Market Vision Commercial Foodservice Market in Italy

Market Vision Commercial foodservice market in Italy

Strictly private and confidential

November 2018 Contents Executive Summary Reference market Competitive landscape

Executive Summary 3 Contents Reference market 6 1 Italian consumers – «out-of-home» food consumption 7 2 The commercial food service market in Italy 12 2.1 Commercial food service on motorways 21 2.2 Commercial food service in airports 24 2.3 Commercial food service on train stations 27 2.4 Commercial food service in city centres 30 2.5 Commercial food service in hospitals 32 Competitive landscape 35

Market Vision November 2018 PwC 2 Contents Executive Summary Reference market Competitive landscape Executive Summary

Market Vision November 2018 PwC 3 Contents Executive Summary Reference market Competitive landscape

Executive Summary – Market Assessment

In Italy, “Out-of-home” Food consumption spending by Italian households, excluding consumption has progressively expenditure on alcoholic beverages, was estimated around gained market share as a €227.1 billion in 2016. Expenditure of Italian households on OK consequence of significant food services (so-called “Out-of-home” food consumption) cultural and structural amounted to approx. €80 billion in 2016, 35.3% of the total changes that can support the consumption sector in the long run

It is estimated that the commercial food service market in Italy will The commercial food service market in Italy is estimated at grow by +1.5% CAGR 18-22 Market approx. €73 billion, the bar and cafeteria sector contributes to driven both by the growth in the assessment around €17 billion, fast food to about €3.9 billion and Travel to OK number of “Out-of-home” €3.6 billion transactions as well as an increase in average receipt

Some of the main trends in the Italian market are: i) continued Growth potential for the growth of franchising, ii) higher consumption of healthy / chains that will be able to quality foods, iii) market entry and penetration of fashion OK propose innovative formats brands, and iv) increasingly important role of digital systems and meet new consumption (e.g. payments) habits

Market Vision November 2018 PwC 4 Contents Executive Summary Reference market Competitive landscape

Executive Summary – Competitive landscape

• Over 329,000 food service operators were active in Italy in Italy is an unsaturated 2016 market, the smaller • In this highly fragmented market, the share of "chains" independent restaurants are appears to be less significant than the European average: The OK joining restaurant chains, "chains" penetration rate in Italy in 2017 was 6.8%, growth potential for below the European average of 22%, highlighting chained food service opportunities for further growth in this segment operators • The competitive landscape of "branded" chains is currently characterized by the presence of multiple players with In the coming years the different business models consolidated players could be Competitive • Concession food service presents a fragmented competitive ~ threatened by new chains landscape landscape characterized by the presence of both small and with innovative formats that large players active mainly in the mass food services show high growth rates • Strong growth of small chain players in recent years, consolidated players show a moderate growth • Mass food service operators generally have lower Mass food service operators are EBITDA margins % and higher incidence of personnel facing some entry barriers when costs compared to commercial food service operators moving in adjacent concessions for ~ • Mass food service operators are increasing their presence commercial food service, due to the in high-margin adjacent concessions for commercial necessity to compete with the food service businesses (e.g. hospitals commercial food innovative PoS formats service, and travel commercial food service) proposed by incumbents

Market Vision November 2018 PwC 5 Contents Executive Summary Reference market Competitive landscape Reference market

Market Vision November 2018 PwC 6 1 Italian consumers – «out-of-home» food consumption Contents Executive Summary Reference market Competitive landscape Italian consumers – «out-of-home» food consumption

Market Vision November 2018 PwC 7 1 Italian consumers – «out-of-home» food consumption Contents Executive Summary Reference market Competitive landscape

In 2016, total “out-of-home" food expenditure incurred by Italian families was worth approx. €80B

Food consumption of Italian families • Expenditure on food consumption of Italian households totalled €227.1B Food in 2016, excluding expenditure on 35,3% alcoholic beverages consumption of Italian • The expenditure of Italian households for the purchase of families in catering services (so-called “Out-of- 2016 home“ food consumption) amounted to approx. €80B in 2016, 35.3% of 64,7% the total consumption for the year €227.1B • The expenditure for food consumption at home sustained by Italian families was approx. €147B, 64.7% of total expenditure incurred in 2016

Food consumption - at home Food consumption - out of home

Source: FIPE Market Vision November 2018 PwC 8 1 Italian consumers – «out-of-home» food consumption Contents Executive Summary Reference market Competitive landscape

Starting from 2013, the food consumption of Italian families showed a recovery. Increase in "Out-of-home" consumption

Food expenditure of Italian families (2007-2016, Base 2007=100)

110

105

100

80 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Food consumption - at home Food consumption - out of home

Source: ISTAT, FIPE Market Vision November 2018 PwC 9 1 Italian consumers – «out-of-home» food consumption Contents Executive Summary Reference market Competitive landscape

In Italy, “Out-of-home” consumption has progressively gained market share, thanks to a significant cultural and structural change that can support the sector in the long run Food consumption at home and «out-of-home» (2001-2016, Share %, constant prices) Main drivers of «out-of- home» consumption 100% Higher Quick lunch attention to break food 31,6% 35,4% 80% Increase in the # of Change in the families (of average small lifestyle dimension) 60% Increase in the # of More working families women composed by outside home one person 40% Busier 68,4% lifestyle and 64,2% Urbanization less time available 20% Request for higher quality and value food 0% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Food consumption - out of home Food consumption - at home

