Bob OBrien

1
Bob OBrien

• President, New
  Business Development NPD Group

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FoodserviceIndustry Overview2005
3

The NPD Group is recognized as a leading
authority on consumption information

• Retail
• National Eating Trends
• Hispanic National Eating Trends
• SnackTrack
• HealthTrack
• Nutrient Intake Database
• Dieting Monitor
• Food Safety Monitor
• C-Store Monitor
• Complete Kitchen Audit
• Special Reports

• Foodservice
• CREST Commercial
• CREST OnSite
• CREST Local Market
• CREST Chain Menu
• CREST Heavy/Light
• CREST Customer Satisfaction
• CREST Competitive Replacement
• ReCount, a census of restaurant units
• SalesTracsm Weekly/Market
• PotatoTrac, track product shipments
• Custom Research

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FoodserviceIndustry Overview2005
5
Economic Backdrop2005
6
Inflation is still a growing concern
Consumer Price Index
Percent Change vs. Year Ago
------03------
--------------04--------------
----------05----------
Q4 based on October / November data only
(December not yet available)
7
Unemployment continues to decline
U.S. Unemployment Rate
Source Bureau of Labor Statistics
8
Growth in the U.S. economy slowed
Real Gross Domestic Product ( Change vs. Year
Ago)
Source Bureau of Economic Analysis
9
DPI below year ago growth rate
Source Consensus Forecasts, USA, December 12,
2005 Economic data reflects
calendar quarter
Preliminary data for Q4
10
Consumer confidence on rebound
Consumer Confidence Index
Source The Conference Board, December 28, 2005
11
Investment levels dropped...
Nonresidential Private Fixed InvestmentChange
vs. Year Ago (Real)
Source Bureau of Economic Analysis
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Economic Backdrop2005
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Industry Performance
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Coming back from weakness!
Quarterly Percent Change in Restaurant Traffic
1977 to 2005
The second W recession
The first W recession
The third W recession,
Consistent Growth for 9 years
Back to the 80s
Source The NPD Group/NPD Foodworld/CREST 1976-2
001 based on research using household diaries,
2001-Present based on on-line methodology
15
Traffic Growing This Year
Total Restaurants
Components of Spending - Change vs. Year Ago
Dollars
3.5
2.1
2.1
3.7
3.5
5.70
5.65
5.75
5.88
Check Size
5.99
Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
16
South and West Lead Growth
Pacific
New England
W.N. Central
E.N. Central
Mid Atlantic
1
3
-1
-1
0
2
3
5
2
Mountain
South Atlantic
E.S. Central
W.S. Central
Source The NPD Group / CREST D-N 2004 vs D-N
2005
Proprietary and confidential - for client use only
17
QSRs and Casual Dining Grow
Traffic Change vs. Year Ago
Total Restaurants
QSR (76)
Midscale (12)
Casual Dining (11)
Fine Dining/ Upscale Hotel (1)
3
2
0
-2
-3
YE Nov 02
YE Nov 03
YE Nov 04
YE Nov 05
YE Nov 01
(Share of Traffic, YE Nov 05)
Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
18
Major chains drive growth
Traffic Distribution
Total Restaurants
PCYA
Major Chains
3
Small Chains
0
Independents
-1
YE Nov 01
YE Nov 02
YE Nov 05
YE Nov 03
YE Nov 04
ReCount Unit Counts PCYA Chains 3 Independents 0

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
19
Unit expansion evenly distributed
Pacific
New England
W.N. Central
E.N. Central
Mid Atlantic
0
1
1
1
1
1
2
1
2
Mountain
South Atlantic
E.S. Central
W.S. Central
Source The NPD Group / ReCount D-N 2004 vs D-N
2005
Proprietary and confidential - for client use only
20
Restaurants Units Growing Again
Change in of New Restaurant Units
Source The NPD Group/NPD Foodworld/ReCount
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Chain performance measured by CREST Customer
Satisfaction

• Chain s
• Portion Size
• Taste and Flavor of food
• Food prepared the way I like it

• Independent s
• Accuracy of order
• Affordable
• Food prepared the way I like it

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
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Industry Performance
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Off Premises Service Drove Growth
Total Restaurants
Traffic Change vs. Year Ago

• Carry Out
• Drive-thru
• At Work
• At home

On-Premises (39)
Off-Premises (61)
YE Nov 01
YE Nov 02
YE Nov 03
YE Nov 04
YE Nov 05
(Share of Traffic, YE Nov 05)
Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
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Breakfast and Lunch Lead
Traffic by Daypart
Total Restaurants
Morning Meal
Lunch
Supper
PM Snack
Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
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Industry Performance
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Categories that Drove Growth2005

• 49 of all traffic increases
• Gourmet Coffee/Tea
• QSR Other Sandwich
• Donut
• Retail!
• 19 of all traffic increases

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
27
Foods with greatest volume increases

• Chicken Sandwiches
• Fruit
• Mexican
• Burgers
• Side Dish Salads

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
28
Drinks with greatest volume increases

