Whitbread Plc · LSE:WTB
Whitbread — Barclays European Conference 2014
51 slides from Whitbread's conference presentation, Sep 3, 2014
Slide 1: European Conference 3 September 2014
European Conference 3 September 2014 WHITBREAD
Slide 2: Disclaimer
PF oisciarnar ‘Thi presentaticn (the “Presentation” i provided ona strictly private and corfidertial bast for irfermation purposes arly By attendne or reading this Presentation, yau will be deemed to have agreedto the cblizatiors and restrictions set cut below Without the ecpress prior written corce
Slide 3: Chris Rogers, Managing Director Costa Coffee
Chris Rogers Managing Director Costa Coffee WHITBREAD.
Slide 4: Agenda
OVERVIEW T UK STORES T BEYOND THE STORE T INTERNATIONAL Agenda 1. OVERVIEW _ 2. UK STORES . 3. BEYOND THESTORE 4. INTERNATIONAL a WHITBREAD _
Slide 5: Costa - A remarkable story
OVERVIEW Costa - A remarkable story * Founded in 1971 by Bruno and Sergio Costa ¢ Built on the unique Mocha Italia blend * Roasted in our own roastery in Lambeth * Ablend made from only 1% of the world’s beans * Served today through c.10,000 points of distribution * UK market leader and Britain’s be
Slide 6: Strength and breadth
OVERVIEW Strength and breadth UK Retail Equity stores Individual franchise System sales £650.3m FY 2013/14 17.5% growth 1,397 stores +12.3% Costa Enterprises Costa Express Corporate Partnerships System sales £287.2m FY 2013/14 22.0% growth 358 stores +7.2% 3,515 machines +37.3% Costa EMEI Europe, Mi
Slide 7: Costa stores 1995-2014
Costa stores : 1995-2014 Acquire Coffee Nation | Acquired by 1,000" store | WHITBREAD & launch Costa Express Enter China via JV; 500'* store Enter France 15t international store in Dubai 1,000" international store in Bangkok Overtake $e in UK 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20
Slide 8: Costa - A strong record of success
UK STORES i BEYOND THE STORE INTERNATIONAL Costa - A strong record of success Reported sales 807.7 £m 5 year CAGR 10 year CAGR 111.8 346 CO) 2003/04 2008/09 2013/14 2003/04 2008/09 Reported profit Return on capital £m 5 year CAGR 10 year CAGR 2003/04 2008/09 2013/14 2003/04 2008/09 32% 2013/14 2013/
Slide 9: System sales
System sales £m DOUBLE 659 2010/11 2012/13 2015/16 2017/18 International system sales share = —_—— ——s
Slide 10: Social and economic
BU sevono ie stone BU NTERNATIONAL ay, Social and economic
Slide 11: Social and economic trends
‘overview \ Social ~ Wee ; E-retail replacing traditional high High street leisure mix increasing Asocial environment Agroup meeting place Increasing consumer sophistication in coffee Increasing female spending power | — Coffee shops provide yy mobile office Fragmented society Your daily essential c
Slide 12: UK Retail - A growing market
UK Retail - A growing market UK coffee shop market, number of outlets~ 2008 to 2018 2013-18 2 Forecast 2018 "Non-specialists ™Independents ™ Branded chains 12. Source: “Allegra Project. . Global coffee consumption (kg/capita/year) ** Finland Norway Sweden Germany France USA Spain Poland
Slide 13: Costa - A relentless focus on customer needs
(a ii_ Costa - A relentless focus on customer needs UK customer hierarchy of needs Thinking about your last visit, how important was each of the following features of the coffee shop in your decision to go there? Convenience Quality coffee Staff friendliness Atmosphere Value for money Other
Slide 14: Convenience - Offering diversity in the market place
BM | U% sTores | [ BEYOND THE sToRE | [INTERNATIONAL | 5 \ " ‘ m COSTA ESPRESSS Convenience - Offering diversity in the market place ay ‘ DRIVE THRU’S SUPERMARKETS > 74 G Can CENTRES i RETAIL PARKS SHOPPING CENTRES ( j WHITBREAD
Slide 15: Convenience through a range of distribution points
Bieieemk.| Ux stores |,] BEYOND THE STORE | | INTERNATIONAL | Convenience through a-range of distribution points %, CO§TA =>EXPRESS présence drives.t f 15 Note: Numbers as of FY'2013/14 Qe _ WHITBREAD
Slide 16: Coffee quality is at the heart of what we do
OVERVIEW Coffee quality is at the heart of what we do Quality control Coffee quality is at the heart Aes of what we do SS 5 years of Barista De : 2 growth - _ coffee Lg cotfee Innovation plantations rs 16 Notes: Darker colour indicates aréas which-are cOnffolled byiCosta, excluding Costrat Home % WH
