Managing Pricing in Today’s Economic Climate
© 2019 Technomic, Inc.
No Big Improvement
Source: Technomic Top 500 Reports
2
Top 500 chains sales growth vs. previous year
4.5%
0.1%
2.6%
3.7%
5.6%
3.8% 4.2%
5.5%
4.4%3.9% 3.9%
0.9%
-2.9%
0.0%
2.8% 2.9%2.4%
3.6% 3.6%
1.4% 1.0% 1.3%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
LSR FSR
© 2019 Technomic, Inc.
As Traffic Lags, Chains Focus On Check AverageYOY Monthly Change %
Top 200 U.S. Chain Performance
Source: Technomic, Inc. Transaction Insights
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Dec2017
Jan2018
Feb2018
Mar2018
Apr2018
May2018
June2018
July2018
Aug2018
Sept2018
Oct2018
Nov2018
Dec2018
Check
Sales
Traffic
© 2019 Technomic, Inc.
Restaurant Growth Outpacing Population
4
YOY cumulative growth
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Population Top 500 UnitsSource: Technomic, Ignite Company
U.S. Census
© 2019 Technomic, Inc.
Fewer Consumers in Sweet Spot
Source: U.S. Bureau of Labor Statistics
U.S. Census
5
Share of households (by age of the head of the household) vs. AFH spending
6%
16%
20% 21%
17%
10% 10%
6%
16% 16%18% 19%
14%
11%
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
0%
5%
10%
15%
20%
25%
<25 25-34 35-44 45-54 55-64 65-74 75+
2007 2017 AFH Spend
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Labor Expenses
*March of respective year
Source: U.S. Bureau of Labor Statistics
6
569647
696647
840912
2014 2015 2016 2017 2018 2019
CAGR
10%
Accommodation & Foodservice Job Openings (000)*
$9.15 $9.20 $9.41 $10.01
$10.53 $11.09
2013 2014 2015 2016 2017 2018
CAGR
4%
Restaurant Wages (Median)
© 2019 Technomic, Inc.
Menu Price Inflation Rising
Source: U.S. Bureau of Labor Statistics
Monthly YOY CPI: FAFH
7
1.5%
1.7%
1.9%
2.1%
2.3%
2.5%
2.7%
2.9%
3.1%
2017 2018 2019
© 2019 Technomic, Inc.
Restaurant Inflation Outpaces Retail
8
-5.0%
0.0%
5.0%
10.0%
15.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019
CPI: Food at Home CPI: Food Away From Home
1.4%
3.0%
*March of respective year
Source: U.S. Bureau of Labor Statistics
© 2019 Technomic, Inc.
Fuel PricePressures Impacting?
9© 2019 Technomic, Inc.
© 2019 Technomic, Inc.
3.3%2017-18 growth
Top 500 restaurants
55%2018 YOY Third-party
sales growth
10
Source: Technomic 2019 Top 500 Report and Transaction Insights. Included
Third-arty brands: Grubhub, DoorDash, Postmates, UberEats, Caviar
3rd Party Delivery Changes the Equation
© 2019 Technomic, Inc.
Key Issues
11
●Traffic Declining
●Price, mix driving growth
●Unit Saturation & demographics not favorable
●Competition over labor increases costs
●Price inflation outpacing retail
●Fuel prices impacting consumers
●3rd party delivery eating profits
© 2019 Technomic, Inc.
Manage Your Pricing Strategy without Impacting Traffic
Mark Kelnhofer
President & CEO,
Return On Ingredients
Moderated by: Richard Shank, Director
of Consumer Insights, Technomic, Inc.
Jessica Sattler
Director, Research, Insights
and Marketing Analytics,
PF Chang's