.1 12.7 45.4 Aged 10-15 14.8 14.5 42.3

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Table 7.6: Adults Who Agreed That They Would Eat More Fast Food If There Were More Healthy Options on the Menu (% of adults), August 2012

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Statement: “I would eat more fast food if there were more healthy options on the menu.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Presence of Children (cont.) No children 74.4 73.0 42.3 Tenure Own home outright 41.9 37.1 38.2 Buying home 33.4 36.0 46.4 Rent from the council 9.7 10.9 48.8 Rent rent privately 11.3 12.3 47.0 Rent-free occupancy 1.2 1.9 67.7

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

Although there is still work for fast-food and takeaway chains to do as four in ten respondents said they would eat in this type of restaurants more often if there were healthier options on the menu, 64.2% of respondents agreed that they had noticed an improvement in the number of healthy options offered by fast-food restaurants and home-delivery outlets over the past 5 years.

Women are more likely to have noticed than men. Those aged 16 to 19 were significantly more sensitive to the influx of healthy products than other age groups (82.8%), particularly those aged 65 and over (43.6%). Those in social grade B were more likely to have agreed with the statement than any other social grade. While 70.7% of those in social grade B noticed a difference in menu offerings, only 20.3% of those in social grade A concurred that healthier products were now more readily available than 5 years ago.

Those in East Anglia (73.8%) were more sensitive to the change in menu than any other region, followed by residents in the South West (70.7%) and Wales (69.7%). Single respondents were more likely to agree with the statement than those of other marital status (71.6%), as were those with children aged 0 to 4 (76.7%) and rent-free tenants (80%) in their own respective categories.

Table 7.7: Adults Who Agreed That Fast-Food Restaurants and Home-Delivery Outlets Now Offer Healthier Options Than 5 Years Ago (% of adults), August 2012

Statement: “Fast-food restaurants and home-delivery outlets now offer healthier options than 5 years ago.”

Sample Purchasing Penetration Profile (%) Profile (%) (%)

All adults 100.0 100.0 64.2 Sex Male 48.8 47.8 62.9 Female 51.2 52.2 65.3 Age 16 to 19 4.5 5.8 82.8 20 to 24 10.6 12.5 75.3 25 to 34 17.5 18.4 67.2 35 to 44 18.4 21.1 73.5 45 to 54 16.3 17.3 68.3 55 to 64 13.1 11.7 57.1 65+ 19.6 13.3 43.6 Social Grade A 1.7 0.5 20.3 B 20.0 22.0 70.7 C1 25.9 26.1 64.5 C2 26.3 26.5 64.6 D 15.9 16.1 65.2 E 10.2 8.8 54.9 Working Status Working full-time† 43.6 46.3 68.2 Part time 18.4 18.5 64.6 Not working (excluding retired/ invalid)‡ 15.5 18.6 77.1 Not working (retired/ invalid) 22.4 16.4 46.9

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Table 7.7: Adults Who Agreed That Fast-Food Restaurants and Home-Delivery Outlets Now Offer Healthier Options Than 5 Years Ago (% of adults), August 2012

...table continued

Statement: “Fast-food restaurants and home-delivery outlets now offer healthier options than 5 years ago.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Region North 4.7 4.7 64.7 Yorkshire and Humberside 10.9 9.9 58.5 East Midlands 6.1 5.8 61.4 West Midlands 6.3 5.8 59.3 East Anglia 8.9 10.2 73.8 South East 16.2 16.6 65.6 Greater London 12.4 11.7 60.9 South West 8.5 9.4 70.7 North West 12.0 11.7 62.7 Wales 5.1 5.5 69.7 Scotland 9.1 8.7 61.3 Size of Household One person 23.3 19.7 54.4 Two persons 30.6 26.8 56.2 Three person 16.9 20.3 77.0 Four persons 21.5 23.6 70.7 Five persons or more 7.3 8.9 78.0 Marital Status Married/living as married 47.1 46.6 63.5 Single 34.5 38.5 71.6 Divorced 7.1 6.8 61.3 Widowed 9.5 6.5 43.7 Separated 1.5 1.4 57.9

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Table 7.7: Adults Who Agreed That Fast-Food Restaurants and Home-Delivery Outlets Now Offer Healthier Options Than 5 Years Ago (% of adults), August 2012

...table continued

Statement: “Fast-food restaurants and home-delivery outlets now offer healthier options than 5 years ago.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Presence of Children Aged 0-4 6.9 8.2 76.7 Aged 5-9 12.1 12.2 64.7 Aged 10-15 14.8 16.0 69.0 No children 74.4 71.8 61.9 Tenure Own home outright 41.9 38.1 58.3 Buying home 33.4 36.4 69.9 Rent from the council 9.7 9.1 60.6 Rent rent privately 11.3 11.4 64.9 Rent-free occupancy 1.2 1.5 80.0

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

Only half of the respondents (54.8%) believe that the food on offer in fast-food and takeaway restaurants is better quality now than 5 years ago. This means that the negative connotation between this type of restaurant and poor food remains widespread in the UK. Men are more likely to hold this opinion than women (59.9% and 50%, respectively). Not only do those aged between 16 to 19 eat in these outlets due to their good value and convenience, but nearly nine in ten respondents (89.5%) in the age group believe that the quality of the food has improved since 2008. By contrast, only 41.6% of those aged 65 and over are likely to share the same opinion, as are only 25.3% of those in social grade A.

Respondents living in the North West are more likely to agree that there has been a rise in the quality of fast food and takeaways in the UK than any other region (62.7%), followed by the North (59.1%). Those living in Greater London (50%) and the West Midlands (50.5%) are the least likely to have noticed an improvement.

Table 7.8: Adults Who Consider the Food on Offer Better Quality than 5 Years Ago (% of adults), August 2012

Statement: “I consider the food on offer of better quality than 5 years ago.”

Sample Purchasing Penetration Profile (%) Profile (%) (%)

All adults 100.0 100.0 54.8 Sex Male 48.8 53.3 59.9 Female 51.2 46.7 50.0 Age 16 to 19 4.5 7.3 89.5 20 to 24 10.6 11.3 58.4 25 to 34 17.5 18.2 56.8 35 to 44 18.4 20.6 61.3 45 to 54 16.3 16.9 56.7 55 to 64 13.1 10.9 45.6 65+ 19.6 14.8 41.6 Social Grade A 1.7 0.8 25.3 B 20.0 20.7 56.8 C1 25.9 26.2 55.4 C2 26.3 28.9 60.2 D 15.9 14.7 50.8 E 10.2 8.7 46.6 Working Status Working full-time† 43.6 45.3 57.0 Part time 18.4 18.3 54.4 Not working (excluding retired/ invalid)‡ 15.5 19.1 67.6

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Table 7.8: Adults Who Consider the Food on Offer Better Quality than 5 Years Ago (% of adults), August 2012

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Statement: “I consider the food on offer of better quality than 5 years ago.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Working Status (cont.) Not working (retired/invalid) 22.4 17.2 41.9 Region North 4.7 5.0 59.1 Yorkshire and Humberside 10.9 11.1 55.6 East Midlands 6.1 6.2 55.9 West Midlands 6.3 5.8 50.5 East Anglia 8.9 9.1 56.5 South East 16.2 15.4 52.3 Greater London 12.4 11.3 50.0 South West 8.5 8.6 55.3 North West 12.0 13.7 62.7 Wales 5.1 4.9 53.4 Scotland 9.1 8.8 53.3 Size of Household One person 23.3 20.6 48.6 Two persons 30.6 28.8 51.5 Three person 16.9 20.3 65.7 Four persons 21.5 21.6 55.3 Five persons or more 7.3 8.2 61.8 Marital Status Married/living as married 47.1 47.2 55.0 Single 34.5 38.3 60.8 Divorced 7.1 6.1 46.7 Widowed 9.5 6.6 38.3 Separated 1.5 1.5 53.4

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Table 7.8: Adults Who Consider the Food on Offer Better Quality than 5 Years Ago (% of adults), August 2012

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Statement: “I consider the food on offer of better quality than 5 years ago.”

Sample Purchasing Penetration Profile (%) Profile (%) (%) Presence of Children Aged 0-4 6.9 6.2 49.4 Aged 5-9 12.1 12.9 58.7 Aged 10-15 14.8 18.1 66.7 No children 74.4 72.0 53.0 Tenure Own home outright 41.9 40.9 53.5 Buying home 33.4 35.7 58.5 Rent from the council 9.7 8.4 47.4 Rent rent privately 11.3 11.5 55.7 Rent-free occupancy 1.2 0.8 34.5

† — 30+ hours a week ‡ — e.g. full-time student, not looking for work, unemployed Base: all adults aged 16+ Weighted sample: 1,000

Source: Key Note

8. Current Issues

TECHNOLOGY

The technological revolution is gaining momentum in the fast-food and home-delivery industry. Chains are increasingly relying on systems and technologies to improve customer experience in the market, as well as to promote their own brands and products. The developments enable the contact between companies and consumers to be speedier and more efficient, as well as creating a newfound dynamic level of interaction.

Contactless Payments

On 19th January 2012, The Guardian reported that 2012 was set to be the year the contactless payment revolution would begin. Virtual payment systems require no tills, cards or pin numbers. They use wave and pay technology with both cards and mobile phones. In spite of security fears, contactless payments can save consumers both time and effort and are predicted as the way forward by supporters in the banking industry. Visa predicts that by 2020 half of all transactions over its network will be made through a mobile device, as reported by another article by The Guardian on 21st August 2012. Contactless payments can be made for payments worth up to £20.

Contactless payment can make the fast-food and takeaway industry even faster by saving several seconds per transaction. Moreover, most purchases in these restaurants are under £20. McDonald’s, Greggs, Burger King and Subway have all adopted the technology to a greater or lesser extent. This trend is set to continue in the future.

Wi-Fi Access

More and more, fast-food chains are offering customers free wireless Internet in their restaurants. In March 2012, Greggs announced that it would install Wi-Fi in all of its stores. The roll-out was expected to be completed by the end of the summer. The importance of these connections is evident by the fact that McDonald’s, which invested £300m to establish Wi-Fi networks in its restaurants in the UK, reported that it now serves more emails a day than it does Big Macs, said a company press release on 16th December 2011. Mark Fabes, Director of IT at the company in the UK, is quoted saying: ‘Demand for Wi-Fi in our restaurants is growing at an incredible pace.’ Giving customers free Wi-Fi access is part of the company’s refurbishment plans, which are expected to be completed by the end of 2012. These instalments reflect the growing importance of smartphones and the Internet as part of consumers’ daily lives and fast-food companies’ desire to enhance customer experience.

Smartphone Apps and Mobilised Websites

Smartphone ownership by adults in the UK increased by 44.4% over the past year, according to The Guardian on 18th July 2012. Ofcom’s annual Communications Market Report found that nearly one in four adults now own the devices (39%). These gadgets are no longer being used simply to make phone calls and send text messages. The survey found that 42% of Britons prefer to use their smartphones when accessing the internet more than any other technology. This figure has risen by 9 percentage points over the past year.

Smartphones are playing a progressively prominent role in consumers’ lives. The gadgets can be used at any time and perform a variety of tasks. Chains in the fast-food and takeaway industry have begun adapting to these developments with the introduction of smartphone applications (‘apps’) and mobilised websites. These enable consumers to view menus, find the nearest restaurant and obtain current deals.

