GE CAPITAL PUBLISHES ANNUAL REVIEW OF CANADIAN CHAIN RESTAURANT INDUSTRY The first annual Canadian Chain Restaurant Industry Review, an extensive research report commissioned by GE Capital and compiled by fsSTRATEGY and NPD Group Canada was released MAY 2012 at the Canadian Restaurant Investment Summit. For the first time, a comprehensive analysis and factual overview of the state of chain foodservice in Canada was compiled. These findings have implications for job growth, construction activity and other factors that will impact the economic health of Canada not only for 2012 but for several years to come. The report also sheds light on consumer spending habits and trends from province to province. Some of the research findings: • Canadian foodservice industry sales are expected to increase by 3.1% to CAD$65.4 billion in 2012. • Visits to Canada’s commercial foodservice industry remained relatively flat last year, growing just 1% over the prior year. • Alberta was the fastest-growing market at 7.8%. • British Columbia was the only province that experienced foodservice revenue declines. The report includes insights from the C-suite executives of leading Canadian chains on important issues such as: • The greatest opportunities and threats in the foodservice industry, • Restaurant industry merger and acquisition opportunities, • Expected changes in sales as well as labour and food costs, among other operating and occupancy costs, and • The outlook on restaurant industry capital expenditures. For a copy of the 2013 Canadian Chain Restaurant Industry Review, please register for the 2013 Canadian Restaurant Investment Summit. Visit www.restaurantinvest.ca

1. Research Partners
Canadian The 2012 Canadian Chain Restaurant Industry Review,
commissioned by GE Capital Canada and undertaken by
Chain fsSTRATEGY and NPD Group Canada, is a comprehensive
Restaurant analysis and factual overview of the state of chain
Industry foodservice in Canada.
Review The report sheds light on consumer spending habits and
the findings have implications for job growth, construction
activity and other factors that will impact the economic
health of Canada. It’s the outcome of a survey conducted
with C-suite executives from leading Canadian chains
on important operational areas such as expectations of
industry sales, traffic, labour, rental and occupancy costs
as well as their opinions on the greatest threats and
opportunities in foodservice today.
Canadian The 2013 Canadian Chain Restaurant Industry
Restaurant Review will be presented at the Canadian
Restaurant Investment Summit, MAY 29 & 30,
Investment 2013 at The Hilton Toronto Hotel. All registered
Summit delegates will receive a complimentary copy.
MAY 29+30, 2013 REGISTER TODAY at
Hilton Toronto Hotel
RESTAURANTINVEST.CA
Founding Producer

2. GE Capital
Franchise Finance
2012
Canadian Chain
Restaurant
Industry Review
Research Partners

3. GE Capital
Franchise Finance
2012
Canadian Chain
Restaurant
Industry Review
1 Introduction
2 Foodservice Industry Profile
3 Trends Impacting Restaurants
4 Finance
5 Cost of Doing Business
6 ReCount® Restaurant Census Trends
7 Notes
Research Partners

