Selling Lobster in the U.S. Opportunities and Challenges U.S. Restaurant Industry ATLANTIC LOBSTER SUMMIT HALIFAX, NOVA SCOTIA October, 2007.

Selling Lobster in the U.S. Opportunities and Challenges

U.S. Restaurant Industry

ATLANTIC LOBSTER SUMMIT HALIFAX , NOVA SCOTIA

October, 2007

Opportunities in the U.S. Market

Darden Restaurants, Inc.

Not Only at Red Lobster…

Lobster SpaghettiLobster Spaghetti

Lobster & Shrimp Pasta

Lobster & Shrimp Pasta

1st Red Lobster 1968 -- Lakeland, Florida1st Red Lobster 1968 -- Lakeland, Florida

Red Lobster Lobster Menu Offerings

Lobster Fest

Food & Beverage Spending

Other

$12 Billion1%

Other

$12 Billion1%

“Food at Home”

$778 Billion61%

“Food at Home”

$778 Billion61%

Restaurant Sales“Away from Home”

$314 Billion

Restaurant Sales“Away from Home”

$314 Billion

$1.3 Trillion$1.3 Trillion

Commercial“Away from Home”

$491 Billion38%

Commercial“Away from Home”

$491 Billion38%

Other Sales“Away from Home”

$177 Billion

Other Sales“Away from Home”

$177 Billion

2006 U.S. Restaurant Industry Sales

$314 Billion

Source: CREST & USDC

Quick ServiceQuick ServiceQuick ServiceQuick Service

Mid-ScaleMid-ScaleMid-ScaleMid-Scale

CasualDiningCasualDining

FineFineDiningDiningFineFine

DiningDining

U.S. Restaurant Growth

$42.8

$199.7

$322.5

$536.9

1970 1987 1997 2007 Est.

$42.8

$199.7

$322.5

$536.9

1970 1987 1997 2007 Est.

Source: National Restaurant Association 2007 Restaurant Industry Forecast

60% Increase inLast 10 Years

60% Increase inLast 10 Years

Restaurant Industry Sales(Billions of Current Dollars)

Restaurant Industry Sales(Billions of Current Dollars)

935,000 restaurants will hit $536.9 billion in sales in 2007935,000 restaurants will hit $536.9 billion in sales in 2007

2006 U.S. Restaurant Industry Sales

$314 Billion

Source: CREST & USDC

Mid-ScaleMid-Scale$50B$50B16%16%

Average Meal Price $9

Mid-ScaleMid-Scale$50B$50B16%16%

Average Meal Price $9Quick ServiceQuick Service$181B$181B

58%58%Average Meal Price $5

Quick ServiceQuick Service$181B$181B

58%58%Average Meal Price $5

2006 U.S. Restaurant Industry Sales

$314 Billion

Source: CREST & USDC

CasualDining$68B21%

Average Meal Price $15

CasualDining$68B21%

Average Meal Price $15

Darden8% Share of

Casual Dining

Darden8% Share of

Casual Dining

FineFineDiningDining$15B$15B

5%5%Average Meal Price $30Average Meal Price $30

FineFineDiningDining$15B$15B

5%5%Average Meal Price $30Average Meal Price $30

Mid-ScaleMid-Scale$50B$50B16%16%

Average Meal Price $9Average Meal Price $9Quick ServiceQuick Service

$181B$181B58%58%

Average Meal Price $5Average Meal Price $5

Opportunities in the U.S. Restaurant Industry

U.S. Lobster Market

Source: National Marine Fishery Service

9%

29%

62%

Cold Warm American

North American Clawed Lobster Production1982 – 2007

30,000

40,000

50,000

60,000

70,000

80,000

90,000

82 84 86 88 90 92 94 96 98 00 02 04 06E

Met

ric

To

ns

Met

ric

To

ns

Florida/Caribbean/Brazil Lobster Production

Western Hemisphere 1982 - 2007

30,000

32,000

34,000

36,000

38,000

40,000

42,000

82 84 86 88 90 92 94 96 98 00 02 04 06E

Met

ric

To

ns

Met

ric

To

ns

Spiny Lobster Stock Status

Status of Stock Countries

Under Exploited Venezuela (some areas)

Fully-exploited or stable

Puerto Rico & Virgin Isles; Turks and Caicos; U.S.A., Belize; Mexico, Costa Rica; Cuba; Antigua & Barbuda; Venezuela (some areas)