Domino’s Pizza is at the forefront of this revolution in the industry. As the leader in the home-delivery market, it has launched apps that allow customers to place orders using their smartphones. According to the company’s half-year financial statement, 17.9% of its sales in the UK were generated from orders on mobile devices in the first half of 2012. The popularity and growing importance of smartphone apps and mobilised websites in the UK is evidenced by the fact that the company’s mobile sales surpassed £1m per week in March 2012, as reported by Caterer and Hotelkeeper on 28th March 2012.

Social Media Advertising Campaigns

Social media advertisements are playing an increasingly important role in company’s marketing campaigns in the UK. Not only are these platforms more cost effective than traditional main media because they are cheaper, but they have the capacity to be more influential by creating a dynamic relationship between the brand and the consumer by bringing a new level of excitement to the market. Fast-food companies are creating Twitter, Facebook and YouTube accounts and building up their ‘fan’ base with games and promotions that are exclusive to these channels. Customers have responded well and are proving to be willing participants in these campaigns. Some examples are outlined below.

In March 2012, Domino’s Pizza introduced a Wild West Facebook game to celebrate the launch of its BBQ pizza. The game asks users a series of questions that test their knowledge on the Wild West. Every time players answered a question correctly, they took one step forward in a ‘classic high noon showdown’ against ‘BBQ Pete’ the ‘infamous pizza rustler’. After responding to ten questions correctly, players won the duel and were awarded points, which were recorded on a scoreboard on Domino’s Pizza’s Facebook page. Every Friday, Domino’s gave a free pizza to the player in the leading position on the scoreboard. Other prizes were also available along the way. Fans could additionally invite their friends to play the game too.

In June, Domino’s Pizza unveiled a football app to coincide with the European Football Championship. It gave iPhone, Android and Facebook users the opportunity to win pizzas by inviting consumers to tap the app whenever a goal was being scored. This gave them the chance to win a Domino’s voucher code. The app was not just about pizzas as users could also receive real-time scores of games being played, as well as fixture information. Simon Wallis, the brand’s Sales and Marketing Director, commented in The Drum on 7th June 2012:

“Pizza and football are a match made in heaven so we wanted to inject a bit of fun and competition into the app too with prizes for fans who have the fastest fingers when the goals are scored.”

In August, Greggs launched a 2-week long online sandwich competition. The Greggs Sandwich Hero app, which users can access via its Facebook page, invites fans to create a virtual sandwich. They choose from three fillings, three salad items, a sauce and a range of bread styles. Once the competition is over, the company plans to put the top ten suggestions to a public vote. The winning creation will then be sold on the high street in the UK.

However, these campaigns are not always successful. McDonald’s was humiliated in January 2012 after its Twitter account (#McDStories) backfired. According to the Financial Times on 24th January 2012, the company had bought two ‘promoted tweets’ using Twitter’s nascent advertising system with the plan for happy customers to share their ‘McDStories’ on the messaging site. However, the account was hit, instead, by a series of unhappy customers who sent abusive tweets, including complaints about food-poisoning incidents and allegations of low standards of employee and animal welfare. The fast-food chain ended up closing the account down.

Electronic Menu Boards and Other Digital Gadgets

Electronic menu boards are full digital LED (light-emitted diode) displays. The advantages of this technology are that store owners can easily update or change the menu, display or promotional images with just a few clicks of the button. Moreover, the innovative signs are better for the environment by saving on paper and offering consumers a more vivid visual experience, enhancing their customer experience. McDonald’s commenced a trial concept restaurant in January 2012 in the UK, which features these electronic menu boards, as well as iPads for children. These devices will be used by all major fast-food chains in the future.

POLITICAL ISSUES

Public Health Responsibility Deal

In March 2012, a new pledge was announced by the Department of Health as part of its Public Health Responsibility Deal. Supermarkets, food manufacturers, caterers and food outlets agreed to cut 5 billion calories from the nation’s daily diet. Subway is one of the companies that has signed up to the pledge. Health Secretary Andrew Lansley commented in the Department’s press release on 26th March 2012, saying: ‘Eating and drinking too many calories is at the heart of the nation’s obesity problem’. He added: ‘This pledge is just the start of what must be a bigger, broader commitment from the food industry. But it is a great step in the right direction.’

Then, on 27th July 2012, the Department issued another article which revealed the creation of three new pledges regarding salt reduction. The ultimate target is to limit the public’s intake to 6 grams (g) of salt a day. According to the press release, the three pledges focus on training and kitchen practice, reformulation and procurement. According to England’s 2011 Urinary Salt Survey, the average consumer currently eats 8.1g of salt a day.

Fast-food Employers Abandon Jobless Work Experience

In summer 2011, the Government unveiled a scheme that allows unemployed youths, aged 16 to 24, to do unpaid work for up to 2 months without losing benefits. Called ‘Get Britain Working’, the scheme aims to enhance their CV (curriculum vitae) and give them work experience. Different companies agreed to sign up to the scheme, including McDonald’s, Greggs and Burger King in the fast-food and home-delivery industry. However, the programme has been heavily criticised by the media and the public, even branded ‘slave labour’ by some.

Although the High Court ruled that the scheme was legal and not a form of ‘forced labour’ in August 2012, Greggs and Burger King backed away from the scheme following public backlash in February. The Guardian quotes a press release by Burger King on 25th February 2012, which states: ‘Given the recent concerns expressed by the public we have decided to no longer have any involvement in the programme.’ McDonald’s continues to support the programme. However, it has limited work experience duration to 2 weeks, instead of the scheme’s 8.

Pasty Tax

On 28th March 2012, Chancellor George Osborne disclosed plans to introduce 20% VAT (value-added tax) on hot baked goods. The proposed tax would cover products kept hot in a cabinet, on a hot plate, under a heat lamp or on a spit, but goods that were piping hot from the oven were not included. Dubbed the ‘pasty tax’, it instantly caused uproar among consumers and bakery businesses alike. In the fast-food and home-delivery industry, Greggs waged a campaign to fight against the proposed tax; Subway, too, protested. 2 months later, at the end of May, the Treasury announced that it had narrowed the scope of the proposed tax, which would no longer affect products in the fast-food and takeaway industry, unless they were kept hot by foil.

CORPORATE SOCIAL RESPONSIBILITY

In an attempt to combat negative perceptions of the role played by fast-food chains and takeaway companies in the national obesity epidemic, animal welfare abuse and the destruction of the environment, major businesses in the industry are increasingly signing up and emphasising their commitment to social, environmental and ethical issues. This is part of their growing duty under the concept of corporate social responsibility (CSR).

Social Causes

Companies have signed up to charities and initiated events to fundraise money for these organisations. The charities are primarily UK-based, although some are international too. Fast-food and home-delivery businesses are additionally combating the negative association between this type of restaurant and the high levels of obesity and other health problems by promoting healthy lifestyles. Below are some causes that major actors in the industry have signed up to:

• Burger King’s 150 is the Magic Number campaign that encourages customers to exercise following the Department of Health’s recommendation that adults ‘achieve at least 150 minutes of moderate to vigorous intensity physical activity every week’. Not only does the burger chain recommend ‘simple ways’ to achieve this target, but it also explains on its website why it is important to exercise and defines what counts as ‘moderate intensity physical activity’.

• In November 2010, Domino’s Pizza joined forces with The Pennies Foundation. The organisation is behind the micro-donating scheme Pennies, an electronic charity box, that invites customers to round up the price of their orders, thereby donating their ‘spare change’ to charity. Since then, Domino’s has raised over £230,000. The money is then donated to charities in the UK. According to a press release on 13th February 2012, the company’s nominated charity is Special Olympics Great Britain. Other charities that it supports are Northern Ireland Children’s Hospice, Shelter, Together for Short Lives and the National Society for Prevention of Cruelty to Children (NSPCC).

• Greggs’ Foundation Fortnight is committed to raising funds for local charities in the UK. The grant-making trust is a registered charity based in Jesmond, Newcastle Upon Tyne, and has access to £1m every year. According to Greggs’ website, the Foundation prioritises organisations that support voluntary carers, people with disabilities, the homeless and older people. The baker is also a corporate partner of BBC Children in Need, a cause which it has supported since 2006.

• KFC (Kentucky Fried Chicken) supports the UN’s World Food Programme against hunger. In the UK, it has a partnership with Barnardo’s, which supports children and young people. Its focus with the charity is youth unemployment. In summer 2011, KFC launched a pilot project in the North of offer work placements and skills development training to youngsters in Barnardo’s services. The project is being rolled out in other regions over the course of 2012.

• In 1989, McDonald’s founded Ronald McDonald House Charities UK. It is part of a corporate non-profit organisation that is present in 52 countries around the world. It sets out to provide support for families with children in hospital and hospices by providing them with free ‘home away from home’ accommodation. This is to help keep family units together during hard and stressful times. The buildings are located near the hospital or adjacent to the ward. If possible, the company sets up a direct phone line. In the UK, there are currently 14 Ronald McDonald Houses and 29 sets of Ronald McDonald Family Rooms, meaning that there are over 400 bedrooms available.

Environmental and Animal Welfare Concerns

Revelations of the use of caged and genetically modified chickens, mechanised meat factories and the use of vulnerable rainforest wood for packaging has damaged the quality credibility of fast-food chains around the world. Following years of accusations over animal cruelty and more recently the destruction of the environment, fast-food chains have been keen to step up their commitment to environmental and animal welfare causes. Below are some examples.

• In April 2012, Burger King vouched to solely use cage-free hens and pigs in the future. It promised that by 2017, all its eggs will come from cage-free chickens and that its pigs would be raised in cage-free environments.

• McDonald’s categorises its environmental commitments under four headings: litter, waste, energy and packaging. The strategy at the core of these initiatives is to reduce, reuse, recycle and redesign, with the ultimate aim being to use less energy. Efforts include minimising energy consumption in restaurants using technology such as Environmental Biotech drainage systems and energy lightbulbs, using used cooking oil to fuel its trucks and using cardboard packaging that is made with 72% recycled material. Moreover, a key highlight of its Olympic flagship restaurant is that it was made with sustainable materials and that up to 75% would be reused and recycled after the event in 2012.

• According to its website, KFC’s napkins and Krushems cups are made from recyclable material and its burger boxes are biodegradable. In addition, the company has decided to stop using palm oil to prevent further deforestation in Malaysia and Indonesia. New restaurants are being built using sustainable materials. It also fuels its trucks and other vehicles with used cooking oil. In 2012, the company was awarded the Carbon Trust Standard for reducing its carbon footprint. KFC has additionally become the first fast-food chain in the UK to be awarded the Red Tractor logo. The emblem guarantees that ingredients meet high standards of food safety, environmental protection and animal welfare.

Ethical Sourcing and Supporting British Trade

Consumers and the media are putting greater pressure on fast-food and home-delivery companies to source their ingredients ethically, as well as to support British trade. For example, McDonald’s is a signatory to ‘Food Vision’, which pledges to use British ingredients where possible. Following public protest, the company agreed to source chicken and beef served at the Olympic and Paralympic Games from domestic farmers instead of abroad. Moreover, in March the company launched its Farm Forward programme in Britain and the Republic of Ireland. According to the company’s press release on 23rd March 2012, the scheme aims to secure a sustainable future for the farming industry by supporting existing and young farmers.

McDonald’s initially invested £1m to concentrate on five core issues: quality of ingredients; animal welfare standards; creating work and training opportunities for young farmers; environmental and efficiency standards; and knowledge sharing. The programme has been created in collaboration with leading farmers and agricultural experts including the National Farm Research Unit, beef and lamb industry organisation EBLEX and FAI Farms. In addition, in September 2011, it was announced that all fish products served by the fast-food chain would carry the official Marine Stewardship Council (MSC) eco-label. The logo certifies that the fish is sustainable and traceable throughout the entire supply chain.