4. 2 3
GE Capital GE Capital
Franchise Finance Franchise Finance
The Inaugural Canadian Chain Restaurant Industry Review GE Capital, Franchise Finance Canada
We’re More Than Just Bankers, We’re Builders
I’m pleased to bring you the first annual Canadian Chain Restaurant Industry Review, a comprehensive
GE Capital, Franchise Finance is a leading lender to the restaurant and hospitality industries in
analysis and overview of the state of chain foodservice in this country. This work was commissioned
Canada. We specialize in financing regional and national restaurant businesses of all sizes across the
by GE Capital and compiled by fsSTRATEGY and NPD Group Canada.
country. Over the past 10 years, we’ve financed more than 700 restaurant customers with upwards of
As the economy moves from recovery to expansion, Canadians are expected to cautiously increase 1,500 property locations. That’s in excess of $1.1 billion that we’ve invested in the Canadian restaurant
their spending at restaurants. In fact, we estimate that Canadian foodservice industry sales will space.
increase by 3%, or almost $2 billion, to $65 billion in 2012. In addition to financing at the franchisee and franchisor levels, we lend money for new developments,
recapitalizations of existing businesses, mergers and acquisitions, and management-led buyouts.
When an industry of this size starts growing by billions of dollars, there will be a ripple effect on job
growth, construction activity, agricultural decisions and a wide variety of other factors that will impact But we offer our clients more than money.
Canada’s economic health this year and for several years to come. At GE Capital, we’re not just bankers, we’re builders. On top of smart financing, we provide the know-
how of GE to help your capital go further and do more. We’re excited that you’re building something
We hope attendees at this year’s third annual Canadian Restaurant Investment Summit will use
great. It takes money, along with knowledge and expertise. That’s where we come in.
this extensive research to shape their future plans, whether that means examining investment
opportunities, exploring new concepts or simply expanding their menu options. Here are some reasons to consider financing with us:
žž A vast portfolio of national and regional restaurant relationships — in a variety of quick service and
Ultimately, we believe these insights can be useful when it comes to mapping out the best strategies
casual formats — that we’ve maintained through economic ups and downs;
to help your business flourish.
žž Deep expertise in the franchise business and a special understanding of the brands that operate in
this market;
Ed Khediguian žž A cash flow-based lending model that allows us to value a business based on performance, while
GE Capital, Canada taking into account seasonality and other operating issues that specifically affect restaurants; and
Franchise Finance žž The Access GE program, through which we bring the tools, resources, insights and expertise of GE
to help business leaders with their most pressing challenges.
We look forward to working with you as you continue to grow and succeed.

5. 4 5
CaNadIaN
RESTauRaNT 1 Introduction
fsSTRATEGY Inc. (“fsSTRATEGY”) and The NPD Group, Inc. (“NPD”) are pleased to
INvESTmENT release this 2012 Canadian Chain Restaurant Industry Review as part of the
2012 Canadian Restaurant Investment Summit.
SummIT Now in its third successful year, the Canadian Restaurant
Investment Summit has solidly established itself as the
This report is the culmination of extensive primary and secondary research
conducted by fsSTRATEGY and NPD. Sources include:
annual business conference that brings the industry žž Research and data provided by the Canadian Restaurant and Foodservices
Founding Producer
into focus. Association (“CRFA”).
Operators, chain executives, franchise operators, investors,
žž C-Suite Survey in February 2012 conducted by fsSTRATEGY and sent to over
lenders and key suppliers from across the country agree 60 CEOs and CFOs in the Canadian chain foodservice market, resulting in a
that this is the event that delivers what they need - insight, resounding response rate of 37%.
information and opportunity—all with meaningful content žž Detailed data from NPD’s Future of Foodservice.
and a tight focus that is uniquely Canadian. žž Interviews with selected food grower associations, food processors and
foodservice distributors.
Each year, the Summit presents topical issues and noted
žž Interviews with landlords to understand the rental market for restaurant
thought leaders who share opinions, stimulate discussion
operators.
and create new directions. The entire conference program
žž Information prepared by GE Canada on the state of money markets and
is designed to yield authoritative information and the latest
chain restaurant financing.
data from across the country. When combined with the
žž Secondary research data gleaned from other sources such as such as
powerful networking opportunities it presents, the Summit
Statistics Canada, TD Economics, the Conference Board of Canada, Hum,
is an experience that is unequalled anywhere in Canada.
an Resources and Skills Development Canada, Canada Ministry of Labour,
Ontario Energy Board, International Monetary Fund and the Chicago Board
ThaNk yOu FOR jOININg
Options Exchange.
ThE dISCuSSION.
For further information, please contact:
Geoff Wilson and Jeff Dover Robert Carter
fsSTRATEGY Inc. The NPD Group, Inc.
MAY 30-31, 2012 gwilson@fsSTRATEGY.com robert.carter@npd.com
ThE hIlTON TORONTO hOTEl jdover@fsSTRATEGY.com (647) 723-7767
(416) 229-2290
1 | Introduction
RESTauRaNTINvEST.Ca RESTauRaNTINvEST.Ca RESTauRaNTINvEST.Ca RESTauRaNTINvEST.Ca

