The legaspi company

Trends and Consumer Habits in the U.S. Hispanic Markets Presented by

José de Jesús Legaspi

FRANCHISES CREATE

BUY INTO A SYSTEM

A SYSTEM

BUSINESS

OPPORTUNITY

INTRODUCTION The Legaspi Company (“TLC”) is The pioneer in Hispanic retailing.

In nearly 40 years, TLC has focused its commercial real estate efforts in ownership, development, redevelopment, brokerage, landlord & tenant representation and consulting. The company’s knowledge in Hispanic demography has enabled it to effectively identify and capitalize on untapped market opportunities and develop projects in urban and Hispanic areas.

IN THE NEWS • The Legaspi Company’s Vanguardia Initiative program was honored with the 2014 U.S. Silver MAXI Award in Las Vegas by ICSC. • The Legaspi Company as No. 34 of The World’s 50 Most Innovative Companies and No. 3 of The World’s Top 10 Most Innovative Companies in Retail • Time Magazine also released a featured story “Mercado of America” in 2014, highlighting CEO José de Jesús Legaspi and his mall — La Gran Plaza • In 2015, Fast Company honored José de Jesús Legaspi as a new member of the Most Creative People in Business 1000

U.S. POPULATION │ Increasing and Evolving Population Distribution Growth by Race 1.5

6.5 11.5 79.6

12.6 3.6 12.3

18.5 5.6 12.8

75.1 70.3

1980

2000

2017

Source: Authors’ graph using U.S. Census Bureau and Claritas Pop-­‐Facts Premier 2017 Estimates data

280%

Hispanic Population Growth Since 1980

Hispanic Asian Black White Alone

U.S. HISPANIC POPULATION

60+Million Hispanics Hispanic Population by State 2,000,000 to 15,471,000 900,000 to 1,999,999 500,000 to 899,999 350,000 to 499,999 220,000 to 349,999 156,000 to 219,999 40,000 to 155,999 12,000 to 39,999

– 20 states have over half a million Hispanic residents –

Source: Authors’ map using Claritas Pop-­‐Facts Premier 2017 data

HISPANIC DEMOGRAPHICS & PSYCHOGRAPHICS DEMOGRAPHICS • 60+ million & over 65% are U.S. born • Median Age is 28.7 – the youngest major ethnic group in the nation • Average household size is 3.3 compared to 2.5 for non-­‐Hispanics

PSYCHOGRAPHICS • Hispanics are multicultural and bilingual • Actively using social media & becoming trendsetters • Hispanics are historically family-­‐oriented Source: Claritas Pop-­‐Facts Premier 2017 Estimates

HISPANICS: A Growing Consumer Force

Hispanic Purchasing Power Increase in 2017

$1.7 Trillion

Billions

U.S. Purchasing Power by Race $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0

$1,802

$1,013 $959

$320 $213 $117 1990

$608 $495 $277

$604

2000

2010

Hispanic

Black

$1,392 $1,205

$1,458 $1,207

$891

2016

2021

Asian

Sources: Statista.com; Authors’ graph using Selig Center for Economic Growth, Terry College of Business, The University of Georgia, June 2016 data.

GROSS DOMESTIC PRODUCT (GDP) GDP of 10 Largest Economies in the World & U.S. Latinos in Trillion U.S. Dollars, 2015 1. U.S. 2. China 3. Japan 4. Germany 5. UK 6. France U.S. Latinos U.S. HISPANICS 7. India 8. Italy 9. Brazil 10. Canada

18.04 11.07

Latino U.S. GDP

4.38 3.36 2.86 2.42

• 7th largest in the world

2.09

• Growing 70% faster than the Country’s non-­‐Latino

2.13 1.82 1.8 1.55

• 2nd largest among all U.S. states

0 5 10 15 20 Source: Latino Gross Domestic Product (GDP) Report: Quantifying the Impact of American Hispanic Economic Growth

TEN LARGEST HISPANIC CONSUMER MARKETS

U.S.A. California Texas Florida New York New Jersey Illinois Arizona Colorado New Mexico Virginia

Total Population

Hispanic Share

325,000,000 40,000,000 28,000,000 21,000,000 20,000,000 9,000,000 13,000,000 7,000,000 6,000,000 40,000,000 8,000,000

18% 39 % 39 % 25% 19% 20 % 17% 31% 22% 39% 9%

2016 Hispanic Buying Power (Billions)

$14,000 $400 $300 $140 $100 $51 $50 $42 $27 $25 $23

California

alone accounts for 26% of Hispanic purchasing power.

