LIST OF CONTENTS AND TABLES

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2 LIST OF CONTENTS AND TABLES in Australia - Category analysis... 1 Headlines... 1 Trends... 1 Competitive Landscape... 2 Prospects... 4 Category Data... 5 Table 1 by Category: Units/Outlets Table 2 by Category: Number of Transactions Table 3 by Category: service Value Table 4 by Category: % Units/Outlets Growth Table 5 by Category: % Transaction Growth Table 6 by Category: % service Value Growth Table 7 Sales of Bakery Products by Type Table 8 Global Brand Owner Shares of Chained Table 9 Brand Shares of Chained Table 10 Forecast Sales in by Category: Units/Outlets Table 11 Forecast Sales in by Category: Number of Transactions Table 12 Forecast Sales in by Category: service Value Table 13 Forecast Sales in by Category: % Units/Outlets Growth Table 14 Forecast Sales in by Category: % Transaction Growth Table 15 Forecast Sales in by Category: % service Value Growth in Australia - Company Profiles Franchised Group in Consumer service (australia) Strategic Direction Key Facts Summary 1 Franchised Group: Key Facts Summary 2 Franchised Group: Operational Indicators Company Background Suppliers Competitive Positioning Summary 3 Franchised Group: Competitive Position Quick Service Restaurant Holdings in Consumer service (australia) Strategic Direction Key Facts Summary 4 Quick Service Restaurant Holdings: Key Facts Summary 5 Quick Service Restaurant Holdings: Operational Indicators Company Background Suppliers Competitive Positioning Summary 6 Quick Service Restaurant Holdings: Competitive Position

3 Retail Group Ltd in Consumer service (australia) Strategic Direction Key Facts Summary 7 Retail Group: Key Facts Summary 8 Retail Group: Operational Indicators Company Background Suppliers Competitive Positioning Summary 9 Retail Group: Competitive Position the Retail Zoo Pty Ltd in Consumer service (australia) Strategic Direction Key Facts Summary 10 The Retail Zoo Pty Ltd: Key Facts Summary 11 The Retail Zoo Pty Ltd: Operational Indicators Company Background Suppliers Competitive Positioning Summary 12 The Retail Zoo Pty Ltd: Competitive Position Consumer service in Australia - Industry Overview Executive Summary Consumers Upgrade During Economic Slowdown Taking It Away Mcdonald s Still the Big Mac Chains Continue Takeover Bright Future for Consumer service Key Trends and Developments Consumer service Sales Higher Than Ever Domestic Brands See Greater Success All Just A Little Bit Fancy Ifood A Time and A Place for Everything Diet Market Data Table 16 Units, Transactions and Value Sales in Consumer service: Table 17 Units, Transactions and Value Sales in Consumer service: % Growth Table 18 Consumer service by Independent Vs Chained Outlets: Units/Outlets Table 19 Consumer service by Eat in Vs Takeaway Table 20 Consumer service by Vs Drinks Split Table 21 Sales in Consumer service by Location Table 22 Leading Chained Consumer service Brands by Number of Units Table 23 Chained Consumer service Company Shares Table 24 Chained Consumer service Brand Shares

4 Table 25 Table 26 Forecast Units, Transactions and Value Sales in Consumer service: Forecast Units, Transactions and Value Sales in Consumer service: % Growth Appendix National Consumer Expenditure Table 27 Consumer Expenditure on Consumer service Table 28 Consumer Expenditure on Consumer service Trade Association Statistics Operating Environment Franchising Definitions Summary 13 Research Sources... 56