6. 6 7
2 Foodservice
Industry
Profile
2.1 Canadian Foodservice Industry Sales
2.2 Chain versus Independent Operator Sales
2.3 Provincial Sales Trends
2.4 Same Store Sales Growth
2.5 C-Suite Expectations for Sales and Traffic
Historic Nominal Foodservice Sales by Sector
2008 2009 2010 2011 2012 (Forecast)
(Millions) Change (Millions) Change (Millions) Change (Millions) Change (Millions) Change
Quick Service Restaurants $ 19,517.1 6.2% $ 20,133.8 3.2% $ 21,219.7 5.4% $ 22,149.8 4.4% $ 22,878.2 3.3%
2.1 Canadian Foodservice Industry Sales Full Service Restaurants 20,864.6 4.3% 20,675.0 -0.9% 20,931.4 1.2% 21,737.4 3.9% 22,389.6 3.0%
Contract and S ocial Caterers 3,854.0 3.5% 3,732.8 -3.1% 3,997.6 7.1% 4,216.8 5.5% 4,347.6 3.1%
In 2011, Canadian foodservice industry sales represented approximately 3% of national gross Drinking Places 2,559.6 1.5% 2,554.8 -0.2% 2,467.7 -3.4% 2,421.9 -1.9% 2,402.2 -0.8%
domestic product, and are expected to increase by 3.1% to $65.4 billion in 2012. The Canadian Total Commercial $ 46,795.3 4.8% $ 47,096.4 0.6% $ 48,616.3 3.2% $ 50,525.9 3.9% $ 52,016.4 2.9%
foodservice industry is divided into Commercial and Non-Commercial sectors. Commercial Accommodation Foodservice $ 5,659.0 2.7% $ 4,861.0 -14.1% $ 5,206.0 7.1% $ 5,503.0 5.7% $ 5,764.0 4.7%
Institutional Foodservice1 3,377.1 3.8% 3,490.8 3.4% 3,640.6 4.3% 3,822.1 5.0% 3,986.5 4.3%
Foodservice includes Full Service Restaurants, Limited-Service Restaurants and Drinking Places.
Retail Foodservice2 1,228.5 8.4% 1,282.3 4.4% 1,284.6 0.2% 1,306.4 1.7% 1,326.0 1.5%
Chain Foodservice sales reside within these three categories.
Other Foodservice 3
2,217.7 3.1% 2,195.5 -1.0% 2,254.8 2.7% 2,304.4 2.2% 2,350.5 2.0%
The following table shows nominal sales by industry sector for 2008 to 2012. Total Non-Commercial $ 12,482.2 3.6% $ 11,829.6 -5.2% $ 12,386.0 4.7% $ 12,935.9 4.4% $ 13,427.0 3.8%
As shown, non-commercial foodservice was hit harder by the 2009 economic recession than Total Foodservice $ 59,277.5 4.6% $ 58,926.1 -0.6% $ 61,002.3 3.5% $ 63,461.8 4.0% $ 65,443.4 3.1%
commercial foodservice due largely to a significant drop in accommodation foodservice sales. Since Menu Inflation 2.5% 3.5% 2.4% 2.9% 2.5%
2009, however, non-commercial annual sales growth has been consistently higher than commercial Real Growth 2.1% -4.1% 1.1% 1.1% 0.6%
sales. The 2012 forecast suggests that in 2012, non-commercial sales will have increased 13.5% from
2009 figures, whereas commercial sales will only have increased by 10.4%. Source: Canadian Restaurant and Foodservices Association’s InfoStats, Statistics Canada, fsSTRATEGY Inc. and PKF Consulting
1
Includes self-operated education, transportation, health care, correctional, remote, private & public sector dining
and military foodservice.
2
Includes foodservice operated by department stores, convenience stores and other retail establishments.
3
Includes vending, sports and private clubs, movie theatres, stadiums and other seasonal or entertainment operations.
2012 Canadian Chain Restaurant Industry Review 2 | Foodservice Industry Profile