Sources: Selig Center for Economic Growth, Terry College of Business, The University of Georgia, June 2016; Population: Claritas Pop-­‐Facts Premier 2017

TOP 10 METROPOLITAN AREAS │ by Hispanic Population 25,000,000

Total Population

$49,589

20,000,000

Hispanic Population

$46,800

$46,017

$47,467

25%

44%

37%

$51,135

Hispanic Median HH Income

$50,521

$45,939

$42,062

$46,357

$52,331

15,000,000 10,000,000 5,000,000 -­‐

46%

51%

Source: Authors’ graph using Claritas Pop-­‐Facts Premier 2017 / Nielsen data

22%

29%

31%

55%

34%

HISPANIC HOUSEHOLD INCOME Median Household Income

$45,858 Income of $100K+

104% Growth Since 1980

Hispanic Households by Total Income Percentage Distribution 7.0 28.4 31.4

14.3

16.6

31.0

28.9

28.8

27.8

33.1

25.7

26.6

1980

2000

2015

$100,000 & Over $50,000 to $99,999 $25,000 to $49,999 $24,999 & Under

Sources: Claritas Pop-­‐Facts Premier 2017 Estimates; Authors’ graph using U.S. Census Bureau, Income and Poverty in the United State: 2015

YOUTHFUL DRIVEN CONSUMER U.S. Millennials by Ethnicity

Hispanic Millennials Nationwide

16.6 Million

Hispanic

22% Asian

6% Black

14%

Non-Hispanic White

58%

• Predominately bicultural & native born, more than any previous generation • Hispanic Millennials are the largest & fastest growing multicultural group

Source: Authors’ graphs using Claritas Pop-­‐Facts Premier 2017 / Nielsen data; *Authors’ calculations using Claritas Pop-­‐Facts

HISPANIC LABOR FORCE PARTICIPATION Labor Force Participation Rates, Annual Averages Population Age 16 and Older

64

69.7

65.9

63.8

67.1

62.7

1980

2000

2015

“

Hispanic Total U.S.

Hispanics accounted for 70% of the U.S. work force’s increase in the first half of this decade.

”

Sources: Authors’ graph using U.S. Bureau of Labor Statistics, Current Population Survey (CPS); Latino Gross Domestic Product (GDP) Report: Quantifying the Impact of American Hispanic Economic Growth

EDUCATIONAL ATTAINMENT: A Work in Progress Educational Attainment of the Hispanic Population 25 Years Old & Over 15.5 10.4

7.6

52.4

104%

66.7

Growth Since 1980

High School Graduation

16.2 1980

Bachelor’s Degree or More

2000

High School Graduate or More

2015 Bachelor's Degree or More

312%

Growth Since 1980

Sources: Authors’ graph using U.S. Census Bureau Statistical Abstract of the United States, Census 2000 and 2015 Current Population Survey data

Hispanic Entrepreneurship: BOOSTING THE U.S. ECONOMY

*2012 Hispanic-Owned Businesses The Legaspi Company

3.31 MILLION 2016 Hispanic-Owned Businesses Projections

4.23 MILLION 2016 Total Sales Receipts for Hispanic-Owned Business

$

$668 BILLION INCREASE 29% SINCE 2012

Sources: *U.S. Census Bureau, 2012 Survey of Business Owners; Geoscape Hispanic Businesses & Entrepreneurs Drive Growth in the New Economy, 4th Annual Report

HISPANIC-OWNED FRANCHISES

400,000

Hispanic 231%

371,078

350,000 300,000 250,000 200,000 150,000 100,000

237,906

200%

Black, 169%

150%

Asian 87%

White 56%

60,032 32,147

40,587 15,087

50,000

250%

100%

52,712 15,931

0

50% 0%

White

Black

2007 Source: Authors’ graph using U.S. Census Bureau data

Asian

2012

Growth

Hispanic

SUCCESSFUL HISPANIC ENTREPRENEURS Guillermo Perales Sun Holdings • Company owns nearly 800 stores and plans to open 100 units & acquiring 50 more • Operates Golden Corral, Burger King, Popeyes Louisiana Kitchen, Cicis, Arby’s, Krispy Kreme, GNC and T-­‐ Mobile

Alex Meruelo

Meruelo Group

• Manages 35 companies in seven different industries • La Pizza Loca, Pacific Whey Café, Okami, FujiSan, GSR Grand, KWHY-­‐TV, Commercial Bank of California, et al

Frank M. Sanchez

The Sanchez Family Corporation

• Owner & Operator at McDonald’s Corp.

