Profit Foodservice in Spain 2009-2014.pdf

datamonitor usa 245 fifth avenue 4th floor new york, ny 10016 usa t: +1 212 686 7400 f: +1 212 686 2626 e: usinfo datamonitor europe 119 farringdon road london ec1r 3da united kingdom t: +44 20 7551 9000 f: +44 20 7675 7500 e: eurinfo datamonitor middle east and north america datamonitor po box 24893 dubai, uae t: +49 69 9754 4517 f: +49 69 9754 4900 e: datamonitormena datamonitor asia pacific level 46, 2 park street sydney, nsw 2000 australia t: +61 2 8705 6900 f: +61 2 8705 6901 e: apinfo spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 1 industry profile profit foodservice in spain reference code: 0180-2338 publication date: september 2010 executive summary spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 2 executive summary market value the spanish profit foodservice sector grew by 4.7% in 2009 to reach a value of $15,002 million. market value forecast in 2014, the spanish profit foodservice sector is forecast to have a value of $17,938.5 million, an increase of 19.6% since 2009. market volume the spanish profit foodservice sector grew by 1.6% in 2009 to reach a volume of 3,232.3 million transactions. market volume forecast in 2014, the spanish profit foodservice sector is forecast to have a volume of 3,567.9 million transactions, an increase of 10.4% since 2009. market segmentation i cafes constitute the largest segment of the profit foodservice sector in spain, accounting for 30.4% of the sectors total value. market segmentation ii spain accounts for 10.3% of the european profit foodservice sector value. market rivalry the spanish profit foodservice sector is predominately geared to serving consumers through cafes and pubs, clubs, nightclubs, with these two segments accounting for 60.8% each of the market, in value terms during 2009. contents spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 3 table of contents executive summary 2 market overview 7 market definition 7 research highlights 8 market analysis 9 market value 10 market volume 11 market segmentation i 12 market segmentation ii 13 five forces analysis 14 summary 14 buyer power 16 supplier power 17 new entrants 18 substitutes 19 rivalry 20 leading companies 21 mcdonalds corporation 21 yum! brands inc 25 telepizza 29 comess group 30 market forecasts 32 market value forecast 32 market volume forecast 33 macroeconomic indicators 34 contents spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 4 appendix 36 methodology 36 industry associations 37 related datamonitor research 37 disclaimer 38 about datamonitor 39 premium reports 39 summary reports 39 datamonitor consulting 39 contents spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 5 list of tables table 1: spain profit foodservice sector value: $ million, 200509 10 table 2: spain profit foodservice sector volume: million transactions, 200509 11 table 3: spain profit foodservice sector segmentation i:% share, by value, 2009 12 table 4: spain profit foodservice sector segmentation ii: % share, by value, 2009 13 table 5: mcdonalds corporation: key facts 21 table 6: mcdonalds corporation: key financials ($) 22 table 7: mcdonalds corporation: key financial ratios 23 table 8: yum! brands inc: key facts 25 table 9: yum! brands inc: key financials ($) 27 table 10: yum! brands inc: key financial ratios 27 table 11: telepizza: key facts 29 table 12: comess group: key facts 30 table 13: spain profit foodservice sector value forecast: $ million, 200914 32 table 14: spain profit foodservice sector volume forecast: million transactions, 200914 33 table 15: spain size of population (million), 200509 34 table 16: spain gdp (constant 2000 prices, $ billion), 200509 34 table 17: spain gdp (current prices, $ billion), 200509 34 table 18: spain inflation, 200509 35 table 19: spain consumer price index (absolute), 200509 35 table 20: spain exchange rate, 200509 35 contents spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 6 list of figures figure 1: spain profit foodservice sector value: $ million, 200509 10 figure 2: spain profit foodservice sector volume: million transactions, 200509 11 figure 3: spain profit foodservice sector segmentation i:% share, by value, 2009 12 figure 4: spain profit foodservice sector segmentation ii: % share, by value, 2009 13 figure 5: forces driving competition in the profit foodservice sector in spain, 2009 14 figure 6: drivers of buyer power in the profit foodservice sector in spain, 2009 16 figure 7: drivers of supplier power in the profit foodservice sector in spain, 2009 17 figure 8: factors influencing the likelihood of new entrants in the profit foodservice sector in spain, 2009 18 figure 9: factors influencing the threat of substitutes in the profit foodservice sector in spain, 2009 19 figure 10: drivers of degree of rivalry in the profit foodservice sector in spain, 2009 20 figure 11: mcdonalds corporation: revenues however the whim of one individual does not have a significant impact on revenues. the greatest threat to cafes and restaurants is the likelihood of buyers essentially achieving backwards integration