Data Monitor Fast Food

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Global - Fast Food 0199 - 2230 - 2009

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INDUSTRY PROFILE

Global Fast Food

Reference Code: 0199-2230

Publication Date: September 2010

EXECUTIVE SUMMARY

Global - Fast Food 0199 - 2230 - 2009


EXECUTIVE SUMMARY

Market value

The global fast food market grew by 3.1% in 2009 to reach a value of $201.1 billion.

Market value forecast

In 2014, the global fast food market is forecast to have a value of $239.7 billion, an increase of 19.2% since 2009.

Market volume

The global fast food market grew by 3.9% in 2009 to reach a volume of 208.1 billion transactions.

Market volume forecast

In 2014, the global fast food market is forecast to have a volume of 248.7 billion transactions, an increase of 19.5% since 2009.

Market segmentation I

QSR is the largest segment of the global fast food market, accounting for 70.9% of the market's total value.

Market segmentation II

Americas accounts for 47.4% of the global fast food market value.

Market rivalry

While particular segments of the fast food market can be concentrated - for example, the burger segment is close to being a Burger King / McDonald's duopoly - the market as a whole is fairly fragmented, with many independents as well as larger chains.

CONTENTS

Global - Fast Food 0199 - 2230 - 2009


TABLE OF CONTENTS

EXECUTIVE SUMMARY 2

MARKET OVERVIEW 6

Market definition 6 Research highlights 7 Market analysis 8

MARKET VALUE 9

MARKET VOLUME 10

MARKET SEGMENTATION I 11

MARKET SEGMENTATION II 12

COMPETITIVE LANDSCAPE 13

LEADING COMPANIES 16

Burger King Corporation 16 Domino's Pizza, Inc. 19 McDonald's Corporation 23 Yum! Brands, Inc. 27

MARKET FORECASTS 32

Market value forecast 32 Market volume forecast 33

APPENDIX 34

Methodology 34 Industry associations 35 Related Datamonitor research 35 Disclaimer 36

ABOUT DATAMONITOR 37

Premium Reports 37 Summary Reports 37 Datamonitor consulting 37

CONTENTS

Global - Fast Food 0199 - 2230 - 2009


LIST OF TABLES Table 1: Global fast food market value: $ billion, 2005–09 9

Table 2: Global fast food market volume: billion transactions, 2005–09 10

Table 3: Global fast food market segmentation I:% share, by value, 2009 11

Table 4: Global fast food market segmentation II: % share, by value, 2009 12

Table 5: Burger King Corporation: key facts 16

Table 6: Burger King Corporation: key financials ($) 17

Table 7: Burger King Corporation: key financial ratios 17

Table 8: Domino's Pizza, Inc.: key facts 19

Table 9: Domino's Pizza, Inc.: key financials ($) 21

Table 10: Domino's Pizza, Inc.: key financial ratios 21

Table 11: McDonald's Corporation: key facts 23

Table 12: McDonald's Corporation: key financials ($) 25

Table 13: McDonald's Corporation: key financial ratios 25

Table 14: Yum! Brands, Inc.: key facts 27

Table 15: Yum! Brands, Inc.: key financials ($) 30

Table 16: Yum! Brands, Inc.: key financial ratios 30

Table 17: Global fast food market value forecast: $ billion, 2009–14 32

Table 18: Global fast food market volume forecast: billion transactions, 2009–14Error! Bookmark not defined.

CONTENTS

Global - Fast Food 0199 - 2230 - 2009


LIST OF FIGURES Figure 1: Global fast food market value: $ billion, 2005–09 9

Figure 2: Global fast food market volume: billion transactions, 2005–09 10

Figure 3: Global fast food market segmentation I:% share, by value, 2009 11

Figure 4: Global fast food market segmentation II: % share, by value, 2009 12

Figure 5: Burger King Corporation: revenues & profitability 18

Figure 6: Burger King Corporation: assets & liabilities 18

Figure 7: Domino's Pizza, Inc.: revenues & profitability 22

Figure 8: Domino's Pizza, Inc.: assets & liabilities 22

Figure 9: McDonald's Corporation: revenues & profitability 26

Figure 10: McDonald's Corporation: assets & liabilities 26

Figure 11: Yum! Brands, Inc.: revenues & profitability 31

Figure 12: Yum! Brands, Inc.: assets & liabilities 31

Figure 13: Global fast food market value forecast: $ billion, 2009–14 32

Figure 14: Global fast food market volume forecast: billion transactions, 2009–14Error! Bookmark not defined.

