Dodo Pizza International Franchising FAQ Updated in June 2020.

Concept, brand and product:

Dodo Pizza’s consumer proposition, concept and product? What is the target consumer for Dodo Pizza? Dodo Pizza’s major global competitors? What differentiates the Dodo Pizza brand vs competition? What is Dodo Pizza’s pricing policy?

Global footprint and strategy:

What countries is Dodo Pizza currently operating in? Number of company-owned and franchised stores? For how many years has Dodo Pizza been offering franchising? How many stores were closed since the company’s inception? What is Dodo Pizza’s turnover as a franchisor? Location of global HQ and number of corporate employees?

Franchising, terms and availability:

What is the initial fee/franchise fee and royalty? Other charges besides royalties and initial fees? How long will be the term of the franchise agreement? Territories currently available for franchising with Dodo Pizza? What ongoing support is given to franchisees? What training does Dodo Pizza provide to the franchisee and their staff? What is the process to become a Dodo Pizza franchisee?

Store format and unit economics:

Size of a typical Dodo Pizza store? Seat count at a standard Dodo Pizza store? Number of people required to run a Dodo Pizza store? Staffing structure and functions performed by each position? Average sales of a Dodo Pizza store in the home market per year / per day? Standard sales distribution by time of day? Home market average check at Dodo Pizza? Sales contribution of delivery vs dine-in? COGS and Food Cost in a Dodo Pizza P&L? Labor Cost in a Dodo Pizza unit? Dodo Pizza store-level EBITDA margin? Set up cost per Dodo Pizza store?

Procurement and supply chain:

Dodo Pizza menu categories and their sales contribution? How does supply chain work? Does Dodo Pizza use HALAL certified products? Vegan products? Separate processing and distribution unit?

Concept, brand and product

W hat, in basic terms, is the nature of Dodo Pizza’s consumer proposition, concept and product?

We prepare and serve to our customers a variety of delicious pizzas, pizza slices, side dishes, desserts, hot and cold beverages and other quality food items either via our own delivery or to be consumed inside our limited service restaurants. We leverage our passion for technology and design in pursuit of unparalleled customer experience. We built the first in the pizza industry proprietary international mobile app. Our customers can watch their food being prepared online. Our restaurants are clean, stylish and very cozy.

W hat is the target consumer for Dodo Pizza?

Dodo Pizza is the mass market pizza brand for the contemporary world. Given our special fondness for technology and the Internet, we tend to appeal more naturally to the under 45 consumer. But as mobile apps, smartphones and social media become more ubiquitous with people of all ages, our audience grows and becomes more diverse.

W ho are Dodo Pizza’s major global competitors?

Our major direct international competitors are Domino's Pizza, Papa John's, Pizza Hut, Little Caesars, Telepizza. It needs to be noted that on the delivery side of the business we also compete de facto with third party delivery companies and on the dine-in side with QSR chains.

W hat differentiates the Dodo Pizza brand vs competition?

Our brand is an extension of our people and culture. It’s young at heart, fun, authentic, curious, transparent, flamboyant, obsessive over details and cleanliness, and it speaks the language of the modern consumer. We are pizza geeks who use data, code and transparency to create the better pizza experience for our customers. Sure, we are small and fairly unknown, compared to the big guys, our global competitors. So we'll just try harder and be better for every single customer.

Our incredible and by all means unlikely 9-year journey from a single pizza shop in a remote town in northern Russia to being the fastest growing restaurant chain in Europe with over 600 stores in 13 countries is proof of endless possibilities. This inspires us to continue improving and innovating. And through our products, our brand and communications, our user-friendly design and transparent service we want to share our inspiration with the world.

W hat is Dodo Pizza’s pricing policy with respect to competition?

This varies and depends primarily on our actual position in a given market, the level of competition, Dodo Pizza brand awareness, marketing strategy etc. In some of our markets we price above competition, whereas in others, slightly below. We view pricing more or less as a tactical matter, which can and should be adjusted as needed. Having said that, we would typically be strongly opposed to pricing significantly below competition simply because we believe that we are capable of delivering superior experience and that this should be reflected in pricing.

Global footprint and strategy

W hat countries is Dodo Pizza currently operating in?