Other examples of ethical sourcing include KFC’s move to ensure all its bone chicken for its Original Recipe comes from UK farmers. Greggs’ website also states that the company sources its products domestically where possible. Emphasising ethical sourcing and the use of British ingredients marks an attempt by the industry to boost the perception of quality in the market.

CORPORATE ACTIVITY

Burger King (UK) Ltd

In April 2012, it was announced that Burger King would be relisted on the New York Stock Exchange (NYSE) in 2 years’ time, following the purchase of a 29% stake in the company by the British company, Justice Holdings Ltd. A board member for the company, Bill Ackman, told The Independent that Justice was buying the business ‘at the bottom’ in terms of customer revenues, but ‘that the company could return to its glory days’ (4th April 2012). As part of the deal, Justice will transfer its listing to the NYSE and rename itself Burger King Worldwide. The fast-food chain has now effectively merged into the Justice corporate shell. The new Delaware-based holding company went public on 20th June 2012.

Domino’s Pizza Group PLC

In December 2011, Domino’s moved its UK headquarters from Kingston, Milton Keynes, to West Ashford in the same area. The new head office is a state-of-the-art facility that includes a test kitchen for research and development (R&D). The new site was designed to support the company’s expansion plans to have 1,200 restaurants in the UK and the Republic of Ireland by 2021. The office is sustainable and was built to BREEAM standards (BRE Environmental Assessment Method).

On 4th January 2012, Lance Batchelor replaced Chris Moore as Chief Executive Officer (CEO) for Domino’s Pizza Group PLC. Batchelor joined Domino’s PLC Board of Directors in July 2010 and was promoted to Deputy Chief Executive in June 2011. He commented on his promotion in the company’s press release, saying:

“I am looking forward to driving growth, contributing new ideas and developing new concepts for the business. Domino’s has earned an excellent reputation as the UK’s leading pizza delivery company and I intend to keep us there. In tough times the best companies thrive, and Domino’s is well positioned for growth.”

KFC (GB) Ltd

In February 2012, KFC (GB) Ltd announced that James Watts would be replacing Misty Reich as Vice President of Human Resources (HR). Watts first joined Yum! Brands in 2004 as Pizza Hut’s Organisational Development Manager (ODM). He was later named KFC’s Director of Operations HR in the UK, before joining Yum Restaurants International (YRI) in December 2008. Prior to his ultimate promotion, he was Senior Director of HR, for YRI. Misty Reich will now be the Chief People Officer for the parent company in Texas.

Pizza Hut (UK) Ltd

In February 2012, Yum! Brands appointed PwC to sell the company’s 340 UK restaurant businesses in the UK. The deal excludes its delivery stations. The new owner will own a stake in the company and will pay a royalty fee, as well as serving as the master franchisee. The parent company additionally demands that the new owner focuses on expanding and refurbishing Pizza Hut UK. On 17th July 2012, The Independent listed the names of private-equity firms that have shown an interest in the business. These are Risk Capital Partners, which was cofounded by Luke Johnson, an entrepreneur and former chairman of Pizza Express, as well as Rutland Partners and Endless. Yum! will retain the rights to the Pizza Hut UK brand.

Select Service Partner UK Ltd

SSP UK appointed Mark Angela as CEO of its UK Republic of Ireland operations in January 2012, effective in February. He replaces Tony Keating. Angela was previously employed by Pizza Express Restaurants, where he worked as CEO for the past 4 years. He was also Managing Director (MD) for the Greene King Pub Company, as well as serving on the Greene King PLC’s board for 3 years. He additionally has experience working for Colgate-Palmolive and ICI (now Astra-Zeneca). Angela is quoted in an article by Caterer and Hotelkeeper on 13th January 2012, saying: ‘Given the positive long-term trends in the travel sector and SSP’s unrivalled position within it, this is an exciting time to be joining a business with such unique expertise and an outstanding portfolio of brands.’

9. The Global Market

INTRODUCTION

Fast-food chains are an American creation. A&W, which was founded in 1916, was the original fast-food joint, followed by White Castle in 1921. Since then, the industry has grown into an international business. Demand for this type of food at the global level is on the rise and companies are doing well in both mature and developing markets. In March 2011, Subway surpassed McDonald’s as the largest restaurant in the world in terms of venues. On 8th March 2011, The Wall Street Journal reported that there were 33,749 Subway outlets compared to 32,737 McDonald’s venues at the end of 2010. Still, McDonald’s continues to dominate in terms of revenue.

GLOBAL CORPORATIONS

McDonald’s Corporation

According to the Corporation’s 2011 Annual Report, McDonald’s serves nearly 68 million customers around the world every day. That year, global comparable sales rose by 5.6%, while revenue increased by 12%. Its global strategy is called Plan to Win and focuses on customer service revolving around these key drivers: people, products, place, price and promotion. The company is committed to its menu and value, which both vary according to country and region, based on cultural preferences, as well as convenience.

McDonald’s continues to expand its presence around the world year-on-year. Between 2009 and 2011, the total number of venues increased by 3.2% to 33,510. The number of franchised restaurants is growing at a faster pace than those that are company-operated, at 3.3% compared with 2.8%. Franchised restaurants account for the majority of McDonald’s restaurants around the world (80.8%).

Table 9.1: McDonald’s Corporation — Number of Restaurants by Type, Years Ending 31st December 2009-2011

2009 2010 2011

Company-operated restaurants 6,262 6,399 6,435 Franchised restaurants 26,216 26,338 27,075

Table continues...

Table 9.1: McDonald’s Corporation — Number of Restaurants by Type, Years Ending 31st December 2009-2011

...table continued

2009 2010 2011 Total 32,478 32,737 33,510

Source: McDonald’s Corporation Annual Report, 2011

In total, McDonald’s operates in 119 countries. In 2011, 42.1% of its restaurants were located in the US. This figure, however, has decreased by 0.9 percentage point since 2009, as the company has focused on increasing its global presence. More than one in four McDonald’s are now found in the APMEA regions, which groups the Asia-Pacific region, the Middle East and Africa together (26.5%). The number of restaurants in Asia Pacific, the Middle East and Africa (APMEA) has risen by 4.4% since 2009. In 2011, 21.4% of all McDonald’s were in Europe.

Table 9.2: McDonald’s Corporation — Number of Restaurants by Region, Years Ending 31st December 2009-2011

2009 2010 2011

US 13,980 14,027 14,098 APMEA† 8,488 8,424 8,865 Europe 6,785 6,969 7,156 Other countries and corporate 3,225 3,317 3,391

Total 32,478 32,737 33,510

† — APMEA indicates Asia/Pacific, Middle East and Africa

Source: McDonald’s Corporation Annual Report, 2011

Although company-operated McDonald’s are a minority, they bring in more revenue than franchised restaurants at the global level. In 2011, company-operated sales were valued at $18.29bn, while franchises contributed $8.71bn. This means that the former accounted for 67.7% of McDonald’s revenues that year. Since 2009, company-operated sales increased by 18.3%, compared with franchises, which grew by 19.6% over the equivalent period.

Table 9.3: McDonald’s Corporation Revenues by Type ($m), Years Ending 31st December 2009-2011

2009 2010 2011

Company-operated sales 15,459 16,233 18,293 Franchised revenues 7,286 7,842 8,713

Total 22,745 24,075 27,006

Total systemwide sales 56,928 61,147 67,648

Source: McDonald’s Corporation Annual Report, 2011

In 2011, Europe accounted for 40.3% of McDonald’s overall revenues, followed by the US (31.6%) and APMEA (22.3%). France and Germany account for 50% of McDonald’s European market, while the People’s Republic of China (PRC), Australia and Japan represent 55% of its APMEA business in terms of revenue. The region has doubled its income contribution to the company’s total revenues over the past 6 years.

Yum! Brands Inc

2011 was a successful year for Yum! Brands. Its earnings per share (EPS) rose by 14%, while its system sales increased by 7%. Its net income was $1.3bn. The main global restaurant chains owned by the brand include Kentucky Fried Chicken (KFC), Pizza Hut and Taco Bell. The majority of its outlets are franchises. These accounted for 72.5% of all venues in 2011. Franchises are playing an increasingly important role in the company, as their total share of the overall number of system restaurants has risen by 1.7 percentage points since 2009. In 2011, 7,437 restaurants were company-operated. These represent 20% of all Yum! Brands restaurants. Its strategy for growth is to build leading brands, implement an aggressive international expansion policy, improve brand positioning and drive long-term shareholder franchisee value.

Table 9.4: Yum! Brands Inc — Number of System Restaurants by Type of Ownership, 2009-2011

2009 2010 2011

Company 7,666 7,271 7,437 Franchisees 25,085 26,219 26,928 Licensees 2,199 2,186 2,169

Table continues...

Table 9.4: Yum! Brands Inc — Number of System Restaurants by Type of Ownership, 2009-2011

...table continued

2009 2010 2011

Unconsolidated affiliates 469 525 587

Total 35,419 36,201 37,121

Source: Yum! Brands Inc Annual Report 2011

Yum! Brands’ primary markets are the US and the PRC. According to its 2011 annual report, the PRC is the best restaurant growth opportunity of the 21st Century, as its consumer base is expected to double over the next 10 years. For future growth, the corporation plans to focus on India and Russia, and France and Germany in the European region.

Table 9.5 shows that almost half of Yum! Brands’ restaurants are located in the US (48.6%). Having said that, there are more KFC venues classified under its international category than either the US or the PRC. Moreover, although the PRC is its second biggest market, there are four times as many Yum! Brands-owned restaurants in the US than in the East Asian country. In the US, there are more Pizza Hut and Taco Bell restaurants than KFC outlets; however, KFC venues dominate at the global level, exceeding its sister brands by 3,654 and 11,456 outlets, respectively.

Table 9.5: Number of Yum! Brands Inc System Restaurants by Brand, 2011

KFC Pizza Hut Taco Bell Total

US 4,780 7,600 5,670 18,050 International 8,920 5,383 275 14,578 PRC 3,701 764 - 4,493

Total 17,401 13,747 5,945 †37,121

KFC — Kentucky Fried Chicken PRC — People’s Republic of China † — does not sum due to rounding

Source: Yum! Brands Inc Annual Report 2011

Company sales accounted for 86.3% of Yum! Brands’ total revenue in 2011. Although contributing more to company revenue than franchises and licensed restaurants, the category’s percentage share has shrunk by 0.6 percentage points since 2009. Still, its value has risen by 15.7% over the 2-year period. In 2011, company sales amounted to $10.89bn. By comparison, franchise and licensee fees and income were valued at $1.73bn. This figure has risen by 21.8% since 2009, a faster rate than company sales.

Table 9.6: Yum! Brands Inc — Revenues by Company and Franchised Sales ($m), 2009-2011

2009 2010 2011

Company sales 9,413 9,783 10,893 Franchise and licensee fees and income 1,423 1,560 1,733

Total 10,836 11,343 12,626

Source: Yum! Brands Inc Annual Report 2011

Burger King Worldwide

By the end of 2011, there were 12,512 Burger Kings in 81 countries, in addition to the US and its territories. The majority of these restaurants (89.6%) were franchises. Only 10.4% were company-owned. The importance of these types of business in the company is declining with the exception of in Latin America, where there are currently three more company-operated venues than in 2009. During the 2-year period, the number of restaurants operated by Burger King itself fell by 8.9%.

