Commercial foodservice market in Italy - PwC · Commercial foodservice market in Italy November 2018. Strictly private and confidential. November 2018 PwC. Executive Summary. 3: Reference

Market VisionCommercial foodservice market in Italy

November 2018

Strictly private and confidential

November 2018PwC

Executive Summary 3

Reference market 6

1 Italian consumers – «out-of-home» food consumption 7

2 The commercial food service market in Italy 12

2.1 Commercial food service on motorways 21

2.2 Commercial food service in airports 24

2.3 Commercial food service on train stations 27

2.4 Commercial food service in city centres 30

2.5 Commercial food service in hospitals 32

Competitive landscape 35

Contents

2Market Vision

Competitive landscapeReference marketExecutive SummaryContents

November 2018PwC

Executive Summary

3Market Vision


November 2018PwC

Executive Summary – Market Assessment

4Market Vision

Market assessment

OK

In Italy, “Out-of-home” consumption has progressively gained market share as a consequence of significant cultural and structural changes that can support the sector in the long run

OK

OK

Food consumption spending by Italian households, excluding expenditure on alcoholic beverages, was estimated around €227.1 billion in 2016. Expenditure of Italian households on food services (so-called “Out-of-home” food consumption) amounted to approx. €80 billion in 2016, 35.3% of the total consumption

The commercial food service market in Italy is estimated at approx. €73 billion, the bar and cafeteria sector contributes to around €17 billion, fast food to about €3.9 billion and Travel to €3.6 billion

Some of the main trends in the Italian market are: i) continued growth of franchising, ii) higher consumption of healthy / quality foods, iii) market entry and penetration of fashion brands, and iv) increasingly important role of digital systems (e.g. payments)

It is estimated that the commercial food service market in Italy will grow by +1.5% CAGR 18-22driven both by the growth in the number of “Out-of-home” transactions as well as an increase in average receipt

Growth potential for the chains that will be able to propose innovative formats and meet new consumption habits


November 2018PwC

Executive Summary – Competitive landscape

5Market Vision

Competitive landscape

OK

• Over 329,000 food service operators were active in Italy in 2016

• In this highly fragmented market, the share of "chains" appears to be less significant than the European average: The"chains" penetration rate in Italy in 2017 was 6.8%, below the European average of 22%, highlighting opportunities for further growth in this segment

• The competitive landscape of "branded" chains is currently characterized by the presence of multiple players with different business models

• Concession food service presents a fragmented competitive landscape characterized by the presence of both small and large players active mainly in the mass food services

• Strong growth of small chain players in recent years, consolidated players show a moderate growth

• Mass food service operators generally have lower EBITDA margins % and higher incidence of personnel costs compared to commercial food service operators

• Mass food service operators are increasing their presence in high-margin adjacent concessions for commercial food service businesses (e.g. hospitals commercial food service, and travel commercial food service)

~

Italy is an unsaturated market, the smaller independent restaurants are joining restaurant chains, growth potential for chained food service operators

Mass food service operators are facing some entry barriers when moving in adjacent concessions for commercial food service, due to the necessity to compete with the innovative PoS formats proposed by incumbents

In the coming years the consolidated players could be threatened by new chains with innovative formats that show high growth rates

~


November 2018PwC

Reference market

6Market Vision


November 2018PwC

Italian consumers – «out-of-home» food consumption

1 Italian consumers – «out-of-home» food consumption

7Market Vision


November 2018PwC

In 2016, total “out-of-home" food expenditure incurred by Italian families was worth approx. €80B

64,7%

35,3%

Food consumption - at home Food consumption - out of home

Source: FIPE

Food consumption of Italian families

• Expenditure on food consumption of Italian households totalled €227.1B in 2016, excluding expenditure on alcoholic beverages

• The expenditure of Italian households for the purchase of catering services (so-called “Out-of-home“ food consumption) amounted to approx. €80B in 2016, 35.3% of the total consumption for the year

• The expenditure for food consumption at home sustained by Italian families was approx. €147B, 64.7% of total expenditure incurred in 2016

Food consumption

of Italian families in

2016

€227.1B


8Market Vision


November 2018PwC

Starting from 2013, the food consumption of Italian families showed a recovery. Increase in "Out-of-home" consumption

80

85

90

95

100

105

110

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Food consumption - at home Food consumption - out of home

Food expenditure of Italian families (2007-2016, Base 2007=100)

Source: ISTAT, FIPE


9Market Vision


November 2018PwC

In Italy, “Out-of-home” consumption has progressively gained market share, thanks to a significant cultural and structural change that can support the sector in the long run

68,4% 64,2%

31,6% 35,4%

0%

20%

40%

60%

80%

100%

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16Food consumption - out of home Food consumption - at home

Main drivers of «out-of-home» consumption

Increase in the # of

families (of small

dimension)