5 FAST FOOD IN AUSTRALIA - CATEGORY ANALYSIS HEADLINES Fast food grows 7% in current value terms in 2010 to reach A$13.5 billion Number of outlets rises 3% to 17,294 With trend towards gourmet fast food, spend per transaction rises from A$9.26 in 2009 to A$9.60 in 2010 Latin American fast food grows fastest with 47% current value terms increase in 2010 McDonald s brand dominates with 21% value share Fast food predicted to see steady constant value CAGR of 4% over forecast period TRENDS Despite the economic slowdown fast food had a particularly successful year in 2010, growing 7% in current value terms, down from the 9% increase of There were several reasons for this continued strong growth, including consumers reducing expenditure and thus trading down during the economic slowdown. At the same time, the boundaries between fast food and full-service restaurants are increasingly blurred. This is due to the growth of chains that follow the fast casual concept, and a gourmet trend, which is particularly evident in pizza fast food and burger fast food. In pizza fast food, this was driven by new players such as Crust Gourmet Pizza and Pizza Capers, while burger fast food has a new gourmet player: Grill d. Meanwhile, established players, including leader McDonald s, have added value through such offerings as the Grand Angus and Mighty Angus, and its gourmet M Selections range. Each of these trends also contributed to the strong growth of 2009, but their influence was still felt in Fast casual has begun to emerge in Australia, with Nando s the primary champion of this trend. Outlets were renovated and new outlets designed that were larger than typical fast food establishments, and with a more authentic atmosphere. Emerging player Salsas Fresh Mex Grill is also developing its fast casual offerings, opening more stores in this format, while Grill d introduced this trend into burger fast food. Although, with the except of Nando s, each of these brands are rapidly expanding emerging players, so is fast casual growing especially fast with 61% current value terms growth in Outlet growth lagged behind value growth in 2010, growing only 3% as difficulties in obtaining finance during the economic slowdown discouraged Australians from embracing franchising, which is the primary means of expansion for fast food operators. This has represented a boon for existing franchisees, however, as not only does it mean that sales per outlet increased from A$739,000 in 2009 to A$763,000 in 2010, but much of the expansion came from existing franchisees buying an additional franchise. Thus, fast food was a particularly profitable industry in Latin American fast food has not previously represented a major part of Australia s fast food culture, largely due to a lack of Latin American immigrants. However, two chains Salsas Fresh Mex Grill and Zambrero Fresh Mex Grill as well as several smaller players, emerged in Some of these had considerable financial support from major players in the

6 Australian consumer foodservice industry. Salsas Fresh Mex Grill, for example, is backed by Janine Allis, who established the Boost Juice chain, and Guzman y Gomez, the founder of McDonald Australasia. Consumers who also had their interest spiked by other aspects of Latin American cuisine, such as churros and paella, have embraced Latin American fast food. This segment saw 47% value growth in 2010, albeit from a low base, up from A$52 million in 2009 to A$76 million in 2010 (compared with almost A$4 billion for burger fast food). Even during tough economic times, consumers want to indulge themselves, and have consequently embraced affordable indulgences. They are willing to spend an extra couple of dollars on something special, with the result being a rise in spend per transaction from A$9.26 in 2009 to A$9.60 in It is this embracing of affordable indulgences that has underpinned the gourmet fast food trend, with consumers willing to spend A$10.00 on a burger from Grill d, or A$25.00 on a gourmet pizza from Crust Gourmet Pizza. The pizza category has benefited most from this trend, growing 27% in current value terms in Bakery products fast food has shifted towards sandwich specialists, which accounted for a 55% value share in This was not only due to the strength of category leader Subway, but consumers attempting to shift to healthy eating options such as the sandwiches sold by Healthy Habits and Fancy Fillings. Meanwhile Krispy Kreme saw over a third of its outlets close in 2010 after it failed to make a significant dent in Donut King s share. Despite long-term discussion of the growing popularity of healthfood, this finally appears to have gone mainstream, with several franchised chains, such as SumoSalad, reaching critical mass required to both reach high brand awareness and take advantage of economies of scale. Sumo Salad is now the largest player in other fast food, as well as leading in healthy fast food a position it reinforced in 2010 by replacing its white bread rolls with healthier multigrain, soy and linseed rolls. Chains of Asian have not performed well in Australia, despite the popularity of Asian food in Australia in general. This is largely due to the availability of inexpensive Asian food in full-service restaurants, thus negating the need for an even cheaper fast food option. As a result, Asian fast food is largely confined to food courts in shopping centres. However, with a number of small but rapidly growing chains such as Wok Me and Red Rock Noodle Bar, as well as more established players such as Noodle Box and wokinabox, this may soon change. Asian fast food experienced 6% current value terms growth in Chicken fast food have represented one of the strongest performing categories in recent years, with 8% current value growth in This reflects trends not only in consumer foodservice but also in consumption trends in general. This is partially due to its low price, but also the variety of ways chicken can be prepared crumbed, fried or grilled for example. The increasing attraction of Australian consumers to chicken is therefore likely to continue over the forecast period. Breakfast is growing particularly rapidly for fast food in Australia. This is underpinned by the success of McCafé, which other fast food operators are attempting to replicate to some extent. Hungry Jack s has rolled out opening for breakfast across Australia a process that was completed by the middle of 2010, while also expanding the number of outlets open on a 24/7 basis. Subway also produced a breakfast offering, and has in general expanded its business hours. COMPETITIVE LANDSCAPE McDonald s remains by far the largest player in fast food in Australia, holding a value share of over 30% in chained fast food, and an incredible 78% in chained burger fast food. This has