By contrast, the number of franchised restaurants increased by 5.3% to 11,217. The number of franchised restaurants in the US and Canada remained stagnant between 2009 and 2011. Still, there are roughly twice as many franchised restaurants in the region than in EMEA/APAC and nearly six times as many as in Latin America. However, 402 new Burger King franchises have been founded in EMEA/APAC and 114 have been opened in Latin America since 2009, compared to just 45 in the US and Canada. These figures reflect Burger King’s global strategy, which is to aggressively expand its presence in high-growth emerging markets, according to The Wall Street Journal on 15th June 2012.

Table 9.7: Burger King Holdings Inc — Number of Restaurants by Type, Years Ending 30th June 2009-2011

2009 2010 2011 Number of Company-Owned Restaurants US and Canada 1,029 984 939 EMEA/APAC† 299 264 259 Latin America 94 96 97 Total company-owned restaurants 1,422 1,344 1,295

Number of Franchised Restaurants US and Canada 6,516 6,566 6,561 EMEA/APAC† 3,129 3,297 3,531 Latin America 1,011 1,044 1,125 Total franchised restaurants 10,656 10,907 11,217

Total Restaurants — System-Wide US and Canada 7,545 7,550 7,500 EMEA/APAC† 3,428 3,561 3,790 Latin America 1,105 1,140 1,222 Total restaurants — system-wide 12,078 12,251 12,512

† — indicates Europe, the Middle East and Africa/Asia Pacific

Source: Burger King Holdings Inc Annual Report, 2011

Burger King’s revenue has declined year-on-year since 2009. In 2011, the company reported revenues of $2.34bn, down from $2.54bn in 2009. Company-owned Burger Kings bring in more than twice as much revenue as franchise and property operations for the company. In 2011, company restaurant revenues accounted for 70.2% of revenue. This figure has fallen by 3.9 percentage points since 2009. Franchise and property revenues rose by 6.1% to $697m during the same time period.

Table 9.8: Burger King Holdings Inc — Revenues by Source ($m), Year Ending 30th June 2009-2011

2009 2010 2011 Company restaurant revenues 1,881 1,839 1,639 Franchise and property revenues 657 663 697 Total †2,537 2,502 2,336

† — does not sum due to rounding

Source: Source: Burger King Holdings Inc Annual Report, 2011

Table 9.9 breaks down Burger King’s revenue by region. It reveals that the sole region that has increased its revenue on a year-on-year basis since 2009 was Latin America. Its contribution has risen by 1.3 percentage points during the time period to 5.5% in 2011. Revenues in EMEA/APAC rose by 1.6% in 2010, but then fell by 8.5% in 2011 to $639m. In 2011, 67.2% of Burger King’s revenue came from the US and Canada. However, revenues in the region have dropped by 10% since 2009.

Table 9.9: Burger King Holdings Inc — Revenues by Region ($m), Years Ending 30th June 2009-2011

2009 2010 2011

US and Canada 1,743 1,695 1,569 EMEA/APAC† 687 698 639 Latin America 107 109 128

Total 2,537 2,502 2,336

† — indicates Europe, the Middle East and Africa/Asia Pacific

Source: Burger King Holdings Inc Annual Report, 2011

10. Forecasts

INTRODUCTION

General Economic Forecasts

Economic trends will continue to affect the state of the environment within which fast-food and home-delivery outlets operate in the UK in the future. Table 10.1 summarises official forecasts for major factors between 2012 and 2016. It reveals that the Government expects the economic crisis to remain. This means that consumers will continue to favour good value, which bodes well for the industry.

The population in the UK is expected to continue increasing over the next 5 years. Population growth is favourable for the fast-food and home-delivery industry as it expands its potential consumer base. Changes in demographics may affect the demand for different types of food as companies introduce menus that target specific groups, including children and ageing baby boomers.

Table 10.1: Economic Forecasts (000, % and million), 2012-2016

2012 2013 2014 2015 2016

UK resident population (000) 63,244 63,758 64,271 64,776 65,271 GDP growth (%) 0.1 1.4 2.0 2.4 2.5 Inflation† (%) 3.4 2.6 2.9 3.4 3.4 Unemployment‡ (million) 1.60 1.67 1.61 1.51 1.40

GDP — gross domestic product † — at retail price index (RPI) ‡ — actual number of claimants; claimant count measures the number of people claiming Jobseeker’s Allowance

Source: National Population Projections, 2010-based projections, National Statistics website/Forecasts for the UK Economy, August 2012, Treasury Independent Average © Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queen’s Printer for Scotland)

The economic crisis is predicted to persist in the future. Although gross domestic product (GDP) is forecast to rise year-on-year, it will stagnate by 2016. Inflation will remain well-above the optimum 2% rate throughout the 5-year period; meanwhile, although unemployment is expected to fall after 2013, around 1.4 million workers will remain unemployed by 2016. Despite this, the market is unpredictable and it is difficult to predict the state of the economy in 5 years time. Nevertheless, Key Note estimates that the fast-food and home-delivery industry will continue to grow during the time period.

The good value offered by the fast-food and home-delivery market, its convenience and the availability of healthier options will continue to draw in customers. Moreover, product and flavour innovation will keep consumers on their toes and help companies differentiate themselves from their competitors. Still, tough market conditions, combined with fierce competition in the industry, means that sustaining profit will be no easy ride. Companies will have to find the balance between rising input costs and the demand for quality products made using British and/or ethically sourced ingredients with good value.

FORECASTS 2012 TO 2016

Key Note predicts that the value of the fast-food, takeaway and home-delivery market will continue to increase over the next 5 years. By 2016, the industry will be worth £13.61bn after rising by 24.5% over the period. Growth will be steady, though it will slow over the years due to the intensity of market conditions and competition in the industry.

In 2012, the fast-food, takeaway and home-delivery market is expected to rise by 6.3% to £10.93bn. The industry will grow at a faster pace than in 2011 as it benefits from the year’s festivities and events. Many consumers are expected to have watched the European Football Championship, the Queen’s Diamond Jubilee celebrations and the London Olympic and Paralympic Games on television and eaten takeaways and home-delivered foods in the process.

Table 10.2: The Forecast UK Fast-Food, Takeaway and Home-Delivery Market by Sector by Value at Current Prices (£m at rsp), 2012-2016

2012 2013 2014 2015 2016

Sandwiches 3,410 3,598 3,778 3,960 4,140 % change year-on-year 6.0 5.5 5.0 4.8 4.5 Burgers 2,505 2,630 2,748 2,865 2,980 % change year-on-year 5.8 5.0 4.5 4.3 4.0 Pizza 1,270 1,346 1,427 1,510 1,593 % change year-on-year 6.5 6.0 6.0 5.8 5.5

Table continues...

Table 10.2: The Forecast UK Fast-Food, Takeaway and Home-Delivery Market by Sector by Value at Current Prices (£m at rsp), 2012-2016

...table continued

2012 2013 2014 2015 2016

Fish and chips 1,088 1,099 1,108 1,115 1,121 % change year-on-year 1.0 1.0 0.8 0.6 0.5 Chicken 809 878 946 1,017 1,088 % change year-on-year 8.0 8.5 7.7 7.5 7.0 Other fast-food/ takeaway outlets 1,848 2,052 2,254 2,465 2,683 % change year-on-year 10.0 11.0 9.8 9.4 8.8

Total 10,930 11,603 12,261 12,932 13,605 % change year-on-year 6.3 6.2 5.7 5.5 5.2

rsp — retail selling prices

Source: Key Note

The other fast-food and takeaway outlets category will be the fastes-growing sector in the market. Consumer interest in exotic cuisines and a demand for more adventurous flavours will boost the segment’s value. It is forecast to rise by 45.2% to £2.68bn during the 5-year period.

The chicken category will also grow ahead of the overall market. Poultry is considered to be healthier than red meat. Its rise in value by 34.5% between 2012 and 2016 will coincide with the influx in more healthy meals in the industry. This phenomenon helps to explain why the burgers sector is the only one in which the rate of growth will be lower in 2012 than in 2011. Burger sales will be driven by innovative sauce flavours and the use of alternative breads as buns that give an exotic theme to the meals. The category’s value is predicted to grow by 19% to £2.98bn between 2012 and 2016.

The pizza sector is set to rise by 25.4% to £1.59bn between 2012 and 2016. Mobile and online sales will be key contributors to the segment’s growth. Lighter variants and innovative flavours will help to boost the category’s value.

Consumers’ fast-paced lifestyles and demand for on-the-go solutions, particularly at breakfast, will push sandwich sales in the future. Key Note calculates that the sector will be worth £4.14bn by 2016, after growing by 21.4%. Meals deals will be a dominant feature in the sector as companies emphasise value in the market.

Fish and chips businesses, the majority of which are independent, will struggle in the future, unable to cope with the difficulties that accompany the economic crisis, including a slow-down in consumer outings to restaurants, increasing production and operating costs and the rising price of sustainability in the fishing industry. The sector is expected to stagnate and rise by a mere 3% over the time period.

Figure 9.1, below, illustrates the market share of the sectors over the 5-year period.

Figure 10.1: The Forecast UK Fast-Food, Takeaway and Home-Delivery Market by Sector by value at Current Prices (£m at rsp), 2012-2016

13,000 Sandwiches 12,000 Burgers 11,000 Pizza 10,000 Fish and chips 9,000 Chicken 8,000 Other fast-food /takeaway outlets 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2012 2013 2014 2015 2016

rsp — retail selling prices

Source: Key Note

MARKET GROWTH

Figure 10.2, on the following page, illustrates the trajectory of the fast-food and home-delivery industry between 2007 and 2016. The market is predicted to grow by 58.3% from £8.59bn to £13.61bn during the time period.

Figure 10.2: Growth in the UK Fast-Food, Takeaway and Home-Delivery Market by Valye at Current Prices (£m at rsp), 2007-2016

14,000 13,500 13,000 12,500 12,000 11,500 11,000 10,500 10,000 9,500 9,000 8,500 8,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

rsp — retail selling prices

Source: Key Note

FUTURE TRENDS

Social Media Campaigns

Social media campaigns will play an increasingly important role in the fast-food and home-delivery industry. These are a less expensive but equally, if not more, effective way of promoting products and brands. Enterprises will use these platforms for their marketing campaigns, which will help to minimise costs to counter balance rising production and operating costs. Moreover, consumers will remain keen to interact with companies via these new channels, whether it be by participating in competitions or by playing games created by their favourite fast-food chains.

Exotic Flavours and Innovative Products

The days of the ordinary burger joint are dying out. Consumer demand for more adventurous products and exciting flavours, as well as for alternative healthy foods, means that companies will diversify their portfolios in the future to include more exotic and original options. Mexican, Caribbean and African-inspired recipes are some of the innovation expected by Key Note in the industry. Meals made with alternative breads, atypical sides and sauces that bring spice and zest will play an increasingly important role in the market in the future. This will help fast-food chains stand out against competitors in a cut-throat market and during difficult economic times.

Healthier Options

Pressure from the media and Government, as well as consumer demand for healthier options, means that there is a niche in the market for businesses to exploit, which they will do in the future. This trend will help fast-food chains to maximise sales in the industry. Companies will continue to reduce calories, fat, sugar, salt and other unhealthy ingredients in their recipes, highlighting the reformulated recipes and healthiness in their media campaigns, on menu boards and on restaurant fixtures.

