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The EuropeanFoodservice Market
Main players, Structures, Dynamics and Trends
Peter Backman
CIR . Prague . 26 January 2006
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Eating out - Europe’s role
USAEuropeRest of the World
Global foodservice:€1.5 trillion
€331 billionSource: Horizons
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The Top 10 Foodservice Operators in Europe 2004
McDonald's €11.4 bnCompass €9.0 bnSodexho Alliance €5.3 bnElior €2.5 bnMitchells & Butlers €2.3 bnWhitbread €1.9 bn Burger King €1.8 bn Yum! Brands €1.7 bn Autogrill €1.6 bnAccor €1.5 bn
Source: Horizons/FSE and ME
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What is Europe?
• One country?• A family?
• A harmonious family?
• A dysfunctional family?
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Common economies
• Growing GDP• Changing power of the state• Employment – Up (a bit)• Unemployment – High but falling• Wide mix of activities• Shift:
• Agriculture > Manufacturing > Services• Opening markets• Competition from China/India
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Common demographics?• Populations growing slowly• Greying/growing life
expectancy• Stable fertility rates• More children outside
marriage• Fewer marriages• More divorces• Increasing age at first
marriage• Increasing dependency• Falling rural populations• More households• More migration
> Falling in 17 countries> Women: Spain/France 84;
Turkey/Moldova 72> Below replacement rate> Nordics >55%, Greece/
Cyprus <5%> Denmark up!> Greece/Lithuania down> Nordics >28; Russia/
Belarus/Ukraine/Turkey <23> S Europe falling fastest> Europe wide> Europe wide> Emigration from 9 countries
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20 Common consumer issues
1. Increasingly well travelled
2. Highly literate3. More inequality
• Gender• Race• Age
4. Fearful• Terrorism• Avian Flu• Pensions
5. More time6. More money7. Less smoking8. More e-aware
9. More choice10. Increasing
complexity• Age• Gender• Lifestage• Expenditure• Global/local
11. More environmentally concerned
12. More ethical13. More individualistic14. Greater
preparedness to try new things
15. More need for comfort
16. More need to belong17. Healthier eating
• Salt• Sugar• Fat
18. Obesity19. Dieting20. Going organic
You have to understand this
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Common foodservice markets
• Increasing corporate activity• Growth of groups• Buying/selling businesses
• Changing styles• Coffee bars• Fast casual• Healthy options• More choice
• Emergence of celebrity chefs
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Harmony or dysfunction?
• A bit of both• The lessons?
• Take account of the differences• Take advantage of the similarities
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How big is foodservice in Europe?
• It serves 65 Bn meals a year20,600 meals every second!
• It consists of 2,920,00 outlets
• Food, drink sales to consumers €331 Bn€431 per person per year
Source: Horizons
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Restaurants, QSR, Drinking Places dominate
Restaurants
QSR
Drinking PlacesHotels
Leisure
Staff Catering
Health Care
EducationServices
Source: Horizons
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Huge differences in size
0 25,000 50,000 75,000
Germany
France
UK
Italy
Spain
Netherlands
Belgium
Greece
Sweden
Portugal
Switzerland
Turkey
Poland
Iceland
Estonia
Sales: Euro MillionSource: Horizons
Top 5: 77%
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Europe v US
Average Sales/outlet 2004• US €496,220• Europe €113,520• EU 15 €171,920• EU 10 €25,920• RoE €18,110
Average Sales/person 2004• US €1,268• Europe €431• EU 15 €815• EU 10 €100• RoE €48
• Europe lags• But there are levels of
development – EU15+, EU 10, RoE
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10 Things standing in the way
1. Finding locations2. Funding
• Banks• Equity• Franchising• Management/contract
3. Labour• Availability• Costs
4. Management skills5. Competition
• Foodservice• Leisure
6. Supply chain• Accessibility• Profitability
7. Supplier support8. Branding is weak9. Lack of focus:• Foodservice +
• Manufacturing• Retailing• Multi-sectoral
10.Few cross-border players
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• No. 25• 19 countries• Triple offer• Multiple promise
• Reward• Destination• Family/children
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The Top 100 Foodservice
Operators in Europe
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What is the Top 100 share?
