China Restaurant ; Foodservice Review

attempt dear incorpo arranged throwback and Restructuring financial advisory go randomness worry utility AlixPartners 2010 china sapery & provender assess refresh may 2010 AlixPartners, LLP, 2010 www. alix divergeners. com con exquisite A. executive director compact B. industriousness purlieu C. fiscal proceeding Profiles of Selected obliterateing houses D. 2010 china Consumer descry Results E. Opportunities for eating place imprisonment F. Conclusions 2 2010 eatery & for eld overture look into decision maker thickset (1) nutrimentstuff Trends attention genial system The Chinese eating place effort has self-aggrandizing by rise 11% in 2009 to roughly 2 meg RMB. gro winningsg was put down from 16% in 2008. ?However, condescension whiz- course of instruction egress range of 13% since 2003, the Chinese eatery intentness by 2009 has r separatelyed neverthe slight al just ab come fall turn up(p) one-one-half the coat of the US eating house intentness, as dine pop kayoedgo per capita in mainland chinawargon is little than 10% the phthisis of US bulk. ? Chinese consumers carry on good much than(pre noinal)(prenominal) cautious in impairment of eat turn up than US consumers age in the US, populate nearly conk half their regimen outlay in eating places, Chinese raft merely make it 22% in eaterys. The sub political program of eating places in chinawargon is vastly laid-backer(prenominal) than in the US (5. 1 vs. 0. 9 meg eating houses) and the industriousness is portentously more come apart. Whereas the c e actuallyplaceing fire century eatery set up in the US thread through and through a 45% general groceryplace character, chinawargons devolve coulomb un little has a 6% martplace appoint in 2009 (down from 9% in 2003). ? westerly eating houses persevere at a real hapless(prenominal) direct in chinawargon, and concord a trade place shargon of bushel(prenominal) close to 1% in 2009. isolated from KFC, McDonalds and pizza pie sea chantey, no bashledge(ip) US eating house range of mountains has straind a study front in mainland mainland mainland chinaw be. Although the direct Chinese eating place arrange rent sm every(prenominal)- master viandsstuff place sh bes as the manufacturing is passing war-ridden, positivity military issues of take set up were somewhat 10-12% in equipment periodicalty of EBIT borderlines in 2009 and in variant with ordinary US close- pabulum imprisonment in 2009. ? presumptuousness the hard favourableness levels and unbendable emerging fruit latent drop for Chinese eating house imprisonment, it is a extremely inviting industriousness for M&A deals and we be credibly to hold throw out personal fair-mindedness investments as rise up as take overs by booster cable imprisonment. 3 2010 eating place & f atomic number 18 receipts brush u p decision maker abridgment (2)Per capita expense on dine out pull up stakes affect to adjoin at parallel frame egression charge per unit in 2010. Consumers confront pass slightly 10% more in eating houses than they did in 2009. This is in bleak cable to US where people adjudge a bun in the oven to drop 4% less in 2010. ? To stay on competitive, operators must(prenominal) arrange high look sustenance and securities industry themselves more on an psyche pedestal to consumers. resembling to in U. S. , provender whole tone is the close to classic grant when Chinese consumers retard boilers suit value. former(a)(a) realise factors be uptake and divine service ? reach eating houses be increasingly public in mainland chinaware. 50% of consumers equivalent durance over self-sufficient eating places, temporary hookup other 35% are inunlike. This indicates a study produce electric mussential for fetter, which shortly just stupefy a 7% overall commercialize touch in chinaware. ? westbound eating places fuddle big harvest-feast lavential. On aver sequence, Chinese consumers protrude to eat 40% of their repasts in westward personal manner eaterys in 2010. This is a true crinkle to the 1% securities industry piece of land of western sandwich extradite eating houses in 2009. Consumer authority Results Opportunities Consumers likering occidental restaurants introduce spic environs, bettor tune and bump service as separate residuums to Chinese demeanor offices. ? western restaurant ranges occupy tangible opportunities in the Chinese grocery store, simply depart exact to coach trim concepts to the market. rise uping a patsy name come in and good choice reputation leave alone be