Greater Use of Quality Ingredients

In the future, companies will continue their fight to break the connotation between fast-food and takeaways and the use of poor quality ingredients, including genetically modified chicken and ‘pink slime’, which refers to ground, finely textured beef, made of mechanically separated fat and beef trimming. Moreover, in order to improve the reputation of the industry, restaurants will increasingly opt for free-range and locally sourced products, in addition to supporting social and environmental causes. Furthermore, the introduction of premium ranges will mark an attempt by fast-food chains to combat negative perceptions that continue to hit the industry.

Value

As the economic crisis drags on, consumers will continue to make a conscious effort to save money by looking for the best bargains. When eating out, this will increasingly mean opting to eat in a fast-food outlet, as it offers better value than most other types of restaurants. Moreover, as chains improve the quality of their recipes and offer healthier options, they will be better able cater to the needs of a broader consumer base. Good value will be a key driver in the industry’s growth in the future.

11. Company Profiles

INTRODUCTION

The following section contains financial profiles of some of the principal companies identified as operating within the market sector discussed in this report. The financial results of some of the important names within the sector may not be reported if:

• their principal activities are so varied that their results are not considered applicable to the survey

• they are no longer trading as separate companies

• their financial data are very out of date. DEFINITIONS

A company which has a ‘Y’ consolidated value has filed consolidated accounts for the relevant year.

† — denotes that the growth rate calculation is invalid, because the figures either move from positive to negative or from negative to positive. Turnover (Sales)

This includes all income derived from the principal activities of the firm, net of VAT. It encompasses UK sales, exports and overseas and intercompany sales. Pre-Tax Profit

The net trading profit figure after deduction of all operating expenses, including depreciation and finance charges but before deduction of tax, dividends, subventions or group relief, and other appropriations. Where applicable, it will include the share of profits and losses of associated companies. Items described by the company as exceptional are included; extraordinary items are excluded. Profit Margin

Pre-tax profit expressed as a percentage of sales. Average Remuneration

Total employee remuneration divided by the number of employees. Sales per Employee

Sales divided by the number of employees. FURTHER INFORMATION

For more detailed financial information telephone Key Note on: 0845-504 0452.

BURGER KING (UK) LTD

Registered Office 15 Bath Road Slough Berkshire, SL1 3UF Telephone: 01753-500 000 Company Registration Number 05811453 Date of Incorporation 09/05/06 Holding Company None Ultimate Holding Company Burger King (Luxembourg) SaRL

Previous Name(s) and Date(s) of Change

None

Principal Activities

The operation of the Burger King franchise business in the UK and the Republic of Ireland for Burger King Europe GmbH, which includes franchise brand support and marketing activities.

SIC Code

74849, Other business activities not elsewhere classified.

Structure

Burger King Ltd is the UK subsidiary of Burger King Worldwide, a Delaware-based holding company that owns the global burger chain brand. It was established in June 2012 following a merger with Justice Holdings Ltd, a London investment firm. The new company went public on the New York Stock Exchange (NYSE) on 20th June 2012. In 2010, the Burger King franchise was purchased by 3G Capital for $3.2bn. The first Burger King restaurant was opened in the UK in 1977 and there are now over 500 venues in the country.

Brand Information

Burger King operates a single brand in the UK, although some are owned by the company, while others are franchises.

Recent Developments

In August 2011, Burger King initiated plans to re-launch its brand in the UK. Since, product innovation in a limited-edition format has been key to Burger King’s brand strategy in the UK. In addition, the company has been committed to improving customer services, including through the use of a customer feedback tool, as well as boosting its portfolio with better quality ingredients and healthier menu options.

FINANCIAL PROFILE

Year End 30/06/10 30/06/09 30/06/08 30/06/07 Weeks 52 52 52 52 Consolidated N N N N

Sales

Sales (£000) 7,074 8,572 9,360 9,658 % change year-on-year -17.48 -8.42 -3.09 - Exports (£000) - - - - Exports/Sales (%) - - - -

Profits

Pre-Tax Profit (£000) 491 406 591 584 % change year-on-year 20.94 -31.30 1.20 - Profit Margin (%) 6.94 4.74 6.31 6.05 Operating Profit (£000) 491 369 501 562

Employees

Number of Employees 54 52 51 51 Average Employee Remuneration (£) 35,556 61,385 60,686 65,745 Sales per Employee (£) 131,000 164,846 183,529 189,373 Profit per Employee (£) 9,093 7,808 11,588 11,451 Capital Employed per Employee (£) 25,778 20,731 15,588 7,804

Balance Sheet/Ratios

Capital Employed (£000) 1,392 1,078 795 398 Return on Capital (%) 35.27 37.66 74.34 146.73 Net Worth (£000) 1,392 1,078 794 397 Current Ratio 1.21 1.13 1.09 1.04 Liquidity Ratio 1.21 1.13 1.09 1.04

DOMINO’S PIZZA GROUP PLC

Registered Office 1 Thornbury West Ashland Milton Keynes Buckinghamshire, MK6 4BB Company Registration Number 03853545 Date of Incorporation 05/10/99 Holding Company None Ultimate Holding Company None

Previous Name(s) and Date(s) of Change

Domino’s Pizza UK & Ireland PLC (23/05/12) Domino’s Pizza PLC (01/11/99) Doublemeasure PLC (15/10/99)

Principal Activities

A group engaged in the operation and development of the ‘Domino’s Pizza’ home-delivery franchise brand and in property management and equipment leasing.

SIC Codes

55303, Take-away food shops. 74849, Other business activities not elsewhere classified.

Structure

On 1st May 2012, Domino’s Pizza UK & Ireland Ltd changed its name to Domino’s Pizza Group PLC. The business is comprised of operations in Germany, in addition to the UK and the Republic of Ireland. The company is a subsidiary of Domino’s Pizza, Incorporated. The first Domino’s Pizza in the UK was opened in 1985. It is now listed on the London Stock Exchange (LSE) and operates nearly 700 outlets in the UK.

Brand Information

Domino’s Pizza solely operates its own brand name. The majority of restaurants in the UK are franchises.

Recent Developments

Domino’s Pizza has recently introduced a series of new products. These include a Gourmet range, Mexican pizza and different stuffed crusts. The innovation reflects the chain’s attempt to meet consumers’ growing demand for quality and dynamic fast food. The company has been at the forefront of social media campaigns in the industry. It has particularly benefitted from mobile and online sales, due to its delivery services. Sales have been boosted by the year’s events, including the Queen’s Diamond Jubilee and the London Olympic and Paralympic Games. In December 2011, Domino’s moved its UK headquarters from Kingston, Milton Keynes, to West Ashford in the same area. On 4th January 2012, Lance Batchelor replaced Chris Moore as the company’s Chief Executive Officer (CEO) in the UK.

FINANCIAL PROFILE

Year End 25/12/11 26/12/10 27/12/09 28/12/08 Weeks 52 52 52 52 Consolidated Y Y Y Y

Sales

Sales (£000) 209,863 188,149 155,044 135,977 % change year-on-year 11.54 21.35 14.02 - Exports (£000) 19,709 17,955 13,684 13,021 Exports/Sales (%) 9.39 9.54 8.83 9.58

Profits

Pre-Tax Profits (£000) 38,789 35,204 40,968 22,149 % change year-on-year 10.18 -14.07 84.97 - Profit Margin (%) 18.48 18.71 26.42 16.29 Operating Profit (£000) 39,366 35,663 26,058 23,685

Employees

Number of Employees 555 433 470 488 Average Employee Remuneration (£) 30,732 37,397 33,613 28,049 Sales per Employee (£) 378,132 434,524 329,881 278,641 Profit per Employee (£) 69,890 81,303 87,166 45,387 Capital Employed per Employee (£) 163,659 220,423 170,568 73,947

Balance Sheet/Ratios

Capital Employed (£000) 90,831 95,443 80,167 36,086 Return on Capital (%) 42.70 36.88 51.10 61.38 Net Worth (£000) 41,249 39,277 19,820 11,481 Current Ratio 0.87 1.37 1.04 1.30 Liquidity Ratio 0.81 1.24 0.97 1.21

GREGGS PLC

Registered Office Fernwood House Clayton Rd Jesmond Newcastle Upon Tyne, NE2 1TL Telephone: 0191-281 7721 Company Registration Number 00502851 Date of Incorporation 29/12/51 Holding Company None Ultimate Holding Company None

Previous Name(s) and Date(s) of Change

Greggs Bakeries Ltd (30/12/83)

Principal Activities

A group engaged in the manufacture and retail of bread, flour confectionery, sandwiches and savoury products and the provision of catering within the shops.

SIC Codes

52240, Retail sale of bread, cakes, flour confectionery and sugar confectionery. 55303, Takeaway food shops. 15899, Manufacture of other food products not elsewhere classified. 15810, Manufacture of bread; manufacture of fresh pastry goods and cakes. 15139, Other meat and poultry meat processing.

Structure

Greggs PLC is a British company whose origins date back to the 1930s. It now owns nearly 1,600 bakeries throughout the UK, and is the largest fast-food and takeaway chain in the country in terms of the number of restaurants. The company is headquartered in Newcastle Upon Tyne.

Brand Information

Greggs is the company’s core brand. It used to operate Bakers Oven outlets, but these have been converted to the Greggs fascia. In 2012, the company opened two new types of outlets: Greggs the Bakery and Greggs Moment, its first coffee shop.

Recent Developments

Greggs has plans to make Wi-Fi available in all of its shops across the UK. In October, it signed a deal with Moto Hospitality to open shops in motorway service stations. It now supplies Iceland with an ‘at-home’ range, which will be exclusive to the retailer until at least April 2013.

FINANCIAL PROFILE

Year End 31/12/11 01/01/11 02/01/10 27/12/08 Weeks 52 52 53 52 Consolidated Y Y Y Y

Sales

Sales (£000) 701,088 662,326 658,186 628,198 % change year-on-year 5.85 0.63 4.77 - Exports (£000) - - - - Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 60,500 52,523 48,779 49,470 % change year-on-year 15.19 7.68 -1.40 - Profit Margin (%) 8.63 7.93 7.41 7.87 Operating Profit (£000) 60,431 52,365 48,433 48,613

Employees

Number of Employees 19,504 19,181 19,044 19,414 Average Employee Remuneration (£) 13,293 13,137 12,200 11,981 Sales per Employee (£) 35,946 34,530 33,909 32,358 Profit per Employee (£) 3,102 2,738 2,513 2,548 Capital Employed per Employee (£) 11,719 10,817 10,421 9,102

Balance Sheet/Ratios

Capital Employed (£000) 228,575 207,487 198,458 176,698 Return on Capital (%) 26.47 25.31 24.12 28.00 Net Worth (£000) 206,531 184,701 172,953 155,697 Current Ratio 0.69 0.75 0.84 0.53 Liquidity Ratio 0.51 0.60 0.69 0.37

KENTUCKY FRIED CHICKEN (GB) LTD

Registered Office 32 Goldsworth Road Woking Surrey, GU21 1JT Telephone: 01483-717 000 Company Registration Number 00967403 Date of Incorporation 02/12/69 Holding Company Restaurant Holdings (UK) Ltd Ultimate Holding Company Yum! Brands Inc

Previous Name(s) and Date(s) of Change

None

Principal Activities

The sale of Kentucky Fried Chicken (‘KFC’) through company-owned stores and the receipt of licence income from franchises of the KFC trade-marks and processes.

SIC Code

55303, Takeaway food shops.