Source: ISTAT, FIPE Market Vision November 2018 PwC 10 1 Italian consumers – «out-of-home» food consumption Contents Executive Summary Reference market Competitive landscape

In 2017, approx. 60% of Italians consumed daily meals out (breakfast, lunch and dinner) with alternating regularity

Eating Habits Breakdown in Italy (2017, %)

2,5% • Up to 63.8% Italians consume 10,7% 10,8% 4,2% breakfast out, although with 16,4% different time profile, whereas up 14,9% 14,2% to 36.2% regularly have breakfast at home. 9,9% 16,5% 15,6% • During the week, up to 67.4% of 7,6% Italians have lunch out. 6,6% 27,9%

• 60.9% of Italians dine out, 15,0% 19,0% although with different time profile, whereas up to 39.1% of people consume their dinner 39,1% regularly at home. 36,2% 32,9%

Breakfast Lunch Dinner (During the week)

Never Once or twice a month Once every 15 days At least 1 or 2 a week At least 3 or 4 a week Everyday

Source: FIPE Market Vision November 2018 PwC 11 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape The commercial food service market in Italy

Market Vision November 2018 PwC 12 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

Trade of commercial catering in Italy accounts for €73B, the cafe and bar sector contributes to approximately €17B, fast food for about €3.9B and travel for about €3.6B

Dimension and segmentation of the commercial food service industry in Italy (€B) 73.2 73.2 Street Stalls/Kiosks ; €0,5B Leisure; €3,2B Fast Food ; €3,9B Retail; €3,5B Travel ; €3,6B 100% Home Delivery/Takeaway; €10,1B Lodging; €7,7B

Cafés/Bars & Self-Service Cafeterias ; €17,0B

Standalone; €55,1B Full-Service Restaurants ; €41,6B

Location Category

N° Transactions 10.9 10.9 (estimates, # billions)(*)

Notes (*): PwC estimates Source: PwC analysis on Euromonitor data Market Vision November 2018 PwC 13 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

The commercial food service market in Italy is expected to grow with a CAGR of +1.5% between 2018 and 2022, driven by the increase of both the number of “Out-of-home” transactions and the value of the average receipt Commercial food service in Italy – growth estimates (2016 - 2022, €B, %) ESTIMATES

80,5 76,9 78,1 79,3 73,2 74,4 75,7

10,9 11,0 11,1 11,2 11,3 11,4 11,5

E2016 F2017 F2018 F2019 F2020 F2021 F2022 Value of commercial food service market in Italy N° transactions CAGR 2018-2022

YoY % Value €B 1.7% 1.7% 1.6% 1.6% 1.5% 1.5% +1.5%

YoY % n° transactions 0.9% 0.9% 0.8% 0.8% 0.8% 0.8% +0.8%

Source: PwC estimates Market Vision November 2018 PwC 14 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

In 2016 over 329,000 food service companies were active in Italy. It is a Highly fragmented market

Food service operators in Italy (2016,#) • Among the Italian regions, Lombardy holds the largest number of companies in the food service sector (50,675), followed by Lazio (36,106) and Campania (31,360). Total food Region # food services services active Lombardy 50,675 in Italy (2016) Lazio 36,106 Campania 31,360 Veneto 26,135 #329,787 Emilia Romagna 25,227 Piedmont 23,679 Tuscany 22,105 Sicily 21,301 Apulia 19,269 Liguria 12,694 Sardinia 10,748 Calabria 10,505 Marche 8,467 Abruzzo 8,033 Friuli-Venezia Giulia 7,249 Trentino-Alto Adige 5,814 Umbria 4,694 Basilicata 2,697 Molise 1,909 Valle d'Aosta 1,120

Source: FIPE Market Vision November 2018 PwC 15 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

Still less significant is the role of restaurant chains: Italy has a penetration rate of «chains» of 6.8% below the World average of 26.8%, which leaves space for further growth opportunities in this segment Penetration rate of brand restaurant chains (2017)

Note

• In Italy most of the European operators are independent and average restaurants are typically family-run Independent 78% • Italy is an unsaturated market

26.8% • The contraction of Restaurant 21.8% 23.4% margins, also due to chains the high cost of rents, 22% 6.8% and a decrease in customer traffic, leads Italy Western Europe Eastern Europe Word the the smallest independent restaurants to join Restaurant chains Indipendent restaurants restaurant chains.