Change in the average lifestyle

Quick lunch break

Increase in the # of families

composed by one person

More working women

outside home

Higher attention to

food

Urbanization

Busier lifestyle and

less time available

Request for higher quality

and value food

Food consumption at home and «out-of-home»(2001-2016, Share %, constant prices)

Source: ISTAT, FIPE


10Market Vision


November 2018PwC

In 2017, approx. 60% of Italians consumed daily meals out (breakfast, lunch and dinner) with alternating regularity

36,2% 32,9%39,1%

15,0% 19,0%

27,9%6,6% 7,6%

9,9%16,5% 15,6%

16,4%14,9% 14,2%

4,2%10,7% 10,8%2,5%

Breakfast Lunch(During the week)

Dinner

Never Once or twice a month Once every 15 daysAt least 1 or 2 a week At least 3 or 4 a week Everyday

Eating Habits Breakdown in Italy(2017, %)

• Up to 63.8% Italians consumebreakfast out, although with different time profile, whereas up to 36.2% regularly have breakfast at home.

• During the week, up to 67.4% of Italians have lunch out.

• 60.9% of Italians dine out, although with different time profile, whereas up to 39.1% of people consume their dinner regularly at home.

Source: FIPE


11Market Vision


November 2018PwC

The commercial food service market in Italy

2 The commercial food service market in Italy

12Market Vision


November 2018PwC

Trade of commercial catering in Italy accounts for €73B, the cafe and bar sector contributes to approximately €17B, fast food for about €3.9B and travel for about €3.6B

Standalone; €55,1B

Lodging; €7,7BTravel ; €3,6BRetail; €3,5B

Leisure; €3,2B

Full-Service Restaurants ; €41,6B

Cafés/Bars & Self-Service Cafeterias ; €17,0B

100% Home Delivery/Takeaway; €10,1B

Fast Food ; €3,9BStreet Stalls/Kiosks ; €0,5B

Location Category

Dimension and segmentation of the commercial food service industry in Italy(€B)

Notes (*): PwC estimatesSource: PwC analysis on Euromonitor data

N° Transactions (estimates, # billions)(*)

10.9 10.9

73.2 73.2


13Market Vision


November 2018PwC

The commercial food service market in Italy is expected to grow with a CAGR of +1.5% between 2018 and 2022, driven by the increase of both the number of “Out-of-home” transactions and the value of the average receipt

Source: PwC estimates

73,2 74,4 75,7 76,9 78,1 79,3 80,5

10,9 11,0 11,1 11,2 11,3 11,4 11,5

E2016 F2017 F2018 F2019 F2020 F2021 F2022

Value of commercial food service market in Italy N° transactions

Commercial food service in Italy – growth estimates(2016 - 2022, €B, %)

+1.5%YoY %

Value €B 1.7% 1.6% 1.6% 1.5% 1.5%1.7%

ESTIMATES

YoY %n° transactions 0.9% 0.8% 0.8% 0.8% 0.8%0.9%

CAGR2018-2022

+0.8%


14Market Vision


November 2018PwC

In 2016 over 329,000 food service companies were active in Italy. It is a Highly fragmented market

Total food services active in Italy (2016)

#329,787

• Among the Italian regions, Lombardy holds the largest number of companies in the food service sector (50,675), followed by Lazio (36,106) and Campania (31,360).

Region # food servicesLombardy 50,675 Lazio 36,106 Campania 31,360 Veneto 26,135 Emilia Romagna 25,227 Piedmont 23,679 Tuscany 22,105 Sicily 21,301 Apulia 19,269 Liguria 12,694 Sardinia 10,748 Calabria 10,505 Marche 8,467 Abruzzo 8,033 Friuli-Venezia Giulia 7,249 Trentino-Alto Adige 5,814 Umbria 4,694 Basilicata 2,697 Molise 1,909 Valle d'Aosta 1,120

Source: FIPE

Food service operators in Italy(2016,#)


15Market Vision


November 2018PwC

Still less significant is the role of restaurant chains: Italy has a penetration rate of «chains» of 6.8% below the World average of 26.8%, which leaves space for further growth opportunities in this segment


16Market Vision

Italy Western Europe Eastern Europe Word

Restaurant chains Indipendent restaurants

6.8%

21.8% 23.4%26.8%

Note

• In Italy most of the operators are independent and restaurants are typically family-run

• Italy is an unsaturated market

• The contraction of margins, also due to the high cost of rents, and a decrease in customer traffic, leads the the smallest independent restaurants to join restaurant chains.