• Operates McDonald’s restaurants in Los Angeles, Victorville, Apple Valley, Oceanside, San Juan Capistrano and San Diego Sources: bizjournals.com, meruelogroup.com, and latinola.com

HISPANIC-­‐OWNED FRANCHISES

FRANCHISES: Targeting Hispanic Entrepreneurs & Consumers Developing bilingual websites

Franchises Actively Attracting Hispanic

Entrepreneurs & Consumers

Supporting Hispanic-­‐focused events Innovating menus Including Hispanic-­‐focused in-­‐store signage Connecting with Spanish-­‐language media Founding Hispanic educational initiatives

Source: Franchising World: Reaching the Untapped Latino Market in Franchising

EL POLLO LOCO & LEGASPI HISTORY In 1979-­‐1983, Mr. Legaspi was an independent real estate consultant for new-­‐store development and store expansions. He was directly involved for the expansion of 21 locations. He was part owner of a store in El Monte, which he then sold interest as 19 Southern California restaurants of El Pollo Loco were acquired by Denny’s Inc. in 1983.

HISPANIC CONSUMER SPENDING TRENDS

Spend More

-­‐Apparel -­‐Groceries -­‐Cell Phone Services -­‐Footwear

Higher Share of Income

-­‐Restaurants -­‐Housing -­‐Vehicle Purchases

-­‐Gasoline -­‐Car Insurance

Source: Selig Center for Economic Growth, Terry College of Business, The University of Georgia, June 2016

U.S. AVERAGE ANNUAL SPENDING SHARE 2014-2015 Food at Home Food Away from Home Housing Apparel & Services Men & Boys Apparel & Services Women & Girls Apparel & Services Cellular Phone Services Vehicle Purchases (net outlay) Footwear Utilities, Fuels & Public Services

8.9% 5.6% 35.2% 4.2% 1.1% 1.6% 2.5% 7.5% 0.9% 7.7% Hispanic Consumer

7.0% 5.2% 32.7% 3.3% 0.8% 1.3% 1.7% 6.7% 0.7% 7.0% Non-­‐Hispanic Consumer

Source: Authors’ graph using Selig Center for Economic Growth, based on data from the Consumer Expenditure Survey, 2015 data.

HISPANIC TOP BRANDS

HISPANIC AUTO SALES TREND PURCHASE NEW OVER USED

71%

VS.

Hispanics

29%

Hispanics

34%

Of New-­‐Vehicle Sales Growth

Non-­‐Hispanic

LUXURY MODEL AS 1ST VEHICLE

41%

2015 HISPANIC SALES GROWTH

VS.

27% Non-­‐Hispanic

TOP HISPANIC-­‐OWNED DEALERS -­‐Greenway Ford Inc, FL -­‐Bravo Southwest LP, TX -­‐Headquarter Toyota, FL -­‐Michael Shaw’s Car Dealerships, CO, TX, LA -­‐Gonzalez Automotive Group Inc, CA

Source: Jumpstart Automotive Group: Today’s Auto shoppers, Dealermarketing.com; Univison.com

LATINAS: Influencing Retailers M·∙A·∙C Selena makeup collection sold out on the first day of online sales (11/30/16) U.S. Cosmetic Sales 7.4%

Source: Nielsen, usnews.com

-­‐1.2% Non-­‐Hispanic

Hispanics

HISPANIC BUYING BEHAVIOR Shopping is a Social Experience

Nearly 8 IN10 Hispanics go Grocery Shopping with Another Person Hispanic Shoppers Eat More Meals per Day

Average Meals per Day 3.3 vs. 2.8 Hispanic

Non-­‐Hispanic

Average Monthly Grocery Spending $391 $361 Older Hispanic Millennials (25-­‐34)

Total Hispanic shoppers

$331 Total U.S. Shoppers

Consumer Brand Decision is Based on Loyalty & Quality

Source: The Why? Behind the Buy Shopper Survey and U.S. Hispanic Shopper Study, 5th Edition by Acosta, Inc. and Univision Communications Inc.

HISPANICS: Influential in Fresh Groceries

Hispanic Organic Purchases

Source: The Why? Behind the Buy A Profile of the U.S. Hispanic Shopper

2015

30.5%

2014

27.8%

2013

14.4%

+69% vs. +52% for Total U.S.

HISPANIC INFLUENCES ON SNACKS Snack Decision Influence

Heritage Culture Upbringing

Source: VRTC: Snacking Culture: How Hispanic Consumers Influence Snack Trends

Founded in 2008 in South Gate, California. Currently has 12 locations in California.

Founded in 2012 in Montebello, California.

Now in 10 Southern California malls & two new locations in Las Vegas, NV.

THE HISPANIC MARKET I An Undeniably Opportunity The Hispanic population will reach 119 million by 2060 – 30% of the total U.S. population Hispanics are the fastest-­‐growing market segment for almost all consumer goods The Hispanic population will continue to be younger & larger

The Legaspi Company

José de Jesús Legaspi President & CEO