• Branded restaurant chains are still a relatively low developed segment in Italy, compared to Europe and World average (*)

Notes (*): percentage of chains against independent restaurants in terms of value (2017) Source: PwC analysis on Euromonitor data Market Vision November 2018 PwC 16 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

Competitive arena of brand chains characterized by the presence of multiple players with different business models

Competitive arena – main brand competitors (illustrative)

High Old Wild West Fast food & fast Giovanni Rana casual Roadhouse Characterized by fast Galloway service and medium- Zushi PizziKotto low price ranges America Graffiti Bistrot Airport Travel BEFeD Brew Pub Consists of catering at locations KFC connected to transport flows, Domino’s Pizza timing appears to be particularly Spizzico Mass catering La Piadineria contracted, bar and restaurants are McDonald’s Means large-scale provision Lowengrube often combined with mini-market Burger King My Chef Chef Express and delivery of complete meals, Ham Holy Burger including the management of Autogrill canteens Sirio Sarni Ristop Grom Crema & CIR food Gemeaz Cioccolato McCafe Festival Hermes elior Dussmann Bricco cafè Snack Bar MU Rita Grand Cafe Vivenda Espressamente Punto Grill CAMST Mondadori Caffè illy Autogrill Rist Gest Caffe Vergnano Serenissima Paolo Mokà cafè Elior 1882 Sodexo Andersson Bar & snack bar Bottega del Includes traditional bars and Puro Gusto Segafredo Ladisa Euro Pellegini

Price range (average receipt) Caffè cafes / snack bars without Ristorazione table service Low Commercial food Mass catering service

Market Vision November 2018 PwC 17 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

Main market trends are: i) continuous growth of Franchising, ii) greater consumption of higher quality/healthy food, iii) new entries, Fashion Brands, and iv) adoption digital systems (e.g. payments) Commercial food service in Italy – Main trends

Trend Description Relevance

1 Franchising still In recent years, the Italian market has seen an increase of numerous franchising brands, in growing, but there particular in the rapidly expanding "Casual Dining Full Service" restaurant market. Compared to the «booming» period of this format during recession years, where the operators used is also a franchising to strengthen the Brand and acquire new customers, a new phase of consolidation in 3 consolidation trend the bakery / pastry and ice-cream sector is now being experienced in the industry

2 Increasing In order to cope with the erosion of margins and the decrease in flows (e.g. competition with consumption of other forms of food service), small operators who have not converted into chains have focused their gastronomic proposal on high quality and healthy food to meet the increasing targeted high quality and needs of customers (e.g. organic food, vegetarian options, product recovery and traditional 3 healthy food processing methods)

3 Between 2016 and 2017, several players operating in the fashion industry entered the food service Fashion Brands scene with the aim of creating "Brand Engagement". This is the case of Diesel, who elaborates a join the food menu with the products of the Bio Ecor Naturasì supermarket chain and of Giorgio Armani, service industry which, after Milan, opened the second Emporio Caffè e Ristorante in Bologna, inside the 2 historical Galleria Cavour

4 In the PoS, the adoption of order and payment systems based on digital technology is growing, Digital orders and including the "Multimedia Kiosks" and "Totem Touchscreen". These innovative forms are sometimes offered in addition to the "classical" order to allow customers to gradually familiarize payments themselves with the tool. The pioneers of digital ordering in Italy include Autogrill, Ikea and 2 McDonalds chains

Source: PwC analysis Market Vision November 2018 PwC 18 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

Growing consumer demand and presence of specific drivers in terms of offer positively influence on the overall market growth

Restaurant Chains

Demand Supply

Macroeconomic Socio-demographic Consumer /Lifestyle # of PoS Offer quality trends factors • Eating out is influenced by • Eating out has become a • An increasing number of • The number of • The growth of "Casual the general "structural" dynamic of the customers with little free restaurants in Italy has Dining" chains has led to macroeconomic behaviour of Italian time available, who are decreased in recent years, an improvement in terms conditions consumers more likely to eat out mainly due to the high of: rate of bankruptcy of Italy's economic outlook  • • There are several reasons to • Increasing number of independent operators, Variety of dishes remains positive (GDP dine out beyond the women in the job market while the number of available 2018: +1.2% and 2019: traditional "three courses" and single families is brand chains continues  +1.1%) Consistency and (e.g. brunch with friends, expected to guide future to grow snack on a shopping trip) growth of the market quality of the offer • The growing threat of • Consolidated chains have  Nature of "informal" terrorist attacks and • The competition on how to developed new formats geopolitical shocks could spend free time is strong, proposals covering a (e.g. single-product, wide range of have an impact on the but eating out remains mixed Wholesalers / overall development of the popular opportunities to eat Risto offers, Retail / Food out market, however this is offers) difficult to assess • "Polarization" of consumers in Italian eating habits: increasing the choice between high-quality or low-cost restaurants

Expected impact on restaurants

Source: PwC analysis Market Vision November 2018 PwC 19 2 The commercial food service market in Italy Contents Executive Summary Reference market Competitive landscape

The commercial travel food service industry serves places connected to transport flows, and presents different characteristics in terms of location, consumer behaviour and infrastructure

Commercial food service NO TRAVEL Commercial food service TRAVEL

Locations Locations

Urban areas Industrial areas Motorways Airports

Shopping centres Other high traffic points Railway stations Ports (e.g. hospitals, schools, etc.)

Characteristics Characteristics

• Consumer uses this type of facility for functional reasons (e.g. lunch • The main priority for the consumer is the trip, whereas a moment of break) or leisure (using this service in their free time). relaxation or leisure at a service station or other food service facilities represents an element of secondary interest. As a consequence the • Seasonal peaks are less pronounced compared to travelling food service. consumer’s attention has to be «captured».