• Branded restaurant chains are still a relatively low developed segment in Italy, compared to Europe and World average (*)

Penetration rate of brand restaurant chains(2017)

European average

Independent78%

Restaurant chains22%

Notes (*): percentage of chains against independent restaurants in terms of value (2017)Source: PwC analysis on Euromonitor data


November 2018PwC

Competitive arena of brand chains characterized by the presence of multiple players with different business models

Competitive arena – main brand competitors(illustrative)

Pri

ce r

ange

(av

erag

e re

ceip

t)

Low

High

Mass cateringCommercial food service

TravelConsists of catering at locations connected to transport flows, timing appears to be particularly contracted, bar and restaurants are often combined with mini-market

Mass catering Means large-scale provision and delivery of complete meals, including the management of canteens

Fast food & fast casualCharacterized by fast service and medium-low price ranges

Bar & snack barIncludes traditional bars and cafes / snack bars without table service


17Market Vision

RoadhouseOld Wild West

America Graffiti

GallowayGiovanni Rana

Zushi PizziKotto

BEFeD Brew Pub

Burger King

Domino’s Pizza

McDonald’s

Bistrot AirportKFC

My Chef

SpizzicoLowengrube

Ham Holy Burger

La Piadineria

Chef Express

Mondadori Caffe

Grom Crema & Cioccolato McCafe

Grand Cafe MU

Puro Gusto Bottega del Caffè

CaffèVergnano1882

Espressamenteilly

Mokà

Segafredo

Autogrillcafè

RistopSirio

Bricco cafè

Sarni

HermesFestival Snack Bar

Punto Grill

Rita

CIR foodAutogrill

Serenissima

CAMST

SodexoLadisa

Rist Gest

Euro Ristorazione

Pellegini

Elior

Gemeazelior

Dussmann

Paolo Andersson

Vivenda


November 2018PwC

Main market trends are: i) continuous growth of Franchising, ii) greater consumption of higher quality/healthy food, iii) new entries, Fashion Brands, and iv) adoption digital systems (e.g. payments)

Commercial food service in Italy – Main trends

Franchising still growing, but there

is also a consolidation trend

Increasing consumption of high quality and

healthy food

Fashion Brands join the food

service industry

Digital orders and payments

In recent years, the Italian market has seen an increase of numerous franchising brands, in particular in the rapidly expanding "Casual Dining Full Service" restaurant market. Compared to the «booming» period of this format during recession years, where the operators used franchising to strengthen the Brand and acquire new customers, a new phase of consolidation in the bakery / pastry and ice-cream sector is now being experienced in the industry

In order to cope with the erosion of margins and the decrease in flows (e.g. competition with other forms of food service), small operators who have not converted into chains have focused their gastronomic proposal on high quality and healthy food to meet the increasing targeted needs of customers (e.g. organic food, vegetarian options, product recovery and traditional processing methods)

Between 2016 and 2017, several players operating in the fashion industry entered the food service scene with the aim of creating "Brand Engagement". This is the case of Diesel, who elaborates a menu with the products of the Bio Ecor Naturasì supermarket chain and of Giorgio Armani, which, after Milan, opened the second Emporio Caffè e Ristorante in Bologna, inside the historical Galleria Cavour

In the PoS, the adoption of order and payment systems based on digital technology is growing, including the "Multimedia Kiosks" and "Totem Touchscreen". These innovative forms are sometimes offered in addition to the "classical" order to allow customers to gradually familiarize themselves with the tool. The pioneers of digital ordering in Italy include Autogrill, Ikea and McDonalds chains

Trend Description Relevance

1

2

3

4


18Market Vision

3

2

3

2

Source: PwC analysis


November 2018PwC

Growing consumer demand and presence of specific drivers in terms of offer positively influence on the overall market growth

Restaurant Chains

Macroeconomic trends Consumer /Lifestyle Socio-demographic

factors # of PoS Offer quality

• Eating out is influenced by the general macroeconomic conditions

• Italy's economic outlook remains positive (GDP 2018: +1.2% and 2019: +1.1%)

• The growing threat of terrorist attacks and geopolitical shocks could have an impact on the overall development of the market, however this is difficult to assess

• Eating out has become a "structural" dynamic of the behaviour of Italian consumers

• There are several reasons to dine out beyond the traditional "three courses" (e.g. brunch with friends, snack on a shopping trip)

• The competition on how to spend free time is strong, but eating out remains popular

• "Polarization" of consumers in Italian eating habits: increasing the choice between high-quality or low-cost restaurants

• An increasing number of customers with little free time available, who are more likely to eat out

• Increasing number of women in the job market and single families is expected to guide future growth of the market

• The number of restaurants in Italy has decreased in recent years, mainly due to the high rate of bankruptcy of independent operators, while the number of brand chains continues to grow

• Consolidated chains have developed new formats (e.g. single-product, mixed Wholesalers / Risto offers, Retail / Food offers)

• The growth of "Casual Dining" chains has led to an improvement in terms of:

Variety of dishes available

Consistency and quality of the offer

Nature of "informal" proposals covering a wide range of opportunities to eat out

Expected impact on restaurants

Demand Supply



19Market Vision


November 2018PwC

Locations

The commercial travel food service industry serves places connected to transport flows, and presents different characteristics in terms of location, consumer behaviour and infrastructure

Commercial food service TRAVELCommercial food service NO TRAVEL

• Consumer uses this type of facility for functional reasons (e.g. lunch break) or leisure (using this service in their free time).