Structure

KFC (GB) Ltd is part of the KFC global franchise, which specialises in fried chicken. It is one of three fast-food chains, alongside Pizza Hut and Taco Bell, which make up Yum! Brands, the restaurants division of the conglomerate PepsiCo. There are currently over 800 KFCs in the UK and the Republic of Ireland.

Brand Information

KFC restaurant ownership in the UK is split 40% equity and 60% franchise.

Recent Developments

In July 2012, KFC began to offer a BA honours degree in Business Management, in conjunction with De Montfort University Leicester. The company’s latest brand strategy is to capitalise on social media forums, such as Facebook and Twitter. In February 2012, KFC announced that James Watts would be replacing Misty Reich as Vice President of Human Resources (HR).

FINANCIAL PROFILE

Year End 28/11/10 29/11/09 30/11/08 02/12/07 Weeks 52 52 52 52 Consolidated N N N N

Sales

Sales (£000) 371,215 360,109 316,719 292,202 % change year-on-year 3.08 13.70 8.39 - Exports (£000) - - - - Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 38,389 41,987 27,854 24,191 % change year-on-year -8.57 50.74 15.14 - Profit Margin (%) 10.34 11.66 8.79 8.28 Operating Profit (£000) 41,229 44,222 28,775 24,853

Employees

Number of Employees 6,753 6,749 5,253 5,129 Average Employee Remuneration (£) 13,972 13,441 15,685 13,680 Sales per Employee (£) 54,970 53,357 60,293 56,971 Profit per Employee (£) 5,685 6,221 5,302 4,717 Capital Employed per Employee (£) 11,706 12,080 13,960 11,301

Balance Sheet/Ratios

Capital Employed (£000) 79,052 81,528 73,332 57,964 Return on Capital (%) 48.56 51.50 37.98 41.73 Net Worth (£000) 60,100 58,580 49,954 31,968 Current Ratio 0.37 0.46 0.39 0.48 Liquidity Ratio 0.36 0.45 0.37 0.48

MCDONALD’S RESTAURANTS LTD

Registered Office 11/59 High Road East Finchley London, N2 8AW Telephone: 08702-413 300 Company Registration Number 01002769 Date of Incorporation 18/02/71 Holding Company McDonald’s Real Estate LLP Ultimate Holding Company McDonald’s Corp Inc

Previous Name(s) and Date(s) of Change

McDonald’s Hamburgers Ltd (28/02/89) McDonalds Hamburgers Ltd (08/02/89)

Principal Activities

The operation of a chain of limited menu quick-service restaurants.

SIC Code

55302, Unlicensed restaurants and cafés.

Structure

McDonald’s Restaurants Ltd is the British subsidiary of the McDonald’s Corporation, the world’s leading fast-food chain in terms of revenue. The company specialises in hamburgers. In the UK, it owns 1,200 restaurants. It is both a sit-down restaurant and has takeaway services.

Brand Information

The company brand is McDonald’s restaurants. Roughly 65% of venues in the UK are franchises.

Recent Developments

Innovation and improved customer service have been at the core of the company’s recent developments. Moreover, the fast-food chain has committed itself to the health trend, including calorie counts on its food boards and developing products, including Fruitizz, a children’s drink that provides them with one of their 5-a-day. McDonald’s was named the official restaurant of the 2012 London Olympic and Paralympic Games. It operated four temporary venues at the Olympic Park in Stratford during the event.

FINANCIAL PROFILE

Year End 31/12/10 31/12/09 31/12/08 31/12/07 Weeks 52 52 52 52 Consolidated N N N N

Sales

Sales (£000) 1,184,462 1,129,957 1,075,535 1,069,780 % change year-on-year 4.82 5.06 0.54 - Exports (£000) - - - - Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 157,211 114,048 77,743 39,973 % change year-on-year 37.85 46.70 94.49 - Profit Margin (%) 13.27 10.09 7.23 3.74 Operating Profit (£000) 157,218 126,937 90,047 62,669

Employees

Number of Employees 39,296 39,359 37,197 37,644 Average Employee Remuneration (£) 7,252 7,092 7,375 7,491 Sales per Employee (£) 30,142 28,709 28,915 28,418 Profit per Employee (£) 4,001 2,898 2,090 1,062 Capital Employed per Employee (£) 10,961 8,609 6,874 5,555

Balance Sheet/Ratios

Capital Employed (£000) 430,711 338,835 255,699 209,101 Return on Capital (%) 36.50 33.66 30.40 19.12 Net Worth (£000) 355,953 212,672 137,371 87,332 Current Ratio 0.18 0.15 0.19 0.17 Liquidity Ratio 0.16 0.14 0.18 0.16

PIZZA HUT (UK) LTD

Registered Office Building 1 Imperial Place Elstree Way Borehamwood, Herts, WD6 1JN Telephone: 020-8732 9000 Company Registration Number 01072921 Date of Incorporation 21/09/72 Holding Company Yum! III (UK) Ltd Ultimate Holding Company Yum! Brands Inc

Previous Name(s) and Date(s) of Change

Dianthus Trading Company Ltd (31/12/78)

Principal Activities

Restaurateurs and delivery operators.

SIC Code

None

Structure

Pizza Hut (UK) Ltd is part of Pizza Hut Incorporated. The parent company belongs to Yum! Brands, the restaurant division of the corporate giant PepsiCo. There are almost 700 Pizza Huts in the UK.

Brand Information

The company operates under its own brand, Pizza Hut. Roughly 22% of its restaurants in the UK are franchises.

Recent Developments

Pizza Hut has struggled in the UK in recent times. As a result, in August 2011, Pizza Hut announced that it would be overhauling its business in the UK, including by trialling four ‘Alpha Hut’ concept stores that are inspired by upmarket Argentinean restaurants, where waiters bring trays to customers’ tables. It hopes that by becoming more in tune with consumers’ lifestyles and by improving customer service, it will be able to reboot its business in the UK. Pizza Hut now gives customers unlimited access to its salad bar, in order to boost its health credentials. In addition, it has launched a new menu, which includes both a lighter and a premium range, reflecting market trends in the UK.

FINANCIAL PROFILE

Year End 04/12/11 28/11/10 29/11/09 30/11/08 Weeks 53 52 52 52 Consolidated N N N N

Sales

Sales (£000) 330,959 346,174 362,549 358,626 % change year-on-year -4.40 -4.52 1.09 - Exports (£000) - - - - Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) -24,178 -22,185 -12,122 -13,306 % change year-on-year † † † - Profit Margin (%) -7.31 -6.41 -3.34 -3.71 Operating Profit (£000) -13,928 -19,005 -6,889 -8,256

Employees

Number of Employees 13,670 16,247 16,967 18,051 Average Employee Remuneration (£) 8,218 7,143 6,846 6,401 Sales per Employee (£) 23,754 21,307 21,368 19,867 Profit per Employee (£) -1,735 -1,365 -714 -737 Capital Employed per Employee (£) 2,581 1,169 2,461 1,534

Balance Sheet/Ratios

Capital Employed (£000) 35,279 18,993 41,759 27,690 Return on Capital (%) -67.24 -116.81 -29.03 -48.05 Net Worth (£000) 31,407 11,642 31,470 4,724 Current Ratio 0.38 0.20 0.24 0.16 Liquidity Ratio 0.36 0.18 0.22 0.14

SUBWAY REALTY LTD

Registered Office Chaston House Mill Court Hinton Way Great Shelford Cambridgeshire, CB22 5LD Telephone: 01223-550 820 Company Registration Number 04174473 Date of Incorporation 07/03/01 Holding Company None Ultimate Holding Company None

Previous Name(s) and Date(s) of Change

Speed 8706 Ltd (10/04/01)

Principal Activities

The holding of head leases and subletting of property to franchisees who operate ’Subway’ sandwich shops.

SIC Codes

70209, Other letting of own property. 74849, Other business activities not elsewhere classified.

Structure

Subway Realty Ltd is the UK branch of the US sandwich and salad franchise, Subway. The parent company trades under the name Doctor’s Associates, Incorporated, which is owned by its founders Fred DeLuca and Peter Buck. The first Subway in the UK opened its doors in 1996. The chain now operates over 1,400 shops in the UK and the Republic of Ireland.

Brand Information

Subway is the company’s brand name.

Recent Developments

In January 2012, John DeLuca announced the company’s ambition to create 600 new Subway in the UK and the Republic of Ireland by 2015. This is part of a plan to treble its number of stores in the UK in the future. The company plans to achieve this by setting up outlets in non-conventional places. This includes a Sixth Form College in Didsbury, Greater Manchester: Parrs Wood High School. Subway is in talks with the school over a potential concession on the grounds. The sandwich chain hopes that the tactic will enable it to reach a broader consumer base in the long run. Healthier options and value deals are also at the core of its recent developments.

FINANCIAL PROFILE

Year End 31/12/10 31/12/09 31/12/08 31/12/07 Weeks 52 52 52 52 Consolidated N N N N

Sales

Sales (£000) 26,282 24,818 18,946 14,236 % change year-on-year 5.90 30.99 33.09 - Exports (£000) - - - - Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 1,440 651 714 659 % change year-on-year 121.20 -8.82 8.35 - Profit Margin (%) 5.48 2.62 3.77 4.63 Operating Profit (£000) 1,440 652 706 651

Employees

Number of Employees 7 30 26 19 Average Employee Remuneration (£) 162,000 33,267 26,077 32,842 Sales per Employee (£) 3,754,571 827,267 728,692 749,263 Profit per Employee (£) 205,714 21,700 27,462 34,684 Capital Employed per Employee (£) 530,571 85,800 53,500 46,684

Balance Sheet/Ratios

Capital Employed (£000) 3,714 2,574 1,391 887 Return on Capital (%) 38.77 25.29 51.33 74.30 Net Worth (£000) 2,885 1,854 1,391 887 Current Ratio 1.63 1.48 1.32 1.57 Liquidity Ratio 1.63 1.48 1.32 1.57

12. Company Financials

The following companies, listed in alphabetical order, are taken from the Key Note database.

When the latest accounts for a company are made available by Companies House, they can be incorporated on our database and be made ready for inclusion in Key Note Market Report Plus’. A short delay occurs at Companies House between receipt of documents and their public release. As this delay can be longer, the availability of accounts can sometimes be affected.

It should be noted that the financial results for certain companies are not restricted to sales of the products covered by this report.