by 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, value pricing and ambiance. five forces analysis spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 15 upstream in the sector, the size and independence of suppliers exerts marginal pressure on players as they feel no urgency to keep raw material prices low. new entrants are attracted by future sector growth and low barriers to entry. with the new generation of macro-malls, generally anchored by a large mixed retailer, catered towards the spanish suburban spanish families, the foodservice sector is expected to benefit. overall, the outlook for the spanish profit foodservice sector is modest. five forces analysis spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 16 buyer power figure 6: drivers of buyer power in the profit foodservice sector in spain, 2009 source: datamonitor d a t a m o n i t o r the profit foodservice sector includes restaurants, cafes, and fast-food outlets, with individual consumers as the only buyers. the lack of switching costs intensifies buyer power; due to low product differentiation, for any given price range consumers have many different businesses to choose from. rivalry among foodservice centers is abundant which enhances buyer power further yet. there is also likely to be relatively high price elasticity of demand, as foodservice is not strictly essential to consumers; in fact, they can backwards integrate by foregoing the restaurant and cooking their own food. high transaction volumes mean that the impact of any one consumer on revenues is usually small - the exception here can be premium-price, non-chain restaurants, whose business model relies on low-volume, high-margin sales. furthermore, investment in brand building, especially in the low- and medium-price segments, has driven customer loyalty, coupled with the social functions and the convenience of foodservice makes it more important to the consumer than a simple source of food. overall, buyer power in the profit foodservice sector is moderate. five forces analysis spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 17 supplier power figure 7: drivers of supplier power in the profit foodservice sector in spain, 2009 source: datamonitor d a t a m o n i t o r foodservice is a labor intensive industry, and wages form a significant proportion of operating costs: around 25-30%. the existence of a statutory minimum wage in spain increases the need for players to keep other costs as lean as possible, which in turn increases the importance of suppliers. foodservice companies are generally low-margin businesses, and need to source good quality food at low prices. risks associated with supply chain disruption, or the inability of a competing supplier to offer food of adequate quality, could increase switching costs. many of the foodservice suppliers are large companies, and the high number of businesses they serve means that they themselves are under less pressure to keep their prices down, and therefore exert significant negotiating power, thus enhancing at the same time supplier power. overall, supplier power is assessed as strong. five forces analysis spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 18 new entrants figure 8: factors influencing the likelihood of new entrants in the profit foodservice sector in spain, 2009 source: datamonitor d a t a m o n i t o r in recent times, the profit foodservice experienced a difficult operating environment with unprecedented volatile currency markets, significant commodity inflation and 25-year-high unemployment levels. in spite of these challenging macroeconomic factors spain recorded positive rate of market growth in 2009. although the rate of growth will decelerate, the market is expected to continue growing over the coming years, making it more inviting to new entrants. there are also few barriers that make profit foodservice business less enticing to possible entrants. in a generally low-margin sector, new entrants will face incumbents already benefiting from scale economies that improve their profitability and allow them to submit highly competitive bids to price-sensitive customers. as foodservice is a highly regulated sector, it is subject to regulations by the food safety agency (aesan) on matters of food hygiene; non compliance to these procedures is subject to severe penalties which may also act as a deterrent. all of these things considered, the overall likelihood of new entrants is assessed to be high. five forces analysis spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 19 substitutes figure 9: factors influencing the threat of substitutes in the profit foodservice sector in spain, 2009 source: datamonitor d a t a m o n i t o r profit foodservice customers are usually in a position to prepare their own food, which constitutes the main threat of substitutes. the main switching cost is the opportunity cost of the time spent in the kitchen, as home-cooked food itself is usually cheaper than a meal in a restaurant. other substitutes include alternative leisure pursuits, such as movie and theatre