• Seasonal peaks are less pronounced compared to travelling food service.

• Timing can change according to consumers’ needs, in general the greater presence of «leisure consumers» involves a more relaxed timing.

• Food service activity in these locations does not necessarily require obtaining licences, more often it is connected to private independent operators.

• The main priority for the consumer is the trip, whereas a moment of relaxation or leisure at a service station or other food service facilities represents an element of secondary interest. As a consequence the consumer’s attention has to be «captured».

• The seasonality of the business is connected to the peaks of traffic holiday (e.g. airports in the summer).

• Time available to the consumer for buying and consuming the food is limited. As a consequence timely service is required.

• Food service activity in these locations is subject to obtaining concessions from local entities/administration of the facilities, typically granted through public tenders.

Urban areas Industrial areas

Shopping centres Other high traffic points(e.g. hospitals, schools, etc.)

Locations

Characteristics Characteristics

Railway stations

Motorways Airports

Ports



20Market Vision


November 2018PwC

Commercial food service on motorways2.1 Commercial food service on motorways

21Market Vision


November 2018PwC

The commercial motorway food service in Italy consists of 412 service areas located along the 6,000 km network. There are 406 snack bars and 170 restaurants

Introductory Notes

• The commercial motorway food service in Italy consists essentially of single-brand food outlets located along on motorways

• The Italian motorway network boasts approx. 6,003.4 km

• In 2017 approx. 83.8 billion km have been travelled in Italy

• There were 412 service areas nationwide in 2017

• The total number of service areas includes 170 restaurants and 406 snack bars

2.1 Commercial food service on motorways

22Market Vision

Source: PwC analysis on AISCAT data


November 2018PwC

Vehicles traffic on Italian motorways increased by +2.8% CAGR in the period 2015-2017. IH 2018 (vs IH 2017) increased by 0.8%

2.1 Commercial food service on motorways

23Market Vision

12,415,7

19,114,3 13,5

15,719,7

14,6 13,316,7

19,814,8 13,4

16,6

4,1

4,7

4,7

4,5 4,34,9

4,8

4,64,5

5,0

4,9

4,84,6

5,216,5

20,4

23,7

18,8 17,820,6

24,5

19,217,7

21,7

24,8

19,618,0

21,8

1Q20

15

2Q20

15

3Q20

15

4Q20

15

1Q20

16

2Q20

16

3Q20

16

4Q20

16

1Q20

17

2Q20

17

3Q20

17

4Q20

17

1Q20

18

2Q20

18

Light Vehicles Heavy goods vehicles

Traffic on Italian motorways (1 Quarter 2015- 2 Quarter 2018 , #B Vehicles-Km)

+2.8%

% Light 75.3% 77.1% 80.4% 76.0% 76.1% 76.2% 80.4% 76.0% 75.0% 76.8% 80.1% 75.7% 74.5% 76.4%

% Heavy 24.7% 22.9% 19.6% 24.0% 24.1% 23.6% 19.6% 24.0% 25.2% 23.0% 19.9% 24.3% 25.5% 23.6%

CAGR 2015-2017

Source: PwC analysis on AISCAT data


November 2018PwC

Commercial food service in airports2.2 Commercial food service in airports

24Market Vision


November 2018PwC

The commercial airport food service in Italy presents an heterogeneous offer in terms of formats. In 2017 ca. 175.4 million travellers were registered in the main Italian airports (#38)

Introductory Notes

• The commercial airport food service in Italy consists of eateries of various size and quality (bars, restaurant chains, starred restaurants) located inside airports.

• Although characterized by heterogeneity of the formats, the market distinguishes some relevant players which have a significant presence on national and international level.

• In Italy there are 38 large airports.

• In 2017 approx. 175.4 million travellerswere recorded (+6.5% compared to 2016 data).

Source: PwC analysis on AssAirports data

2.2 Commercial food service in airports

25Market Vision


November 2018PwC

Steady growth of passenger traffic in Italian airports and liberalization of the sector have positively influenced the creation of commercial services for passengers

9,1

17,2

9

17,8

10,2

19,1

10,9

17,9

Passenger traffic in Italian airports(2015 – 1H2018, #M passengers)

2016 2017 20182015

20,1

11,4

6,2

5,0

4,5

4,5

4,5

4,0

3,0

2,9

Rome Fiumicino

Milan Malpensa

Bergamo

Venice

Milan Linate

Naples

Catania

Bologna

Palermo

Rome Ciampino

10 Italian airports with the most traffic(1H2018, #M passengers)

• Traffic in Italian airports shows continued growth, exceeding 175 million passengers in transit in 2017

• The National Airports Plan estimates that approx. 300 million passengers will transit through Italian airports by 2030