7. 8 9
The table below shows nominal national foodservice and commercial foodservice sales The table below illustrates 2012 forecasted share of total foodservice sales by sector.
for 1990 to present. 2012 Forecasted Share of Foodservice Sales by Sector
Historical Foodservices Sales Total versus Commercial—1990 through 2012 (Forecast) Total Foodservice Commercial Foodservice
$1,326.0 $2,350.5 $2,402.2
$3,986.5 $4,347.6
70 Total Commercial $22,878.2
1990: Commercial Foodservice 75.0% of Total Foodservice 65
64 $5,764.0 Quick-service restaurants
2012: Commercial Foodservice 79.5% of Total Foodservice Accommodation
61
59 59 foodservice
60 Full-service restaurants
57 Institutional foodservice
55 Contract and social
52 52 Retail foodservice caterers
50 51
50 48 49
47 47 47 Other foodservice Drinking places
45 45
44 43 $52,016.4 $22,389.6
41 41
Billions of Dollars
39 40
40 37 38 38
36
35 35
33 33 33
31 31 31 Source: Canadian Restaurant and Foodservices Association ‘s InfoStats, Statistics Canada, fsSTRATEGY Inc. and PKF Consulting
29 30 29
30 28
26 27 As shown, commercial foodservice accounts for approximately 79% of total foodservices sales. Quick
23 24
22 23 service and full service generate relatively similar sales and represent the majority of commercial
20 foodservice sales.
10
0
1990
1991
1992
1995
1996
1999
2000
2001
2002
2005
2006
2009
2010
2012-f
1994
1997
2004
2007
2011-p
1993
1998
2003
2008
Commercial Foodservice Total Foodservice p = preliminary
f = forecast
Source: Canadian Restaurant and Foodservices Association, Statistics Canada, fsSTRATEGY Inc. and PKF Consulting.
Total nominal foodservice sales have increased from $30.8 billion to $65.4 billion since 1990.
Commercial sales (which include chain foodservice) represent the majority of total foodservice
sales. In fact, commercial foodservice has increased its share of total foodservice by 4.5% and
now accounts for 79.5% of total industry sales versus 75.0% in 1990.
3
Adjusted for menu inflation.
2012 Canadian Chain Restaurant Industry Review 2 | Foodservice Industry Profile

8. 10 11
Growth trends vary by sector. The table below compares commercial foodservice sector growth The following table shows nominal foodservice sales by province over the past five years.
using a sales index. The index compares real sales to 2007. Canadian Foodservice Sales 2008 through 2012 (Forecast) by Province
Sales Index by Industry Segment in Thousands of Dollars
Sales Index 2007 = 100
New Brunswick
Newfoundland
Saskatchewan
110
and Labrador
Nova Scotia
108
Manitoba
Columbia
Canada
Ontario
Quebec
Edward
Alberta
107
British
Prince
Island
105
104
104 2007 $44,636,968 $532,421 $170,777 $1,114,252 $846,629 $8,773,617 $16,649,363 $1,224,444 $1,167,620 $6,409,540 $7,611,363
102
102 101 2008 $46,795,255 $565,006 $176,233 $1,210,275 $891,334 $9,304,854 $17,593,324 $1,290,495 $1,287,297 $6,618,399 $7,709,844
101
100 100 100
99 2009 $47,096,429 $588,886 $175,136 $1,209,506 $938,700 $9,385,175 $17,631,848 $1,338,637 $1,356,991 $6,526,605 $7,795,980
99 99
2010 $48,616,283 $644,086 $184,145 $1,252,019 $968,838 $9,715,759 $18,381,418 $1,369,856 $1,428,570 $6,665,414 $7,846,102
97 97
96 2011-p $50,525,622 $685,422 $189,013 $1,292,747 $972,265 $10,025,906 $19,252,294 $1,446,520 $1,501,172 $7,173,026 $7,829,050
96
95 94
Percent Change vs Previous Year
90 2007 3.0% 1.0% -2.4% 1.3% -4.2% 2.6% 2.7% -0.3% 6.9% 5.9% 2.8%
90
2008 4.8% 6.1% 3.2% 8.6% 5.3% 6.1% 5.7% 5.4% 10.2% 3.3% 1.3%
2009 0.6% 4.2% -0.6% -0.1% 5.3% 0.9% 0.2% 3.7% 5.4% -1.4% 1.1%
86
85 2010 3.2% 9.4% 5.1% 3.5% 3.2% 3.5% 4.3% 2.3% 5.3% 2.1% 0.6%
2011 3.9% 6.4% 2.6% 3.3% 0.4% 3.2% 4.7% 5.6% 5.1% 7.6% -0.2%
Source: Canadian Restaurant and Foodservices Association’s InfoStats, Statistics Canada, fsSTRATEGY Inc. and PKF Consulting
80
2007 2008 2009 2010 2011
Total Commercial Full-Service Restaurants Quick-Service Restaurants Caterers Drinking Places
Source: Canadian Restaurant and Foodservices Association ‘s InfoStats, Statistics Canada, fsSTRATEGY Inc. and PKF Consulting
As shown, the fastest growing provincial market in 2011 was Alberta at 7.8% over the previous year.
As shown, caterers were affected the most by the recession in 2009, followed by drinking places. Not British Columbia was the only province experiencing foodservice revenue declines in 2011. Almost
surprisingly, quick service restaurants fared better than other sectors in the recession, losing less 40% of Canadian foodservice revenue is generated in Ontario.
than one index point. The full service sector has yet to recover to prerecession sales levels. The quick
service sector generally is less impacted by and recovers faster from recessions. Quick service sales
continue to grow, albeit at a slower rate than before the recession.
The sharp, continual decline seen in drinking places sales is the result of a decline in the number of
establishments classifying themselves as drinking places. Drinking places have experienced similar
real sales per location growth trends compared to other commercial foodservice sectors.
2012 Canadian Chain Restaurant Industry Review 2 | Foodservice Industry Profile