• Timing can change according to consumers’ needs, in general the greater • The seasonality of the business is connected to the peaks of traffic holiday presence of «leisure consumers» involves a more relaxed timing. (e.g. airports in the summer).

• Food service activity in these locations does not necessarily require • Time available to the consumer for buying and consuming the food is obtaining licences, more often it is connected to private independent limited. As a consequence timely service is required. operators. • Food service activity in these locations is subject to obtaining concessions from local entities/administration of the facilities, typically granted Source: PwC analysis through public tenders. Market Vision November 2018 PwC 20 2.1 Commercial food service on motorways Contents Executive Summary Reference market Competitive landscape Commercial food service on motorways

Market Vision November 2018 PwC 21 2.1 Commercial food service on motorways Contents Executive Summary Reference market Competitive landscape

The commercial motorway food service in Italy consists of 412 service areas located along the 6,000 km network. There are 406 snack bars and 170 restaurants

Introductory Notes

• The commercial motorway food service in Italy consists essentially of single-brand food outlets located along on motorways • The Italian motorway network boasts approx. 6,003.4 km • In 2017 approx. 83.8 billion km have been travelled in Italy • There were 412 service areas nationwide in 2017 • The total number of service areas includes 170 restaurants and 406 snack bars

Source: PwC analysis on AISCAT data Market Vision November 2018 PwC 22 2.1 Commercial food service on motorways Contents Executive Summary Reference market Competitive landscape

Vehicles traffic on Italian motorways increased by +2.8% CAGR in the period 2015-2017. IH 2018 (vs IH 2017) increased by 0.8%

Traffic on Italian motorways CAGR 2015-2017 (1 Quarter 2015- 2 Quarter 2018 , #B Vehicles-Km) +2.8%

24,8 23,7 24,5 21,7 21,8 20,6 4,8 4,9 20,4 4,7 19,6 18,8 19,2 17,8 17,7 5,0 18,0 5,2 16,5 4,7 4,9 4,5 4,6 4,8 4,3 4,5 4,6 4,1

19,1 19,7 19,8 16,7 16,6 15,7 14,3 15,7 14,6 14,8 12,4 13,5 13,3 13,4 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 Light Vehicles Heavy goods vehicles

% Light 75.3% 77.1% 80.4% 76.0% 76.1% 76.2% 80.4% 76.0% 75.0% 76.8% 80.1% 75.7% 74.5% 76.4%

% Heavy 24.7% 22.9% 19.6% 24.0% 24.1% 23.6% 19.6% 24.0% 25.2% 23.0% 19.9% 24.3% 25.5% 23.6%

Source: PwC analysis on AISCAT data Market Vision November 2018 PwC 23 2.2 Commercial food service in airports Contents Executive Summary Reference market Competitive landscape Commercial food service in airports

Market Vision November 2018 PwC 24 2.2 Commercial food service in airports Contents Executive Summary Reference market Competitive landscape

The commercial airport food service in Italy presents an heterogeneous offer in terms of formats. In 2017 ca. 175.4 million travellers were registered in the main Italian airports (#38)

Introductory Notes

• The commercial airport food service in Italy consists of eateries of various size and quality (bars, restaurant chains, starred restaurants) located inside airports. • Although characterized by heterogeneity of the formats, the market distinguishes some relevant players which have a significant presence on national and international level.

• In Italy there are 38 large airports.

• In 2017 approx. 175.4 million travellers were recorded (+6.5% compared to 2016 data).

Source: PwC analysis on AssAirports data Market Vision November 2018 PwC 25 2.2 Commercial food service in airports Contents Executive Summary Reference market Competitive landscape

Steady growth of passenger traffic in Italian airports and liberalization of the sector have positively influenced the creation of commercial services for passengers

Passenger traffic in Italian airports CAGR 2015-2017 (2015 – 1H2018, #M passengers) • Traffic in Italian airports shows continued +5.6% growth, exceeding 175 million passengers in 19,1 transit in 2017 17,8 17,9 • The National Airports Plan estimates that 17,2 approx. 300 million passengers will transit through Italian airports by 2030

10 Italian airports with the most traffic (1H2018, #M passengers) 10,9 10,2 Rome Ciampino 2,9 9 9,1 Palermo 3,0

Bologna 4,0

Catania 4,5 2015 2016 2017 2018 Naples 4,5

Milan Linate 4,5 • Rome Fiumicino airport ranks first in terms Venice 5,0 of passenger traffic

Bergamo 6,2 • A phase of liberalization of the sector began in the ’90s, both for aviation and non- Milan Malpensa 11,4 aviation activities, with a consequent Rome Fiumicino 20,1 proliferation of activities related to passengers' leisure needs Source: PwC analysis on AssAirports data Market Vision November 2018 PwC 26 2.3 Commercial food service on train stations Contents Executive Summary Reference market Competitive landscape Commercial food service on train stations

Market Vision November 2018 PwC 27 2.3 Commercial food service on train stations Contents Executive Summary Reference market Competitive landscape In Italy there are approx. 2,287 train stations, of which 14 high traffic ones managed by Grandi Stazioni and the remaining ones are managed by RFI which recently incorporated Centostazioni