• Rome Fiumicino airport ranks first in terms of passenger traffic

• A phase of liberalization of the sector began in the ’90s, both for aviation and non-aviation activities, with a consequent proliferation of activities related to passengers' leisure needs

Source: PwC analysis on AssAirports data

2.2 Commercial food service in airports

26Market Vision

CAGR 2015-2017 +5.6%


November 2018PwC

Commercial food service on train stations2.3 Commercial food service on train stations

27Market Vision


November 2018PwC

In Italy there are approx. 2,287 train stations, of which 14 high traffic ones managed by Grandi Stazioni and the remaining ones are managed by RFI which recently incorporated Centostazioni

Introductory Notes

• The commercial railway food service in Italy essentially consists of eateries of various size and quality (bars, restaurant chains, starred restaurants) located inside the main train station

• The national railway infrastructure counts 16,787 km

• In Italy there are over 2,287 stations of which 14 are large stations with significant passenger traffic managed by Grandi Stazioni, the others are managed by RFI (recent incorporation of Centostazioni)

2.3 Commercial food service on train stations

28Market Vision

Source: PwC analysis on Ferrovie dello Stato Italiane data

Key trends

• Opening of the railway market: by 2019, European States will be required to liberalize the passenger rail transport market

• Infrastructural development: new high-speed sections will be built and existing ones will be strengthened: Turin-Venice (2019), Bologna-Ancona-Bari (2019), Milan-Genoa (2022), Naples-Bari (2016)

• A complete separation of regional/local traffic from national/high-speed traffic is expected


November 2018PwC

In Italy traffic in railways stations has grown in the last years. The main stations in terms of passengers’ traffic are Torino Porta Nuova, Milano Centrale and Roma Termini

2.3 Commercial food service on train stations

29Market Vision

854,8

864,1

872,6869,2

878,7

885,7

2013 2014 2015 2016 2017E 2018E

Traffic on Italian trains (2013-2018, #M Passengers)

150,0

116,8

70,0

59,0

58,0

51,0

50,0

31,0

30,0

25,0

24,0

22,0

19,0

14,0

ROMA TERMINI

MILANO CENTRALE

TORINO PORTA NUOVA

FIRENZE SANTA MARIA NOVELLA

BOLOGNA CENTRALE

ROMA TIBURTINA

NAPOLI CENTRALE

VENEZIA MESTRE

VENEZIA SANTA LUCIA

VERONA PORTA NUOVA

GENOVA PIAZZA PRINCIPE

GENOVA BRIGNOLE

PALERMO CENTRALE

BARI CENTRALE

People per year

Traffic in main Italian train stations(2017, #M people per year)

Source: PwC analysis and estimates on Istat data Source: Grandi stazioni 2017

YoY (%) 1.1% 1.1%1.0% (0.4%) 0.8%

• Passengers’ traffic expected to grow by 0.8% in 2018 (estimates)

ESTIMATES


November 2018PwC

Commercial food service in city centres2.4 Commercial food service in city centres

30Market Vision


November 2018PwC

Between 2008 and 2017 historical Italian city centres registered a positive trend in terms of openings of new commercial businesses in the HoReCa industry: +17.0% of active businesses

City Centres (2008-2017)

• Between 2008 and 2017 historical Italian city centres recorded a positive trend in terms of openings of new businesses in the hospitality and food service industry.

• In the same period historical Italian city centres have registered the following variations in terms of number of active commercial businesses:

Retailers -11.9%;

Street trading +8.7%;

Hospitality, bars and restaurants +17.0%.

• An increase of the number of commercial food service equal to +26.4% in the southern regions and of +13.6% in the north and centre of Italy was recorded between 2008 and 2017.

Source: PwC analysis on Confcommercio data

2.4 Commercial food service in city centres

31Market Vision


November 2018PwC

Commercial food service in hospitals2.5 Commercial food service in hospitals

32Market Vision


November 2018PwC

In Italy, commercial food service in hospitals is mainly divided into the management of canteens, mass catering services and management of eateries inside the facilities

Introductory notes

• In December 2016,there were 1,384 public and private healthcare facilities (accredited and non-accredited) in Italy.

• Hospital commercial food service in Italy mainly consists of the following services:

Management of hospital canteensand catering with on-site kitchen or conveyed meals;

Management of hospital canteens for employees;

Management of eateries (e.g. bar) for employees, visitors and patients.

• This services are assigned to various suppliers through tenders, which in public structures are public and subject to specific legislation (public tender or European tender).