7 long been one of the strongest global markets for McDonald s. One of the reasons for this is that the improvements in the McDonald s brand in terms of health, for example were initiated by McDonald s in Australia, which made it more acceptable to consumers, many of whom previously considered McDonald s offerings as simply junk food. Many consumers still do hold this perception, but increasingly McDonald s is reaping the benefits of its improved brand image. These initiatives include the integration of McCafé initially invented in Australia in 1993, and since adopted by McDonald s around the world into McDonald s outlets, and its offering of free wi-fi. These efforts represented an important part of the company s attempt to move away from its fast food image towards creating a more stylish environment in which consumers want to spend more time. As a result, not only has McCafé contributed to rising spend per transaction within the combination of McDonald s/mccafé, but it has also served to take share from other competitors. However, spend per transaction within McDonald s itself has edged down as consumers choose a coffee instead of a Coke, for example.

8 PROSPECTS Much of the success of fast food in recent years has been due to the popularity of the Angus burger, the emergence of both gourmet burgers and gourmet pizzas, as well as the fast casual concept. The impact of these is likely to fade over the forecast period. Even though Grill d, with a less than 1% value share in burger fast food, could potentially gain a couple of extra percentage points as it expands across Australia, it remains only a minor player, and would have only a minor impact on the overall fast food category. Furthermore, fast casual is unlikely to have a major impact on Australia, as the market already has a wide variety of

9 inexpensive eating options, typically referred to as cheap eats. Although many fast food operators, ranging from Nando s to McDonald s with its incorporation of McCafé, are renovating their outlets to make them more attractive and encourage consumers to spend more, such additional expenditure is likely to be marginal. As a result, fast food is expected to experience a solid constant value CAGR of 4% over the forecast period, while the premiumisation trend will increase spend per transaction from A$9.60 in 2010 up to A$10.06 in CATEGORY DATA Table 1 by Category: Units/Outlets outlets

10 Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger Fast - Independent Burger Chicken - Chained Chicken Fast - Independent Chicken Convenience Stores Fast - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Fast Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

11 Table 2 by Category: Number of Transactions Mn transactions Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger Fast - Independent Burger Chicken - Chained Chicken Fast - Independent Chicken Convenience Stores Fast - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Fast Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other

12 Fast Casual Dining Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 3 by Category: service Value A$ million Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger Fast - Independent Burger Chicken - Chained Chicken Fast - Independent Chicken Convenience Stores Fast - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Fast Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza

13 - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 4 by Category: % Units/Outlets Growth % Units/Outlets growth Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger - Independent Burger Chicken - Chained Chicken - Independent Chicken Convenience Stores - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

14 Table 5 by Category: % Transaction Growth % transaction growth Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger - Independent Burger Chicken - Chained Chicken - Independent Chicken Convenience Stores - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining 2009/ CAGR 2005/10 TOTAL Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 6 by Category: % service Value Growth % value growth Chained Independent Asian - Chained Asian - Independent Asian Bakery Products 2009/ CAGR 2005/10 TOTAL