• Bottled Water
• Iced Tea
• Cappuccino, etc.
• Diet CSDs
• Milk

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
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Industry Performance
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FoodserviceIndustry Overview2005
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Lifecycle Groups
Empty Nesters Younger
Singles 65-74
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CREST Visit Situations
Traffic (000s) YE Nov. '05
Fast Breakfast Adult Snacks Out to
Lunch Moving Lunches Family Lunch Out with the
Kids Daily Grind Full Breakfast Family
Snacks Dinner Crisis Quiet Night Out A Bite at
Night In with the Family Quick Meal In Quiet
Night In Moving Weekend Meals Adult Meals on
the Move Leisurely Lunch
Proprietary - for client use only Source The
NPD Group / NPD Foodworld / CREST
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Industry Outlook
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Lifecycle Groups Distribution
Traffic () YE Nov. '05 vs. YE Nov. 01
Single 75
Married 75
Seniors Married
Singles Young
Traditional Families
Seniors Active
DINKS
Single Parents
Older Empty Nesters
Young Empty Nesters
Singles Older
Working Parents
Proprietary - for client use only Source The
NPD Group / NPD Foodworld / CREST
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How has restaurant use changed in the past 5
years?

• Decreased the Most
• Working Parents
• Young Singles
• Empty Nesters
• Single, 75

• Increased the Most
• Traditional Families
• Married Seniors
• DINKs (
• Older Singles

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
36
Which groups will grow the most in the next 10
years?

• Older Singles
• Older Empty Nesters
• Married Seniors
• Married 75
• Single 75

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
37
Preferences of "Older Singles"

• Midscale Varied Menu
• Family Style

• Largest Share
• Hamburger Cat.
• C-Stores
• Pizza
• Other Sandwich
• Donut

• Increased Most
• Hamburger Cat.
• C-Stores
• Other Sandwich
• Gourmet Coffee
• Donut

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
38
Preferences of "Older Empty Nesters"

• MS Varied Menu
• Family Style
• MS Grill/Buffet

• Largest Share
• Hamburger Cat.
• Pizza
• C-Stores
• Other Sandwich
• Family Style

• Increased Most
• Hamburger Cat.
• Gourmet Coffee
• C-Stores
• Other Sandwich
• CD Bar and Grill

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
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Industry Outlook
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75 and Seniors have the highest customer
satisfaction
Customer Satisfaction - YE Nov 05
Top Two Box - Rating of Excellent or Very Good
Total Restaurant Satisfaction Single 75 Married
75 Seniors Married Seniors Active Empty Nesters
Young DINKS Empty Nesters Older Working
Parents Traditional Parents Single
Parents Singles Young Singles Older
Proprietary - for client use only Source The
NPD Group / NPD Foodworld / CREST
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Visit SituationsAnother Perspective on Demand
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Fast breakfast and moving lunch have lead
Share of Total Traffic
Traffic Change (000s) YE Nov. '05 vs. YE Nov. 01
Fast Breakfast Moving Lunches Family
Lunch Quick Meal In Quiet Night In Moving
Weekend Meals Adult Meals on the Move Full
Breakfast Out with the Kids Dinner
Crisis Leisurely Lunch In with the
Family Quiet Night Out A Bite at Night Daily
Grind Out to Lunch Adult Snacks Family Snacks
13.4 7.9 7.1 3.6 3.2 2.9 2.5 5.6 6.1 4.4 2.5 4.0 4
.2 4.0 5.7 8.2 9.6 5.1
Proprietary - for client use only Source The
NPD Group / NPD Foodworld / CREST
43
Preferences of "Older Singles"

• Full Breakfast
• Out To Lunch
• A Bite at Nite

• Largest Share
• Fast Breakfast
• Adult Snacks
• Out to Lunch
• Moving Lunch
• Full Breakfast

• Increased Most
• Fast Breakfast
• Quick Meal In
• Quiet Night In
• Adult Meals on the Move

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
44
Preferences of "Older Empty Nesters"

• Full Breakfast
• Adult Snacks
• Out to Lunch
• Quiet Night Out

• Largest Share
• Fast Breakfast
• Out to Lunch
• Adult Snacks
• Full Breakfast
• A Bite at Night

• Increased Most
• Fast Breakfast
• Quick Meal In
• Quiet Night In
• Moving Lunch

Proprietary and confidential - for client use
only Source The NPD Group/ NPD Foodworld?/
CREST ?
45
Industry Outlook
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Individual Restaurant Use Grew Through the 90s
Annual Meals Purchased at a Restaurant per Person
Source The NPD Groups CREST Service Note
numbers revised from last years report.
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Use nudged up in 2005
Annual Meals Purchased at a Restaurant per Person
Source The NPD Groups CREST Service Note
numbers revised from last years report.
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Taking Stock

• Impact of personal income weakness
• Concentration of Major Chains
• Retailers
• Aging consumers
• Snacks and Fast Breakfast

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FoodserviceIndustry Overview2005
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Thank You!