Source: Ministero della Salute della Repubblica Italiana

2.5 Commercial food service in hospitals

33Market Vision


November 2018PwC

Italian regions with the highest number of healthcare facilities and hospital personnel are Lombardy, Veneto, Lazio, Piedmont, Emilia Romagna, Campania and SicilyPublic healthcare facilities per Italian region(2016, #active facilities)

30,6

17,3

17,1

14,9

14,7

12,8

12,6

11,3

10,9

5,9

100,9

46,8

45,1

41,9

44,7

30,7

33,2

35,5

29,1

18,9

LOMBARDY

VENETO

LAZIO

EMILIA ROMAGNA

PIEDMONT

CAMPANIA

SICILY

TUSCANY

APULIA

LIGURIA

Beds Personnel

Top 10 Italian regions: by #beds and #personnel(2013, #K beds, #K personnel)

Source: Ministero della Salute della Repubblica Italiana

2.5 Commercial food service in hospitals

34Market Vision

134

32

8321206114

2

10330

81

4425

27155

11

132

15

56

39

74


November 2018PwC

Competitive landscape

35Market Vision


November 2018PwC

4,711.1

670,0 660,7

541,4454,2 422,8

372,0 349,1 315,8 306,7214,0

163,3 131,785,2 61,6 59,2 39,0 21,1 17,4 10,3 5,4

Commercial food service: fragmented competitive landscape characterized by the presence of both small and large players active mainly in the mass food service segmentCompetitive landscape – Turnover and EBITDA% of main players(2017, €M, %)

36Market Vision

Mainly commercial food service operators

Mainly mass food service operators

EBITDA* 2017 8.5% 4.2% 5.7% 7.2% 8.2% 6.2% 4.0% 3.7% 6.3% 6.1% 7.7% 11.6% 9.1% 15.4% 6.6% 10.3% 3.8% 5.1% 2.7% 7.8% 5.3%

EBITDA* 2016 8.9% 4.7% 7.3% n.a. 8.4% 6.1% 4.2% 4.9% 7.1% 5.1% 5.5% 10.9% 9.2% 14.0% 7.3% 6.3% 1.6% 3.8% 2.3% 4.2% 5.0%

YoY '16-'17Revenues 1.5% 10.3% 15.9% n.a. 11.3% 4.8% 4.2% -6.8% 10.3% 4.0% -0.9% 1.3% -1.8% 13.5% 14.3% 18.6% 29.5% 128.4% 8.7% 5.7% 1.1%

Source: PwC analysis on financial statements (*) Ebitda calculated on statutory account (**) Turnover and ebitda net of “oil” business components as per Autogrill consolidated management report

Elior Group

Cremonini Group

Lagardere Group


November 2018PwC

Points of sales (1/2): Autogrill, leader (in terms of PoS number) in commercial food service on motorways, AIREST, Chef Express and MyChef main players in commercial food service in airports, …

8 350 12 52 422

111 571 20 90✔

149 15 24541 636✔2 2 2 4 5 2121

COMMERCIAL FOOD SERVICE

Hospitals AirportsMotorways

/ service stations

Train stations

Ports / interports Prisons Univ. /

Schools

Sport centres / museums / theatres

MallsCity centre OtherIndustrial areas

MASS RESTAURANTS Total local units

presence

# PoS

✔

Notes (*): socio-healthcare includes hospitals, private clinics, rehab centre and hospicesSource: PwC Analysis on public information (website, press release, financial statements)

37Market Vision

116 14122 11632 12015 404✔

✔212 31 228 71

✔2 1 3162 25

6536 526 2 31 166

17843 9 11922 ✔✔1 1 1 4 7

248 20 6 15 1 84

Autogrill

CAMST

CIR

Dussmann

Sodexo

Gemeaz

Chef Express

Serenissima

Vivenda

MyChef


November 2018PwC

Points of sales (2/2): … Chef Express leader in railway stations, SIRIO leading player in commercial foods in Hospitals … CIR and CAMST leaders in mass commercial food service and in the industrial areas

COMMERCIAL FOOD SERVICE

Hospitals AirportsMotorways

/ service stations

Train stations

Ports / interports Prisons Univ. /

Schools

Sport centres / museums / theatres

MallsCity centre OtherIndustrial areas

MASS RESTAURANTS Total local units

presence

# PoS

✔

Notes (*): socio-healthcare includes hospitals, private clinics, rehab centre and hospices; Source: PwC Analysis on public information (website, press release, financial statements)

38Market Vision

44 44

35 52 15

531 119 5 79

✔3 10 31 19

1 1

74 2 13

✔420 1 2 273 6 63

4 2 21 8 26✔

1 41 9 15✔

44 757 72

Total 85152 498231 3212 317 571129 44165 2,430

Sarni

AIREST

EuroRistorazione

Sirio

Fabbro

Hermes

Punto Grill

Pellegrini

Paolo Ardisson

Bauli


November 2018PwC

Commercial food services: “apparent strategy” of main players (1/3)

39Market Vision

Sources: Website, Annual Report, press releases

Autogrill is the leader in Italy in terms of number of PoS in motorway service stations.Autogrill is a leading global operator in food & beverage services for travellers with a portfolio of 300 brands and a global presence in 31 countries, 90% of its business is managed through concessions, with a global presence of approx. 145 airports, 648 gas stations/motorway service areas, 85 cities/exhibition centres and malls, 49 railway stations.In the next years Autogrill aims to grow in the airport channel, maintaining the leadership in the motorway segment, but with a more selective and targeted commitment, innovate the services and products offered, expanding and diversifying them through the introduction of new tools and technologies, able to combine the efficiency of the processes with the evolution of the relationship with the customers, both in terms of supply and communication channels.