15 - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger - Independent Burger Chicken - Chained Chicken - Independent Chicken Convenience Stores - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 7 Sales of Bakery Products by Type % value Sandwich Specialists Sweet Bakery Goods Specialists Other Including Mixed Bakery Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources Table 8 Global Brand Owner Shares of Chained % value Company

16 Others Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 9 Brand Shares of Chained % value Brand Global Brand Owner

17 Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 10 Forecast Sales in by Category: Units/Outlets outlets Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery

18 Products Burger - Chained Burger Fast - Independent Burger Chicken - Chained Chicken Fast - Independent Chicken Convenience Stores Fast - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Fast Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Table 11 Forecast Sales in by Category: Number of Transactions Mn transactions Chained Independent Asian - Chained Asian

19 - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger Fast - Independent Burger Chicken - Chained Chicken Fast - Independent Chicken Convenience Stores Fast - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Fast Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Table 12 Forecast Sales in by Category: service Value A$ million

20 Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger Fast - Independent Burger Chicken - Chained Chicken Fast - Independent Chicken Convenience Stores Fast - Chained Convenience Stores - Independent Convenience Stores Fast Fish - Chained Fish - Independent Fish Fast Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining

21 Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Table 13 Forecast Sales in by Category: % Units/Outlets Growth % Units/Outlets growth Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger - Independent Burger Chicken - Chained Chicken - Independent Chicken Convenience Stores - Chained Convenience Stores - Independent Convenience Stores Fish - Chained Fish - Independent Fish Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining CAGR 2010/15 TOTAL Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Table 14 Forecast Sales in by Category: % Transaction Growth % transaction growth Chained Independent Asian - Chained Asian CAGR 2010/15 TOTAL

22 - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger - Independent Burger Chicken - Chained Chicken - Independent Chicken Convenience Stores - Chained Convenience Stores - Independent Convenience Stores Fish - Chained Fish - Independent Fish Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Table 15 Forecast Sales in by Category: % service Value Growth % value growth Chained Independent Asian - Chained Asian - Independent Asian Bakery Products - Chained Bakery Products - Independent Bakery Products Burger - Chained Burger - Independent Burger Chicken - Chained Chicken - Independent Chicken Convenience Stores - Chained Convenience Stores - Independent Convenience Stores CAGR 2010/15 TOTAL

23 Fish - Chained Fish - Independent Fish Ice Cream - Chained Ice Cream - Independent Ice Cream Latin American - Chained Latin American - Independent Latin American Middle Eastern - Chained Middle Eastern - Independent Middle Eastern Pizza - Chained Pizza - Independent Pizza Other - Chained Other - Independent Other Fast Casual Dining Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