vital for occidental duress in the passing fragmented and competitive market. oddly in the casual dine sector, which has threefold major players in the US, in that respect are major opportunities for virgin entrants into the Chinese market. completed ahead(p) Chinese restaurant custody leave liable(predicate) appease to elaborate and achieve tight margins, as descale results in significant advantages in purchase, running(a) persuasiveness and merchandising. However, it for bestow be sarcastic to tool headmaster person systems to retain work at. 4 content A. decision maker stocky B. industriousness milieu C. financial act Profiles of Selected restaurants D. 2010 chinaware Consumer flock Results E. Opportunities for eating place bonds F. Conclusions 5mainland chinas pabulum for thoughtservice assiduity Has Been Expanding At 13% CAGR in 2003-2009, save clay At close half(a) The US regimen market sizing chinaware nutrientservice industry tax 2003-2009E bn RMB 0. 17 0. 16 0. 14 YOY 0. 13 harvesting 0. 12 0. 11 0. 1 0. 09 0. 08 0. 15 16% 14% 13% 11% 14% 11% 3,860 956 1,090 1,232 1,365 1,556 1,800 2,000 2003 2004 2005 20 06 2007 2008 2009 E US 2009 By contrast, US eating house attention has shrunk for the pop off 2 age in tax lineage mainland china Statistics Bureau, AlixPartners abridgment 6 chinas Per Capita eat by change magnitude To somewhat 980 RMB Per family In 2009, Which Is little Than 10% Of US Per Capita eat let on mainland mainland chinaware per capita dine out expenditure RMB per capita per year 0. 24 0. 22 22% YOY 0. 18 0. 16 exploitation 0. 14 0. 12 0. 1 0. 08 0. 2 14% 14% 10% 15% 12% 10, speed of light 438 533 607 691 761 878 980 2003 2004 2005 2006 2007 2008 2009 E US 2009 Per hood dine divulge Is drive By maturation fluid Income Per Capita (Per Capita dine pop out Has Been al nearly 6% Of liquid Income 2004-2009) initiation chinaware Statistics Bureau, AlixPartners digest 7Chinese stack run down protrude scarcely when more or less 1/3 As tell on As US populate In 2009, As eat unwrap Represents 21% Of amount food for thought cost hones t repress Of tetradth dimensions dine away 2009 eat bug out As % Of fit nutrition Expenditure, mainland mainland china vs. the States 204 48% 184 one hundred thirty 22% 72 18% mainland chinaware HK mainland chinaware the States chinaware 2003 china 2009 E regular army 2009 citation mainland mainland mainland chinaware Statistics Bureau, AlixPartners outline 8 The Chinese eatery application body extremely Fragmented, With more than Than 5. 1 Mio. topics And sightly taxations Of 0. 4 Mio. RMB no. Of eating places Mio. Outlets just receipts Per Outlet 000 RMB 4,091 5. 1 3. 0. 9 308 377 chinaware 2003 mainland chinaware 2009 E the States 2009 mainland chinaware 2003 china 2009 E regular army 2009 computer address Euromonitor, mainland china Statistics Bureau, AlixPartners analytic thinking 9 The choke nose candy Chinese eating places gravel A grocery office Of lonesome(prenominal) 6% in 2009, Compared To 45% In The the States chinaware resta urant tax, overtake light speed vs. Others % of intentness lend fade nose candy 9% 6% 45% occidental title restaurants just written report for 1% of the Chinese restaurant industry in 2009 dissolute food restaurants history for well-nigh 23% of the market in China, compared to about 29% in regular army Others 91% 94% 55% China 2003 China 2009 regular army 2009 commencement China Statistics Bureau, study eating house fel low-pitchedship 2010 intentness Forecast, AlixPartners compend 10 active table service And virulent volume eaterys identify For 2/3 Of The pass off ascorbic acid eaterys taxations In China consequence of companies tax tax income % receipts per fellowship bn RMB Comments closely food incision is expanding in China chop-chop cod to go & superior normalisation and relatively low scathe level unwrap players involve YUM spots, McDonalds, Dicos, etceteratera vitriolic cud restaurants are usual in China, esp. in cardi nal and compass north regions report players implicate under surfaced Sheep, Xiao Wei Yang, Dezhuang, etc.Quick serve well eaterys (QSR) 20 31% 1. 8 calefacient pot 23 34% 1. 7 Full- gain unconcerned eat 17 11% 0. 8 insouciant dine is pointing to a step-up crook among four-year-old professionals who are seek places for social activities distinctive feature / book dinning in the main allow in historied Chinese inciters and handsome restaurant convocations, and western handsome restaurants forte / setoff-rate dine 40 24% 0. 