MARKET OVERVIEW

Global - Fast Food 0199 - 2230 - 2009


MARKET OVERVIEW

Market definition

The fast food market is defined as the sale of food and drinks for immediate consumption either on the premises or in designated eating areas shared with other foodservice operators, or for consumption elsewhere. Datamonitor's definition excludes sales through vending machines and is restricted to sales in specific foodservice channels (please see channel definitions below). All market values are given in Operator Buying Prices, which is the amount spent by foodservice operators on the food and drink that they serve and not the amount the consumers spend on food and drinks (Operator Selling Prices - OSPs) in these channels. The difference is the mark up the foodservice operator adds in order to cover their other costs and generate a profit. This therefore values the market in terms of the amount of money for which food and drinks manufacturers are competing. All currency conversions were performed using constant 2009 average annual exchange rates. Market volumes are classed as the total number of visits by individuals to foodservice locations that involve the consumption of either food. Multiple purchases made during the same visit are counted as one transaction. The purchase of drink with food in the same location in the same visit is also considered as one transaction, not two. The market is broken down in to four segments: Quick Service Restaurants (QSR), Takeaways, Mobile & Street Vendors and Leisure Locations. QSR's are defined as: locations where the primary function is to provide full meals but where table service is not offered. Takeaways are defined as: establishments that provide freshly prepared food for immediate consumption and where typically 80% or more of revenues come from consumers who take the food off the premises to consume. Mobile & street vendors are defined as: either individual mobile stalls or vans that offer a limited range of freshly prepared food as well as beverages. Leisure locations are defined as: locations serving food and drinks for immediate consumption on premises within leisure outlets (such as Cinemas, Theatres, Racecourses etc.) that the leisure operator owns and operates itself.

For the purposes of this report, the global market consists of North America, South America, Western Europe, Eastern Europe, and Asia-Pacific.

North America consists of Canada, Mexico, and the United States.

South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.

Western Europe comprises Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.

Eastern Europe comprises the Czech Republic, Hungary, Poland, Romania, Russia, and Ukraine.

Asia-Pacific comprises Australia, China, India, Japan, Singapore, South Korea, and Taiwan.

MARKET OVERVIEW

Global - Fast Food 0199 - 2230 - 2009


Research highlights

The global fast food market had total revenue of $201.1 billion in 2009, representing a compound annual growth rate (CAGR) of 4.8% for the period spanning 2005-2009.

Market consumption volumes increased with a CAGR of 4.6% between 2005-2009, to reach a total of 208.1 billion transactions in 2009.

The performance of the market is forecast to decelerate, with an anticipated CAGR of 3.6% for the five-year period 2009-2014, which is expected to drive the market to a value of $239.8 billion by the end of 2014.

MARKET OVERVIEW

Global - Fast Food 0199 - 2230 - 2009


Market analysis

The global fast food market has been decelerating in recent years as a result of the worldwide economic malaise. After reaching a low point of 3.1% in 2009, a phase of recovery is however anticipated with accelerating growth rates expected for the remainder of the forecast period.

The global fast food market had total revenue of $201.1 billion in 2009, representing a compound annual growth rate (CAGR) of 4.8% for the period spanning 2005-2009. In comparison, the European and Asia-Pacific markets grew with CAGRs of 4.7% and 6.1% respectively, over the same period, to reach respective values of $34.2 billion and $71.6 billion in 2009.

Market consumption volumes increased with a CAGR of 4.6% between 2005-2009, to reach a total of 208.1 billion transactions in 2009. The market's volume is expected to rise to 248.7 billion transactions by the end of 2014, representing a CAGR of 3.6% for the 2009-2014 period.

The QSR segment was the market's most lucrative in 2009, with total revenue of $142.6 billion, equivalent to 70.9% of the market's overall value. The takeaways segment contributed revenue of $24.3 billion in 2009, equating to 12.1% of the market's aggregate value.

The performance of the market is forecast to decelerate, with an anticipated CAGR of 3.6% for the five-year period 2009-2014, which is expected to drive the market to a value of $239.8 billion by the end of 2014. Comparatively, the European and Asia-Pacific markets will grow with CAGRs of 4.1% and 5% respectively, over the same period, to reach respective values of $41.9 billion and $91.2 billion in 2014.

MARKET VALUE

Global - Fast Food 0199 - 2230 - 2009


MARKET VALUE

The global fast food market grew by 3.1% in 2009 to reach a value of $201.1 billion.

The compound annual growth rate of the market in the period 2005–09 was 4.8%.

Table 1: Global fast food market value: $ billion, 2005–09 Year $ billion € billion % Growth2005 166.6 119.8 2006 175.3 126.1 5.2%2007 185.9 133.7 6.0%2008 194.9 140.2 4.9%2009 201.1 144.6 3.1%

CAGR: 2005–09 4.8%

Source: Datamonitor D A T A M O N I T O R

Figure 1: Global fast food market value: $ billion, 2005–09


MARKET VOLUME

Global - Fast Food 0199 - 2230 - 2009


MARKET VOLUME

The global fast food market grew by 3.9% in 2009 to reach a volume of 208.1 billion transactions.

The compound annual growth rate of the market in the period 2005–09 was 4.6%.

Table 2: Global fast food market volume: billion transactions, 2005–09 Year billion transactions % Growth2005 173.82006 183.1 5.4%2007 192.2 4.9%2008 200.4 4.3%2009 208.1 3.9%

CAGR: 2005–09 4.6%


Figure 2: Global fast food market volume: billion transactions, 2005–09


MARKET SEGMENTATION I

Global - Fast Food 0199 - 2230 - 2009


MARKET SEGMENTATION I

QSR is the largest segment of the global fast food market, accounting for 70.9% of the market's total value.