0%
20%
40%
60%
80%
100%
Turnover Countries
All othersTop100
1717€€68 bn68 bnsalessales
Source: Horizons/FSE and ME
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The Top 100 - Rules
• Measures food and beverage sales• Systemwide figures• Categorised by:
• Main business activity• Country of origin
• Reported figures – otherwise estimates• Constant currencies• Beware:
• Comparing apples and pears: many sectors• Strips out:
• Accommodation• Facilities management• UK: Tenanted/leased pubs
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Group operators
• Polarisation• Growing importance of groups• Benefits of scale:
• Access to finance• Marketing• Branding• Employment• Purchasing/cost reduction
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What sectors?% of Top 100 Sales
Contract CateringQSRPubsTravelRestaurantsHotelsOthers
Source: Horizons/FSE and ME
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Sector F&B salesAverage in each sector
0 200 400 600 800 1000 1200 1400
Contract Catering
QSR
Pubs
Travel
Restaurants
Hotels
Others
€ million per group
Source: Horizons/FSE and ME
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The fastest growing sectors- 2004 vs. 2003
0
2
4
6
QSR
Restau
rants
Hotels
Pubs
Others
Total
Contra
ct Cate
ring
% c
hang
e
Source: Horizons/FSE and ME
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Groups – where do they come from? % of Top 100 Sales
UKUSAFranceGermanyItalySpain10 Others
Source: Horizons/FSE and ME
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SalesAverage from each country
0.0
0.5
1.0
1.5
2.0
USA UKFran
ce Italy
Sweden
Belgium
Switzerl
and
German
ySpa
inFinl
and
Greece
Netherl
ands
Norway
Portug
alRus
siaAus
tria€
milli
on
Source: Horizons/FSE and ME
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What does this tell us?
• 3 countries have 77% of “group” business• UK
• The most “grouped” European country• Strong in Contract/Restaurants/Pubs
• France• Also strongly “grouped”• Especially in Contract catering
• US is dominant for• High throughput concepts• QSR
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How does Europe compare - by sector?
0%
20%
40%
60%
80%
100%
Europe USA
F&B
sal
es OthersContractQSR
Source: Horizons/FSE and ME/Nations Restaurant News
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The Top 10 Foodservice Operators: Europe and USA
McDonald‘s €11.4 bnCompass €9.0 bnSodexho €5.3 bnElior €2.5 bnM&B €2.3 bnWhitbread €1.9 bn Burger King €1.8 bnYum! €1.7 bnAutogrill €1.6 bnAccor €1.5 bn
McDonald's $24.4 bnYum! $16.7 bnBurger King $7.9 bnWendy’s $7.9 bnSubway $6.3 bnAramark $5.3 bn Sodexho $5.1 bnCompass $5.1 bnDarden $4.7 bnApplebee’s $3.9 bn
Source: Horizons/FSE and ME/Nation’s Restaurant News
++
Source: Horizons/FSE and ME/Nations Restaurant News
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Will Europe follow the US?
• Europe’s structure is different:• US: QSR dominates• Europe: Contract +QSR + other sectors
• The US model works where there are common:Beliefs, expectations
x Languagex Real estate developmentx Property lawx Currency
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What’s the potential?
0
400
800
1,200
1,600
Europe USA
€ B
illion
/ €
/ Milli
on
Population MillionsFoodservice Sales/personFoodservice Sales € Billion
Source: Horizons
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How can you do it across Europe?
1. Identify and understand your customers2. Get your infrastructure right3. Treat Europe like an adult
• Here’s how some operators get it right –some of the time …
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• Developed by Kaye family• Serial concept creators
• 4 stores• Features
• Stylish• Fast casual• Sector top-end spend
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• Portuguese from South Africa!