going, in the sense that consumers could decide on those, as opposed to meeting friends for a meal in a restaurant. furthermore, a cultural increase in snacking and eating on the go has tended to reduce the number of formal meal occasions in the consumers week and driven business to retailers instead. the usual strategy adopted to deal with the threat of substitutes in profit foodservice is to sell an experience, as well as food and drink. for chains, this may be achieved through investment in brand building; for high-end independent full service restaurants, it may involve the development of a much more individualized identity, perhaps focusing on the influence of a particular style of cooking. the impact of substitutes on profit foodservice is assessed as moderate. five forces analysis spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 20 rivalry figure 10: drivers of degree of rivalry in the profit foodservice sector in spain, 2009 source: datamonitor d a t a m o n i t o r in the profit foodservice sector, the competitors are usually medium or small but numerous businesses; thus, within any segment, there are many companies with similar structures offering similar products, and consumers incur no costs in changing their foodservice providers, which intensifies rivalry among players. rivalry is somewhat mitigated, however, by the relative ease of expansion and also the absence of high exit costs. furthermore, growth in the sector eases rivalry, as it gives opportunities for the profit foodservices to expand without the need of overlapping with competition. even complete exit from the sector is not unduly expensive: physical assets such as restaurants do not represent significant sunk costs even if owned rather than rented, as they can be sold for a good price, and most of the staff laid off will not be eligible for costly redundancy payments. rivalry in the profit sector is assessed to be strong overall. leading companies spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 21 leading companies mcdonalds corporation table 5: mcdonalds corporation: key facts head office: one mcdonalds plaza, oak brook, illinois 60523, usa telephone: 1 630 623 3000 fax: 1 630 623 5004 website: financial year-end: december ticker: mcd stock exchange: new york source: company website d a t a m o n i t o r mcdonalds operates fast food restaurants all over the world. the company is one of the worlds largest food service retailing chains, preparing and serving a range of food products and beverages. 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 companys 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. mcdonalds restaurants offer a standardized menu, although there may be geographic variations. mcdonalds key product offerings includes 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. mcdonalds restaurants in the us and many international markets also offer a wide range of breakfast menu options. the companys breakfast offerings include muffins, biscuits, hotcakes, and bagel sandwiches. mcdonalds markets its products under a wide range of brand names that include big mac, big n tasty, filet-o-fish, mcnuggets, mcflurry, mcmuffin, and mcgriddles among others. mcdonalds generates revenues through company operated restaurants and franchisee restaurants. of the total 32,478 mcdonalds restaurants, over 6,200 are operated by mcdonalds and over 26,000 are operated by franchisees and affiliates. the companys revenue comprises sales from company operated restaurants and fees as well as rent from franchisees and affiliates. leading companies spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 22 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. mcdonalds owns the land and building or secures long-term leases for both mcdonalds operated and conventional franchised restaurant sites. as of december 31 2009 mcdonalds had a presence of 407 restaurants in spain, of which 80% are operated by franchisees. 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 $4,313 million in the preceding year. table 6: mcdonalds corporation: key financials ($) $ million 2005200620072008 2009 revenues 19,117.320,895.222,786.623,522.0 22,744.7 net income (loss) 2,602.23,544.22,395.14,313.0 4,551.0 total assets 29,988.828,974.529,391.728,462.0 30,224.9 total liabilities 14,842.713,516.214,111.915,079.0 16,191.0 employees 447,000465,000390,000400,000 400,000 source: company filings d a t a m o n i t o r leading companies spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 23 table 7: mcdonalds corporation: key financial ratios ratio 2005200620072008 2009 profit 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 $56,862 profit 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 figure 11: mcdonalds corporation: revenues & profitability source: company filings d a t a m o n i t o r leading companies spain - profit foodservice 0180 - 2338 - 2009 datamonitor. this profile is a licensed product and is not to be photocopied page 24 figure 12: mcdonalds corporation: assets & liabilities source: company filings d a t a m o n i t o r leading co