The takeaways segment accounts for a further 12.1% of the market.

Table 3: Global fast food market segmentation I:% share, by value, 2009 Category % ShareQSR 70.9%Takeaways 12.1%Mobile & Street Vendors 11.2%Leisure Locations 5.8%

Total 100%


Figure 3: Global fast food market segmentation I:% share, by value, 2009


MARKET SEGMENTATION II

Global - Fast Food 0199 - 2230 - 2009


MARKET SEGMENTATION II

Americas accounts for 47.4% of the global fast food market value.

Asia-Pacific accounts for a further 35.6% of the global market.

Table 4: Global fast food market segmentation II: % share, by value, 2009 Category % ShareAmericas 47.4%Asia-Pacific 35.6%Europe 17.0%

Total 100%


Figure 4: Global fast food market segmentation II: % share, by value, 2009


COMPETITIVE LANDSCAPE

Global - Fast Food 0199 - 2230 - 2009



The fast food market will be analyzed taking fast food operators as players. The key buyers will be taken as consumers, and food ingredients providers and workforce providers as the key suppliers.

While particular segments of the fast food market can be concentrated - for example, the burger segment is close to being a Burger King / McDonald's duopoly - the market as a whole is fairly fragmented, with many independents as well as larger chains.

The fast food market is not, as once thought, recession proof, but has had to work hard in the downturn to enhance growth. Industry players have attempted to enhance their business in the downturn by offering cheaper value offerings to encourage consumers to eat out of the home. For example, McDonald’s, the largest fast food chain in the world, created meals of smaller-size and smaller price- “fourth-tier menu items”- to boost sales. The Snack Deluxe line in Germany and P’tit Plaisir mini sandwiches in France are examples as well as the dollar saver menu in the US, all a strategy to beat the downturn. As fast food giants continue to exploit the recession with pricing strategies coupled with economic recovery the overall fast food market is expected to grow over the coming years. The fast food market will be analyzed taking independent and chain restaurant companies as players and consumers as buyers. Players differentiate their offering via brand building on a range of foods with attractive discounts. While brand awareness strengthens consumer loyalty, buyer power weakens. Alternatively, supplier power is boosted in this market as suppliers usually have other profit foodservice and cost foodservice customers thereby decreasing their dependence on fast food players. The greatest threat, especially in times of economic malaise, is the likelihood of buyers turning to substitutes, such as purchasing the raw materials cheaply and cooking the meal themselves in their own kitchen. The degree of rivalry within the sector is strong as customers can switch from one player to another with relatively low switching costs (effectively zero) and players themselves can quite easily increase capacity. Consequently, players mitigate rivalry by competing via brand awareness, food quality and value pricing. As the market as a whole is fragmented rivalry is intensified. However, with little initial capital outlay required and low fixed costs, rivalry is reduced to a degree, as companies are not committed to a certain scale of operation in order to remain profitable. This also makes the likelihood of new entrants to the market a strong possibility.


Global - Fast Food 0199 - 2230 - 2009


Economic malaise resulting from the financial crisis has consequently strengthened buyer power as industry players secure price sensitive consumers with competitive pricing strategies. For example, players have started offering discounts and combination meals to raise revenue from all the corners. However, the main source of buyer power is the lack of switching costs: within a given price range, a consumer's choice of fast food provider is purely a matter of personal taste, and can vary from one day to the next. There is also likely to be relatively high price elasticity of demand, because fast food is not strictly essential to consumers. Despite a downturn in consumer expenditure and signs of saturation, investment in the fast food industry remains high, with new stores opening across the sector. McDonald's remains the global giant of the fast food industry. Investment in brand building has driven customer loyalty, while the sheer convenience of fast food makes it more important to the consumer than a simple source of food. Buyer power is assessed to be moderate overall.

One key input for the fast food market is of course food. It is vital for fast food companies to maintain reliable supply chains offering food of marketable quality, and in a generally low margin - high volume business, keeping food costs down is pivotal. Suppliers in this market usually have other kinds of profit foodservice and cost foodservice customers, decreasing their dependence on fast food players. The large number of businesses served by upstream companies means that they themselves are under less pressure to keep their own prices down. While in some European countries, foodservice supply is fragmented, cash-and-carry wholesalers are highly concentrated in France and Germany, while delivery wholesalers are also starting to consolidate in the UK where just two companies (3663 and Brakes) dominate the upstream landscape. These factors boost supplier power, especially for the many small foodservice players. The fast food business is labor intensive, and the minimum wage legislation or collective agreements found in many countries goes some way towards strengthening employees, considered here as suppliers of labor. Overall, supplier power is assessed as moderate.