There are currently Dodo Pizza stores in the following 13 countries: Russia, Kazakhstan, Belarus, UK, USA, China, Kyrgyzstan, Uzbekistan, Estonia, Lithuania, Romania, Slovenia, Nigeria. Current country launch pipeline (meaning that Dodo Pizza will soon be entering) as per franchise commitments is as follows: Poland, Germany, Slovakia, Czech Republic, Finland and Hungary.

N umber of company-owned and franchised stores?

As of 15 April 2020 there were 25 company-owned stores and 579 franchised.

F or how many years has Dodo Pizza been offering franchising?

The first Dodo Pizza store opened in Syktyvkar, Russia in 2011. Two years later, in 2013, we started offering franchising in Russia.

H ow many stores were closed since the company’s inception?

9 (as of June 2020).

W hat is Dodo Pizza’s turnover as a franchisor?

As a franchisor, we have 2 sources of revenue: (1) franchise fees (also often referred to as initial fee, opening fee etc) and (2) royalties.

(1) For the year 2019 we received 53.1 million in Russian rubles as franchise fees, which is equivalent to USD $0.85 million (at the exchange rate on 31 December 2019). ​ ​

(2) And, for the same year, 2019, we received 874.5 million in Russian rubles as royalty payments, which is equivalent to USD $14 million (at the exchange rate on 31 December ​ ​ 2019).

Therefore, our revenue from franchising for the year 2019 amounted to USD $14.85 million. ​ ​

This data is available in our open monthly financial updates, here in slide 13: January 2020. ​ ​

We also own and operate corporate-owned Dodo Pizza stores. In the 12 month period February 2019 to January 2020 we opened 6 new corporate-owned stores, increasing their number from 19 to 25. Their total revenue (sales) for the period amounted to 909.5 million Russian rubles, which is equivalent to USD $14.21 million (at the exchange rate on 31 January 2020).

This data is available in our open monthly financial updates, here in slide 14: February 2020. ​ ​

L ocation of global HQ and number of corporate employees?

Our global HQ is in Moscow, Russia. We also operate corporate branches in the UK and China. Total number of corporate staff is around 300 (April 2020).

Franchising, terms and availability

W hat is the initial fee/franchise fee and royalty?

Franchise fees and royalties need to be discussed on an individual basis for each new country. On signing the franchise agreement for a new market we typically collect a country fee which covers franchise fees for the first 20-40 stores to be launched in the country.

A re there other charges besides royalties and initial fees?

Not outside of Russia, Kazakhstan and Belarus. In Russia, we do have a 3% marketing fee. And it is likely that at some point we will introduce the marketing fee also in the UK and possibly in other future markets where we will be working with multiple franchisees in one country.

H ow long will be the term of the franchise agreement?

This will depend on the country. But the standard offer for new countries is 20 years.

W hat territories are currently available for franchising with Dodo Pizza?

Single-unit franchising is currently available only in the following countries: Russia, Kazakhstan, Belarus, UK, Romania.

In the following countries we already have exclusive country-wide agreements and therefore do not consider any franchise applications: Estonia, Lithuania, Latvia, Slovakia, Finland, Slovenia, Hungary, Czech Republic, Uzbekistan, Kyrgyzstan.

Germany We are currently working on the pilot stores in Germany. The launch of the first store is planned for the second half of 2020. After a test period of at least one year we will be prepared to offer franchising in Germany, probably in 2022. If you would like to be notified about the start of franchising in Germany please write to [email protected] and we will put you on the ​ ​ notification list.

Poland Our master franchisee in Poland will start offering franchises there in 2022-2023. If you would like to be notified about the start of franchising in Poland please write to [email protected] and ​ ​ we will put you on the notification list.

USA and Canada Dodo Pizza stores currently operating in the USA are pilot projects. At this stage we are not prepared to expand in the US or Canada. Therefore, franchising in these countries is temporarily not available. If you’d like to be notified about the start of franchising in the US and/or Canada please write to [email protected] and we will put you on the notification list. ​

China We are currently focused on expanding our corporate-owned stores in China. Franchising there is temporarily unavailable. However, If you’d like to be notified when we resume franchising in China, please write to [email protected] and we will put you on the notification list. ​ ​

Nigeria Our master franchisee in Nigeria is currently focused on expanding via their corporate-owned stores. So franchising there is temporarily unavailable. However, If you’d like to be notified of opening franchising opportunities in Nigeria, please write to [email protected] and we will put you ​ ​ on the notification list.

