1. Trends and Opportunities In International Operations, Service & New Development Wednesday May 25 th, 2011 By Bernard Platt, SVP Franchising, Au Bon Pain

2. 2 Agenda Introduction International Development; what to look for. Au Bon Pain Experience The Indian Market Pre – opening Process Post opening Process Take Aways

3. 3 Introduction – Bernard Platt Bernard Platt –35 years management and executive experience –Full service, licensed dining and fast casual –Domestic and International Franchise Licensing –Operations, Marketing, Development, Food & Beverage –International Markets include Thailand, Middle East, South Korea and India.

4. 4 Introduction – Au Bon Pain Au Bon Pain is a fast casual concept founded in Boston in 1978. Defined by top quality flavorful, distinctive and nutritional foods, quick and easy service, reasonable prices, and high hospitality in a comfortable café environment Operates 318 bakery cafés in 20 states and 5 foreign countries –167 Company cafés –151 franchise cafés –63 International franchise cafes Competitive Advantages –Success across multiple real estate configurations – hospitals, office buildings, transportation centers, universities and malls –Broad menu offering that spans all dayparts with ongoing new product development –Marketplace service system for speed –High hospitality culture –Attractive cafés, now featuring soft urban design –High breakfast counts increases customer loyalty

5. 5 Agenda Introduction International Development; what to look for Au Bon Pains Experience The Indian Market Pre – opening Process Post opening Process Take Aways

6. 6 International Development; what to look for Stability –Politically, economically, socially Solid Judiciary & System of Law –You need to protect your trademarks Compatible business agreements w/ USA –Free movement of goods and money Ability to do business in country –Procurement, logistics, work force, infrastructure Development Compatibility –Real Estate, Menu, Service System, Brand

7. 7 Agenda Introduction International Development; what to look for Au Bon Pains Experience The Indian Market Pre – opening Process Post opening Process Real estate development Take aways

8. 8 Au Bon Pains Experience Introduction to India Courting potential partner Narrowing the field –Approval process Contract process –LOI/MOU, Negotiation, Final Agreement Research Process –Procurement, logistics, Brand research – quantitative and qualitative, menu, culture Opening –Manufacturing & retail

9. 9 Agenda Introduction International Development; what to look for Au Bon Pains Experience The Indian Market Pre – opening Process Post opening Process Real estate development Take Aways

10. 10 The Indian Market Industry OverviewIndustry Overview Indian PerspectiveIndian Perspective Opportunities and Threats of ABPOpportunities and Threats of ABP Focused recommendationsFocused recommendations

11. 11 The Indian Market Fits within the largest segment of disposable income spending – food & beveragesFits within the largest segment of disposable income spending – food & beverages Steady growth in this segment – so at right timeSteady growth in this segment – so at right time As demand for convenience has made eating out a normal routine, the demand for speciality food services has increased manifolds in recent yearsAs demand for convenience has made eating out a normal routine, the demand for speciality food services has increased manifolds in recent years Globalization of Indian food and beverage industry is really on the roll.Globalization of Indian food and beverage industry is really on the roll. Companies e.g. Café Coffee Day, Barista, McDonalds has presence in multiple locations, so competition is fierceCompanies e.g. Café Coffee Day, Barista, McDonalds has presence in multiple locations, so competition is fierce Competitors use LOCATION, PRODUCT MIX and STORE AMBIENCE differentiation to establish market nicheCompetitors use LOCATION, PRODUCT MIX and STORE AMBIENCE differentiation to establish market niche