Entry to the global fast food market does not require large capital outlay; setting up a single, independent fast food outlet is within the means of many individuals in the region, even in countries such as India, with low-median incomes. Larger companies can reduce the cost of expanding by running some or all of their outlets as franchises. Whilst expansion is relatively easy around the globe, notable exceptions include the Asia-Pacific region where restrictions to such an expansion are imposed. For example, franchise regulations by the Chinese Ministry of Commerce (MOFCOM), include a requirement that foreign franchisors open pilot locations in China first, making it more difficult for foreign franchisors to franchise in China. The regulations enacted in February of 2005 include the requirements, that a foreign franchisor must have operated two pilot locations for a minimum of one year before offering franchises in China. Moreover, the foreign franchisor must be registered with the Chinese government. In addition to the regulatory restrictions foreign franchisors face, it is important that preliminary marketing and brand promotions precede the major introduction of foreign franchise concepts in China. Market entrants face several other barriers; retaliation by existing players, such as the launch of a price war, especially where a new entrant moves into a more concentrated segment. The brand strength of the major chains is not negligible, which may negate some of the effect of low consumer switching costs. Overall, there is a moderate likelihood of new entrants.


Global - Fast Food 0199 - 2230 - 2009


Substitutes for fast food include other forms of profit foodservice, and also food retail (ready meals or ingredients for home cooking). The generic product of fast food is mainly considered as convenience. Convenience and availability are the main drivers for choosing fast food coupled with a focus on value. As the market consists of many differentiated fast food companies, customers have the option of choosing the best value products. Frozen re-heatable prepared food offers a strong competitive strength against regular take away fast food. For example, in China popular items include instant noodles and microwavable frozen dumplings that cost about 70 cents a bag and comes in dozens of varieties, including pork, celery, shrimp and vegetarian. The substitute product is convenient and offers both cheap value meals and quality products on a scale that matches the fast food industry. Many forms of fast food have attracted criticism for being unhealthy, while food retail offers consumers greater freedom to control their diet. However, the market for healthier forms of fast food is accelerating. America’s health-reform bill, which Congress passed in March 2010, requires restaurant chains with 20 or more outlets to put the calorie-content of items they serve on the menu. Consequently the trend towards ‘healthy fast food’ will continue to develop in early 2011, when it is enacted. Similar measures are to follow in Australia also. For the calorie conscious consumer, the main substitute is preparing a home cooked meal where the switching cost is the opportunity cost of the time spent in the kitchen. Overall, the threat of substitutes is assessed to be moderate.

While particular segments of the fast food market can be concentrated - for example, the burger segment is close to being a Burger King / McDonald's duopoly - the market as a whole is fairly fragmented, with many independents as well as larger chains. Rivalry is somewhat mitigated with the absence of high exit costs coupled with the ease with which capacity can be increased; chains can increase the number of outlets (the prevalence of franchising is a factor here) whilst independents can take on more staff or extend opening hours. As players of all sizes in this market are highly focused on fast food, profitability relies on low margin-high turnover operations. Price competition is thus prevalent amongst industry players, especially between value meals. In particular, the value meals within the $1-$2 range are a reaction to the shifting consumer trends and a larger focus on competition amongst industry players. This form of price dumping has become particularly prevalent as a result of a fragile wider economic environment. Brand power however forms the greatest competition in the fast food market, for example, McDonald’s spent $650.8 million on advertising (globally) in 2009. Overall, rivalry is assessed to be strong.

LEADING COMPANIES

Global - Fast Food 0199 - 2230 - 2009


LEADING COMPANIES

Burger King Corporation

Table 5: Burger King Corporation: key facts Head office: 5505 Blue Lagoon Drive, Miami, Florida 33126, USA Telephone: 1 305 378 3000 Fax: 1 305 378 7262 Website: www.bk.com Financial year-end: June Ticker: BKC Stock exchange: New York Source: company website D A T A M O N I T O R

Burger King Corporation (BKC) is one of the world's leading fast food restaurants. It operates more than 11,925 restaurants in 73 countries and the US territories, of which 1,429 restaurants are company restaurants and 10,496 are owned by independent franchisees. Out of these, 7,233 restaurants are located in the US and 4,692 are located in international markets.

The company's business is divided into three geographic segments; the US and Canada; Europe, the Middle East, Africa and Asia-Pacific (EMEA/APAC); and Latin America. About 7,512 BKC restaurants are located in the US and Canada. Over 2,580 of the company's restaurants are located in EMEA, 733 restaurants in APAC, and 1,078 restaurants in Latin America.

The chain offers a range of burgers, sandwiches, salads and breakfast items, including flame-broiled hamburgers, chicken and other specialty sandwiches, French fries, soft drinks and other food items. BKC introduced drive-thru services, which now account for almost 62% of the US company restaurant business.

The company generates revenues from three sources: sales at company restaurants, royalties and franchise fees, and property income from certain franchise restaurants that lease or sub-lease property from the company.

LEADING COMPANIES

Global - Fast Food 0199 - 2230 - 2009


Key Metrics

The company recorded revenues of $2,357 million in the fiscal year ending June 2009, a decrease of 4% compared to fiscal 2008. Its net income was $200 million in fiscal 2009, compared to a net income of $190 million in the preceding year.

