NPD CREST State of the Nation 2015
Evolving consumer trends in the foodservice market
Copyright 2014. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD. The NPD Group, Inc. | Proprietary and Confidential ® CREST The Currency for Food Service Industry Decisions in Europe and Across the World
Consumer Reports on Eating Share Trends
USA Canada Great Britain Germany France Spain
Italy Russia Japan China Australia Mexico
The NPD Group, Inc. | Proprietary and Confidential 2 Basics about CREST
Database designed to measure consumer restaurant behaviour... captured through surveys sent to a maintained, representative panel.
CREST = Consumer Reports on Eating Share Trends Source for data are consumers, not restaurant chains A syndicated study of ready prepared meals/snacks for immediate consumption Covering every day, 365 days per year Includes prepared meals and snacks from restaurants/deliveries as well as retail outlets (Grocery/Deli/C Stores) Captures restaurant meals and snacks consumed both on and off-premises
The NPD Group, Inc. | Proprietary and Confidential 3 Executive summary
Choice and newness in Full experience particular in London
&
Treat themselves Technology, Buzz and their family and loyalty Food Service +0.9% in visits
The NPD Group, Inc. | Proprietary and Confidential FOOD SERVICE
PERFORMANCEThe image should fill up the entire space of the gray box, no gray should be seen
The NPD Group, Inc. | Proprietary and Confidential Healthy growth for total out of home.
+2.0% £50.8b Total Spend
+1.0% +0.9% £4.60 11.1b Average Eater Check Visits
-1.1% +2.6% £1.94 2.4 Av price per unit Item per eater
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, YE Dec '14 Independents are struggling to compete against chains to answer changing consumer needs.
Independents -3.7% Small Chains +12.7% Major Brands +2.3%
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, YE Dec '14 vs YE Dec’13 Full service failed to meet new consumers’ needs.
Visits year on year % change UP Casual dining +6.8% Full Service exc. Casual Dining -3.1% Travel & Leisure +1.6% Canteen -1.0% Quick service restaurants +1.4%
Pubs +0.7% DOWN
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, YE Dec '14 vs YE Dec’13 All day-parts are back to growth, apart from snacking.
Breakfast +4.6% Lunch +1.9%
Dinner +3.5% Snacking -3.7%
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, YE Dec '14 vs YE Dec’13 Growth entirely comes from Deals - in particular, Meal Deals.
On Deal 27% of visits
+ 5.3% year on year
Meal Deal 15% of visits + 7.7% year on year
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, YE Dec '14 vs YE Dec’13 Burgers, sandwiches & cold beverages are the only growing categories. Strong decline for hot beverages (warm year) Total Out of Home (OOH) Incidence and Servings Trend Incidence Serving PPT % Category Incidence (% of orders that include the item) Change PCYA
Alcoholic Beverages 8.9 -0.2 -2.0 Cold Beverages 44.4 0.7 2.5 Hot Beverages 26.5 -1.3 -4.3 Total Breakfast 7.5 -0.3 -2.2 Total Bakery 11.2 0.1 0.1 Total Snacks 6.2 0.0 -0.2 Total Desserts 11.1 0.0 1.1 Total Meat Main Dish 14.2 -0.1 0.2 Fin Fish Total 3.9 0.0 0.3 Shellfish Total 1.2 -0.1 -0.9 Total Burger 11.3 0.9 9.6 Total Sand/Wraps 19.6 0.5 2.1 Total Ethnic 14.3 0.1 -0.8 Total English 0.3 0.0 n/a Total Side Dish 1.2 0.0 -2.4 Total Starters 1.0 0.0 -1.1
The NPD Group, Inc. | Proprietary and Confidential ] 13 [ Source: The NPD Group/CREST®, YE Dec ‘14 Proteins grow in importance overall – driven by Chicken, Beef and Pork. Total Out of Home (OOH) Incidence and Servings Trend
Category Incidence (% of orders that include the item)
1.2 Shellfish 1.3
3.9 Fish 3.9
12.6 Pork 12.2
0.8 Lamb YE Dec 14 0.8 YE Dec 13 11.9 Beef and Veal 11.4
14.5 Poultry 13.8
44.6 Total Protein 42.8
The NPD Group, Inc. | Proprietary and Confidential ] 14 [ Source: The NPD Group/CREST®, YE Dec ‘14 The changing British landscape has changed consumers’ behaviours across different industries…
The NPD Group, Inc. | Proprietary and Confidential TREAT NEWNESS
TECHNOLOGY EXPERIENCE
The NPD Group, Inc. | Proprietary and Confidential Consumers treat their kids and themselves
Sources: NPD UK Toys , Sports and CREST Consumer Panel / NPD UK Prestige Beauty / All data 2014 vs 2013, except* vs 2009
The NPD Group, Inc. | Proprietary and Confidential 17 Outlets need to please both Parents and Kids
Quality of Food 18% more important than for adult only parties Kids like it there 24% of visits Variety of Food 22% more important than for adult only parties
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, Reason choice of an outlet % of visits YE Dec '14 TREAT NEWNESS
TECHNOLOGY EXPERIENCE
The NPD Group, Inc. | Proprietary and Confidential Consumers love newness and diversity
Sources: NPD UK Toys and CREST Consumer Panel / NPD UK Prestige Beauty / All data 2014 vs 2013
The NPD Group, Inc. | Proprietary and Confidential 20 London is a great example of this trend
X2 in 5 years +58% year on year London gives birth to lots of new restaurant chains inspired by American trends, international cuisine and street food
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, visits YE Dec '14 vs YE Dec’09 and YE Dec’13 More choice means that the consumer has become more promiscuous
The NPD Group, Inc. | Proprietary and Confidential As a result, convenience is less and less important when choosing a restaurant Total out of home – Reason for choice of an outlet
1 Convenience/Habit
2 Quality/Choice/Craving
3 Price/Voucher
4 New/Recommended
5 Kids like it there
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, visits YE Dec '14 TREAT NEWNESS
TECHNOLOGY EXPERIENCE
The NPD Group, Inc. | Proprietary and Confidential With more and more choice, the outlet must give a better experience
John Lewis has created the “town hall” concept The retailer size has converted the 1st floor space that makes beauty product browsing a of their store into a Nike Skateboard area “voyage of discovery”
In Foodservice, social moments have grown Lego in store corners by +16% vs 2009
The NPD Group, Inc. | Proprietary and Confidential Sources: NPD UK CREST All data 2014 vs 2013 25 To enjoy the experience, consumers eat more on premise
On premise +3.4%
Off premise -0.5%
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, total out f home visits YE Dec '14 vs YE Dec’13 Casual dining leaves customers satisfied about all aspects of their experiences
Quality of Service
Valued Value For Customer Money Overall Satisfaction 78% Excellent or very good Atmosphe Taste of re/Ambian Food ce Friendly environm ent for kids
The NPD Group, Inc. | Proprietary and Confidential Source: The NPD Group/CREST®, Casual Dining Customer satisfaction % of visits YE Dec '14 What About Lunch on the Go in London vs. the Rest of Great Britain?