Introductory Notes

• The commercial railway food service in Italy essentially consists of eateries of various size and quality (bars, restaurant chains, starred restaurants) located inside the main train station • The national railway infrastructure counts 16,787 km • In Italy there are over 2,287 stations of which 14 are large stations with significant passenger traffic managed by Grandi Stazioni, the others are managed by RFI (recent incorporation of Centostazioni)

Key trends

• Opening of the railway market: by 2019, European States will be required to liberalize the passenger rail transport market • Infrastructural development: new high-speed sections will be built and existing ones will be strengthened: Turin- Venice (2019), Bologna-Ancona-Bari (2019), Milan-Genoa (2022), Naples-Bari (2016) • A complete separation of regional/local traffic from national/high-speed traffic is expected

Source: PwC analysis on Ferrovie dello Stato Italiane data Market Vision November 2018 PwC 28 2.3 Commercial food service on train stations Contents Executive Summary Reference market Competitive landscape

In Italy traffic in railways stations has grown in the last years. The main stations in terms of passengers’ traffic are Torino Porta Nuova, Milano Centrale and Roma Termini Traffic on Italian trains Traffic in main Italian train stations (2013-2018, #M Passengers) (2017, #M people per year)

ESTIMATES BARI CENTRALE 14,0 PALERMO CENTRALE 19,0

885,7 GENOVA BRIGNOLE 22,0 878,7 GENOVA PIAZZA PRINCIPE 24,0 872,6 869,2 VERONA PORTA NUOVA 25,0 864,1 VENEZIA SANTA LUCIA 30,0 854,8 VENEZIA MESTRE 31,0

NAPOLI CENTRALE 50,0

ROMA TIBURTINA 51,0

BOLOGNA CENTRALE 58,0 2013 2014 2015 2016 2017E 2018E FIRENZE SANTA MARIA NOVELLA 59,0 YoY (%) 1.1% 1.0% (0.4%) 1.1% 0.8% TORINO PORTA NUOVA 70,0

• Passengers’ traffic expected to grow by 0.8% in 2018 MILANO CENTRALE 116,8 (estimates) ROMA TERMINI 150,0

People per year

Source: PwC analysis and estimates on Istat data Source: Grandi stazioni 2017 Market Vision November 2018 PwC 29 2.4 Commercial food service in city centres Contents Executive Summary Reference market Competitive landscape Commercial food service in city centres

Market Vision November 2018 PwC 30 2.4 Commercial food service in city centres Contents Executive Summary Reference market Competitive landscape

Between 2008 and 2017 historical Italian city centres registered a positive trend in terms of openings of new commercial businesses in the HoReCa industry: +17.0% of active businesses

City Centres (2008-2017)

• Between 2008 and 2017 historical Italian city centres recorded a positive trend in terms of openings of new businesses in the hospitality and food service industry.

• In the same period historical Italian city centres have registered the following variations in terms of number of active commercial businesses:

 Retailers -11.9%;

 Street trading +8.7%;

 Hospitality, bars and restaurants +17.0%.

• An increase of the number of commercial food service equal to +26.4% in the southern regions and of +13.6% in the north and centre of Italy was recorded between 2008 and 2017.

Source: PwC analysis on Confcommercio data Market Vision November 2018 PwC 31 2.5 Commercial food service in hospitals Contents Executive Summary Reference market Competitive landscape Commercial food service in hospitals

Market Vision November 2018 PwC 32 2.5 Commercial food service in hospitals Contents Executive Summary Reference market Competitive landscape

In Italy, commercial food service in hospitals is mainly divided into the management of canteens, mass catering services and management of eateries inside the facilities

Introductory notes

• In December 2016,there were 1,384 public and private healthcare facilities (accredited and non-accredited) in Italy.

• Hospital commercial food service in Italy mainly consists of the following services:

 Management of hospital canteens and catering with on-site kitchen or conveyed meals;

 Management of hospital canteens for employees;

 Management of eateries (e.g. bar) for employees, visitors and patients.

• This services are assigned to various suppliers through tenders, which in public structures are public and subject to specific legislation (public tender or European tender).

Source: Ministero della Salute della Repubblica Italiana Market Vision November 2018 PwC 33 2.5 Commercial food service in hospitals Contents Executive Summary Reference market Competitive landscape

Italian regions with the highest number of healthcare facilities and hospital personnel are Lombardy, Veneto, Lazio, Piedmont, Emilia Romagna, Campania and Sicily Public healthcare facilities per Italian region Top 10 Italian regions: by #beds and #personnel (2016, #active facilities) (2013, #K beds, #K personnel) 32 2 Beds Personnel

114 206 21 83 LIGURIA 5,9 18,9

30 103 APULIA 10,9 29,1

81 TUSCANY 11,3 35,5 44 25 SICILY 12,6 33,2

155 27 39 CAMPANIA 12,8 30,7 11

PIEDMONT 14,7 44,7 132 74 15 EMILIA ROMAGNA 14,9 41,9

LAZIO 17,1 45,1 56

VENETO 17,3 46,8

134 LOMBARDY 30,6 100,9

Source: Ministero della Salute della Repubblica Italiana Market Vision November 2018 PwC 34 Contents Executive Summary Reference market Competitive landscape Competitive landscape