The US and Canada, Burger King's largest geographical market, accounted for 68.7% of the total revenues in FY2009. Revenues from the US and Canada reached $1,743 million in 2009, an increase of 10.4% over 2008.

EMEA/APAC (Europe, the Middle East, Africa and Asia Pacific) accounted for 27.1% of the total revenues in FY2009. Revenues from EMEA/APAC reached $687.4 million in 2009, a decrease of 9.6% compared with 2008.

Latin America accounted for 4.2% of the total revenues in FY2009. Revenues from Latin America reached $107 million in 2009, a decrease of 7.3% compared with 2008.

Table 6: Burger King Corporation: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 1,940.0 2,048.0 2,234.0 2,455.0 2,357.4Net income (loss) 47.0 27.0 148.0 190.0 200.1Total assets 2,723.0 2,552.0 2,517.0 2,687.0 2,707.1Total liabilities 2,246.0 1,985.0 1,801.0 1,842.0 1,732.2 Source: company filings D A T A M O N I T O R

Table 7: Burger King Corporation: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 2.4% 1.3% 6.6% 7.7% 8.5%Revenue growth 10.6% 5.6% 9.1% 9.9% (4.0%)Asset growth 2.2% (6.3%) (1.4%) 6.8% 0.7%Liabilities growth 0.2% (11.6%) (9.3%) 2.3% (6.0%)Debt/asset ratio 82.5% 77.8% 71.6% 68.6% 64.0%Return on assets 1.7% 1.0% 5.8% 7.3% 7.4% Source: company filings D A T A M O N I T O R

LEADING COMPANIES

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Figure 5: Burger King Corporation: revenues & profitability

Source: company filings D A T A M O N I T O R

Figure 6: Burger King Corporation: assets & liabilities


LEADING COMPANIES

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Domino's Pizza, Inc.

Table 8: Domino's Pizza, Inc.: key facts Head office: 30 Frank Lloyd Wright Drive, Ann Arbor, Michigan 48106, USA Telephone: 1 734 930 3030 Fax: 1 734 930 4346 Website: www.dominos.com Financial year-end: December Ticker: DPZ Stock exchange: New York Source: company website D A T A M O N I T O R

Domino's Pizza is one of the world's leading pizza delivery companies. The company operates through a network of 8,999 company-owned and franchise stores, located in all 50 states of the US and across 60 countries worldwide. The company operates 16 regional dough manufacturing and supply chain centers, one thin crust manufacturing center, one vegetable processing supply chain center in the US, and six dough manufacturing and supply chain centers outside the US.

Domino's operates in three business segments: domestic stores, domestic supply chain, and international.

The domestic stores segment is comprised of 4,461 franchise stores and 466 company-owned stores. The domestic franchises are operated by entrepreneurs who own and operate an average of three to four stores. Six of the company's domestic franchisees operate more than 50 stores, including its largest domestic franchisee, which operates 143 stores. The principal sources of revenues from domestic store operations are company-owned store sales and royalty payments based on retail sales by its franchisees. The domestic company-owned store operations are divided into 11 geographic areas located throughout the US, while its domestic franchise operations are divided into four regions.

The domestic supply chain segment is comprised of dough manufacturing and supply chain centers that manufacture fresh dough on a daily basis and purchase, receive, store and deliver quality pizza-related food products and complementary side items to all of the company-owned stores and over 99% of its domestic franchise stores. This segment operates 16 regional dough manufacturing and supply chain centers. Each regional dough manufacturing and supply chain center serves approximately 300 stores.

LEADING COMPANIES

Global - Fast Food 0199 - 2230 - 2009


The international segment oversees the company's network of 4,072 international franchise stores in more than 60 countries. It also manufactures dough and distributes food and supplies in a limited number of international markets. The company has 589 franchise stores in Mexico, 562 franchise stores in the UK, 411 franchise stores in Australia, 329 franchise stores in South Korea, 319 franchise stores in Canada, 296 franchise stores in India and over 100 franchise stores in each of Japan, Turkey, Taiwan and France. The principal sources of revenues from its international operations are royalty payments generated by retail sales from franchise stores, and sales of food and supplies to franchisees in certain markets.

Key Metrics

The company recorded revenues of $1,404 million in the fiscal year ending December 2009, a decrease of 1.5% compared to fiscal 2008. Its net income was $80 million in fiscal 2009, compared to a net income of $54 million in the preceding year.

The reason for the decline in revenues was primarily due to low company-owned store revenues and domestic supply chain revenues coupled with the negative impact of changes in foreign currency exchange rates from its international revenues.

Domino's Pizza generates revenues through three business segments: domestic supply chain (57.1% of the total revenues during FY2009), domestic stores (33.1%), and international (9.8%).

The domestic stores segment recorded revenues of $493.6 million in FY2009, a decrease of 3.5% as compared to FY2008.

The international segment recorded revenues of $146.8 million in FY2009, an increase of 3% over FY2008.