Turnover Pre-Tax Profit (£000) (£000) Year End Company

Adil Catering Ltd 8,539 373 31/03/12 Allied Domecq Ltd - - 30/06/11 Bella Italia Restaurants Ltd 67,628 10,250 29/05/11 Benugo Ltd 44,080 2,187 30/12/11 Breadwinner Foods Ltd 61,143 3,160 30/09/11 Burger King (UK) Ltd 7,074 491 30/06/10 Caffè Nero Group Ltd 165,583 17,354 31/05/11 Courts Quality Foods Ltd 4,052 206 30/12/10 Compass Group PLC 15,833,000 958,000 30/09/11 Délice de France PLC 147,164 4,355 31/07/11 Delifrance (UK) Ltd 128,551 -702 31/12/10 Domino’s Pizza Group PLC† 209,863 38,789 25/12/11 EAT Ltd 87,359 2,740 30/06/11 Favorite Fried Chicken Ltd 3,183 219 31/01/12 Gondola Group Ltd 569,500 -47,000 26/06/11 Greggs PLC 701,088 60,500 31/12/11 Harry Ramsden’s Ltd 18,880 -1,471 26/12/10 Kaykem Fast Foods Ltd - - 31/08/11

Turnover Pre-Tax Profit (£000) (£000) Year End Kentucky Fried Chicken (GB) Ltd 371,215 38,389 28/11/10 McDonald’s Restaurants Ltd 1,184,462 157,211 31/12/10 Nando’s Chickenland Ltd 317,356 31,496 27/02/11 Noon Products Ltd 165,741 1,141 31/12/10 Papa John’s (GB) Ltd‡ 18,906 -1,965 26/12/10 PizzaExpress (Restaurants) Ltd 322,490 58,641 26/06/11 Pizza Hut (UK) Ltd 330,959 -24,178 04/12/11 Ponti’s Group Ltd 20,447 2,215 30/01/11 Pret A Manger (Europe) Ltd 316,926 34,643 29/12/11 The Restaurant Group PLC 487,114 48,608 01/01/12 Rollover Ltd 9,222 1,029 31/01/12 Select Service Partner UK Ltd 548,082 4,769 28/09/11 Sheermans Ltd 12,338 904 31/07/11 SME Group PLC 47,162 4,321 27/03/11 Spudulike Group Ltd 17,254 675 30/12/10 Starbucks Coffee Company (UK) Ltd 397,716 -32,854 02/10/11 Subway Reality Ltd 26,282 1,440 31/12/10 Whitbread PLC 1,778,000 305,800 01/03/12 Yo Sushi UK Ltd 50,312 3,961 28/11/10

† — company previously known as Domino’s Pizza UK & IRL PLC ‡ — company previously known as Perfect Pizza Ltd

13. Further Sources

Publications

Bakery Info The Drum William Reed Business Media Mercat Building Broadfield Park 4th Floor Crawley 26 Gallowgate West Sussex, RH11 9RT Glasgow, G1 5AB http://www.bakeryinfo.co.uk Telephone: 0141-552 5858 E-mail: enquiries at thedrum.com Business Insider http://www.thedrum.co.uk 257 Park Avenue South 13th Floor The Financial Times New York, NY 10010 One Southwark Bridge US London, SE1 9HL http://www.businessinsider.com http://www.ft.com

Caterer and Hotelkeeper The Grocer Reed Business Information William Reed Business Media Quadrant House Broadfield Park The Quadrant Crawley Sutton West Sussex, RH11 9RT Surrey, SM2 5AS http://www.thegrocer.co.uk Telephone: 020-8652 4424 Fax: 020-8652 8973 The Guardian E-mail: info@catererandhotel Kings Place keeper.com 90 York Way http://www.caterersearch.com London, N1 9GU Telephone: 020-3353 2000 The Daily Mail http://www.guardian.co.uk Associated Newspapers Ltd Northcliffe House The Independent 2 Derry Street 2 Derry Street London, W8 5TT London, W8 5HF Telephone: 020-7938 6000 Telephone: 020-7005 2000 http://www.dailymail.co.uk http://www.independent.co.uk

The Daily Telegraph 111 Buckingham Palace Road London, SW1W 0DT Telephone: 020-7931 2000 http://www.telegraph.co.uk

Marketing Magazine Popsop Haymarket Business Information 1-3 Floor 174 Hammersmith Road 124 Baker Street London, W6 7JP London, W1U 6TY Telephone: 020-8267 5000 Telephone: 020-7193 0876 http://www.marketing http://popsop.com magazine.co.uk PR Week Marketing Week Haymarket Business Media Centaur Media PLC 22 Bute Gardens Wells Point London, W6 7HN 79 Wells Street Telephone: 020-8267 4429 London, W1T 3QN http://www.prweek.com Telephone: 020-7970 4000 http://www.marketingweek.co.uk The Wall Street Journal 1211 Avenue of the Americas Pizza News New York, NY 10036 35a Greenford Road US Greenford http://uk.wsj.com Middlesex, UB6 9AU http://www.pizzanews.co.uk

General Sources

Kantar Media NEMS Market Research Ealing Gateway 22-23 Manor Way 26-30 Uxbridge Road Belasis Hall Technology Park Ealing Billingham, TS23 4HN London, W5 2BP Telephone: 01642-373 355 Telephone: 020-8433 4000 Fax: 01642-373 350 Fax: 020-8433 4001 http://www.nemsmr.co.uk http://www.kantarmedia.com

Nielsen Atrium Court The Ring Bracknell Berkshire, RG12 1BZ Telephone: 01344-469 100 Fax: 01344-469 102 E-mail: mediacommunication [email protected] http://www.nielsenmedia.co.uk

Government Publications

Department of Health National Statistics Richmond House Government Buildings 79 Whitehall Cardiff Road London, SW1A 2NS Newport http://www.dh.gov.uk South Wales, NP10 8XG http://www.statistics.gov.uk HM Treasury • Consumer Price Indices, July 2012 1 Horse Guards Road • Consumer Trends Quarter 1 2012 London, SW1A 2HQ • Employee Jobs by Industry, July 2012 Telephone: 020-7270 4558 • Labour Market Statistics, August Fax: 020-7270 4861 2012 http://www.hm-treasury.gov.uk • National Population Projections, • Forecasts for the UK Economy— 2010-based projections Treasury Independent Average, • Population Estimates for UK, August 2012 England and Wales, Scotland and Northern Ireland — Population Estimates Timeseries 1971 to Current Year, December 2011 • UK Business: Activity, Size and Location 2010 and 2011 • United Kingdom Economic Accounts, July 2012

Other Sources

Fast Food Nation Retail Economics http://www.fastfoodnation.co.uk Telephone: 020-3532 7356 E-mail: [email protected] Ofcom http://www.retaileconomics.co.uk Riverside House 2a Southwark Bridge Road Zagat London, SE1 9HA 76 9th Ave Telephone: 03001-233 000 4th Floor Fax: 020-7981 3333 New York, NY 10011 http://www.ofcom.org.uk US http://www.zagat.com

Key Note Sources

Key Note Ltd Key Note Market Reviews • Catering Market 5th Floor • Food Market Harlequin House

7 High Street Focusing on the bigger picture, Teddington Key Note Market Reviews are Richmond Upon Thames, TW11 8EE designed to inform you of Telephone: 0845-504 0452 developments and opportunities Fax: 0845-504 0453 across entire industry sectors. E-mail: [email protected] http://www.keynote.co.uk Key Note Market Assessments • Coffee & Sandwich Shops Key Note Market Reports • Cooking & Eating Habits • Breakfast Cereals • European Trends in Food Shopping • Catering Equipment • Functional Foods • Cooking Sauces & Food Seasonings • Organic Foods • Fish & Fish Products • Pet Market • Fruit & Vegetables • Sweet & Salty Snacks • Meat & Meat Products • Vegetarian Foods • Natural Products • Poultry Providing in-depth strategic analysis • Soup Market and including primary research, these premium reports examine the scope,

dynamics and shape of key UK and Invaluable aids to anyone needing to European markets, with a particular gain a highly detailed understanding focus on financial services, consumer of a specific market for more informed and lifestyle sectors. decision-making. Key Note Market Updates Key Note Market Reports Plus • Biscuits & Cakes • Canned Foods • Bread & Bakery Products • Chilled Foods • Confectionery • Ethnic Foods • Diet Foods • Frozen Foods • Ice Creams & Frozen Desserts • Ready Meals • Milk & Dairy Products • Sauces & Spreads • Restaurants • Snack Foods

Designed to provide updated analysis Concentrating on more dynamic on highly dynamic markets, consumer markets, these offer the incorporating the latest market size same incisive market intelligence and forecasts, identifying strengths as Market Reports, but include and weaknesses, and exploring the additional chapters and primary impact of recent developments within research data. an industry.

Key Note UKplc Report Key Note Research UKplc is an indispensable guide for Consultancy managers and for those interested We can offer a full-service in gaining a greater insight into the bespoke solution for any research financial performance of an average requirements not covered by the company operating in each of the published report range. Our main industries in the UK. Providing comprehensive market research up-to-date information and analysis, and information consultancy service the publication will allow the reader is managed in house. to gain a greater level of market intelligence as well as a good Contact us for more information: knowledge of the current state [email protected] of the UK industry.

Key Note Bespoke Data Service As well as choosing the companies you want to analyse, you can also choose exactly what performance information you need on them — with our Bespoke Data Service. We will be able to provide you with information covering the companies, sectors, performance figures, ratios and other data items specific to your individual requirements alone. Even historical figures can be provided.

Understanding Consumer Survey Data

TGI tables, produced by Kantar Media, are generally based on one of the following groups: households — consisting of either one person living alone or a group of people, usually members of one family, who live together and whose food and other household expenses are managed as one unit; adults — aged 15 or over; housewives — a member of a private household who is solely or mainly responsible for the household duties.

NEMS Market Research is often commissioned by Key Note to conduct exclusive consumer surveys among a representative sample of adults aged 16 and over in Great Britain.

Number, Profile, Penetration

Tables used in Key Note reports may give figures for the Number, Profile, and/or Penetration.

Social Grade

This is normally based on the occupation of the Head of the Household, or if the Head of the Household is retired, their former occupation. If this information is not available, social grade is based on environmental factors such as type of dwelling, amenities in the home, presence of domestic help, etc.

The following table broadly defines the six social grades used. The relationship between social grade and net income of the Head of the Household is a complex one and readers should note that income is not determinant of social grade. Head of Household’s Social Grade Social Status Occupation A Upper middle class Higher managerial, administrative or professional B Middle class Intermediate managerial, administrative or professional C1 Lower middle class Supervisory or clerical and junior managerial, administrative or professional C2 Skilled working class Skilled manual workers D Working class Semi and unskilled workers E Those at lowest levels of State pensioners or widows subsistence (no other earner)

Standard Region

This is as defined by the Registrar-General.

Key Note Research

Key Note is a leading supplier of market information, publishing an extensive range of consumer, industrial, business-to-business and services titles. With over 30 years’ experience, Key Note represents clear, concise, quality market information.

For all reports, Key Note undertakes various types of research:

Online searching is carried out by product code or free search method, and covers the period from the last edition of the report to the current day.

Trade sources, such as trade associations, trade journals and specific company contacts, are invaluable to the Key Note research process.

Secondary data are provided by Kantar Media (TGI) and Nielsen for consumer/demographic information and advertising expenditure, respectively. In addition, various official publications published by National Statistics, etc. are used for essential background data and market trends.

Interviews are undertaken by Key Note for various reports, either face-to-face or by telephone. This provides qualitative data (‘industry comment’) to enhance the statistics in reports; questionnaires may also be used.

Field research is commissioned for various consumer reports and market reviews, and is carried out by NEMS Market Research.

Key Note estimates are derived from statistical analysis and trade research carried out by experienced research analysts. Up-to-date figures are inserted where possible, although there will be some instances where a realistic estimate cannot be made or external sources request that we do not update their figures.