Slide 17: Friendly colleagues
OVERVIEW i UK STORES BEYOND THE STORE #@ INTERNATIONAL 7m 2 f 4 Friendly colleagues it wt hh Costa training materials Genuine Team engagement drives low team turnover, increased like for like growth and high Net Promoter Score Team turnover % of employees 2003/04
Slide 18: ces ED ESET: MES
ces ED ESET: MES
Slide 19: Operational excellence and consistency
7 Ee _ it aaaiayaes UK STORES [BEYOND THE STORE [Mm INTERNATIONAL . a —si. so Operational excellence and consistency "7 4 .% = ee It isn’t easy to deliver consistently good coffee in over 2,800 ih stores but we’re pretty good at it Over 1 million cups of coffee per day! 49M Rote: Numbers as of FYT0A
Slide 20: Costa UK - A formula delivering success
OVERVIEW Costa UK - A formula delivering success *Costa’s total market share 2009"to 2013 Number of UK stores! 790 743 757 530 560 c i l : OG COSTA B Starbucks | Nero. 731 Preference ** Costa is the UK’s favourite andthe gap is widening 2009 2010 2011 2012 Costa Starbucks ©—— Nero y - — Disource: Al
Slide 21: Like for like growth by store type
e for like Pitti iy store type Average FY 2012/13 5.4 7.0) 8.8 12.6% 6.8% like for like growth Ye f Opened pre- Opened_in Opened in Opened.in All UK f Bano Obentng, 2007/08 2008/09 2009/10 2010/11 | equity stores Average FY 2012/13 like for like growth in London stores 5.2% Average FY 2012/13 like f
Slide 22: Success at home supports International and Channel growth
Success at home supports International and Channel growth 1999 3 Growth of Costa Express Machines 7 3515 1st international Present in store in Dubai “se 30 countries® 2010/11 2011/12 2012/13 2013/14 22. Note: “Including the UK —— ze Oy WHITBREAD _
Slide 23: So what of the future?
(GN Uk stores If BeVOND THE stoRE [f/INTERNATIONAL © what of the future? é So what are the levers of future growth? UK stores Beyond the International coffee shop A=: ca WHITBREAD
Slide 24: Future growth
COSTA Future growth
Slide 25: UK - Continuing growth
UK - Continuing growth Number of stores New retail stores by channel to 2018 Retail Park/ © Drive Thru Shopping centre/high 7 street +200 University/ Office/Other WHITBREAD
Slide 26: Profitable future growth channels
@ - Profitable future growth channels ELGIN CACI retail rank 565° x2stores - High street - Retail park Population: c.19,800 Open (high street) 2012/13 Average weekly sales” £9,500 Store cash contribution 26% 26 “Source: CACI 2013 retail footprint “2012/13 STOKESLEY CACI retail Rank 2,443° x 1 store
Slide 27: Coffee innovation - Old Paradise Street Limited Roast
Coffee innovation - Old Paradise Street Limited Roast INS DISCOVER ottP FOR ae DISCOVER oY. Too A N EW — THE AST OF OUR ASTE. 3h > OF OUR N LIMITED yo. ROAST : . LIMITED a. ROAST i < DP ae f come infgfore AND all come inffsfore AND TRY H TODAY WHITBREAD
Slide 28: Costa - Food innovation
ew | | BM | BEYOND THE STORE | — er, = Costa - Food innovation
Slide 29: Continual reinvestment in the store environment
Bee BEYOND THE STORE ff INTERNATIONAL [a Continual reinvestment in the store environment Ww Or refurbished over the last 3 year a | Big
Slide 30: Investing in our people engagement
[overview | f Bi BEYOND THE STORE ff INTERNATIONAL ] E Investing in our people engagement The Costa culture BEST COMPANIE! “Ato WORK FOR
Slide 31: Our people drive profitable growth
Our people drive profitable growth 4 High people engagement = Low team turnover + High Net Promoter Score = Like for like sales growth Customer Winning Teams Heartbeat Profitable Growth €ceB 16€FHER A force for good AA Team engagement score Upper quartile store vs. Lower quartile store 2ppts less +9
Slide 32: Building the brand connection
Povenview LMM | 8€YONO THE sToRe ] [TERNATIONAL] Building the brand connection Digital engagement Local engagement ° twitter facebook CO§TA BOOK AWARDS It’s coffees all round in huge show of support for charity COSTA COFFEE Rawtenstall U12s kit ‘Sponsor WHITBREAD
Slide 33: Costa Express development
Fresh milk if. Fresh coffee be. ‘ Telemetry “5 senses of Marlow” Coffee Nation Costa Express Marlow 877 machines March 2011 3,515 machines FY 2013/14 Ongoing development WHITBREAD
Slide 34: Costa Express - Plenty of opportunities