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25 even includes a smile. Although the mutual acquisitions of 2009 and 2010, would be a lot for such a relatively small company, Franchised is also on the look out for other acquisitions, making offers for Baskin-Robbins and the remnants of the crumbling Souvlaki Hut in Franchised s greatest risk, therefore, is possibly to resist getting too carried away and becoming too large, too fast. Nutshack, one of the major brands that Franchised owns, is outside Euromonitor s definition of consumer foodservice, as it sells only nuts. Franchised is likely to make some changes over the forecast period, however, most notably the establishment of cobranded stores, such as those combining Nutshack and Cold Rock Ice-Creamery ingredients. Prior to the formation of Franchise s, and crucially, the acquisition of Cold Rock Ice- Creamery, the company, under the name of Debley Group, gained the licensed of Mr Whippy. This was previously the primary ice cream van brand in Australia, although there have been no official Mr Whippy vans since the 1970s, and instead it operates from just six stores As might be expected by its name, Franchise s is in the business not so much of consumer foodservice, but managing franchises. It therefore intends not only to grow the brands it already owns, but also make acquisitions of additional franchises from which it can gain synergies. Given the failure of Allied Brands, which attempted a similar business model but decided to expand its operations outside consumer foodservice, this may seem a risky strategy. As can be seen by its plans to co-brand its outlets however, the company also plans to maximise synergies, maximising revenue per outlet by offering a wider variety of branded products. This is likely to be a more successful strategy. Of all its brands, Franchised is especially focusing on Cold Rock Ice-Creamery, which it acquired in September 2009, believing that its selling proposition selling ice cream with additional ingredients, so that every ice cream is customised with over 3,000 potential variations will prove attractive to Australian consumers. Also being the Australian brand owner of Mr Whippy suggests that the long-anticipated return of Mr Whippy to Australia will predominately include Cold Rock Ice-Creamery products. The primary risk of concentrating on Cold Rock Ice-Creamery is that the American brands Cold Rock Ice-Creamery is based on Cold Stone Icecreamery and Marble Slab are planning to enter the Australian market during the forecast period. With the competitive environment about to become tougher, Franchised needs to rapidly expand the presence of Cold Rock Ice-Creamery, not just in its home state of Queensland, but throughout Australia. The company plans to maximise the potential of its acquisitions, not only in relation to economies of scale and supply chains, but also by combining the two chains into single outlets such as a combination of Cold Rock Ice-Creamery and Nutshack, thereby doubling the number of potential purchases for each shop. This is quite a revolutionary approach to exploiting the opportunities opened up by acquisitions. Similarly, a Cold Rock Ice- Creamery/Pretzel World store has been opened in Queensland, and considered a success. This is because it increases the potential times consumers are likely to visit the store, pretzels being more popular in the morning and ice cream in the afternoon and evening. Suppliers The most important ingredient for Cold Rock Ice-Creamery, other than the ice cream, are the mix-ins. These are typically branded confectionery products such as Snickers, M&M s and Maltesers from Mars Australia, KitKat from Nestlé, and Flake and Caramello Koalas from Cadbury.

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34 million. This deal should provide Retail Zoo with the opportunity to increase its international presence. Suppliers

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36 CONSUMER FOODSERVICE IN AUSTRALIA - INDUSTRY OVERVIEW EXECUTIVE SUMMARY Consumers Upgrade During Economic Slowdown Although performing far better than other economies around the world, the Australian economy, particularly the retail category, was virtually stagnant throughout Consumer foodservice appeared to be a major exception, with consumers deciding that food was an affordable indulgence, where for just a couple of dollars extra they could enjoy something special. This trend was especially visible in fast food, where such concepts as gourmet pizza, championed by Crust Gourmet Pizza, and Pizza Capers, and gourmet burgers, championed by Grill d, was the most notable feature in consumer foodservice in Taking It Away While consumers embraced consumer foodservice in 2010, they still prefer to eat in the comfort of their own home, where they can watch television and do not have to get dressed up. 100% HDTA therefore represented the fastest growing category in consumer foodservice, while other chains which do offer dine-in options have seen their takeaway component increase in recent years. As consumer foodservice slowly shifts to being a 24-hour industry, drive-thru outlets have proven particularly successful. Mcdonald s Still the Big Mac Although Subway has more outlets, when it comes to value share McDonald s is the largest player in Australia consumer foodservice, even if the additional share provided by McCafé outlets is not included. The popularity of McDonald s in Australia, where its popularity is greater than most other markets around the world, is due in part to having spent the last decade improving its reputation through such measures as a Healthy Choice menu, and the introduction of McCafé, both of which were Australian innovations. In 2010, however, continued growth was largely due to the popularity of McDonald s range of Angus burgers Chains Continue Takeover Although they make up only around a third of the total value of consumer foodservice in Australia, chains continue to grow in importance, as emerging players in consumer foodservice embrace the franchise system as a means of expanding their brands as rapidly as possible. This system slowed down considerably during the economic slowdown due to the highly publicised failures of Krispy Kreme and Souvlaki Hut, uncertainty regarding proposed legislation, and difficulties in obtaining finance from the banks. Bright Future for Consumer service Although the difficulties involved in sourcing new franchisees during the economic slowdown will act as something of a suppressing force over at least the early years of the forecast period, consumer foodservice as a whole is likely to perform well. Specifically, the trend towards affordable indulgences will ensure that the consumers who embraced gourmet pizzas and