Key Note Editorial, 2012

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Corporate & Promotional F Giftware 4 2011 Fast-Food & Home-Delivery Cosmetic Surgery 10 2012 Outlets 26 2012 Cosmetics & Fragrances 25 2012 Film Market 2 2009 Courier & Express Services 16 2010 Financial Services Marketing to Cruise Market 3 2012 BCs 1 2009 Customer Magazines 5 2012 Financial Services Marketing to Customer Relationship DEs 2009 Management 4 2008 Financial Services Marketing to Customer Services in Financial Start-Up Businesses & the Self- Organisations 5 2010 Employed 3 2010 Financial Services Marketing to D the Affluent 1 2009 Debt Management (Commercial Financial Services Organisations & Consumer) 6 2010 on the Internet 4 2009 Defence Equipment 11 2010 Fire Protection Equipment 9 2012 Diet Foods 4 2011 Fish & Fish Products 15 2012 Digital Broadcasting 6 2012 Food Industry 20 2010 Digital Communications 2 2012 Football Clubs & Finance 4 2009 Direct Insurance 6 2010 Footwear 17 2012 Direct Marketing 20 2012 Forecourt Retailing 9 2012 Direct Mortgages 8 2012 Franchising 13 2012 Discount Retailing 8 2011 Freight Forwarding 18 2011 Disposable Paper Products 13 2009 Frozen Foods 25 2011 Distribution Industry 10 2009 Fruit & Vegetables 22 2011 DIY & Home Improvements Fruit Juices & Health Drinks 13 2010 Industry 11 2009 Functional Foods 6 2010 Domestic Heating 14 2009 Further & Higher Education 7 2011 Drinks Market 19 2009 G E Garden Equipment 14 2012 E-Commerce: The Internet Grocery Market 6 2009 Gas Industry 7 2012 E-Commerce: The Internet General Insurance 13 2010 Leisure & Entertainment Market 5 2008 Giftware 20 2011 Electrical Contracting 10 2011 Glassware 16 2011 Electrical Wholesale 5 2009 Green & Ethical Consumer 5 2012 Electricity Industry 8 2012 Greetings Cards 27 2012 Electronic Banking 4 2008 Grey Consumer 5 2009 Energy Industry 8 2010 H Equipment for the Disabled 6 2012 Hand Luggage & Leather Goods 16 2012 E-Recruitment 4 2012 Health Clubs & Leisure Centres 11 2011 Estate Agents 18 2011 Healthy Eating 6 2008 Estate Agents & Services 6 2012 Holiday Purchasing Patterns 6 2012 Ethnic Foods 17 2012 Home Entertainment 4 2012 European Long-Term Insurance 4 2008 Home Furnishings 20 2011 European Renewable Energy 2 2008 Home Shopping 14 2011 European Short Breaks 2 2008 Horticultural Retailing 17 2008 European Telecommunications 3 2010 Hot Beverages 7 2012 European Tourist Attractions 3 2010 Hotels 26 2012 European Trends in Food Housebuilding 20 2012 Shoppin 4 2009 Exhibitions & Conferences 12 2011

Title Edition Published Title Edition Published

Household Appliances (Brown N Goods) 12 2011 Natural Products 3 2012 Household Appliances (White Newspapers 19 2012 Goods) 18 2012 Non-Food Sales in Supermarkets 5 2010 Household Detergents & Cleaners 17 2012 Non-Metal Recycling 4 2012 Household Furniture 19 2011 Nutraceuticals 3 2008 I O Ice Creams & Frozen Desserts Office Equipment Industry 9 2010 Update 15 2011 Office Furniture 22 2012 Independent Financial Advisers 4 2008 Offshore Oil & Gas Industry 6 2012 Insurance Companies 12 2009 Ophthalmic Goods & Services 18 2011 Insurance Industry 10 2009 Opticians & Optical Goods 5 2010 Insurance Market 13 2012 Organic Food & Drink 8 2012 Insurance Prospects 2 2008 OTC Pharmaceuticals 15 2011 Internet & Telephone Banking 1 2011 Over-50s Consumer 1 2009 Internet Advertising 7 2011 Own Brands 14 2012 IT Recruitment 6 2012 P IT Security 10 2011 Packaging (Food & Drink) 6 2010 IT Training 14 2012 Packaging (Glass) 13 2008 J Packaging (Metals & Aerosols) 13 2012 Jewellery & Watches 26 2011 Packaging (Paper & Board) 16 2012 K Packaging (Plastics) 16 2012 Kitchenware 8 2012 Pensions 6 2009 Personal Banking 2 2012 L Laboratory Equipment 10 2011 Personal Lines Insurance 5 2012 Leisure in the Home 3 2010 Personal Loans 4 2008 Leisure Outside the Home 3 2010 Pet Market 4 2009 Lifestyle Magazines 5 2011 Pharmaceuticals Industry 6 2008 Lingerie 10 2011 Planning for Retirement 1 2008 Local Government Services 3 2010 Plus-Size Fashion 4 2011 Low-Fat & Reduced-Sugar Foods 5 2008 Poultry 5 2012 Power Tools 6 2012 M Premium Lagers, Beers & Ciders 10 2012 Marketing in the Digital Age 4 2012 Printing 16 2011 Meat & Meat Products 22 2011 Private Healthcare 22 2011 Medical Equipment 18 2012 Protective Clothing & Equipment 8 2012 Medical & Health Insurance 4 2012 Public Houses 28 2012 Men & Women’s Buying Habits 6 2012 Public Relations Industry 4 2012 Men’s Toiletries & Fragrances 6 2012 Publishing Industry 13 2010 Metal Recycling 6 2011 Milk & Dairy Products 26 2012 R Mobile Marketing 1 2009 Rail Travel 8 2011 Mobile Phones 8 2012 Ready Meals 13 2012 Motor Finance 4 2011 Recruitment Agencies (Permanent) 12 2012 Motor Industry 12 2008 Recruitment Agencies Music Industry 2 2010 (Temporary & Contract) 12 2012 Renewable Energy 5 2012 Restaurants 26 2012 Retail Pharmacies 17 2011

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Road Haulage 23 2012 U Rural Economy 2 2009 UK Internet Market 1 2009 S Utilities 4 2010 Sauces & Spreads 13 2012 V Savings & Investments 6 2010 Vegetarian Foods 7 2012 Security Industry 13 2010 Vehicle Breakdown Services 7 2012 Shopfitting 15 2012 Vehicle Security 10 2012 Shopping Centres 3 2008 Video Gaming 1 2011 Singles Market 5 2012 Vitamins, Minerals & Slimming Market 4 2011 Supplements 7 2011 Small Businesses & Banks 2 2010 W Small Domestic Electrical Wallcoverings & Ceramic Tiles 19 2012 Appliances 13 2012 Waste Management 11 2011 Snack Foods 21 2012 Water Industry 7 2012 Social Media Marketing 2 2012 Windows & Doors 21 2012 Soft Drinks (Carbonated & Wine 22 2012 Concentrated) 19 2012 Working Women 5 2009 Soup Market 4 2012 Spirits & Liqueurs 2 2012 Key Note Archive Reports Sports Clothing & Footwear 14 2012 A Sports Equipment 17 2012 Aerospace 12 2003 Sports Market 13 2010 Agrochemicals & Fertilisers 3 2002 Sports Sponsorship 9 2012 Air Freight 2 2005 Stationery (Personal & Office) 26 2012 Air Transport Logistics 1 2003 Supermarket Own Label 4 2009 Animal Feedstuffs 11 2001 Sweet & Salty Snacks 16 2010 Audio Visual Retailing 1 2000 T B Take-Home Trade 18 2011 Baby Foods 3 2006 Teenage & Pre-Teen Magazines 5 2012 Baths & Showers 1 2000 Teenage Fashionwear 3 2011 Bearings 2 2007 Timber & Joinery 20 2011 Beds, Bedrooms & Upholstered Toiletries 24 2011 Furniture 2 2000 Toys & Games 25 2012 Bottled Water 2 2001 Training 20 2012 C Travel & Tourism Market 17 2010 Cable & Satellite TV 10 2004 Travel Agents & Overseas Tour Call Centres 6 2006 Operators 24 2012 Cash & Carry Outlets 16 2001 Trends in Food Shopping 5 2008 Cinemas & Theatres 9 2001 Trends in Leisure Activities 5 2012 Clothing Retailers 1 2000 Tyre Industry 6 2011 Commercial Radio 8 2004 Consumer Borrowing in Europe 1 2004 Consumer Internet Usage 4 2000 Contracted-Out Services 3 2007 Convenience Retailing 12 2002 Cross-Border Shopping 1 2000 Customer Loyalty in the Financial Services 1 2000

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D G Dark Spirits & Liqueurs 3 2004 Generation Y 1 2007 Defence Industry 7 2003 Global Positioning Systems 1 2002 Design Consultancies 3 2000 Global Waste management 2 2070 Digital TV 2 2003 H DINKY Market 3 2007 Health Foods 22 2003 Document Imaging Systems 1 2007 Healthcare Market 10 2005 Domestic Telecommunications 4 2006 Heating, Ventilating & Air Dry Cleaning & Laundry Services 5 2005 Conditioning 9 2002 E I Electronic Component In-Car Entertainment 1 2000 Distribution 12 2002 Individual Savings Accounts 2 2005 Electronic Component Industrial Fasteners 8 2001 Manufacturing 11 2002 Industrial Pumps 5 2000 Electronic Games 4 2003 Industrial Valves 8 2001 Equipment Leasing 12 2003 Internet Service Providers 2 2005 E-Shopping 1 2002 Internet Usage in Business 8 2005 European Electricity Industry 3 2007 Issues & Challenges in the UK Life European Gas Industry 3 2007 Assurance Market 2 2002 European Oil & Gas Industry 2 2007 Issues in Higher Education European Water Industry 3 2007 Funding 2 2006 Extended Financial Families 1 2005 L F Leisure & Recreation Market 15 2005 Factoring & Invoice Discounting 2 2003 Lighting Equipment 14 2002 Finance Houses 11 2000 M Financial Services Marketing to Management Consultants 10 2003 ABC1s 1 2000 Marketing to Children 4-11 3 2003 Financial Services Marketing to Mechanical Handling 9 2001 ABs 4 2006 Millenium Youth 2 2002 Financial Services Marketing to C1C2DEs 1 2004 Mobile Telecommunications 2 2007 Financial Services Marketing to N Over 60s 1 2004 New Media Marketing 3 2002 Financial Services Marketing to O the Retired & Elderly 3 2007 Off-Trade Spirits 3 2004 Fitted Kitchens 11 2007 Organic Baby & Toddler Care 1 2007 Free-To-Air TV 8 2004 Over-40s Consumer 2 2005 P Paper & Board Manufacturers 14 2002 Passenger Travel in the UK 5 2007 Pay TV 2 2004 Pension Extenders 1 2002 Photocopiers & Fax Machines 14 2005 Plant Hire 13 2007 Plastic Cards in Europe 2 2005 Plastics Processing 10 2003 Pre-School Childcare 1 2001 Private-Sector Opportunities in Education 2 2001

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Process Plant Industry 1 2000 T Public Transport 1 2001 Teenage Magazines 3 2007 R Telecommunications 21 2007 Rail Transport Logistics 1 2003 Teleworking 2 2003 Railway Industry 2 2006 The Computer Market 11 2004 Recycling & the Environment 1 2000 The Film Industry 4 2002 Retail Credit 2 2000 The Fish Industry 1 2001 Retail Development 1 2001 The Legal Services Market 1 2005 Road Transport Logistics 1 2003 The Luggage Market 1 2000 S The Newspaper Industry 3 2005 Saving Trends in Eurozone 2 2002 Tourist Attractions 5 2001 Short Break Holidays 4 2001 Tweenagers 1 2001 Short Breaks 2 2004 V Slimming Market 8 2000 Video & DVD Retail & Hire 8 2005 Small Office Home Office Videoconferencing 4 2007 Consumer 1 2001 W Small Office Home Office Water Transport Logistics 1 2003 Products 1 2001 White Goods 2 2000 Sponsorship 2 2000 White Spirits 1 2005 Supermarket Services 3 2007 Women over 45 3 2007 Supermarkets & Superstores 20 2003

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