12. 12 The Indian Market There is a growing affinity of global brand, particularly among 200 million strong middle class.There is a growing affinity of global brand, particularly among 200 million strong middle class. Consumer Food service has been seeing a growth of 18 % for past three year, bolstered by 8% growth in GDP, higher disposable income, more influx of tourists from UK, US and Bangladesh.Consumer Food service has been seeing a growth of 18 % for past three year, bolstered by 8% growth in GDP, higher disposable income, more influx of tourists from UK, US and Bangladesh. A place is needed like Starbucks / Au Bon Pain, to hang out, eat, drink, to see and to be seen.A place is needed like Starbucks / Au Bon Pain, to hang out, eat, drink, to see and to be seen. Industry reports suggest that Indias nascent gourmet coffee market holds the potential for 5000 cafes in next 5 yearsIndustry reports suggest that Indias nascent gourmet coffee market holds the potential for 5000 cafes in next 5 years

13. 13 The Indian Market Creating an dining destination with its strengths ( e.g. varieties and nutritional menu )Creating an dining destination with its strengths ( e.g. varieties and nutritional menu ) 50 % of Indian population is youth ( avg 25 yrs ) with high disposable income.50 % of Indian population is youth ( avg 25 yrs ) with high disposable income. Lack of organised International players in Indian marketLack of organised International players in Indian market Easy accessibility to coffee & tea sourcingEasy accessibility to coffee & tea sourcing Booming organised retail industryBooming organised retail industry Eating out in stylized International brands is in vogueEating out in stylized International brands is in vogue Early entrance advantage as Starbucks is delayed.Early entrance advantage as Starbucks is delayed.

14. 14 The Indian Market Very price sensitive marketVery price sensitive market Café format popular among youngsters onlyCafé format popular among youngsters only Café concept in India relates to beverages.Café concept in India relates to beverages. Health consciousness is in the nascent stage in India, whereas nutritional guidance in stores is an USP for ABP.Health consciousness is in the nascent stage in India, whereas nutritional guidance in stores is an USP for ABP. New in Indian market.New in Indian market.

15. 15 The Indian Market Premium International cuisines entices upmarket IndiansPremium International cuisines entices upmarket Indians International Chains adopt Indianized Menus for expansion and for mass appealInternational Chains adopt Indianized Menus for expansion and for mass appeal McDonalds leads with strong marketing initiativesMcDonalds leads with strong marketing initiatives Corporate dining on the riseCorporate dining on the rise Rich young consumers boost Casual or fast food growthRich young consumers boost Casual or fast food growth Out of home breakfast emerging as foodservice option in big wayOut of home breakfast emerging as foodservice option in big way More than anything, a venue is required to socialize, finalize business deals, conducting interviews, listening to music and reading.More than anything, a venue is required to socialize, finalize business deals, conducting interviews, listening to music and reading.

16. 16 The Indian Market Right time of entry for an International playerRight time of entry for an International player Basic flavor of their speciality menu to be retained with some Indianized additions.Basic flavor of their speciality menu to be retained with some Indianized additions. Thrust on Breakfast menuThrust on Breakfast menu ABPs nutritional guidance to be used as an effective weapon of marketing, as health consciousness is IN.ABPs nutritional guidance to be used as an effective weapon of marketing, as health consciousness is IN. To give an International Café experience in India itself to even the foreigners and Indian International Travelers.To give an International Café experience in India itself to even the foreigners and Indian International Travelers.

17. 17 The Indian Market Consumer research by Pizza Hut, McDonalds, KFC shows Indians want international taste with Indian heart.Consumer research by Pizza Hut, McDonalds, KFC shows Indians want international taste with Indian heart. Delicate balance marketers and chefs have to handle each time they develop a new menu offering.Delicate balance marketers and chefs have to handle each time they develop a new menu offering. Is Indian flavor too much ? Is it diluting the core productIs Indian flavor too much ? Is it diluting the core product 35% of Indian are vegetarian,35% of Indian are vegetarian, In Mumbai & Delhi, 50% population is vegetarianIn Mumbai & Delhi, 50% population is vegetarian In Bangalore & rest of URBAN South India, more than 70% people are non vegetarian ( source KFC studies )In Bangalore & rest of URBAN South India, more than 70% people are non vegetarian ( source KFC studies ) Thus region specific menu is advisable.Thus region specific menu is advisable.