Market Vision November 2018 PwC 35 Contents Executive Summary Reference market Competitive landscape

Commercial food service: fragmented competitive landscape characterized by the presence of both small and large players active mainly in the mass food service segment

Competitive landscape – Turnover and EBITDA% of main players Mainly commercial food (2017, €M, %) service operators Mainly mass food 4,711.1 service operators

Elior Group

Cremonini Group 670,0 660,7 541,4 Lagardere Group 454,2 422,8 372,0 349,1 315,8 306,7 214,0 163,3 131,7 85,2 61,6 59,2 39,0 21,1 17,4 10,3 5,4

EBITDA* 8.5% 4.2% 5.7% 7.2% 8.2% 6.2% 4.0% 3.7% 6.3% 6.1% 7.7% 11.6% 9.1% 15.4% 6.6% 10.3% 3.8% 5.1% 2.7% 7.8% 5.3% 2017 EBITDA* 8.9% 4.7% 7.3% n.a. 8.4% 6.1% 4.2% 4.9% 7.1% 5.1% 5.5% 10.9% 9.2% 14.0% 7.3% 6.3% 1.6% 3.8% 2.3% 4.2% 5.0% 2016 YoY '16-'17 1.5% 10.3% 15.9% n.a. 11.3% 4.8% 4.2% -6.8% 10.3% 4.0% -0.9% 1.3% -1.8% 13.5% 14.3% 18.6% 29.5% 128.4% 8.7% 5.7% 1.1% Revenues

Source: PwC analysis on financial statements (*) Ebitda calculated on statutory account (**) Turnover and ebitda net of “oil” business components as per Autogrill consolidated management report Market Vision November 2018 PwC 36 Contents Executive Summary Reference market Competitive landscape

Points of sales (1/2): Autogrill, leader (in terms of PoS number) in commercial food service on motorways, AIREST, Chef Express and MyChef main players in commercial food service in airports, …

presence COMMERCIAL FOOD SERVICE Sport ✔ Motorways MASS Train Ports / Univ. / centres / Industrial Total local units PoS Hospitals Airports / service Prisons City centre Malls Other RESTAURANTS # stations interports Schools museums areas stations / theatres

Autogrill 8 350 12 52 422

CAMST 16 1 2 12 14 15 32 120 116 404 ✔ CIR 49 2 2 1 2 1 4 5 41 15 245 212 636 ✔ Dussmann 12 2 1 3 8 22 71 ✔ Sodexo 11 1 1 20 57 90 ✔ Gemeaz 2 1 2 16 3 25 ✔ Chef Express 6 36 52 65 2 1 3 166

Serenissima 43 9 2 2 119 178 ✔ Vivenda 1 1 1 4 7 ✔ MyChef 48 20 2 6 5 1 1 84

Notes (*): socio-healthcare includes hospitals, private clinics, rehab centre and hospices Source: PwC Analysis on public information (website, press release, financial statements) Market Vision November 2018 PwC 37 Contents Executive Summary Reference market Competitive landscape

Points of sales (2/2): … Chef Express leader in railway stations, SIRIO leading player in commercial foods in Hospitals … CIR and CAMST leaders in mass commercial food service and in the industrial areas

Sarni 1 53 19 5 1 79

AIREST 44 44

Euro 4 2 1 8 2 26 Ristorazione ✔ Sirio 57 4 7 4 72

Fabbro 20 4 1 2 3 6 27 63

Hermes 4 7 2 ✔ 13

Punto Grill 2 5 5 3 15

Pellegrini 1 1 9 4 15

Paolo 3 1 10 3 ✔ 19 Ardisson

Bauli 1 ✔ 1

Total 231 152 498 85 7 12 31 32 65 129 441 571 2,430

Notes (*): socio-healthcare includes hospitals, private clinics, rehab centre and hospices; Source: PwC Analysis on public information (website, press release, financial statements) Market Vision November 2018 PwC 38 Contents Executive Summary Reference market Competitive landscape

Commercial food services: “apparent strategy” of main players (1/3)

Player Apparent strategy Autogrill is the leader in Italy in terms of number of PoS in motorway service stations. Autogrill is a leading global operator in food & beverage services for travellers with a portfolio of 300 brands and a global presence in 31 countries, 90% of its business is managed through concessions, with a global presence of approx. 145 Autogrill airports, 648 gas stations/motorway service areas, 85 cities/exhibition centres and malls, 49 railway stations. In the next years Autogrill aims to grow in the airport channel, maintaining the leadership in the motorway segment, but with a more selective and targeted commitment, innovate the services and products offered, expanding and diversifying them through the introduction of new tools and technologies, able to combine the efficiency of the processes with the evolution of the relationship with the customers, both in terms of supply and communication channels. MyChef is the leader in Italy in terms of number of PoS in airports. It is a Business Unit of the Elior Group and is the third largest provider of concession catering (airports, motorways, railway stations and leisure) present in 14 countries, specifically in Europe and in the US. The Italian branch/legal entity is known as MyChef Catering Commerciale SpA. MyChef One of the greatest strengths of Areas Italia/MyChef is the ability to conceive, develop and manage innovative retail formats ranging from premium brands such as Davide Oldani Cafè, Il Michelangelo Restaurant and Ferrari Spazio Bollicine to successful coffee shops such as Briciole and Illy Caffè.

