Latest features

Market Watch – winter 2018

In our Food Franchise autumn edition 2017 we counted down the Top 50 Food Franchises. During our research of the market we were not surprised to find the number of units owned by the vast majority of our Top 50, grew – some by up to 100 units!

This staggering development of the 14,000 + food franchises included in our countdown of the businesses making the biggest splash in the food and beverage sector is incredible and we at food franchise are excited to witness its staggering growth. 

With fast food taking the monopoly – the scene is far from dead.  Despite a huge number of QSR’s present consumers still continue to invest in these lucrative brands, largely thanks to the incredible innovation provided by some of the UK’s most prevalent business men and women. 

Of course the f&b sector encompasses much, much more – coffee shops are more popular with consumers than ever before, not to mention sweet shops, food delivery firms and the rise of the mobile trader, who have all positively impacted 2017 – making the industry stronger, more diverse, and incredibly exciting. 

From speaking to those best informed, you, we at Food Franchise expect that as we enter into 2018, we will witness further growth in the franchising sector – as the 900+ UK food franchise brands continue to flourish in the market. 

Brand in Focus: McDonalds (MCD)

In this issues Market Watch our brand in focus is McDonalds, a company, who thanks to continued innovation – namely their ongoing technological refurbishment of stores – have experienced an increase of sales share of 40% YTD (at the time of writing this it was trading at 173.86).  Overall third-quarter sales and profits matched analysts’ expectations. 

• Same store sales increased 6% around the globe.
• Average guests counts world-wide were up 2.4%.
• Revenues at company-operated restaurants declined 23% to $3.06 billion. However, the same at franchise-operated restaurants increased 10% to $2.69 billion.
• Global comps grew 6%, supported by positive guest counts across all segments. This marked the ninth consecutive quarter of positive comparable sales
• Its lead international markets continue to perform well as same store sales increased by 5.7% – with the continual momentum in the U.K helping to drive this forward. 

Thanks to menu innovation and a multi-million pound restaurant transformation programme – the fast food chain has monopolised on convenience – with kudos to be given to their popular tie-up with food delivery app UberEATS, an avenue that has propelled the company into the forefront of the fast food-to-go industry. 

Commenting on McDonald’s Q3 results, Paul Pomroy, UK CEO, said: “Together with our franchisees, we have continued to listen and invest in what matters most to our customers and our people.  The changes we are making have helped us to achieve our 46th consecutive quarter of sales and guest count growth in the UK, with July and August both record months. This is all the more pleasing against an increasingly competitive market and thanks to our focus on providing great-tasting food, value for money and a fantastic restaurant experience.

“Our multi-million pound restaurant transformation programme, Experience of the Future, continues with over three quarters of our UK estate now converted. Experience of the Future has revolutionised our customer and people experience – from table service through to menu innovation as a result of our new kitchens such as the Signature Collection - our gourmet burgers now available in over 900 restaurants.

“Ultimate Convenience remains fundamental to our customers who want to be served in a way that suits them, when it suits them and where it suits them – our drive-thru’s and 24hour opening play a significant role and were recently complemented by the addition of delivery and click and collect. In June we began trials of McDelivery and are pleased to report strong initial results. McDelivery is available in just over 270 restaurants nationwide and already accounts for an impressive 10 per cent of sales in those stores. Our self-order app, where customers can order on their mobile device, then click and collect from the counter, is also proving popular and is live in over 900 restaurants. Continued investment in convenience will be key to our success going forward.

“From kitchen to counter to front of house, our success would not be possible without the hard work of our people, so we will keep working hard to do right by them. As part of this by the end of the year, all of our 115,000 people will have been offered the choice between a flexible contract and a fixed contract offering minimum guaranteed hours.  If we listen to our people, stay close to our customers, and give them more of what they want, they will continue to reward us for the approach we are taking.”

Papa Johns (PZZA) – $57.76

• Third quarter earnings per diluted share of $0.60 in 2017 compared to $0.57 in the third quarter of 2016, an increase of 5.3%.
• System-wide third quarter comparable sales increases of 1.0% for North America and 5.3% for International.
Yum! Brands (YUM) - $82.39
• Worldwide system sales grew 6%, with KFC at 7%, Taco Bell at 6% and Pizza Hut at 3%.
• Opened 362 net new units for 3% net unit growth.
• Refranchised 209 restaurants, including 72 KFC, 46 Pizza Hut and 91 Taco Bell units, for gross proceeds of $395 million.  Recorded net refranchising gains of $201 million in Special Items. As of quarter end, global franchise ownership mix increased to 95%.

Marston’s (MARS) - £116.90

• Sales and profits for the year are ahead of last year, and they have targeted further growth in 2018.
• In Taverns, like-for-like sales were 1.6% above last year. These wet-led community pubs continue to benefit from greater consumer interest in local beers and craft drinks and the continuing development of our offers, together with the continued strong performance of pubs operated under franchise-style agreements.
• Their priority is to focus on quality, service and standards. We are well placed to continue to implement our growth strategy through investment in higher quality pubs and bars and through our unrivalled beer brand range supported by high customer service standards.’’

Domino’s (DOM) - $ 199.19

• Revenues were up 13.6% for the third quarter versus the prior year period, due primarily to higher supply chain revenues from increased volumes. Higher same store sales and store count growth in both our domestic and international markets also contributed to the increase in revenues.
• Domestic same store sales grew 8.4% during the quarter versus the year-ago period, which represents the 26th consecutive quarter of positive sales.
• International same store sales grew 5.1% during the quarter, marking the 95th consecutive quarter of positive international same store sales growth.

Whitbread (Costa) - 3,941.80

• Strong revenue growth of 7.4% and market share gains in both Premier Inn and Costa
• Operating profit growth at Costa constant at £65 million
• Developed product innovation capability in Costa which has already launched new breakfast and lunch ranges, combined with new coffees and cold drinks.

Friday, 19th January, 2018
MVH Media
Food Franchise