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Technomic’s Market Diligence PracticeA Brief Introduction To Technomic, Our Expertise and Experience
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Overview
Technomic understands the process of foodservice industry asset acquisition entails a number of critical phases. Broadly speaking these include :
Target Screening & Identification
Market Diligence
Post Acquisition
Technomic’s Market Diligence Program provides savvy investors with a unique set of acquisition tools designed to assist them through all phases the + objective of any M&A transaction is to create value. When considering acquisition of assets within the Foodservice Industry, credible and comprehensive market diligence can make the difference between a sound investment and one which carries unnecessary risk. that offers unparalleled industry insight using Technomic’sexclusive industry analysis tools, expertise and experience.
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The Technomic Advantage
With over 40 years of experience, Technomic has we have long been recognized as the leader in foodservice industry research and consultancy, providing assistance to both chain restaurant operators and the businesses that interface with them. To sustain our station as the foremost foodservice industry research firm and consultancy in the world, Technomic leverages its unequaled resource advantage:
World class research assets
Comprehensive and expansive knowledge resources and libraries
Unparalleled expertise gained over a unique history of foodservice industry experience
Unmatched access to senior industry thought leaders
History of consistently delivering extraordinary results for clients
Highly flexible and responsive project initiations
Robust best-practice methodologies and work processes
Vast experience in industry due diligence projects
The Technomic Advantage means our clients get results faster and results that are more meaningful.
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Knowledge Resources
In addition to world-class secondary research, Technomic relies on a number of proprietary analytical tools to provide investing clients with the information they need to succeed. These tools include Technomic’s:
Menu Monitor - an online searchable resource for in-depth menu tracking providing instant access to thousands (3,500) of current U.S. (1,900) and international menus (1,600), as well as powerful analysis tools.
Consumer Brand Metrics - provides ongoing consumer assessments of leading foodservice brands. Performance ratings are based on descriptive attributes in major categories, such as food/beverage, unit appearance, value, brand image, convenience, and service/hospitality.
Digital Resource Library - an online database delivering comprehensive operator intelligence on thousands (3,700) of detailed foodservice company profiles that are updated continuously for leading U.S. (2,450) and international chains (1,250), as well as industry financials with expert insights from Technomic reports and news briefs.
Smart Support – integrates Technomic analytics to deliver quick responses to specific questions, providing the information needed to conduct competitive analyses and understand data points.
Price Monitor - utilizes menu price-tracking resource that facilitates analysis of competitive chain menus in relevant U.S. and Canadian markets. Technomic obtains menus for each chain in selected DMAs and compiles data for analysis by meal part, item and price.
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Client List
Our due diligence engagements are individually designed to meet your needs and circumstances. Following are a number of clients that have already utilized our services in assessing various chain restaurants:
Client Acquisition
American Securities Capital Partners Fast-casual Mexican chain
Brazos Private Equity Partners Casual dining chain
Caxton-Iseman Midscale restaurant chain
Falfurrias Capital Partners Quick-service chicken chain
JP Morgan Capital Partners Bakery chain , Foodservice management firm, Cash-and-carry retailer
Madison Dearborn Partners Quick-service hamburger chain
PNC Riverarch Quick-service hamburger chain
Sterling Investment Partners Quick-service pizza chain
Sterling Partners Bakery chain
Thomas Weisel Partners Fast-casual restaurant group
Three Cities Research Casual-dining chain , Fast-food chain
ValueAct Capital Southwest restaurant chain
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Target Screening & Identification Program
When a buyer or investor decides to engage in an acquisition, the first step is a comprehensive screening process to identify potential targets. Technomic’s Target Screening and Identification Program delivers powerful insights incorporating benchmarking analytics based upon either broad segments of the foodservice industry or specific chains. The benchmarking variables Technomic utilizes include (but are not limited to):
Clients are provided a “Screening Scorecard” which enables them to quickly and easily identify and prioritize potential acquisition targets. Deliverables for the TSI Program are available on quarterly, semi-annually or single point in time (“Snap Shot”) basis. Having this information available enables clients to make informed decisions regarding opportunities within the restaurant industry space. Once targets are identified, clients can proceed with confidence to the next phase.
Technomic Target Screening Benchmark Variables
• Visits by daypart • Unit Sales –AUV
• Check average • System Sales CAGR
• Visit frequency • Estimated number of transactions
• Drive-through/Dine-in usage mix • Sales by daypart
• Estimated sales by food type • Share of visits by food type
• Brand Performance Metrics • Sales by demographic
• Menu Gap Analysis • Takeout/Delivery usage mix
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Market Diligence Program
Once an acquisition target has been identified, credible and comprehensive market diligence can make the difference between a sound investment and one which carries unnecessary risk. Technomic’s Market Diligence Program offers unparalleled industry insight using Technomic’sexclusive industry analysis tools, expertise and experience.