Georgia, Armenia, Azerbaijan, Tajikistan, Turkmenistan, Moldova, Mongolia Franchising in these countries is not available, as we intend to focus on larger markets in the next 4-6 years. If you would like to be notified of the franchise opportunity in either of these countries, please get in touch via [email protected] and we will put you on the respective notification list. ​ ​

All other countries We welcome franchising inquiries for other countries. Please be advised that only multi-unit franchising is available for new markets. Prospective franchisees must have extensive experience in multi-unit foodservice or retail operations, excellent knowledge of their local QSR and pizza delivery market and the resources at their disposal to execute an aggressive growth strategy in their country.

The current minimum market development requirement is at least 20 stores within the first 5 years. Please direct your franchising inquiries to [email protected]. ​ ​

W hat ongoing support is given to franchisees by Dodo Pizza?

Menu. We develop the initial menu for the launch in the new country. And then from time to time we will adapt new products that we release in our home market to your market (subject to common sense and market relevance) and/or from time to time develop new products specifically for your market. Gradually, the country-wide franchisee is expected to take a more active role in their menu development as they are in a more immediate touch with the local tastes, trends and suppliers etc.

Restaurant site approval and design. We review all properties proposed by the franchisee to become Dodo Pizza restaurants. After approving a site we produce the kitchen layout and store design. We then pass these on to the franchisee to be adapted by a local architect and used by the construction team.

Knowledge Base. We provide access to our Knowledge Base. This is a restricted-access online portal that acts as an online operations manual, training and communications platform, storage for branded design and marketing materials, Dodo IS manuals, brandbook and design guidelines etc.

Dodo IS, the Dodo Pizza mobile app and website for customers. This is perhaps the most differentiating and advanced feature of the Dodo Pizza franchise system. When launching a new country we adapt Dodo IS by integrating it with local payment systems, address systems, and by integrating translations into the local language. Same goes for the Dodo Pizza mobile app and website. After the launch, we continuously maintain the system, host it, provide technical support, develop and roll-out new features.

Ongoing quality control. We have our proprietary mystery shopper program that we will use, along with other quality control instruments, to monitor and assure the franchisee’s compliance with Dodo Pizza standards. Our in-house quality control department runs these programs. In addition, of course, there will be regular field visits by our corporate staff to make their own field assessments and assist with improving operations and compliance.

Business development and franchisee support. Our international business development team will be continuously in touch with you, helping with ​ ​ various operational and marketing matters. They will monitor your operations metrics, hold regular calls with you to discuss tactics and pain points. This is a team that acts essentially as your representative at the franchisor’s HQ.

Marketing support. Within the international business development team, there is a separate marketing team that will continuously advise you (your marketing team) on your marketing activities, help with

implementation of our relevant best marketing practices and ensure that you have access to the most up-to-date marketing visuals. Our marketing managers will also keep track of some of your essential marketing metrics (including online and offline campaigns) to ensure the fastest learning curve for your marketing team and that you take full advantage of the cool ideas and marketing initiatives that we come up with.

All product photography and graphic design. We handle production of all visuals that will be used on the Dodo Pizza website and app in your country as well as on menu boards in the store signs and posters and on the promo print materials (including packaging and uniforms). That is not to say that you will not be able to produce some cool stuff for your Dodo Pizza social media accounts. You will, as per our brandbook and design guidelines.

Management meetings and Annual Dodo Pizza Franchisee Summit. Once or twice a year we will have a big management meeting with you to review your P&L, business plan and make any strategic adjustments together if need be. In addition, we hold an annual Dodo Pizza Franchisee summit every summer, which you and your team members will attend to meet other Dodo Pizza operators, corporate staff, exchange ideas, have fun and just get energised.

W hat training does Dodo Pizza provide to the franchisee and their staff?

There is mandatory training for key operations management, which normally takes place at our training center in Moscow (5-7 days). Additionally, prior to the launch of the first store in a new country, our international training specialist will travel to the location to train the store team before the launch on site (7-10 days). Additional training for store staff is available at any time at the franchisee’s request. Depending on the course, this will either take place online or at our training center.