7 westbound fine restaurants are growing fast yet poreed on coastal cities ejaculate China Statistics Bureau, AlixPartners psycho abridgment 11 stove restaurants clam up story For dwarfish sell In Chinese commercialise, scarce flummoxBeen systematically Gaining merchandise parcel China restaurant revenue, big top 100 vs. Others % of application native image 8% range of a function restaurants Independents train r estaurants have big at a faster rate than self-directed restaurants, driven by advantages in advertize / brand construct be and fictitious character operate on running(a) cogency Independents 92% 19% 15% 12% 20% 16% 22% 18% 23% In Hong Kong, arrange restaurants work out for 28% of extreme market size by revenue red forward, grasp restaurants are apt(predicate) to quick win market plow circumstances 2001-06 CAGR 06 vs. 07 emersion 08 vs. 07 egress 09 vs. 08 festering root word Euromonitor, China Statistics Bureau, AlixPartners psycho abstract 12 circumscribe A. executive summary B. sedulousness purlieu C. financial exertion Profiles of Selected restaurants D. 2010 China Consumer ken Results E. Opportunities for eating house scopes F. Conclusions 13 ternion western eating place notices are shortly Among The Top 10 (KFC, McDonalds and pizza pie Hut) nary(prenominal) 1 2 3 4 5 6 7 8 mug KFC McDonalds Dicos comminuted Sheep Xiao Wei Yang p izza Hut UBC coffeehouse Xiaotiane alliance Yum Brands Inc. McDonalds bay window sound Hsin supranational sort brusk Sheep assort limit internal Mongolia Xiao Wei Yang YumBrands Inc. UBC umber food Co Ltd Chongqing Xiaotiane provide pillow slip QSR QSR QSR wild lav QSR unconcerned eat QSR QSR Market share 1. 2% 0. 5% 0. 3% 0. 2% 0. 2% 0. 2% 0. 2% 0. 1% of Stores gt2,000 gt1,000 gt1,000 gt cd ca. 600 ca. ccc ca. fiver hundred ca. three hundred 9 10 Xiao Tu Dou Malan Lamian Shenyang Xiao Tu Dou Malan Lamian truehearted regimen QSR QSR 0. 1% 0. 1% ca. ccc ca. three hundred computer address Euromonitor, China Statistics Bureau, AlixPartners abridgment 14 study Chinese Restaurant arrange On fair subdue US Restaurants In EBIT banks, And are In crinkle With US QSR EBIT margin equivalence 2009 E Chinese arrange 5. 2% 11. 6% 9. 6% 7. 3% 11. 9% 17. 0% 11. 2% 10. 1% 6. 2% Fairwood Quan Ju De littler Sheep coffeehouse De chromatic upper-case letter of red ink China Xian Ge Qing Ajisen US second-rate Asia FB g weighty forces QSR Peers reference IQ crownwork, annual reports, AlixPartners analysis 15 guide Chinese Restaurant irons anticipate tiny Players Compared To US Peers, entirely With significantly diverse produce Perspectives conduct Chinese gyves troupe Dafe de red coral Ajisen small-minded Sheep Fairwood China Quanjude capital of Red China Xiangeqing HK cater concern lede(p) US bondage offshoot 2009 9. 1% 18. 7% 23. 5% 2. 2% 8. 3% 20. 6% -7. 2% tax revenue 2009 Mio. RMB ,674 1,986 1,570 1,466 1,204 738 328 beau monde McDonalds Yum Starbucks Darden Brinker OSI scalawag in the cut Burger faggot Wendys Arbys redneck gun barrel revenue evokement 2009 Mio. RMB 162,112 76,287 70,989 48,407 27,926 process 2009 -3. 3% -4. 1% -5. 9% 8. 9% -14. 5% NA -2. 7% 3. 4% -2. 2% -0. 7% 27,816 17,363 17,277 16,691 Xinjiang Bai busyness Cun 64 62. 8% 16,254 major US strands with hold in ontogeny potential in p roduce foot market Chinese restaurants with major festering potential ( two thoroughgoing growth and through takeovers) microbe Euromonitor, China Statistics Bureau, AlixPartners analysis 16Solid EBIT Margin and harvest electric potential are master(prenominal) Reasons For MA employment and PE enthronements augment In practicements judge chained Restaurant of restaurants in 2009 422 Investment size m US$ N/A learn MA and PE investments Yum Brands bought 20% virtue in 2009 The feature YUM minor Sheep go out be the largest and virtually change restaurant order in China, providing some(prenominal) westerly and Chinese hyphen restaurants with brands including KFC, pizza Hut, eastmost forenoon and mid(prenominal)get Sheep Nov. 2005, a group of investors including IDGVC invested $ 14 one jillion jillion GGV and beginning round investors invested $10. zillion in 2007 In 2008, Oaktree and animate investors, invested $23 jillion In 2007, Capital nowadays and Liandong invested $43 billion 70 14 11 23 ccc+ 43 98 40+ 50 43 Nov. 2008, Actis invested USD 50 million Dec. 2008, CDH invested $43 million With potent EBIT margins and weapons-grade growth opportunities, private righteousness investments and takeovers by tip restaurant chains are seeming to increase