10th August 2009

UK Restaurant Leader Report 2009

Following on from the report commissioned by McDonald's, ‘Eating Out in the UK 2009' published in July, Allegra Strategies has surveyed close to 150 restaurant industry leaders* for the ‘UK Restaurant Leader Report 2009'. The report has revealed that although trading conditions remain difficult for many restaurant operators, there are signs that the economy is beginning to improve. This has been reflected in diminishing concern over the economic climate.

Key findings include:

The economy is beginning to show signs of improvement and restaurant operators will now begin to plan for recovery:

• Trading conditions remain difficult for the UK restaurant market with nearly 60% of restaurant operators reporting negative like-for-like performance in the quarter to June 2009
• However, level of concern with the economy is diminishing - significantly fewer industry executives reported strong concern compared with results in 2008
• Operators with average turnover of £10 per head or less have been less affected. Brands such as Whitbread Group, McDonald's and Subway are well positioned as a result.

The recession, combined with empowered consumers, has increased competition and substantial discounting will leave a considerable legacy:

• 85% of restaurant leaders agree that customer value expectations have risen as a result of the recession
• Increasingly knowledgeable consumers, greater choice in the market and the desire for value, have made customers more selective and less loyal to previously favoured restaurants
• A key challenge for restaurant operators is to find ways to offer customers enhanced value.

The future outlook:

• 63% of industry leaders agree that consumers will be eating out of the home more regularly in five years' time
• 64% of leaders believe Fast Casual dining is the business model set to grow the fastest in the next three to five years as consumers become more mobile and lead more informal lifestyles
• Healthy eating concepts, British cuisine and South East Asian food are the cuisine types set to grow the most in the next three to five years.

Industry recognition:

• PizzaExpress has been voted the most admired brand by industry peers
• Admired emerging brands include: Byron, Leon and Wahaca
• Jamie Oliver has been recognised as the most admired individual within the restaurant industry.

‘The UK Restaurant Leader Report 2009' will soon be followed by a report based on research undertaken with independent operators, ‘The UK Independent Operator Restaurant Report 2009'.

Allegra Strategies is a London-based management consultancy and has accurately predicted trends in the UK branded coffee shop market since 1999. Allegra is recognised as one of the global leaders in the coffee sector and in foodservice research.

*150 industry leaders were interviewed in May/June 2009 to form the findings of this report.

For more information on the ‘UK Restaurant Leader Report 2009' please contact Emily Stella, estella@allegra.co.uk or phone 020 7691 8847. www.allegra.co.uk