37 gourmet burgers during the economic slowdown embrace them to an even greater degree as the economy recovers. KEY TRENDS AND DEVELOPMENTS Consumer service Sales Higher Than Ever Current impact

38 Outlook Future impact

39 Latino trending in 2010 Current impact Outlook

40 Future impact Domestic Brands See Greater Success

41 Current impact Outlook

42 Future impact All Just A Little Bit Fancy Current impact

43 Outlook Future impact

44 Ifood

45 Current impact Outlook Future impact

46 A Time and A Place for Everything

47 Current impact Outlook Future impact

48 Diet Current impact

49 Outlook

50 Future impact MARKET DATA Table 1 Units, Transactions and Value Sales in Consumer service: Units ('000) Transactions (mn) A$ billion current prices A$ billion constant prices Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 2 Units, Transactions and Value Sales in Consumer service: % Growth % growth Units Transactions Value current prices Value constant prices 2009/ CAGR 2005/10 TOTAL

51 Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 3 outlets Consumer service by Independent Vs Chained Outlets: Units/Outlets 2010 Independent Chained Total Cafés/Bars 100% Home Delivery/Takeaway Full-Service Restaurants Street Stalls/Kiosks Pizza Consumer service Self-Service Cafeterias Consumer service Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 4 Consumer service by Eat in Vs Takeaway 2010 % value analysis 100% Home Delivery/Takeaway Cafés/Bars Full-Service Restaurants Street Stalls/Kiosks Self-Service Cafeterias Consumer service Eat in Takeaway Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 5 Consumer service by Vs Drinks Split 2010 % value analysis 100% Home Delivery/Takeaway Cafés/Bars Full-Service Restaurants Street Stalls/Kiosks Self-Service Cafeterias Consumer service Drink Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 6 Sales in Consumer service by Location % value

52 Leisure Lodging Retail Travel Stand-Alone Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 7 Leading Chained Consumer service Brands by Number of Units 2010 Brand Global Brand Owner outlets

53 Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 8 Chained Consumer service Company Shares % value Company

54 Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 9 Chained Consumer service Brand Shares % value Brand Global Brand Owner

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56 Total Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Table 10 Forecast Units, Transactions and Value Sales in Consumer service: Units ('000) Transactions (mn) A$ billion Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Table 11 Forecast Units, Transactions and Value Sales in Consumer service: % Growth % growth Units Transactions Constant value Source: CAGR 2010/15 TOTAL Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources APPENDIX National Consumer Expenditure The ABS Business Demography figures measures businesses not outlets per se, so consequently the figures are significantly lower than Euromonitor s. Also those outlets retailing baked goods are excluded from ABS figures, thereby excluding the bulk of bakery products fast food. Although this is a comparatively minor issue, the ABS does not include businesses that open and then quickly close again, within the same financial year. Due to the low start up costs

57 associated with establishing some consumer foodservice outlets, this issue is especially important for this industry. Also a minor issue is the ABS s exclusion of theatre restaurants. ABS Retail Trade data, on the other hand, does not include pubs and bars. Table 12 Consumer Expenditure on Consumer service No. of outlets Cafés and restaurants Takeaway foodservice Pubs, taverns and bars Clubs (Hospitality) Total Source: Australian Bureau of Statistics Business Demography Table 13 Consumer Expenditure on Consumer service A$ million Cafes, restaurants and catering services Takeaway foodservice Total Cafes, restaurants and catering services Takeaway foodservice Total Source: Australian Bureau of Statistics Retail Trade Trade Association Statistics While Australia does have a variety of associations covering consumer foodservice both national and state-based such as the Restaurant & Catering Association none of these publish data on either the size or state of the industry. OPERATING ENVIRONMENT Franchising According to the World Franchise Council, Australia is the most franchised nation in the world, with three times as many franchises per capita than the United States. This is partly due to an urge among Australians to work for themselves, along with a middle class affluent enough that they can afford to make such a leap. Probably the most crucial reason for franchising being so popular in Australia, however, is to avoid Payroll Tax, which is applicable to

58 businesses that pay wages of over A$600,000. Since each franchise is owner-operated, it is legally its own business, thereby avoiding payroll tax.

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