9. 12 13
2.2 Chain versus Independent Operator Sales 2.3 Provincial Sales Trends
The chart below graphically depicts the share of chain and independent operator sales in various The following table compares total commercial foodservice sales and commercial foodservice sales
regions of Canada for 2011. per capita by province.
Chain versus Independent Sales—2011 Commercial Foodservice Sales by Province
25,000 2,000
100% $1,897.93
90%
National Commercial 1,800
80%
Foodservice Sales Per Capita
70% $1,711.90
20,000 19,252.3 1,600
60%
50%
$1,342.39 $1,367.41 $1,439.64 $1,419.01 1,400
40%
30%
Per Capita Sales in Dollars
$1,295.50 $1,286.92
Sales in Millions of Dollars
20% 15,000 $1,256.43 1,200
$1,156.66
10%
0 1,000
Canada Atlantic Quebec Ontario West
10,025.9
10,000 800
Chain Independent
7,829.0
7,173.0
Source: The NPD Group/CREST® 600
5,000 400
Over 60% of restaurant sales in Canada can be attributed to chain operators. Chain penetration is
greatest in Atlantic Canada and lowest in Quebec.
1,292.7 1,446.5 1,501.2 200
685.4 972.3
189.0
0 0
NL PE NS NB QC ON MB SK AB BC
2011 Commercial Foodservice Sales 2011 Commecial Foodservice Sales Per Capita
National Average Per Capita Spend
Source: Canadian Restaurant and Foodservices Association, Statistics Canada
As shown, Ontario and Quebec have the greatest commercial foodservice sales. This is not surprising
considering these provinces have the greatest populations. However, despite having the greatest
population, Ontario has only the third greatest commercial foodservice sales per capita after
Alberta ($1,897.93) and British Columbia ($1,711.90). Quebec has the second lowest per capita sales
($1,256.43) after Manitoba ($1,156.66).
2012 Canadian Chain Restaurant Industry Review 2 | Foodservice Industry Profile