The NPD Group, Inc. | Proprietary and Confidential 28 London Overtrades at Breakfast and for Snacking Occasions and outgrows the rest of GB
Regional Share of traffic – Off-Premise occasions in QSR
16.9 Total Daypart 83.1
22.8 Breakfast 77.2
17.2 Lunch 82.8
13.4 Dinner 86.6
18.7 Total Snack 81.3
London Rest of GB
Source: The NPD Group/CREST®, YE Dec '14
The NPD Group, Inc. | Proprietary and Confidential 29 Same number of items but a 22% higher average ticket in London
London QSR Lunch on the go Rest of GB
4.1 Million Visits per Week 19.7 2.0 Number of Items 1.99
3.49 Average Ticket £ 2.87
28.3% % visits on deal/promo 27.6%
Source: The NPD Group/CREST®, YE Dec '14
The NPD Group, Inc. | Proprietary and Confidential 30 Portability Needs are Different in London and in the Rest of GB
% of Lunch Visits within QSR made off premise
40% 50% Outside/in At Work a car
London Rest of GB
Source: The NPD Group/CREST®, YE Dec '14
The NPD Group, Inc. | Proprietary and Confidential 31 London Remains a Booming Place for Independent Street Food Outlets
Lunch on the Go in QSR – Brands & Independents Traffic Share
London Rest of GB 20 27
Brands +4% Independents +1%
73 80
Source: The NPD Group/CREST®, YE Dec '14
The NPD Group, Inc. | Proprietary and Confidential 32 Nationally, Convenience and Quality of food are the most important reasons for choice; Quality holds a higher percentage in London while Convenience is higher outside of London Reason to choose a specific outlet to eat/drink out for lunch off premise, in QSR (% of visits) LONDON REST OF GB
62% Convenience 67% Location Drive Thru, Delivery No time to cook
46% Food related 40% Quality of Food Variety of Food Specific taste Light/Healthy
The NPD Group, Inc. | Proprietary and Confidential ] 33 [ Source: The NPD Group/CREST®, YE Dec '14 Top items demand Lunch on the GO in QSR
What about salads? Pasta? Veal? Lamb? Duck? What about sweet foods?
Food Beverages Savory 91% Total Beverages 61% Cold 56% Cola 20% Hot 49% Hot Beverage 11% Sandwiches 49% Bottled Water 10% Burger 12% Juice 8% Chips/French 9% Fries Ethnic 7%
The NPD Group, Inc. | Proprietary and Confidential 34 TRENDS FOR 2015
The NPD Group, Inc. | Proprietary and Confidential TOP 5 TRENDS TO WATCH IN 2015
GOOD BYE BLIND LOYALTY
SQUEEZED MIDDLE
AUTHENTICITY, FRESHNESS AND TRANSPARENCY
HEALTHY INDULGENCE
NICHE CUISINE GOES MAINSTREAM
The NPD Group, Inc. | Proprietary and Confidential Forecasts show visit growth continuing, and actually out-pacing average spend growth in 2015 and 2016.
Total OOH – KPIs YOY % Growth
Forecast
1.5% 0.9% 1.1% 0.1% -0.5% -0.8%
-2.4% -3.0%
2009 2010 2011 2012 2013 2014 2015 2016
Visits (000s)
The NPD Group, Inc. | Proprietary and Confidential Thank You
Industries Countries Automotive Australia Beauty Austria Consumer Electronics Belgium Entertainment Brazil Fashion Canada Food / Foodservice China Home France Luxury Germany Mobile Italy Office Supplies Japan Sports Mexico Technology Netherlands Toys New Zealand Video Games Poland Portugal Russia South Korea Keep up with what’s new at The NPD Group. Spain Subscribe to our newsletter and other communications Sweden by visiting npd.com and clicking “Subscribe.” Taiwan United Kingdom United States
The NPD Group, Inc. | Proprietary and Confidential