Investment banking report on the restaurant and food retail industries. This report covers general trends in M&A and other ancillary benefits of the food, beverage and restaurant sectors.

1. Restaurant & Food Retail
Industry Report

2. Industry Overview
Food Retail in the U.S.
Restaurants in the U.S.
SWOT
Opportunities
2
4
13
21
24
2

3. Industry Overview
Economy
 4.8 average trips to Grocery made per month by U.S. shopers in 2014, according to Statista
 47.5 % of U.S. consumers visit two different stores for their regular grocery shopping
 74% U.S. females consumers use self-checkout when buying groceries
 In 2015 5% grocery pickup and 4% grocery delivery
Industry
 According to United States Census Bureau, there were 326 million people in the United States in 2016
 Most populous states are California with 39 Million, Texas 27 Million, Florida 20 Million, and New York 19 Million
 United States GDP grow 2.3% in 2016, and 2.2% in 2015
 2016 Unemployment rate at 4.9% according Bureau of Labor and Statistics
Customer
 Food comsumption grow at 3.9% from 2014-2015 according to Bureau report
 Food at home correspond to 7.2% distribution of total anual expenditures shares
 Food away from home grow at 7.9% from 2014-2015
 Food away correspond to 5.4% distribution of total anual expenditures shares
Source : https://www.bls.gov/opub/reports/consumer-expenditures/2015/pdf/home.pdf 1
Source : https://www-statista-com.erl.lib.byu.edu/topics/1660/food-retail/
3

4. Industry Overview
Food Retail in the U.S.
Restaurants in the U.S.
SWOT
Opportunities
2
4
13
21
24
4

5. Average annual household food expenditure in the United States from
2000 to 2016 (in U.S. dollars)
Source : https://www-statista-com.erl.lib.byu.edu/topics/1660/food-retail/
5

6. Average annual food at-home expenditure of United States households
from 2000 to 2016 (in U.S. dollars)*
Source : https://www-statista-com.erl.lib.byu.edu/topics/1660/food-retail/
6

7. Average trips made per month by U.S. shoppers in 2014, by channel
Source : https://www-statista-com.erl.lib.byu.edu/topics/1660/food-retail/
7

8. How many different stores do you visit to do your regular grocery
shopping?
Source : https://www-statista-com.erl.lib.byu.edu/topics/1660/food-retail/
8

9. Primary reasons among U.S. female consumers for using self-checkout
when buying groceries in 2015
Source : https://www-statista-com.erl.lib.byu.edu/topics/1660/food-retail/
9

10. Which of the following checkout processes do you use to purchase
groceries?
Source : https://www-statista-com.erl.lib.byu.edu/topics/1660/food-retail/
10

11. Major Players
Food Retail
11

12. M&A Transaction
Food Retail
12

13. Industry Overview
Food Retail in the U.S.
Restaurants in the U.S.
SWOT
Opportunities
2
4
13
21
24
13

14. Average annual food away-from-home expenditures of United States
households from 2010 to 2016 (in U.S. dollars)*
Source : https://www-statista-com.erl.lib.byu.edu/study/11721/restaurants-in-the-us-statista-dossier/
14

15. Sales of the leading chain restaurants in the United States in 2016 (in
million U.S. dollars)
15
Source : https://www-statista-com.erl.lib.byu.edu/study/11721/restaurants-in-the-us-statista-dossier/

16. Fastest-growing small restaurant chains in the United States in 2016, by
systemwide sales (in million U.S. dollars)
16
Source : https://www-statista-com.erl.lib.byu.edu/study/11721/restaurants-in-the-us-statista-dossier/

17. Leading quick service restaurant (QSR) chains in the United States in
2016, by number of units
17
Source : https://www-statista-com.erl.lib.byu.edu/study/11721/restaurants-in-the-us-statista-dossier/

18. Number of employees in the restaurant industry in the United States from
2010 to 2016 (in millions)
18
Source : https://www-statista-com.erl.lib.byu.edu/study/11721/restaurants-in-the-us-statista-dossier/

19. Major Players
Restaurant
19
Source : https://www-statista-com.erl.lib.byu.edu/study/11721/restaurants-in-the-us-statista-dossier/

20. M&A Transaction
Restaurants
20
Source : http://aaronallen.com/blog/2017-restaurant-mergers-acquisitions

21. Industry Overview
Food Retail in the U.S.
Restaurants in the U.S.
SWOT
Opportunities
2
4
13
21
24
21

22. Food Retail
SWOT
22
Strengths
 We have good M&A exit in the industry, there are strategic
and financial players willing to buy companies in the
industry. All the competition attached brings more value to
company’s owners and shareholders. Also, foreign
investors are willing to enter into the market.
Opportunities/Trends:
 Private labels can save 50% in costs to customers and
companies invest in their brands to attract more people
willing to spend less and keep their customer who are loyal
to their brand.
Weaknesses
 Traditional players and discount groceries have flooded
into the market in the US by opening large number of
stores in the past 10 years. The sales have not increase as
much as they expected, which is forcing many stores to
close, slow openings in the next few years. Competition is
pushing for reduced prices in order to better compete,
consequently is reducing margin.
Threats
 Discount groceries as Aldi, LidI, and Dollar are increasing in
growth with their grocery store, where they are a fast pace
in expansion and plan to continue growing in the next
years. As discount groceries expand, they will reach more
people and increase in sales by targeting people wanting
to save money by doing groceries.

23. Restaurants
SWOT
23
Strengths
 There is greater growth by expanding brands overseas and
conquering open markets in other countries.
 Exit opportunities are huge, because we are having
examples of financial players who are buying chains and
expanding them.
Opportunities/Trends:
 M&A is an option to grow and invest in small and medium
size restaurants and use synergies to reduce cost and
increase value to the business.
 M&A is an option to grow and invest in small and medium
size restaurants and use synergies to reduce cost and
increase value to the business.
Weaknesses
 States have been implemented laws to increase minimum
wages. So, the cost for labor has increased and their profit
have decreased (because the fixed costs associated with
salaries). Wages are already responsible for almost 30% of
all costs of the industry.
Threats
 Have a clear target market to prevent the mistake of
investing as if everyone is your customer, and not a specific
group.
 Diversity in the United States population as gender, race,
culture, age, money, demographic and other factors are
influencing customer’s behaviors and spending.

24. Industry Overview
Food Retail in the U.S.
Restaurants in the U.S.
SWOT
Opportunities
2
4
13
21
24
24

25. Opportunities
Targets for M&A
25
 They have been performing well past years but the restaurant has a menu of more than 200 items and
runs a bakery that produces more than 50 types of cheesecake and baked goods. It is an opportunity to
minimize the menu and expand.
 They have closed 55 locations this year because under performance. Since their IPO in 2013 they lost 83%
in stock price.
 To shift its focus from sit-down dining, Red Robin has been investing in online ordering and to-go
capabilities

26. Opportunities
Targets for M&A
26
 Lower-income diners, have opted to eat at home or buy from convenience stores. Meanwhile, it has lost
foot-traffic and profitability as larger national brands have slashed prices in order to lure in diners.
 They face a similar problem from the industry, since their IPO the company was not able to keep the
stock high and had a big price drop since then. They have struggled to grow even with their headquarters
in California the most populous state in the U.S.