10. 14 15
2.4 Same Store Sales Growth The average SSSG for selected Canadian restaurant chains is graphically represented below.
Average Same Store Sales Growth 2007-2011
Same Store Sales Growth (“SSSG”) is used to measure the performance of restaurant chains year-over-
year, comparing for the same base of stores from one year to the next on a rolling basis.
Selected Publicly Traded Canadian Restaurant Chains1
The table below provides an average of SSSG from 2007 to 2011 for the seven largest Canadian 4%
As the exhibits demonstrate, SSSG declined
publicly traded restaurant chains. Data for 2011 has been taken from either annual reports or Q3 or 2.9%
3% 2.5% significantly through the recession and is
Q4 reports, as available by chain. 1.8% beginning to recover.
2% 1.4%
In its 2011 Q4 Restaurant Outlook Survey,
1%
the CRFA stated that nearly 40% of operators
0% reported higher same store sales in Q4. The
Same Store Sales Growth 2007 through 2011, Selected Publicly Traded Canadian table below summarizes the results of its
-1%
survey.
Restaurant Chains -2% -1.5%
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
Minimum -3.9% -1.2% -6.5% -1.7% 0.4% Source: fsSTRATEGY Inc. using data from publicly traded company annual and quarterly reports.
1. Seven publicly traded Canadian restaurant chains. 2011 data represents year-to-date second or third quarter results.
Average 2.9% 1.8% -1.5% 1.4% 2.5%
Maximum 5.9% 7.3% 2.9% 4.9% 4.5%
Reported 2011 Q4 Same Store Sales versus Q4 2010
Source: fsSTRATEGY Inc. using data from publicly traded company annual reports.
3.0%
3% 2.5%
2.0%
2%
1.4%
1%
0%
-1%
-2% -1.5%
2007 2008 2009 2010 2011
Source: Canadian Restaurant and Foodservices Association “Restaurant Outlook Survey, Q4, 2011”.
The CRFA report went on to say:
žž Thirty-four per cent of full service restaurant respondents expect their same store sales to grow at
a slower rate in the first six months of 2012 compared to 20% who expect same store sales to grow
at a greater rate.
žž Thirty-three per cent of quick service restaurant respondents expect same store sales to grow
at a faster rate in the first six months of 2012, while only 25% expected same store sales to
grow at a slower rate.
2 | Foodservice Industry Profile

11. 16 17
2.5 C-Suite Expectations for Sales and Traffic
C-Suite survey respondents were asked how they expected industry sales to change
in 2012 compared to 2011
Expected sales growth will be driven primarily by either
In 2012, Industry Sales are Expected to: menu inflation or more efficient customer conversions
Decline 5.1% to 7.5% 0% through upselling and other sales techniques
Decline 2.6% to 5% 10%
Decline 0.1% to 2.5% 0%
Remain Flat 25%
Increase 0.1% to 2.5% 35%
Increase 2.6% to 5% 25%
Increase 5.1% to 7.5% 0%
Not sure 5%
Source: fsSTRATEGY Inc. C-Suite Survey
Most respondents (60%) expect industry sales to be flat or increase by less than 2.5% in 2012
compared to 2011. Twenty-five percent of respondents expect sales to increase by more than
2.5% and 10% believe that sales will drop by 2.5% to 5.0%. As shown, respondents were less optimistic about traffic with 40% of respondents expecting industry
traffic to remain flat, while only 30% expected slight growth of less than 2.5% compared to 2011.
This suggests that the expected sales growth depicted above will be driven primarily by either menu
inflation or more efficient customer conversions through upselling and other sales techniques.
C-suite survey respondents were also asked what changes they expected regarding C-Suite respondents were asked to list the three greatest opportunities and threats in the foodservice
industry traffic. industry for 2012. Opportunities that were mentioned by more than one respondent included menu
conversions, healthy menu options, local food, general innovation and simplifying operations to
In 2012, Industry Traffic is Expected to: focus on core strengths. Operating costs (costs of goods sold, labour, occupancy costs and general
Decline 5.1% to 7.5% 0% operating costs) were seen as the largest threat representing 29% of all responses. Other threats
Decline 2.6% to 5% 10% included economy (21%), competition (market saturation, undercutting prices, retail, international
competition and lack of differentiation between brands) (19%), government regulations (10%), and
Decline 0.1% to 2.5% 0%
human resource challenges (labour market, employee engagement, availability of management) (7%).
Remain Flat 40%
Increase 0.1% to 2.5% 30%
Increase 2.6% to 5% 15%
Increase 5.1% to 7.5% 0%
Not sure 5%
Source: fsSTRATEGY Inc. C-Suite Survey
2012 Canadian Chain Restaurant Industry Review 2 | Foodservice Industry Profile

12. 18 19
3.1 Key Consumer Profiles
3 Trends
Impacting
Restaurants
3.1 Key Consumer Profiles
3.2 Key Foodservice Industry Trends
The table below compares the number of commercial restaurant meal and snack visits by various
age groups in 2008 and 2011.
Commercial Restaurants—Traffic Per Capita—2011 and 2008
Source: The NPD Group/CREST®
2012 Canadian Chain Restaurant Industry Review 3 | Trends Impacting Restaurants