LEADING COMPANIES

Global - Fast Food 0199 - 2230 - 2009


Table 9: Domino's Pizza, Inc.: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 1,511.6 1,437.3 1,462.9 1,425.1 1,404.1Net income (loss) 108.2 106.2 37.9 54.0 79.7Total assets 461.1 380.2 473.2 463.8 453.8Total liabilities 972.1 945.1 1,923.3 1,888.4 1,774.8Employees 13,500 13,300 12,500 10,500 10,200 Source: company filings D A T A M O N I T O R

Table 10: Domino's Pizza, Inc.: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 7.2% 7.4% 2.6% 3.8% 5.7%Revenue growth 4.5% (4.9%) 1.8% (2.6%) (1.5%)Asset growth 3.1% (17.5%) 24.5% (2.0%) (2.2%)Liabilities growth (2.5%) (2.8%) 103.5% (1.8%) (6.0%)Debt/asset ratio 210.8% 248.6% 406.4% 407.2% 391.1%Return on assets 23.8% 25.3% 8.9% 11.5% 17.4%Revenue per employee $111,970 $108,069 $117,032 $135,724 $137,657Profit per employee $8,015 $7,987 $3,032 $5,143 $7,814 Source: company filings D A T A M O N I T O R

LEADING COMPANIES

Global - Fast Food 0199 - 2230 - 2009


Figure 7: Domino's Pizza, Inc.: revenues & profitability


Figure 8: Domino's Pizza, Inc.: assets & liabilities


LEADING COMPANIES

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McDonald's Corporation

Table 11: McDonald's Corporation: key facts Head office: One McDonald's Plaza, Oak Brook, Illinois 60523, USA Telephone: 1 630 623 3000 Fax: 1 630 623 5004 Website: www.mcdonalds.com Financial year-end: December Ticker: MCD Stock exchange: New York Source: company website D A T A M O N I T O R

McDonald's is one of the world's largest foodservice retailing chains. All restaurants are operated either by the company or by franchisees, including conventional franchisees under franchise arrangements, and foreign affiliated markets and developmental licensees under license agreements. The company is primarily known for its burgers and fries which it sells through more than 32,478 fast-food restaurants in over 100 countries. It primarily operates in Europe, Asia-Pacific, and North America.

The company's business is divided into four geographic segments: Europe, the US, APMEA (Asia-Pacific, Middle East and Africa), and other countries and corporate. Other countries and corporate includes Canada and Latin America, as well as corporate activities and certain investments.

McDonald's restaurants offer a standardized menu, although there may be geographic variations. McDonald's key product offerings include hamburgers and cheeseburgers, chicken sandwiches, French fries, wraps, chicken nuggets, salads, desserts, sundaes, soft serve cones, pies, and cookies. It also offers beverages, such as milk shakes, soft drinks, coffee, and flavored tea. McDonald's restaurants in the US and many international markets also offer a wide range of breakfast menu items. The company's breakfast offerings include muffins, biscuits, hotcakes, and bagel sandwiches.

McDonald's markets its products under a wide range of brand names that include Big Mac, Big N' Tasty, Filet-O-Fish, McNuggets, McFlurry, McMuffin, and McGriddle, among others.

McDonald's generates revenues through company operated restaurants and franchisee restaurants. Of a total 32,478 McDonald's restaurants, over 6,200 are operated by McDonald's and over 26,000 are operated by franchisees and affiliates. The company's revenue comprises sales from company operated restaurants and fees as well as rent from franchisees and affiliates.

LEADING COMPANIES

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Under conventional franchise arrangement, franchisees provide a portion of the capital required by initially investing in the equipment, signs, seating, and decor of their restaurant businesses, and by reinvesting in the business over time. McDonald's owns the land and building or secures long-term leases for both McDonald's operated and conventional franchised restaurant sites.

Key Metrics

The company recorded revenues of $22,745 million in the fiscal year ending December 2009, a decrease of 3.3% compared to fiscal 2008. Its net income was $4,551 million in fiscal 2009, compared to a net income of $4,313 million in the preceding year.

The decrease in revenues in FY2009 was primarily caused by a shift to a greater percentage of franchised restaurants, where McDonald's receives rent and/or royalties based on a percent of sales.

Europe, McDonald's largest geographical market, accounted for 40.8% of the total revenues in FY2009. Revenues from Europe reached $9,273.8 million in 2009, a decrease of 6.5% over 2008.

The US accounted for 34.9% of the total revenues in FY2009. Revenues from US reached $7,943.8 million in 2009, a decrease of 1.7% over 2008.

Asia/Pacific, Middle East and Africa (APMEA) accounted for 19.1% of the total revenues in FY2009. Revenues from APMEA reached $4,337 million in 2009, an increase of 2.5% over 2008.

Other countries (Canada and Latin American) & corporate accounted for 5.2% of the total revenues in FY2009. Revenues from other countries & corporate reached $1,190.1 million in 2009, a decrease of 7.8% over 2008.