[overview | [ux svores | (EEYQXP RIE etag [ yreenarionat Costa Express - Plenty of opportunities EXPRESS WHITBREAD 877 : Coffee Nation 2013/14 2017/18 gZ —~ ae |
Slide 35: Starting to expand internationally
(AE BEYOND THE sto INTERNATIONAL Starting to expand internationally COSTA == EXPRESS oeent Ireland Poland France Denmark BY 2013/14 22 142 WHITBREAD
Slide 36: International - Investing in growth
International - Investing in growth Number of stores 381 285 200 526 568 454 be os 2009/10 2010/11 2011/12 2012/13 36] 0 ni Bh 2013/14 Franchise Equity Net stores opened in last 5 years 408 Future store growth 2018 +c.250-300 +c.500-600 * c.1,850 international stores by 2018 WHITBREAD _
Slide 37: Costa International
Costa International * Focus now is translating Costa success into selected international markets ¢ Challenges ahead Market adaptation Talent management and capability Operational excellence WHITBREAD
Slide 38: Market adaptation - Costa, similar but different
Market adaptation - Costa, similar but different Costa International in numbers As-/S- % Coffee sales 69% of drinks 69% of drinks 62% of drinks 74% of drinks gee ahture aie 38 Source: Internal and franchise partner record
Slide 39: Market adaptation - Hierarchy of needs
Market adaptation - Hierarchy of needs: common but different © ©Onm© { Poland Cleanliness Convenience Convenience BRdrdciness Convenience Convenience @ Coffee quality Wifi vei % Coffee quality Coffee quality | Staff efficiency 4 Cleanliness Cleanliness & friendliness CaS S quel Saye qiueiiiey and ti
Slide 40: Talent management and capability
[overviews].| uk sTorEs ],[ BEYOND THE sTORE | | Talent management and capability « Local management and global leadership * Outside hires and experienced operators ¢ Culturally aware and imbued with Costa DNA
Slide 41: Operational excellence
Operational excellence Costa Resource Centre for international operations O$TA cir RESOU] gpsvener WH bik AU
Slide 42: pe: R COFFEE
pe: R COFFEE
Slide 43: Drivers of growth internationally
[overview ].[ UK STORES |, BEYOND THE STORE ] Drivers of growth internationally COSTA Future international
Slide 44: International franchise - A successful model
[overviews].[ uk sTorEs ],[ BEYOND THE sTORE | | International franchise - A successful 654 stores across 26 countries Strong partners in the Middle East and Ireland Getting the strategy_right Good localised marketing — Product innovation — _ Growing quality partners, Growth opportunity c.10% stores
Slide 45: European Equity - Growing the brand
B/INTERNATIONAL European Equity - Growing the brand + Poland - a recovery plan ina * France - early days but good start difficult market Ss — Closed 15 unprofitable stores =e — Rebranding to Costa on plan — Smart pricing and focus on product development 5 equity stores 2 franchise stores Trialing 3
Slide 46: China - We are currently number 2 with ambitions to grow
hina - We are currently number 3 with ambitions to grow é * The branded coffee shop market is forecast to double in four years to £2bn... .. and our current market share is small Market size specialist coffee shop chains China* Market share China* £m £m, 2012 2,070 389 88 4 48 38 9 | oi Starbucks |
Slide 47: China - We have built a platform for success
ES oo. China - We have built a platform for success with two meaningful JVs oe fh a Beijing Hualian Group Yueda South Holdings i r ah Fe North China South, East & West China hh z Be a: 118 stores 208 stores a i: ee i re 6 cities 24 cities © Costa 49% : BHG 51% Costa 51% : Yueda 49% <i WHITBREAD |
Slide 48: Drivers of success in China
Uf INTERNATIONAL Drivers of success in China Profitable | stores | sweo} Quality store environment Ajpuei4 7 Great coffee | and food range
Slide 49: China - A platform for growth
China - A platform for growth e pavi2olt ves Haerbin Just 3 cities Beijin dj @ Shenyang Beijing e, Shijiazhuang @ - @ Dalian Tianjin HuaiAn Yancheng CX) ._ Changzhou ‘nS Changning Hotel @B s Shanghai uhu’s Zhonglou” ® Ningbo Wuhan @ Gena Ezhouls * Wenzhou XiAn @ Chengdu @ Chongqing @ Yiwu Changsha @
Slide 50: ing
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Slide 51: European Conference September 2014
European Conference 3 September 2014 WHITBREAD