18. 18 The Indian Market As the menu for Au Bon Pain is more of Soups, Salads and Sandwiches, we can do an ideal benchmarking with CCD/Barista MenuAs the menu for Au Bon Pain is more of Soups, Salads and Sandwiches, we can do an ideal benchmarking with CCD/Barista Menu In fact the pricing in Au Bon Pain in India should be in between Café Coffee Day and Barista (5 – 10% higher than CCD and at best par with Barista)In fact the pricing in Au Bon Pain in India should be in between Café Coffee Day and Barista (5 – 10% higher than CCD and at best par with Barista) Average Ticket Value of Café Coffee Day is Rs. 55, whereas Barista is Rs. 70. Ideally for ABP, it should be Rs. 60 – 65. By this the customer profile can be differentiated also.Average Ticket Value of Café Coffee Day is Rs. 55, whereas Barista is Rs. 70. Ideally for ABP, it should be Rs. 60 – 65. By this the customer profile can be differentiated also.

19. 19 The Indian Market Basic International menu format is kept intactBasic International menu format is kept intact No beef in the menu.No beef in the menu. Thrust on sandwiches, salads, soups with a health tagThrust on sandwiches, salads, soups with a health tag Bakery & Confectionary items are big draw in India and the demand is growing at a very fast rate. ABakery & Confectionary items are big draw in India and the demand is growing at a very fast rate. A No. of rice items has been kept limited due to the fact that targeted office crowd wont prefer it.No. of rice items has been kept limited due to the fact that targeted office crowd wont prefer it. Inclusion of favorite Indian fillings in wraps, sandwiches, salads and rice bowl section, which will attract people across all geographies of India.Inclusion of favorite Indian fillings in wraps, sandwiches, salads and rice bowl section, which will attract people across all geographies of India. Thrust is given on the vegetarian selections looking at the vast cross section of vegetarian clienteleThrust is given on the vegetarian selections looking at the vast cross section of vegetarian clientele Nutritional chart in the menuNutritional chart in the menu

20. 20 The Indian Market An International café experience to allure the youth of a booming economy and prosperous India.An International café experience to allure the youth of a booming economy and prosperous India. Great ambience with solid serviceGreat ambience with solid service A unique menu compositionA unique menu composition Playing the VALUE FOR MONEY Card.Playing the VALUE FOR MONEY Card. Should be place of cultural activities e.g. book release function, music release function etc.Should be place of cultural activities e.g. book release function, music release function etc.

21. 21 Agenda Introduction International Development; what to look for Au Bon Pains Experience The Indian Market Pre – opening Process Post opening Process Real estate development Take aways

22. 22 Pre – opening Process Collaborative –Putting the team together –Beginning research for Branding, design, service system, menu, price points, guest demographic etceteras Economic Plan –Objectives, cafe level, company level Manufacturing & Procurement –Development, logistics, benchmarking, training Menu development –Research, benchmarking, tasting, testing Cafe development –Design, service system, FFE Marketing –Strategy & tactics Operations –Hiring, training, standards, execution expectations

23. 23 Agenda Introduction International Development; what to look for Au Bon Pains Experience The Indian Market Pre – opening Process Post opening Process Real estate development Take Aways

24. 24 Post Opening Process Iterating the model –Guest research –Cafe level economics –Fine tuning of menu, prices, marketing, design etceteras –People –Execution Proven Model Roll out of the brand

25. 25 Agenda Introduction International Development; what to look for Au Bon Pains Experience The Indian Market Pre – opening Process Post opening Process Take aways

26. 26 Take Aways Do your homework & become a student Research, Research, Research Listen to the research Listen to your partners Ask questions Create and in country solution Work collaboratively Ask all the questions Understand the culture Be relentless with your process Reap the rewards

27. 27 Final Thought Let my house not be walled on four sides, let all the windows be open, let all the cultures blown in, but let no culture blow me off my feet - Mahatma Gandhi - Mahatma Gandhi