13. 20 21
Commercial Restaurant—Traffic (Millions)—2007 through 2011
6,601
Commercial Restaurant—Traffic Per Capita by Household Income 6,530 6,536
6,496
(Consumers 13 Years of Age and Older) 6,428
2007 2008 2009 2010 2011
Source: The NPD Group/CREST®
Visits to Canada’s commercial foodservice industry remained relatively flat in 2011, growing just 1%
over the prior year, with annual volume that is 70 million visits above 2008 pre-recession levels. GDP
and job growth indicate the Canadian economy is moving from recovery to expansion mode, but
Canadians remain cautious about spending freely at restaurants.
Total Restaurants—Percentage Growth in Sales Year-Over-Year
4%
3% 4%
4% 3% 2%
2%
1%
Source: The NPD Group /CREST® 1% 1%
0%
Not surprisingly, as household income grows, so do restaurant visits. Greater disposable income is a
key indicator for restaurant usage.
-2%
Just two income groups used restaurants more in 2011 than 2010: -3%
SON'08 DJF'09 MAM'09 JJA'09 SON'09 DJF'10 MAM'10 JJA'10 SON'10 DJF'11 MAM'11 JJA'11 SON'11
žž Consumers with $100,000 and over in household income increased by an average five visits
Source: The NPD Group/CREST®
annually; and
žž middle income ($55,000 to $70,000) households increased by six visits annually.
Growth is attributed to strong sales performance in the second half of 2011, with 4% dollar gains in
In a market with minimal growth, driving revenues is a case of stealing share from competitors. With
both Q3 and Q4 2011. Increased visits (3%) were the key driver of growth during this period. With
a detailed understanding of what customers want, restaurateurs can gain a distinct competitive
just 1% coming from increased average spending per person, there is pressure on margins, as menu
advantage. Operators must find the means to stay new in consumers’ minds—innovative products,
inflation is running at 3%*.
unique promotions, competitive pricing – and above all deliver an enjoyable experience that
*
Statistics Canada, CPI, Food from Restaurants, November 2011.
consumers can’t get at home.
2012 Canadian Chain Restaurant Industry Review 3 | Trends Impacting Restaurants

14. 22 23
3.2 Key Foodservice Industry Trends 3.2.2 Regional Trends
3.2.1 Market Segment Trends
The table below shows the year over year restaurant sales growth by region.
The table below shows restaurant market segment shares in terms of traffic and revenue.
Full Service and Quick Service Restaurant Sales Performance by Region
Restaurant Market Segments — Share of Traffic and Dollar Sales PYCA - Percent Change vs. Year Ago
6% 6%
5% 4% 4%
3% 3% 3%
2% 2%
1% 1% 1%
0%
TOTAL Atlantic Quebec Ontario Manitoba/ Alberta British
CANADA Region Saskatchewan Columbia
QSR FSR
Source: The NPD Group/CREST®
As shown above, QSR sales are outperforming FSR in all regions except Alberta and British Columbia.
The Quebec market is the most challenged, remaining relatively flat at both segments.
2012 Canadian Chain Restaurant Industry Review 3 | Trends Impacting Restaurants