• 116 stores in Europe• 3 countries• Imaginative/high
energy
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coffeeheaven• 42 stores• Central Europe• Coffee• Emerging economies
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The Subway business• Massive expansion • Totally franchised• 1,056 stores in 24
countries in Europe• 80% in UK and Germany
The Subway offer• Fresh• Fast• Casual• Positioned against
McDonald’s
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Cantina Mariachi
Cantina Mariachi• 108 stores• 4 countries• Mexican theme• Clear model:
• Retail parks• Fast• Restaurant• Efficient supply chain
Comess Group• 4 concepts• 160 stores
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• “To accomplish great things we must dream as well as act”• Anatole France
• “Action may not always bring happiness … but there is no happiness without action”• Benjamin Disraeli
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Thank you for listening to me
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How to contact usPeter Backman
Horizons FS Limited313 Regents Park RoadLondon N3 1DPUnited Kingdom
T: 00 44 20 8349 1062F: 00 44 8701 272 219M: 000 44 7785 242809E: [email protected]
www.horizonsforsuccess.com
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Horizons services
• Consultancy
• The Key Club – Study Tours and Workshops
• Foodservice Intelligence database
• Survey projects
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We help our clients make better decisions
• 30 years experience• 100% focused on foodservice in UK and
Europe• We work for:
• Operators• Distributors• Manufacturers• Financial institutions• Marketing agencies• … and many more
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Horizons Database: Features
• Covers foodservice, hospitality• Fully integrated model, consistent definitions• UK and pan-European• 160,000+ statistics• Externally validated methodology and statistics• Base year 2004 plus 2001 to 2009 • Information on over 3,000 operator brands• Distributor information• Market commentaries• Multiple delivery options – spreadsheet, web, hardcopy,
presentation etc
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Horizons Database:Definitions – page 1 (of 6)
SECTORSRestaurantsEuropeanBritish/CosmopolitanItalian/SpanishFrenchEthnicChinese/OrientalIndian/PakistaniMediterraneanOtherConceptIn-StoreSpecialist Roadside RestaurantsPub Restaurants
N.B: These are pubs for which food sales account for over 50% oftotal salesPizza/PastaMexican/Tex-Mex/CaribbeanThemedSpecialist Menu/Other.Pubs
N.B: All pubs that are part of a hotel are counted in the hotel sector.Tenanted operators include franchises and leases.
Brewery OwnedTenanted and LeasedManaged BrandedManaged UnbrandedPubco OwnedTenanted and LeasedManaged BrandedManaged UnbrandedOtherFreehouseWine BarNight Club.Leisure
N.B: Leisure parks (such as Warner Village) are excluded from this category. Outlets located on such sites are included in the relevant sector (Restaurants, Quick Service etc).
Quick ServiceFast Food
NB: These are chains where control lies at head office, with over 50 outlets worldwide and which operate at least a sit-in area or a delivery service;
Burger KingDomino’s PizzaKFCPizza HutPret a MangerMcDonald’sWimpy
CafesCoffee Shops
N.B: The coffee shop sector consists of those outlets that serve hot or cold beverages, but no alcohol and that serve viennoiserie, doughnuts, cakes or ice-creams. They may also serve sandwiches, small salads or soups, although serving meals is not their main domain of business. These include tea rooms, action based coffee shops, ice-creams parlours as well as the more traditional coffee shops
Traditional CafesTake AwaysSandwich barsFish & Chips/KebabsChinese/Oriental
N.B: Outlets that have no restaurant section and only operate a take-away/delivery service
Indian/Pakistani:N.B: Outlets that have no restaurant section and only operate a take-away/delivery service
Burger/Pizza/ChickenJacket Potatoes/OthersHotels
N.B: Each site is counted as one outlet even though it might have several foodservice components within it (e.g. a restaurant, a pub and room service). Travel hotels are counted only if they offer some foodservice offering (e.g. room service). Self catering outlets are not included.
Hotels201+ Rooms101-200 Rooms51-100 Rooms26-50 Rooms