US Foodservice Sales and Traffic Trends
Mr Nelson Griffin

Mr Nelson Griffin, Chief Procurement Officer, Red Lobster

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Figure 1

Red Lobster is the number one restaurant on its market in North America.

Figure 2: Red Lobster’s Vision

Red Lobster owns 667 restaurants in the US and 27 in Canada and is still opening new ones on these two markets. There are franchised restaurants in nine countries, recently the second one opened in China and one in the Philippines etc. The future is bright, and we try to set the standards for quality seafood.

Figure 3: Highlights

These are the highlights in Red Lobster’s business environment.

Figure 4: The U.S. Economy Expansion

Our expectations are the expansion will continue in the US Economy, but at the same time is the landscape rather challenging with the barrier wars between the US and other economic areas.

Figure 5: U.S. Economic Policy Uncertainty Index

The graph shows the current uncertainty in the US economy. The uncertainty plays a role in peoples mind, also when comes to the decision on where they want to have their next dining experience.

Figure 6: Unemployment

Everybody who wants a job can have a job. Over 60% of the people are gainfully employed which makes it very challenging to find a replacement employee if you lose someone. The graph reflects the situation.

Figure 7: Annual Restaurant Industry Sales

The restaurant business is a huge industry in the US and Red Lobster is very proud to be a part of it.

Figure 8: Foodservice Sales

Revenues at full-service restaurants have been in a downturn in the recent months but the limited-service restaurants are showing continued expansion. The trend reflects the economic turmoil in the US economy.

Figure 9: Industry Sales

This gives a sense of the challenges the industry is facing and have been facing for several months. July and August are months of the year where we typically see success in our business.

Figure 10: 2019 YTD Summary

Success has not been the case in recent months.

Figure 11: Comp Sales & Traffic by Segment

The industry is flat with declining traffic.

Figure 12: Casual Dining Average Check

This slide shows how the casual dining space has survived over the last number of years by elevator the price point in order to create the margin expectation needed when fewer people are in the seats.

Figure 13: Share of Disposable Income

This graph shows what has been happening for the last nearly six decades when comes to where people spend their money comparatively. Proportionate spending at restaurants has been unchanged from 1960. Approx 5% of the income is spent there. When prices go up, people spend less money on the industry.

Figure 14: 3-Year Change in Share of Wallet

The red bars are what affects the industry.

Figure 15: Consumer Spending by Income Level

What Red Lobster has been seeing for several years is that people with lower income, who used to celebrate at our restaurants 4 to 5 times a year, they come now only 3 or 4 times a year.

Figure 16: Consumer Food Away-from-Home
Figure 17: Companies with Positive Performance

It’s hard to crack the code to get the people into the restaurants and more frequently. Red Lobster’s main traffic is on Friday night, two shifts on Saturdays and Sundays. The rest of the time RL is struggling with keeping the balance.

Figure 18: Comp Sales, Traffic & PPA / PTA Growth

The industry is struggling with how to create more values for the customers to get them more frequently into the restaurants.

Figure 19: BBI Summary Dashboard

Here you see who is doing well and who is struggling.

Figure 20: PPA / PTA Growth by State
Figure 21: Comp Traffic by State
Figure 22: Aggressive Pricing is the New Normal in Casual Dining

Aggressive pricing is the New Normal in Casual Dining and has, so far, not slowed the downward trend.

Figure 23: Comp Dine-In & To-Go Sales

The trend for Dine-In and To-Go Sales is similar.

Figure 24: Low Adoption of Meal Kits and Online Grocery
Figure 25: Total 3PD Spend
Figure 26: Key Points