Chef Express is the leader in Italy in terms of number of PoS in railway stations. Chef Express is the Italian travel food service operator of the Cremonini Group, with over 100 PoS in railway stations, airports and motorway service stations through seven different brands. The main formats are the "Chef Express" bar-cafeteria, the bar "Mokà", for a wider and demanding target, the Mr. Panino Chef sandwich shop and the self-service restaurant with the "Gusto Ristorante" brand. Express Chef Express is the legal entity of the Cremonini Group dedicated to food service concessions. The group is now expanding this business line in Europe through the subsidiary company Chef Express UK and the acquisition of the well-known "Bagel Factory" chain.

Sources: Website, Annual Report, press releases Market Vision November 2018 PwC 39 Contents Executive Summary Reference market Competitive landscape

Commercial food services: “apparent strategy” of main players (2/3)

Player Apparent strategy CIR Food is the leader in Italy in terms of number of PoS in both cities and industrial areas. CIR Food is an Italian catering cooperative and one of the largest catering companies in Italy and Europe. It offers collective catering by managing canteens for schools, hospitals, armed forces and other communities, as well as canteens CIR inside companies. It also manages food preparation centres, self-service restaurants and snack bars, pizzerias and sandwich shops, banqueting services and meal vouchers. CIR Food commercial catering division proposes a wide selection of formats from free-flow restaurants, cafes and snack bars, fast casual restaurants with the brands Chiccotosto, la Polpetteria, Let’s Toast, Piazza del Sole, Rita, Rita Snack Bar, Tracce and Vivai.

CAMST is an Italian group operating in the mass food service business in Italy and Europe with more than 20 legal CAMST entities. Over the years, in addition to its core business, the group has also expanded and grown in the catering and banqueting segment and in the commercial food service segment with approx. 150 PoS in city centres, commercial malls, exhibition centres, hospitals, theatres and universities. In recent years, CAMST has developed numerous brands and formats for bars and restaurants.

Sirio operates in four main channels with different brands: commercial food service in hospitals with the brand SirioBar, food service on motorways with the brand SirioGill, food service in airports with the brand La Ghiotta and fast food food service as franchisee of the Burger King brand. Sirio Sirio is a leading player in Italy in terms of number of PoS in hospitals. In the last 10 years the company has experienced a period of strong growth, consolidating its position in the hospital market and entering in new businesses (airports, motorways and fast food).

Sources: website, Annual Report, press releases Market Vision November 2018 PwC 40 Contents Executive Summary Reference market Competitive landscape

Commercial food services: “apparent strategy” of main players (3/3)

Player Apparent strategy Airest was established in 2001 to manage the retail and foodservice activities in the Marco Polo Venice Airport. 50% of Airest SpA has been acquired by Lagaredere Group. Through concession contracts, it currently has over 213 PoS (in Airest airports, on motorways, in train stations, shopping malls, outlets and museums) in 11 countries. Lagardere Group has recently manifested its interest in further expanding its network in Italy in the airports, motorway and railway stations segments.

Sources: website, Annual Report, press releases Market Vision November 2018 PwC 41 Contents Executive Summary Reference market Competitive landscape

Key economics – main players (1/6)

Main players– Key economics* (2017 €M, %)

4.711,1 Revenues Personnel Raw Materials Rents EBITDA

1.519,8 1.421,4 670,0 660,7 828,2 541,4 291,6 254,0 399,0 210,1 190,2 14,4 27,8 17,7 37,5 154,7117,0 9,9 39,1

Autogrill** CAMST Srl CIR Food Pellegrini

Personnel % 32.3% 43.5% 38.4% 28.6%

Raw 30.2% 31.4% 28.8% 21.6% Materials %

Rents % 17.6% 2.2% 2.7% 1.8%

EBITDA % 8.5% 4.2% 5.7% 7.2%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account (**) Turnover and ebitda net of “oil” business components as per Autogrill consolidated management report Market Vision November 2018 PwC 42 Contents Executive Summary Reference market Competitive landscape

Key economics – main players (2/6)

Main players– Key economics* (2017 €M, %)

454,2 Revenues 422,8 Personnel 372,0 Raw Materials 349,1 Rents 283,4 EBITDA

216,4

146,8 99,2 109,4 96,8 95,4 61,9 37,1 26,1 9,3 15,9 9,8 14,8 8,4 12,8

Dussmann Service Srl Sodexo Elior/ Elior Group Gemeaz / Elior Group

Personnel % 62.4% 51.2% 39.5% 27.7%

Raw 13.6% 23.5% 29.4% 27.3% Materials %

Rents % 2.0% 3.8% 2.6% 2.4%

EBITDA % 8.2% 6.2% 4.0% 3.7%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account Market Vision November 2018 PwC 43 Contents Executive Summary Reference market Competitive landscape

Key economics – main players (3/6)