LEADING COMPANIES

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Table 12: McDonald's Corporation: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 19,117.3 20,895.2 22,786.6 23,522.0 22,744.7Net income (loss) 2,602.2 3,544.2 2,395.1 4,313.0 4,551.0Total assets 29,988.8 28,974.5 29,391.7 28,462.0 30,224.9Total liabilities 14,842.7 13,516.2 14,111.9 15,079.0 16,191.0Employees 447,000 465,000 390,000 400,000 400,000 Source: company filings D A T A M O N I T O R

Table 13: McDonald's Corporation: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 13.6% 17.0% 10.5% 18.3% 20.0%Revenue growth 2.8% 9.3% 9.1% 3.2% (3.3%)Asset growth 7.7% (3.4%) 1.4% (3.2%) 6.2%Liabilities growth 8.8% (8.9%) 4.4% 6.9% 7.4%Debt/asset ratio 49.5% 46.6% 48.0% 53.0% 53.6%Return on assets 9.0% 12.0% 8.2% 14.9% 15.5%Revenue per employee $42,768 $44,936 $58,427 $58,805 $56,862Profit per employee $5,821 $7,622 $6,141 $10,783 $11,378 Source: company filings D A T A M O N I T O R

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Figure 9: McDonald's Corporation: revenues & profitability


Figure 10: McDonald's Corporation: assets & liabilities


LEADING COMPANIES

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Yum! Brands, Inc.

Table 14: Yum! Brands, Inc.: key facts Head office: 1441 Gardiner Lane, Louisville, Kentucky 40213, USA Telephone: 1 502 874 8300 Fax: 1 502 454 2410 Website: www.yum.com Financial year-end: December Ticker: YUM Stock exchange: New York Source: company website D A T A M O N I T O R

Yum! Brands operates franchises and licenses a chain of restaurant brands including Kentucky Fried Chicken (KFC), Pizza Hut, Taco Bell, Long John Silver's (LJS) and All America Food (A&W). It operates more than 36,000 restaurants in 110 countries. Of the over 36,000 restaurants, 21% are operated by the company, 73% are operated by franchisees and unconsolidated affiliates and 6% are operated by licensees.

KFC restaurants in the US offer fried chicken-on-the-bone products, mainly marketed under the names Original Recipe and Extra Tasty Crispy. The restaurant's other principal items include chicken sandwiches (including the Snacker and the Twister), KFC Famous Bowls, Colonel's Crispy Strips, chicken wings, Popcorn Chicken and, seasonally, Chunky Chicken Pot Pies. KFC restaurants in the US also offer a variety of side items also, such as biscuits, mashed potatoes and gravy, coleslaw, corn and potato wedges, as well as desserts. While many of these products are offered outside of the US, international menus are more focused on chicken sandwiches and Colonel's Crispy Strips, and include side items that are suited to local preferences and tastes. Restaurant decor throughout the world is characterized by the image of Colonel Sanders.

KFC operates in 109 countries throughout the world. As of 2008, KFC has 5,253 units in the US, and 10,327 units outside the US.

LEADING COMPANIES

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The Pizza Hut restaurant chain, headquartered in Dallas County, Texas, specializes in the sale of ready-to-eat pizza products. The chain features a variety of pizzas, which include Pan Pizza, Thin 'n Crispy, Hand Tossed, Sicilian, Stuffed Crust, Twisted Crust, Sicilian Lasagna Pizza, Cheesy Bites Pizza, The Big New Yorker, The Insider, The Chicago Dish and 4forALL. Each type of pizza is offered with a variety of toppings. In some restaurants, Pizza Hut also offers breadsticks, pasta, salads and sandwiches. Menu items outside of the US are generally similar to those offered in the US, although pizza toppings are often matched to local preferences and tastes.

Pizza Hut operates in 97 countries throughout the world. As of 2008, Pizza Hut had 7,564 units in the US, and 5,611 units outside the US.

Taco Bell specializes in Mexican-style food products, including various types of tacos, burritos, gorditas, chalupas, quesadillas, salads, nachos and related items. Additionally, it also offers proprietary items such as Grilled Stuft Burritos and Border Bowls. Taco Bell restaurants feature a distinctive bell logo on their signage.

Taco Bell operates in 17 countries and territories throughout the world. As of 2008, there were 5,588 Taco Bell units in the US and 245 units outside the US.

Long John Silver's (LJS) features a variety of seafood and chicken items, including meals featuring batter-dipped fish, chicken, shrimp, hushpuppies and portable snack items. LJS restaurants basically feature a distinctive seaside/nautical theme.

LJS operates in seven countries throughout the world. As of 2008, there were 1,022 LJS units in the US, and 38 units outside the US.

All America Food (A&W) serves A&W draft Root Beer and its signature A&W Root Beer floats, besides hot dogs and hamburgers.

A&W operates in 10 countries throughout the world. As of 2008, there were 363 A&W units in the US, and 264 units outside the US.

Yum Brands consists of six operating segments: KFC-US, Pizza Hut-US, Taco Bell-US, LJS/A&W-US, Yum Restaurants International (YRI) and Yum Restaurants China (China).

For financial reporting purposes, it combined the four US operating segments into a single reporting segment (the US). The China segment includes China, Thailand and Taiwan, and the international segment includes the remainder of its international operations.