MyChef is the leader in Italy in terms of number of PoS in airports. It is a Business Unit of the Elior Group and is the third largest provider of concession catering (airports, motorways, railway stations and leisure) present in 14 countries, specifically in Europe and in the US. The Italian branch/legal entity is known as MyChef Catering Commerciale SpA.One of the greatest strengths of Areas Italia/MyChef is the ability to conceive, develop and manage innovative retail formats ranging from premium brands such as Davide Oldani Cafè, Il Michelangelo Restaurant and Ferrari SpazioBollicine to successful coffee shops such as Briciole and Illy Caffè.

Chef Express is the leader in Italy in terms of number of PoS in railway stations.Chef Express is the Italian travel food service operator of the Cremonini Group, with over 100 PoS in railway stations, airports and motorway service stations through seven different brands.The main formats are the "Chef Express" bar-cafeteria, the bar "Mokà", for a wider and demanding target, the Mr. Panino sandwich shop and the self-service restaurant with the "Gusto Ristorante" brand.Chef Express is the legal entity of the Cremonini Group dedicated to food service concessions. The group is now expanding this business line in Europe through the subsidiary company Chef Express UK and the acquisition of the well-known "Bagel Factory" chain.

Apparent strategy

Autogrill

MyChef

Chef Express

Player


November 2018PwC


40Market Vision

Sources: website, Annual Report, press releases

CIR Food is the leader in Italy in terms of number of PoS in both cities and industrial areas.CIR Food is an Italian catering cooperative and one of the largest catering companies in Italy and Europe. It offers collective catering by managing canteens for schools, hospitals, armed forces and other communities, as well as canteens inside companies. It also manages food preparation centres, self-service restaurants and snack bars, pizzerias and sandwich shops, banqueting services and meal vouchers.CIR Food commercial catering division proposes a wide selection of formats from free-flow restaurants, cafes and snack bars, fast casual restaurants with the brands Chiccotosto, la Polpetteria, Let’s Toast, Piazza del Sole, Rita, Rita Snack Bar, Tracce and Vivai.

Apparent strategy

CIR

CAMST is an Italian group operating in the mass food service business in Italy and Europe with more than 20 legal entities. Over the years, in addition to its core business, the group has also expanded and grown in the catering and banqueting segment and in the commercial food service segment with approx. 150 PoS in city centres, commercial malls, exhibition centres, hospitals, theatres and universities. In recent years, CAMST has developed numerous brands and formats for bars and restaurants.

CAMST

Player

Sirio operates in four main channels with different brands: commercial food service in hospitals with the brand SirioBar, food service on motorways with the brand SirioGill, food service in airports with the brand La Ghiotta and fast food foodservice as franchisee of the Burger King brand.Sirio is a leading player in Italy in terms of number of PoS in hospitals. In the last 10 years the company has experienced a period of strong growth, consolidating its position in the hospital market and entering in new businesses (airports, motorways and fast food).

Sirio


November 2018PwC


41Market Vision

Sources: website, Annual Report, press releases

Apparent strategyAirest was established in 2001 to manage the retail and foodservice activities in the Marco Polo Venice Airport. 50% of Airest SpA has been acquired by Lagaredere Group. Through concession contracts, it currently has over 213 PoS (in airports, on motorways, in train stations, shopping malls, outlets and museums) in 11 countries. Lagardere Group has recently manifested its interest in further expanding its network in Italy in the airports, motorway and railway stations segments.

Airest

Player


November 2018PwC

Key economics – main players (1/6)

4.711,1

670,0 660,7 541,4

1.519,8

291,6 254,0154,7

1.421,4

210,1 190,2 117,0

828,2

14,4 17,7 9,9399,0

27,8 37,5 39,1

Autogrill** CAMST Srl CIR Food Pellegrini

RevenuesPersonnelRaw MaterialsRentsEBITDA

Main players– Key economics*(2017 €M, %)

8.5% 4.2% 5.7%

Raw Materials %

Personnel %

Rents %

EBITDA %

32.3% 43.5% 38.4%

30.2% 31.4% 28.8%

17.6% 2.2% 2.7%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account (**) Turnover and ebitda net of “oil” business components as per Autogrill consolidated management report