Main players– Key economics* (2017 €M, %) Revenues 315,8 306,7 Personnel Raw Materials Rents EBITDA 214,0

163,3

123,8 116,4115,5 88,4 77,5 56,8 57,0 41,2 50,8 20,0 18,7 19,0 16,5 6,3 16,6 7,2

Chef Express / Cremonini Group Serenissima Ristorazione Spa La Cascina (Vivenda) MyChef / Areas / Elior Group

Personnel % 24.5% 37.9% 41.3% 25.2%

Raw 39.2% 37.7% 26.6% 31.1% Materials %

Rents % 18.0% 5.4% 3.0% 4.4%

EBITDA % 6.3% 6.1% 7.7% 11.6%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account Market Vision November 2018 PwC 44 Contents Executive Summary Reference market Competitive landscape

Key economics – main players (4/6)

Main players– Key economics* (2017 €M, %)

131,7 Revenues Personnel Raw Materials Rents EBITDA 85,2

61,6 59,2

39,5 31,2 30,6 32,6 26,1 22,1 19,5 12,0 14,1 13,9 13,1 14,7 14,2 2,8 4,1 6,1

Sarni Airest /Lagardere Group Euroristorazione Srl Sirio

Personnel % 23.7% 16.6% 42.4% 24.8%

Raw 30.0% 38.2% 35.9% 32.9% Materials %

Rents % 23.3% 16.3% 4.5% 24.0%

EBITDA % 9.1% 15.4% 6.6% 10.3%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account Market Vision November 2018 PwC 45 Contents Executive Summary Reference market Competitive landscape

Key economics – main players (5/6)

Main players– Key economics* (2017 €M, %) Revenues 39,0 Personnel Raw Materials Rents EBITDA

21,1 17,4 16,0 12,0 12,4 10,3 8,7 6,1 4,6 5,2 2,6 1,9 2,0 1,5 1,1 0,9 0,5 0,6 0,8

Fabbro Hermes Punto Grill Srl Paolo Ardisson Srl

Personnel % 40.9% 21.7% 11.0% 18.9%

Raw 30.7% 41.3% 71.2% 59.2% Materials %

Rents % 6.6% 24.5% 5.2% 5.5%

EBITDA % 3.8% 5.1% 2.7% 7.8%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account Market Vision November 2018 PwC 46 Contents Executive Summary Reference market Competitive landscape

Key economics – main players (6/6)

Main players– Key economics* (2017 €M, %) Revenues 5,4 Personnel Raw Materials Rents EBITDA

2,5

1,4

0,3 0,0

Bauli Grill

Weighted average

Personnel % 25.5% 35.4%

Raw 46.5% 29.2% Materials %

Rents % 0.0% 11.1%

EBITDA % 5.3% 7.4%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account Market Vision November 2018 PwC 47 Contents Executive Summary Reference market Competitive landscape

Mass food service operators are positioned in the lower end of the regulatory band, whereas commercial food service operators are located in the upper end Competitive landscape – Relative Market share Elior €100M Turnover (2017, %) Group Mainly commercial food 18% Cremonini service operators Group Mainly mass food service operators Lagardere 16% Group Airest

14%

12% MyChef / Areas

10% Sirio

%* Sarni La Cascina (Vivenda) Dussmann Service Srl Autogrill** 8% Paolo Ardisson Srl Chef Express Pellegrini Euroristorazione Srl EBITDA EBITDA 6% Bauli Grill CIR Food Serenissima Hermes Ristorazione Spa Sodexo CAMST Srl 4% Fabbro Elior Punto Grill Srl Gemeaz 2%

0% 0,0 0,1 0,1 0,2 0,2 RMS – Relative Market Share Source: Elaboration PwC on deposited financial statements as of 2017 (*) Ebitda calculated on statutory account (**) Turnover and ebitda net of “oil” business components as per Autogrill consolidated management report Market Vision November 2018 PwC 48 Contents Executive Summary Reference market Competitive landscape

Strong growth of new chain players in recent years, consolidated players show a moderate growth

Competitive landscape– Revenues and EBITDA growth (2015-2017, %)

100%

80%

Fabbro Hermes 60% Sirio Average* CAGR Revenues +3.5% 40% Punto Grill Srl

20% Airest

Serenissima Ristorazione Spa 2017 15% Dussmann Service Srl

10% Bauli Grill

5% Autogrill Gemeaz Average* CAGR EBITDA 2015 - EBITDA 0% EBITDA+1.5% MyChef / Areas CAMST Srl Sodexo

CAGR CAGR Elior Euroristorazione Srl €300M Turnover -5% Group Elior Chef Express Mainly commercial food Cremonini -10% CIR Food service operators Group Mainly mass food -15% La Cascina (Vivenda) service operators Lagardere Group

-20% -15% -10% -5% 0% 5% 10% 15% 20% 65% 70% CAGR Revenues 2015-2017

Source: Elaboration PwC on deposited financial statements as of FY2015 and FY2017 (*) Weighted average (**) Pellegrini and Sarni not available data

Market Vision November 2018 PwC 49 © 2018 PricewaterhouseCoopers Advisory SpA. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Advisory SpA which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, ,and should not be used as a substitute for consultation with professional advisors.