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Key Metrics

The company recorded revenues of $10,836 million in the fiscal year ending December 2009, a decrease of 4.1% compared to fiscal 2008. Its net income was $1,071 million in fiscal 2009, compared to a net income of $964 million in the preceding year.

Yum Brands generates revenues through three geographic business divisions: the US (45.4% of the total revenues during FY2008), China (27.7%) and Yum Restaurants International (YRI) (26.8%).

The US, Yum Brands' largest geographical market, accounted for 45.4% of the total revenues in FY2008. Revenues from the US reached $5,125 million in FY2008, a decrease of 1.4% compared with FY2007.

China accounted for 27.7% of the total revenues in FY2008. Revenues from China reached $3,128 million in FY2008, an increase of 45.9% over FY2007.

YRI accounted for 26.8% of the total revenues in FY2008. Revenues from YRI reached $3,026 million in FY2008, a decrease of 1.6% compared with FY2007.

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Table 15: Yum! Brands, Inc.: key financials ($) $ million 2005 2006 2007 2008 2009Revenues 9,349.0 9,561.0 10,416.0 11,304.0 10,836.0Net income (loss) 762.0 824.0 909.0 964.0 1,071.0Total assets 5,797.0 6,353.0 7,242.0 6,527.0 7,148.0Total liabilities 4,348.0 4,916.0 6,103.0 6,635.0 6,123.0Employees 59,840 53,200 48,160 49,000 50,400 Source: company filings D A T A M O N I T O R

Table 16: Yum! Brands, Inc.: key financial ratios Ratio 2005 2006 2007 2008 2009Profit margin 8.2% 8.6% 8.7% 8.5% 9.9%Revenue growth 3.8% 2.3% 8.9% 8.5% (4.1%)Asset growth 1.8% 9.6% 14.0% (9.9%) 9.5%Liabilities growth 6.0% 13.1% 24.1% 8.7% (7.7%)Debt/asset ratio 75.0% 77.4% 84.3% 101.7% 85.7%Return on assets 13.3% 13.6% 13.4% 14.0% 15.7%Revenue per employee $156,233 $179,718 $216,279 $230,694 $215,000Profit per employee $12,734 $15,489 $18,875 $19,673 $21,250 Source: company filings D A T A M O N I T O R

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Figure 11: Yum! Brands, Inc.: revenues & profitability


Figure 12: Yum! Brands, Inc.: assets & liabilities


MARKET FORECASTS

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MARKET FORECASTS

Market value forecast

In 2014, the global fast food market is forecast to have a value of $239.8 billion, an increase of 19.3% since 2009.

The compound annual growth rate of the market in the period 2009–14 is predicted to be 3.6%.

Table 17: Global fast food market value forecast: $ billion, 2009–14 Year $ billion € billion % Growth2009 201.1 144.6 3.1%2010 207.7 149.3 3.3%2011 214.7 154.4 3.4%2012 222.3 159.9 3.6%2013 230.3 165.7 3.6%2014 239.8 172.5 4.1%

CAGR: 2009–14 3.6%


Figure 13: Global fast food market value forecast: $ billion, 2009–14


MARKET FORECASTS

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Market volume forecast

In 2014, the global fast food market is forecast to have a volume of 248.7 billion transactions, an increase of 19.5% since 2009.

The compound annual growth rate of the market in the period 2009–14 is predicted to be 3.6%.

Table 18: Global fast food market volume forecast: billion transactions, 2009–14 Year billion transactions % Growth2009 208.1 3.9%2010 216.1 3.8%2011 224.3 3.8%2012 232.6 3.7%2013 240.7 3.5%2014 248.7 3.3%

CAGR: 2009–14 3.6%


Figure 14: Global fast food market volume forecast: billion transactions, 2009–14


APPENDIX

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APPENDIX

Methodology

Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-checked and presented in a consistent and accessible style.

Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and supported by analysis from industry experts using highly complex modeling & forecasting tools, Datamonitor’s in-house databases provide the foundation for all related industry profiles

Preparatory research – We also maintain extensive in-house databases of news, analyst commentary, company profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market overview

Definitions – Market definitions are standardized to allow comparison from country to country. The parameters of each definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the market and our clients

Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and trends

Datamonitor aggregates and analyzes a number of secondary information sources, including: - National/Governmental statistics - International data (official international sources) - National and International trade associations - Broker and analyst reports - Company Annual Reports - Business information libraries and databases

Modeling & forecasting tools – Datamonitor has developed powerful tools that allow quantitative and qualitative data to be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can then be refined according to specific competitive, regulatory and demand-related factors

Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date

APPENDIX

Global - Fast Food 0199 - 2230 - 2009


Industry associations

International Hotel & Restaurant Association 48 Boulevard de Sébastopol, 75003 Paris, France Tel.: 33 1 4488 9220 Fax: 33 1 4488 9230 www.ih-ra.com

Related Datamonitor research

Industry Profile

Fast Food in the United States

Fast Food in Europe

Fast Food in Asia-Pacific

APPENDIX

Global - Fast Food 0199 - 2230 - 2009


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Global - Fast Food 0199 - 2230 - 2009


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