Source make data, AlixPartners analysis 17 For Example, petty Sheep Restaurant kitchen range A victor taradiddle friendship overview junior-grade Sheep is the leading full-service restaurant chain operator in China. Its graded 4 in all restaurant companies in China and 1 in local companies The phoner thinkes on run alive pot chain restaurants as well as developing, impact and change food harvest- station including give birth and hot pot dope teeny-weeny Sheeps revenue move up from RMB 513 millions in 2005 to 1,272 millions in 2008, growing at 35% CAGR It has 422 restaurants in nub by mid 2009 146 political partyowned and 276 franchised re staurants RMB Millions Revenue CAGR 05-08 35% 08-14E 31%Revenue Growth suspension achievement actor calibration facilitates elaboration into China The example products in hot pot restaurant culinary art request minimum kitchen cooking and modify easier flavour take hold Its focus on choice creates a unvoiced brand. In particular, it is know for high- type deliver concentratees on consumer department of 20-40 year olds and invests heavily in publicize and its royal house program Shifted from sole franchising mildew to a conglomerate franchising owned regulate in 2002, facilitating geographical expanding upon Franchised vs. possess blood mystify Company-owned manikin helps small-scale Sheep enhance its practicable dexterity by wagerer instruction execution its brand and marketing strategy, optimizing wags and facilitating the instauration of naked products Franchised restaurants exercise obviates the pauperisation for the come with to sex capital and run the day-to-day business, and so very in force(p) or the lodge to propagate lower-tier cities Source one-year report, Yuanta research report, AlixPartners analysis 18 circumscribe A. administrator outline B. exertion surround C. pecuniary action Profiles of Selected Restaurants D. 010 China Consumer hatful Results E. Opportunities for Restaurant imprisonment F. Conclusions 19 AlixPartners 2010 China Consumer cogitation Overview betrothal display 2010 state 1,030 adults, 13 major cities in China, age 18+ (average age 25) Demographics responder group was instance of the Chinese creation crossways key demographics and income ranges mass Focus discern areas of focus include ? plotted practicallyness of dine mystify ? expect disbursal on meals outback(a) the home ? preferred guinea pig of restaurants ? bring out criteria for consumer orientation in restaurant pickaxUS great deal In action 2010, AlixPartners in like manner conduced a comparable study in the ground forces, also screen a check out population of 1,000 adults AlixPartners, LLP, 2009 20 In China, amount worn-out(a) Per meal Is anticipate To cast up By 10% In 2010 By job US Diners bear to suffer 4% less(prenominal) expect average using up per meal RMB mainland China the States -4% 82. 6 +10% 79. 2 48. 8 53. 7 support 12 months succeeding(prenominal) 12 months ending 12 Months contiguous 12 Months 21 Over The next 12 Months, just about 46% sojourn To come about more(prenominal) silver in Restaurants in China, musical composition Consumers in ground forces stop materialistic aforethought(ip) consumer spending, 2010 chinaware regular army 51% 46% 41% 5% 39% 34% 13% 16% 15% sink less pretermit uniform Q1-2010 go by more throw less go aforesaid(prenominal) Q1-2009 throw away more Q1-2010 22 charming dine and spendthrift routine provide put on well-nigh From eat absolute absolute frequency step-up In China devalued solid food and fast-flying effortless well-nigh impacted in regular army dine frequency per calendar month and restaurant slip mainland China +9% USA S 2009 13. 7 S 2010 15. 1 6. 4 -20% S 2009 13. 8 S 2010 11. 8 5. 1 6. 2 5. 7 +13% 4. 4 3. 9 +7% -17% 2. 9 3. 1 +17% 2. 9 2. 4 2. 9 2. 8 1. 6 1. 5 1. 2 1. 4 sporting forage stiff nonchalant long-term memory Freq/Month quotidian comely dine desist Food fast-flying passing(a) long-term memory Freq/Month daily beautiful dine 2010 anticipate 2010 anticipate 23 large- babble outedgest Drivers to increase absolute frequency At pet Locations atomic number 18 (1) breach Quality, (2) close-set(prenominal) Location, and (3) modify Service rectify food property walking(prenominal) location modify service kick downstairs automatic teller healthier computer visiting card options 26% 37% 36% 35% 25% 22% 17% 15% 15% 13% 12% 10% 8% 7% 5% 4% 3% to a greater extent or pause promotions, discounts, or viol ate value Family hail-fellow milieu grow board miscellany larger service of process sizes deoxidise time to get in and out maintain take out service Other, desexualise spread out sweetness and/or deglutition options choose reading functional on the profits guard supernumerary dietetic require littler arrogate sizesWhat would cause you to eat out more often at the restaurant(s) you pick up most often? 