We do have additional online training for advanced employees (store managers, shift managers, cash desk excellence course). But not all of them are presently available in English, though we are working on it.

W hat is the process to become a Dodo Pizza franchisee?

1) Carefully read the information on dodofranchise.com and in this document. 2) Make sure that (a) the territory that you are interested in is not listed among countries where we don’t offer franchising and (b) that at least in your estimation you meet the basic Dodo Pizza franchisee requirements for a new country / territory (including territories in the UK). Both are outlined in this document. 3) Please write to [email protected] indicating your territory of interest and specify ​ ​ your qualifications, relevant experience, current occupation and whatever else you feel might be relevant. 4) We will then schedule a call, during which we will be able to answer each other’s questions and discuss further steps.

5) Next stage would be for you to come and visit Dodo Pizza global HQ in Moscow, meet the team, visit various Dodo Pizza stores, see our kitchens and how everything works, taste the products. 6) Provided that everything will have been to our mutual satisfaction up to this point, we will then need to visit you, meet your team and see for ourselves your current operation, do a little competition analysis of our own. At our discretion we may choose to bypass this stage. 7) Then you will prepare a pizza and QSR market analysis of your proposed new territory as well as a business plan for your Dodo Pizza franchise business and present it to us. 8) Then, subject to our approval of your market presentation and business plan, we will discuss and agree on the basic terms of the franchise agreement to be concluded. We will sign a term sheet about our intentions to enter into a franchise agreement, outlining the basic terms of the agreement. We will accept a deposit of 50% of the country / territory franchise fee. 9) Approximately 6 months before the scheduled launch of the first store in your country or territory we will commence localising Dodo IS, Dodo Pizza mobile app and website for your market, creating the menu, store design and other pre-launch preparations. Somewhere around this time your key operations management team will need to travel to Moscow and undergo essential training at our training center. 10) Before the launch of the first store we sign the franchise agreement for your country / territory and you will pay the remaining 50% of the franchise fee. Our product team and field training specialist will travel to train your store team, test and confirm the launch menu at your store. 11) Launch of the first store.

Store format and unit economics

W hat is the actual size of a typical Dodo Pizza store?

We have several store formats. Size of the kitchen (back-of-house) is more or less the same across these: from 70 to 120 m2. But the desired size of the dining area is going to be different for each format. We have a flexible, common sense approach to selecting and approving best-suited properties for Dodo Pizza stores, especially in new international markets. So there always will be some reasonable changes to the formats (and desired site parameters) to accommodate specific local market circumstances. Having said that, below are the current standard requirements for the 3 main formats.

Dodo Pizza City. ​ This is a store for city center / heavy footfall areas in larger cities where properties are usually relatively more expensive. It is geared towards delivering to surrounding businesses and serving on the premises to people on the go who wouldn’t spend too much time in the store. Ideal total area is about 130 m2, but can easily be within 100-160 m2 range. The seating area will have mostly high ​ ​ ​ ​ chairs and tables. And there is no play zone for children.

Dodo Pizza Family. ​

This is a store format for residential areas and mid-size to small cities, where properties are less costly and therefore, larger spaces can be occupied. Delivery is covering the surrounding residential and businesses. This store has a larger dining area, predominantly low, soft seating conducive to prolonged stays and usually a play zone for children. Total space is about 220 m2, but can be as small ​ ​ as 160 m2 and as large as 280 m2. ​ ​ ​ ​

Dodo Pizza Express. ​ This is a food court format for shopping malls. It doesn’t have delivery (though there are exceptions). Here we are essentially only talking about the back-of-house area: 50 to 90 m2. And the seating area ​ ​ is that of the food court. It should be noted that this is a supplementary format. And Dodo Pizza Express stores are typically not included in the store opening commitments of an international franchisee nor do they count towards store openings in the development schedule of the franchise agreement.

W hat is the seat count at a standard Dodo Pizza store?

Depends on the store format and available space. The smallest Dodo Pizza City stores have 15 seats. Larger Dodo Pizza Family stores have 60 and more seats.

W hat is the average number of people required to run a Dodo Pizza store?