42Market Vision

7.2%

28.6%

21.6%

1.8%


November 2018PwC


454,2422,8

372,0349,1

283,4

216,4

146,896,8

61,999,2 109,4 95,4

9,3 15,9 9,8 8,437,1 26,1 14,8 12,8

Dussmann Service Srl Sodexo Elior/ Elior Group Gemeaz / Elior Group


6.2% 4.0% 3.7%

Raw Materials %

Personnel %

Rents %

EBITDA %

51.2% 39.5% 27.7%

23.5% 29.4% 27.3%

3.8% 2.6% 2.4%

43Market Vision


8.2%

62.4%

13.6%

2.0%

Source: Statutory financial statements as of 2017 (*) Ebitda calculated on statutory account


November 2018PwC


315,8 306,7

214,0

163,3

77,5

116,488,4

41,2

123,8 115,5

57,0 50,856,8

16,5 6,3 7,220,0 18,7 16,6 19,0

Chef Express / Cremonini Group Serenissima Ristorazione Spa La Cascina (Vivenda) MyChef / Areas / Elior Group


6.1% 7.7% 11.6%

37.9% 41.3% 25.2%

37.7% 26.6% 31.1%

5.4% 3.0% 4.4%

Raw Materials %

Personnel %

Rents %

EBITDA %

44Market Vision


6.3%

24.5%

39.2%

18.0%



November 2018PwC


131,7

85,2

61,6 59,2

31,2

14,126,1

14,7

39,532,6

22,1 19,530,6

13,92,8

14,212,0 13,14,1 6,1

Sarni Airest /Lagardere Group Euroristorazione Srl Sirio


15.4% 6.6% 10.3%

16.6% 42.4% 24.8%

38.2% 35.9% 32.9%

16.3% 4.5% 24.0%

Raw Materials %

Personnel %

Rents %

EBITDA %

45Market Vision


9.1%

23.7%

30.0%

23.3%



November 2018PwC


39,0

21,117,4

10,3

16,0

4,61,9 2,0

12,08,7

12,4

6,12,6

5,20,9 0,61,5 1,1 0,5 0,8

Fabbro Hermes Punto Grill Srl Paolo Ardisson Srl


5.1% 2.7% 7.8%

21.7% 11.0% 18.9%

41.3% 71.2% 59.2%

24.5% 5.2% 5.5%

Raw Materials %

Personnel %

Rents %

EBITDA %

46Market Vision


3.8%

40.9%

30.7%

6.6%



November 2018PwC


5,4

1,4

2,5

0,00,3

Bauli Grill


5.3%

25.5%

46.5%

0.0%

Raw Materials %

Personnel %

Rents %

EBITDA %

Market Vision

35.4%

29.2%

11.1%

7.4%


47

Weighted average



November 2018PwC

Mass food service operators are positioned in the lower end of the regulatory band, whereas commercial food service operators are located in the upper end

Autogrill**

CAMST Srl

CIR Food

Dussmann Service Srl

SodexoElior

Gemeaz

Chef Express

Serenissima Ristorazione Spa

La Cascina (Vivenda)

MyChef / Areas

Sarni

Airest

Euroristorazione Srl

Sirio

Fabbro

Hermes

Punto Grill Srl

PellegriniPaolo Ardisson Srl

Bauli Grill

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0,0 0,1 0,1 0,2 0,2

Competitive landscape – Relative Market share(2017, %)

RMS – Relative Market Share

EBIT

DA

%*

Source: Elaboration PwC on deposited financial statements as of 2017 (*) Ebitda calculated on statutory account (**) Turnover and ebitda net of “oil” business components as per Autogrillconsolidated management report

48Market Vision



€100M Turnover EliorGroup

CremoniniGroup

LagardereGroup


November 2018PwC

Strong growth of new chain players in recent years, consolidated players show a moderate growth

49Market Vision

Autogrill

CAMST Srl

CIR Food

Dussmann Service Srl

Sodexo

Elior

Gemeaz

Chef Express

Serenissima Ristorazione Spa

La Cascina (Vivenda)

MyChef / Areas

Airest

Euroristorazione Srl

Bauli Grill

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

-15% -10% -5% 0% 5% 10% 15% 20%

SirioFabbro

Punto Grill Srl40%

60%

80%

100%

Hermes

65% 70%

CAG

R E

BIT

DA

2015

-201

7

CAGR Revenues 2015-2017

Source: Elaboration PwC on deposited financial statements as of FY2015 and FY2017 (*) Weighted average (**) Pellegrini and Sarni not available data

Competitive landscape– Revenues and EBITDA growth (2015-2017, %)



€300M Turnover EliorGroup

CremoniniGroup

LagardereGroup

Ave

rage

* C

AG

R

Rev

enue

s +3

.5%

Average* CAGR EBITDA+1.5%


© 2018 PricewaterhouseCoopers Advisory SpA. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Advisory SpA which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Please see www.pwc.com/structure for further details.

This content is for general information purposes only, ,and should not be used as a substitute for consultation with professional advisors.

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Documents

Commercial foodservice market in Italy - PwC · Commercial foodservice market in Italy November 2018. Strictly private and confidential. November 2018 PwC. Executive Summary. 3: Reference