Process Fundamentals
Process Inputs
Process Initiation Meeting
Process Deliverables
Process Deliverables - Samples
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Process Fundamentals
Technomic’s Market Diligence Program makes use of an integrated, structured approach built upon four fundamentals which represent critical internal and external inputs:
Foundational Understanding
Overall Foodservice Industry &
Performance Review & Analysis
Foodservice Segment Insight
Segment Specific
Performance Review and
Analysis
ChainAnalytics
Chain Specific Performance Review and
Analysis
Custom Client Perspectives
Information & Analysis Custom
Tailored to Client Needs
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Process Inputs
FoundationalUnderstanding
Foodservice Segment Insight
Chain Analytics Custom Client Perspectives
• Overall Foodservice Industry Performance Review & Analysis
• Historical & Projected Industry Revenues
• Historical & Projected Unit Levels
• Historical Traffic Levels• Historical Economic
Determinants of Overall Industry Performance
• Demographic Determinants of Industry Performance
• Historical Levels of Operator Sentiment
• Segment Specific Performance Review & Analysis
• Historical & Projected Segment Revenues
• Historical & Projected Segment Unit Levels
• Historical Segment Traffic Levels
• Historical Economic Determinants of Overall Segment Performance
• Demographic Determinants of Segment Performance
• Segment Trends & Influences
• Custom Research & Analysis
• System & Unit Level Economic Benchmarking
• User Profiles• Consumer
Brand Metrics• Comparative
Competitive Environment Analysis
• Menu Analysis• Forecasting
• Custom Market Diligence
• Franchisee Qualitative/Quantitative Evaluations
• Customer Quantitative/Qualitative Evaluations
• Strategic Initiative Impact Assessment
• Relevant Merger & Acquisition Activity
• Financial Benchmarking
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Process Initiation Meeting
The Process initiates with a Process Initiation Meeting. We believe this meeting is critical to the process because it sets the tone for a successful project. The Process Initiation Meeting enables both Technomic and client to:
Gain a thorough understanding of the underlying business rationale and strategy associated with the potential acquisition;
Identify key issues and drivers
Clarify points in question
Set time lines
Establish lines of communication
Finalize issues related to related to:
– Scope
– Methodology
– Deliverables
Only when there has been a mutually satisfactory Process Initiation Meeting can Technomic began work in earnest.
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Deliverables
Because Technomic crafts deliverables to meet the specific needs of it clients, each set of deliverables is slightly different. However, deliverables typically include a written report (available in PDF or hard copy formats) presented to clients consisting of:
Table of Contents
Executive Summary
Technomic’s evaluation, insight and analysis related to:
– Foundational Understanding
– Segment Insights
– Chain Analytics
– Unique Perspectives
Conclusions and Implications
Appendix
After the report is completed, Technomic reviews (either by conference call or in person at a mutually agreed upon location) its findings and answer any questions clients may have. Sample deliverables are found on the following page.
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Historical & Projected Industry Revenue: Total Restaurants And Limited Service Restaurants From 2000 To 2013
Technomic Foodservice Segment Time Series: Full Service Restaurants
Year
Retail Sales Equivalent
($B)% Nominal
Change% Real Change
2000(R) 112.474 6.8% 4.3%2001(R) 117.939 4.9 1.92002(R) 120.095 1.8 -0.7
2003(R) 127.218 5.9 4.2
2004(R) 136.075 7 3.4
2005(R) 144.397 6.1 2.92006(R) 155.274 7.5 4.32007(R) 163.366 5.2 1.52008(R) 159.282 -2.5 -6.62009(R) 149.725 -6 -9.1
2010(R) 147.778 -1.3 -2.52011(R) 151.473 2.5 0
2012(P) 157.532 4 1.52013(FC) 164.621 4.5 2
Source: Technomic Data Digest 2012
Technomic Foodservice Segment Time Series:Limited Service Restaurants
Year
Retail Sales Equivalent
($B)% Nominal
Change% RealChange
2001(R) 129.515 4.0% 1.0%2002(R) 134.782 4.1 1.52003(R) 143.602 6.5 4.82004(R) 155.227 8.1 4.52005(R) 165.765 6.8 3.52006(R) 174.960 5.5 2.42007(R) 182.967 4.6 0.92008(R) 188.822 3.2 -1.22009(R) 187.877 -0.5 -3.82010(R) *** *** ***2011(R) *** *** ***2012(P) *** *** ***2013(FC) *** *** ***
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McDonald's And Wendy’s Are The Top BK Competitors Nationally; Sonic And Hardee’s Are More Prominent On The Local Level
“If you had not visited Burger King on this occasion,
which of the following would you have been most
likely to do instead?”
“Which restaurant(s) (would you have gone to instead of Burger King)?”
51%
42%
8%
66%
28%
6%
65%
32%
3%
71%
24%
5%
A different restaurant
At home
A prepared meal
National BK Local BK Competitor Casual Burger
Note: Burger King was mentioned as an alternative to visiting a competitor burger chain by 6% of respondents.
Most recent visit: Burger KingBase: National BK (656); Local BK (500); Competitor (150); Casual Burger (1,699)
Top 5 Restaurant Alternatives to Burger King(unaided mentions)
National BK Local BK
1 McDonald’s (49%) McDonald’s (45%)
2 Wendy’s (23%) Wendy’s (22%)
3 Subway (12%) Hardees (11%)
4 Taco Bell (11%) Sonic (8%)
5 Arby’s (10%) Taco Bell (7%)
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Post Acquisition Program
The objective of any M&A transaction is to create value. Once a target company is acquired, the post-acquisition phase is an excellent opportunity to identify operational, customer and menu areas which can yield additional value. Technomic’s Post Acquisition Program provides clients with an expansive toolkit to gain a better understanding of the areas the newly acquired company may be underperforming in as well as insights and recommendations to address potential issues.
Operational Audit
– Labor Standards & Management
– Food Production/Food Cost Standards & Management
– Service Standards & Management
– Performance Benchmarks & Measurement
Menu Evaluations
– Menu & Category Mix
– Menu Variety
– Food Quality
Customer Research
– Dining Experience
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For More Information
Mathew MandeltortSenior Consultant
http:epicureancandidate.wordpress.com
300 S. Riverside PlazaSuite 1200
Chicago, IL 60606