This will depend on: - the actual amount of business the store is doing, that is it’s order counts: general principle being - the more orders the store is getting, the more employees are needed to fulfill them - whether a store has part-time employees: the fewer hours an average employee works per period the more employees are needed for the same level of sales ,same work to be done, in that period - employees’ skill level: the more skilled and experienced an average employee is, the fewer employees are needed to do the same amount of work

An average in (terms of sales) store, working 7 days a week in 2 8-hour shifts per day, with employees working on average 40 hours per week (that is, all full-time employees) will require a staff of around 25 people. ​ ​

W hat is the staffing structure of a Dodo Pizza store and what are the functions performed by each position?

Store manager. ​ The store manager does not have to be always present at the store but can function as any and all of the positions below and often does. One store manager per store. Store manager’s primary responsibilities are: purchasing and stock management, hiring and staff management, reporting store P&L, setting and controlling store KPIs, shift scheduling. Store manager is a salary position.

Shift supervisor. ​ There must be one shift supervisor managing every shift. They are usually paid per hour and can combine with performing tasks of any of the other positions below (cash desk, pizzamaker). There are typically at least 2-3 shift managers attached to a store. This position is responsible for running operations during a specific shift. The supervisor clocks employees in and out of the shift, distributes work between the store team on the shift, manages problematic orders and certain customer complaints, trains new shift supervisors.

Kitchen employee: pizzamaker and/or cash desk person. These are often interchangeable, especially during less busy hours and when there are fewer people on shift. As mentioned above, at any time, a store manager or shift supervisor can help out as pizzamaker or cash desk attendant. About 10-12 pizzamakers are needed per store on average.

Delivery driver. ​ At Dodo Pizza drivers typically have a separate entrance and don’t enter the kitchen itself or the dining area. Though in some of our international stores we have experimented with multi-function employees, specifically combining functions of kitchen employee and delivery driver. Drivers have their own delivery POS station in the back of the store where they pick up orders for delivery. In our home markets (Russia and CIS) drivers are paid per hour plus per each delivery. They use their own automobiles, bikes or deliver on foot. In some international markets the store provides the means of delivery to the driver. Provided that all drivers work 40 hours a week, an average store will need 10 of them to run smoothly.

A verage sales of a Dodo Pizza store in the home market per year / per day?

Average annual sales per store (including new stores) in Russia and CIS for the year from Marrch 2019 to February 2020: 40.487 million in Russian rubles, which is equivalent to USD $0.643 million ​ (at the exchange rate on 31 January 2020). Here is a spreadsheet with all monthly sales and order ​ counts for every Dodo Pizza store in the world since the company's inception in 2011. ​

Average daily sales per store (including new stores) in Russia and CIS for the 12 month period from March 2019 to February 2020: 110.6 thousand in Russian rubles or USD $1,728 (at 31 January 2020 ​ ​ exchange rate).

S tandard sales distribution by time of day?

This very much depends on the store location and other parameters. But overall, the current breakdown is roughly as follows: Breakfast: 10% Lunch: 30% Afternoon: 20% Evening: 40%

W hat is the average check at Dodo Pizza?

We look at delivery average check and dine-in average check separately. Delivery and on-premises are in a sense two separate businesses operating out of one kitchen. The delivery check is on average 3 times the size of the dine-in check. This is because dine-in is largely driven by lower price point items: pizza by the slice, coffee, our signature wrap The Dodster, side dishes ​ ​ and cold beverages. Whereas delivery is mostly about whole pizzas and combos.

Average check in Russia for the 12 month period March 2019 to February 2020 (converted from Russian rubles at the exchange rate on 31 January 2020): Delivery: USD $14.67 ​ Dine-in: USD $5.43 ​

W hat is the sales contribution of delivery vs dine-in?

Historically, it has been 70-80% delivery and the rest dine-in. But more recently we have been making efforts to shift towards a more balanced model. So now dine-in represents up to 40% in terms of sales and in some cases over 50%. Some markets, for example Nigeria or remote small towns in Russia, are 70-90% dine-in.

W hat is the average COGS or Food Cost in a typical Dodo Pizza P&L?