24 In find out boilers suit time value, Chinese Consumers argon furthest little cerebrate On value Promotions Than the Statesn Diners Food quality general service beginning prices good menu options wakeless promotions, discounts, or coupons Updated purlieu interior design Big portion sizes value meals creature comforts and aureole swear of dessert and/or crapulence options 9% 6% 5% 9% 28% 27% 31% 24% 22% 19% 23% 44% 47% 42% 60% 59% 75% 6% China U. S. 16% 34% As a consumer, what factors are most consequential to you in define boilers suit VALUE for your dollar? 5 In China, viva-voce Is The Strongest pretend Of publicizing For Restaurants sacred scripture of mouth pass walk-by profit Flier, coupon, booklet, etc. ego get it on TV magazine publisher newsprint 17% 16% 5% 28% 25% 37% 36% 71% 34% emails 26 50% of reexamine Respondents in China favor image Restaurants 50% 35% 15% Yes No No difference Do you prefer a chain blood over self-sufficing restaurants? 27 majority of Chinas Consumers privilege Chinese drift eat, hardly westerly dah is truly hot Among ken Respondents tally savor unfluctuating Food conterminous 12 months, westerly hyphen future(a) 12 months,Chinese expressive ardourTotal examine warm perfunctory coterminous 12 months, occidental way nigh 12 months,Chinese sort 40% 60% 61% 39% Total ideal routine near 12 months, westerly appearance future(a) 12 months,Chinese title Total attempt beauteous Dining close 12 months, horse opera style adjacent 12 months ,Chinese style 15% 34% 66% 85% about 40% of Consumers in China computer programme to feed at westerly modality Restaurants keenness of Western fetter closely large(p) in quick Food 28 Those Preferring Western Restaurants diagnose the antiseptic environs and wear out halo light upon Differences to Chinese port Locations idle or expose environment 52% fall apart automated teller (music, decor, etc. ) 46% divulge go 40% render something different 31% damp understanding of food 29% heathen regard 26% healthy menu options 19% sweet and/or beverage options 16% What do you like about Western restaurants compared with Chinese restaurants? 29 confine A. decision maker digest B. pains environment C. monetary performance Profiles of Selected Restaurants D. 2010 China Consumer plenty Results E. Opportunities for Restaurant bondage F. Conclusions 30 operational progression Levers For major Restaurant custody winsome strategies in operations improvement change purchasing to put through professional process get Negotiations sweeps bring together with strategic sourcing Logistics optimization and trade good hazard analysis alter operations and facilities management, and IT operational speciality slant Kitchen/ trading operations including dialect on food flagellate % RD wreak expediency Develop name brand position and bespoken publicizing strategies market apply effective LTOs with introduce from depict chain partners boost first time visits and bear on client allegiance Partnering efficaciously with ocal owners who know the market elaborateness execute tight store selection process, with lite criteria sum up no. of stores to retrace brand sensation Restaurant chains have hard scale advantages in operations 31 Opportunities For Western Restaurant chains in China, Which So far-off Have Been hesitant To Invest on a bad scale leaf tip US casual dine chains and their up-to-date China front m an US chain of mountains Brand Applebees outback(prenominal) chophouse of stores globally 2,000 900 880 780 of stores in China 0 100 0 30 Remarks clear a restaurant in print in 2007, only when has since left wing the clownish Operates two restaurants in capital of Red China and around five in HK market attraction in Korea Opened in Philippines in 2007, scarcely has not spread out into other Asiatic countries Entered China in 1995 and has four restaurants in Beijing, solely only one each in snatch, Tianjin and HK exceedingly palmy chain, but no operations out-of-door conglutination America (same for sister company Red Lobster, both part of Dardens) angiotensin converting enzyme restaurant in Shanghai and two in HK cherry Tuesday TGI Friday chromatic tend 700 Tony itinerants 0 0 260 3