15. 24 25
3.2.3 Restaurant Trends Analysis
Based on the research, restaurant operators should consider the following:
žž Bright spots in the foodservice industry
žž both chains and independents contributed to QSR’s 2% traffic growth;
žž the lunch meal period realized the greatest gains, while morning meals and supper increased
modestly;
žž average cheque growth at FSR of 4% is outpacing menu inflation—it would appear that while
FSR customers may be going less often, the average spend has increased; and
žž full serve ethnic restaurants are outperforming the segment, an indication of growing
customer interest in authentic ethnic cuisines.
žž Areas of the foodservice industry still in need of improvement
žž full service restaurants are still experiencing flat to declining traffic across all dayparts, with
FSR chains faring worse than independents;
žž convenience stores fell by more than 22 million visits for prepared food in the past year in the
face of strong QSR competition for key morning and snacking visits; and
žž consumers cut back on desserts and appetizers more than other menu items, while sides and
beverages are not keeping pace with traffic as consumers try to manage spending. Distribution of the Population by Age—2011 and 2016
3.2.4 What Full Service Restaurant Customers Want
From NPD’s FSR Report, 3rd Edition, menu innovation is clearly the key in giving consumers new
reasons to visit. Three-quarters of FSR visitors reported that they would like to see greater menu
variety, even more than in 2010.
The demand for greater variety was strongest for Main Dishes and Appetizers. Consumers voiced the
No. of Individuals in the Population
greatest interest for innovation with Chicken, Seafood / Fish and Pasta.
3.2.5 A Look Ahead
The NPD Group forecasts that commercial foodservice traffic will grow by an average of 1.7%
annually, 2012 through 2016, modestly outpacing annual population gains of 1.1%.
Acknowledging that current market conditions are not likely to improve dramatically in the near
future, it is important to understand and plan for the future. The expectation is that Family/Midscale
restaurants will experience the least growth while QSR outlets will experience the greatest gains.
The aging of Canada’s population does not support strong growth for the restaurant industry. As
consumers age they become less frequent restaurant users, resulting in heavier dependence
Age: LT1 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100
on lighter buyers. Certain restaurant brands can benefit however, by effectively targeting older
consumers. It will be important to recognize their loyalty, and pay attention to service and their 2011 F2016
requirements for smaller portion sizes and healthier options.
*Source: Statistics Canada – 2011 vs. 2016 3 | Trends Impacting Restaurants
2012 Canadian Chain Restaurant Industry Review

16. 26 27
Other pockets of opportunity exist to be taken advantage of by understanding what consumers are The table below shows the average number of menu items by menu section for Canada’s top
looking for in their restaurant experience and what will drive growth in the coming years. For example, full service restaurants.
expect ethnic foods to grow in interest and influence. Particularly in Canada’s urban centres, tastes Average Number of Menu Items by Menu Section
will continue to become more adventurous and sophisticated, with ethnic flavours and dishes trickling Top Full Service Chain Restaurants
down to the mainstream. Other food and beverage items that are projected to outpace market
growth include burgers, healthy/ light sandwiches, and non-carbonated beverages. Targeting the
core customers for these products may reap benefits. 20
18
16
14
12
10
8
6
4
2
0
es
a
s
a
ns
s
rs
ts
d
de
up
zz
st
ich
la
ize
ai
er
Pa
Pi
Si
So
Sa
M
ss
w
et
nd
De
p
Ap
Sa
s/
er
rg
Bu
2006 2007 2008 2009 2010 2011
Source: fsSTRATEGY Inc., The NPD Group/Canadian Full Service Chain Restaurant Menu Analysis
As shown, side dishes continue to increase on menus at a significant rate, likely as a means to
increase average checks without significant increases to menu price. The number of appetizer items
on menus spiked in 2010 but have returned to 2009 levels. Burgers and sandwiches continue to
increase their prominence on Canadian menus while pastas appear to be gradually declining.
2012 Canadian Chain Restaurant Industry Review 3 | Trends Impacting Restaurants

17. 28 29
4 Finance
4.1 The Economy
4.2 Money Markets
4.3 Restaurant Acquisition Activity
Total Foodservice Sales Real Growth vs. Disposable Income and GDP Real Growth
10%
5%
4.1 The Economy
Year-Over-Year Percentage Change
The table across compares total real foodservice sales growth against two economic indicators: real 0%
disposable income and real GDP.
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2012-f
2011-p
The table illustrates a relationship between real foodservice sales, real GDP and real disposable -5%
income. Comparing 1991 and 2009 suggests that real disposable income could have a shielding
effect on foodservice sales during time of recession. In 1991, both GDP and disposable income
declined simultaneously, and foodservice sales fell by 15%. Despite a greater decrease to GDP -10%
in 2009, compared to 1991, real disposable income still increased slightly and the decrease in
foodservice sales was less than 5%.
-15%
-20%
Real Foodservice Sales-Total Real Disposable Income Real GDP
Source: Statistics Canada, Canadian Restaurant and Foodservices Association, TD Economics and Conference
Board of Canada
2012 Canadian Chain Restaurant Industry Review 4 | Finance