The Unit Cost (food cost + packaging) in Russia and CIS generally fluctuates around 30%. In our ​ ​ European stores the Unit Cost is generally lower, around 25% or below. ​ ​

W hat is the average Labor Cost in a Dodo Pizza unit?

In our home markets, Russia and CIS, we target the following equetion: Unit Cost + Labor Cost = 60%. Unit Cost is Food Cost + packaging. Depending on various factors, the LC and UC proportions can ​ vary between regions and cities. For example, in central Russia (around Moscow and St Petersburg) labor tends to be relatively in higher demand and therefore represents a higher expenditure in the unit economics, while food supplies cost less (than in remote northern regions, for example) because of lower logistics costs. Conversely, in more remote parts of Russia, Unit Cost ends up being higher because of costly logistics but Labor Cost is lower than in central Russia.

W hat is the average Dodo Pizza store-level EBITDA margin?

In Russia, we target store-level EBITDA margin of 18% for mature (over 1 year old) stores. You can take a closer look at our corporate owned stores for reference. Notice how EBITDA margin in Moscow and St Petersburg stores is consistently below that of the stores in Syktyvkar and Khimki. ​ ​ ​ ​ ​ ​ ​ None of this implies that we would expect the same margins in other markets. For each new market

entry, a prospective franchisee is expected to conduct their own market research, planning and unit economics modeling.

W hat is the approximate set up cost per Dodo Pizza store?

An average Dodo Pizza store in our current markets (excluding China and the UK) requires an investment of approximately USD $250 thousand. This consists of the following expenditures:

Equipment - 30% Construction works - 15% Construction materials - 23% Furniture - 10% Ventilation - 5% Front signage - 1.5% Initial stock - 2% Payroll and taxes - 2% Pre-launch rent - 1.5% Other expenses, including banking, garbage disposal, transport and storage, Internet, utilities, legal, accounting, print materials, franchise fee, cleaning, travel, marketing, architect and planning - 10%

Fit out costs vary from location to location mainly influenced by the size of the unit, the amount of remedial and construction works to be completed and other challenges presented by the shape and complexity of the building. ​

Procurement and supply chain

D odo Pizza menu categories and their respective sales contribution?

Pizzas, pizza slices, side dishes (including our signature wrap the Dodster, potato products, baked ​ ​ pasta, chicken wings etc), desserts, salads, coffee (and tea), cold beverages (sodas, milkshakes, juices, water), dipping sauces. Our menus vary somewhat from country to country. You can for example compare the UK delivery menu with that in Nigeria. ​ ​ ​ ​

Here is the sales breakdown for delivery and dine-in. Combos are combinations of pizzas, sides and ​ cold beverages.

Delivery Combo 14.7% Pizzas 69.7% Sides 11.0% Cold beverage 1.6%

Desserts 2.1% Dips 0.9%

Dine-in Slices 11.2% Pizzas 49.5% Sides 13.7% Cold beverage 10.4% Hot beverage 12.0% Desserts 3.0% Dips 0.6%

H ow does supply chain work?

Currently, in markets where we have the largest coverage and work with multiple franchisees, products are supplied to the stores by third-party foodservice logistics providers and/or by the manufacturer. We, as the franchisor, typically nominate essential suppliers and approve specific or generic products to be used in the stores. In international markets where we work with single country-wide franchisees, the franchisee is responsible for their supply chain. We only make sure that the franchisee uses products, fittings and equipment that meet our quality standards.

D oes Dodo Pizza use HALAL certified products? Vegan products?

Certainly. Our franchisees in Kazakhstan and Kyrgyzstan use HALAL certified products. We have vegan products currently in our UK and USA stores. And we will be expanding both these categories going forward.

D oes Dodo Pizza supply chain make use of a separate processing and distribution unit?

In regions where we have reached certain density of stores and scale, we (and our franchisees) operate a number of external dough production facilities. Some of these are fairly small and service 5-10 stores. The largest one currently supplies fresh dough for 80 stores in the Moscow region. Nevertheless, over 50% of all Dodo Pizza stores even in our home market, Russia and CIS, make their own dough on site.

An approximate budget estimate for a dough production facility with capacity to supply dough for up to 40 stores within a radius of up to 400 kilometers is USD $200 thousand. It requires a space of about 300 m2 and can be operated by 12-15 people.