Over-Exploited Nicaragua; Jamaica; Dominican Republic; Brazil; Colombia; Honduras

Unknown Martinique; Guadalupe; Haiti; Bahamas; other Lesser Antilles countries

Regional Workshop on the Assessment and Management

of Caribbean Spiny Lobster (Panulirus argus)

Regional Workshop on the Assessment and Management

of Caribbean Spiny Lobster (Panulirus argus)

Global Seafood Procurement…Not Without Controversy

Darden Environmental Trust

Global Aquaculture -- Darden Actions

Seafood Guides – United States• Audubon Society (http://seafood.audubon.org/seafood_wallet.pdf)

• Blue Ocean Institute [Seafood MiniGuide: www.blueoceaninstitute.org]

• Monterey Bay Aquarium [Seafood Watch Pocket Guide: www.seafoodwatch.org]

• Environmental Defense [Seafood Selector: www.oceansalive.org]

• NRDC [Mercury in Fish: www.nrdc.org]

• Shedd Aquarium [Rite Bite Seafood Wallet Card: www.sheddaquarium.org]

• Wildlife Conservation Society [Go Fish card: www.wcs/gofish.org]

• Steinhart Aquarium [California Academy of Sciences Seafood Guide: www.calacademy.org]

• ECHO Fund [Seafood Surveillance Card: www.echofund.org]

• Eartheasy [Sustainable seafood guide: http://eartheasy.com/eat_sustainable_seafoods.htm]

• Physicians for Social Responsibility [Guide to Healthy Fish: www.mercuryaction.org]

• Organic Styles [Seafood Shopping List: www.organicstyle.com]

• Eating Well [The Essential Eating Well Seafood Guide: ww.eatingwell.com]

• Purdue University [Fish for Your Health: http://fn.cfs.purdue.edu/fish4health/]

Standards/Certification Programs

Global Aquaculture Alliance GlobalFAO & WHO/CODEX alimentarius commission GlobalInternational Standards Organization (ISO) GlobalMarine Stewardship Council GlobalNaturland GlobalOffice international des épizooties (OIE) GlobalSafe Quality Food -- SQF GlobalWWF GlobalAgriculture, Fisheries and Conservation Department of Hong Kong/Accredited Fish Farm Scheme Hong KongAlter-trade Japan Japan, IndonesiaBIO-GRO New Zealand New ZealandBIO-Suisse SwitzerlandBrand Canada AmericasCarrefour Quality Line InternalConseil ds appellations agroalimentaires du Québec (CAAQ)/Quebec Organic Reference Standard QuebecEurepGAP: Integrated Aquaculture Assurance ScotlandFriends of the Sea JamaicaFundaciòn Chile ChileIFOAM InternationalLabel Rouge FranceMarine Aquarium Council (MAC) InternationalMilieukeur NetherlandsNASAA Australian and South PacificNational Code System for Responsible Aquaculture CanadaQuality Approved Scottish Salmon/Tartan Quality Mark ScotlandSafe Quality Food CanadaShrimp Seal of Quality BangladeshSoil Association UKSPLAM MalaysiaSwiss Import Promotion Programme (SIPPO) SwitzerlandThai Quality Shrimp ThailandUSDA USUSDA - Organic USWhole Foods Internal

Proposed Solutions -- Short Term

The Role of International Organizations

• Companies in the United States, Japan, European nations, and other developed nations work to reduce number of standards.

– Effort should be led by international organizations such as theFood and Agriculture Organization of the United Nations

Proposed Solutions -- Long-Term

The Role of Governments • Consumer facing companies, production companies, and

supply chain companies should petition their respective governmentsto enhance national laws pertaining to environment and social justice– For emerging nations, credibility of their laws and their enforcement

is key to government supplanting private standard setting organizations

• Partnerships can be developed with stakeholders, such as non-governmental organizations to avoid negative impacts on ecosystems, communities, and other unplanned activities

Summary of MarketOpportunities and Challenges

• The Casual Dining and Fine Dining segments of the U.S. restaurant industry will continue to grow

• Increasing sales to the Casual Dining segment will require creative approaches where the average meal price is $15.00

• A static Western Hemisphere lobster resource is an opportunity tempered by consideration for consumers’ price sensitivity for restaurant meals

• Industry needs to address growing media attention to food safety, resource management and sustainability