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7 August 2020 Equity Research Americas |

US Food for Thought: That’s A Wrap

Restaurants | Weekly Analysis

This is our weekly US Restaurants note that highlights the most significant news as it pertains Research Analysts to our coverage and industry. Lauren Silberman 2Q Earnings Read-Through: 2Q earnings wrapped up this week, marking the most 212 325 2720 challenging quarter in history, though also demonstrating an impressive level of [email protected] acceleration & agility in a historically slow industry, and offering increased transparency into the health of the systems and business operations. Key themes across the space to Douglas Eisman influence future strategies include: 1) portfolio optimization (RBI to close several hundred 212 325 8212 restaurants globally, MCD to accelerate the closure of ~200 low-volume US units, SBUX [email protected] to close up to 400 US & 200 Canadian company stores, DNKN to close 800 US low- volume stores (up from 450 previously) & 350 international stores); 2) better real estate environment (noted by CMG, YUM, DPZ, DRI, TXRH, PZZA, SHAK, MCD, WEN); 3) planned changes to new unit prototypes, with focus on increased access (noted by SBUX, CMG, YUM, SHAK, TXRH); and 4) operating efficiencies identified supporting margin improvement (noted by MCD, YUM, DRI, DNKN, WEN, CAKE, BLMN, PZZA). NYC Spotlight: Despite being home to some of the best restaurants in the world, NYC is facing outsized challenges given significantly reduced traffic as residents have left the city, businesses are operating under work from home models, travel is stalled and indoor dining remains prohibited. reported Manhattan July SSS were -65%, a meaningful drag as some of its highest volume restaurants are closed (Grand Central), or down even more significantly (Theater District, Penn Station) given a near halt in tourism & commuting. In June, McDonald’s announced it was closing its 42nd Street flagship location (though planned). ’ closed stores & portfolio optimization are concentrated in NYC metro. Based on a survey by the NYC Hospitality Alliance, 83% of bars, restaurants & nightclubs could not pay full rent in July & 37% were unable to pay rent at all, with 71% of landlords refusing to waive any rent, 61% denying any deferral & 90% refusing to renegotiate leases. July SSS Recap (dates range): MCD US slightly positive, BK US flat end of July, JACK 10%+, WEN 8.2%, SHAK -39%, SBUX US -14%, DNKN US down LSD, TH Canada down mid-teens end of July, CMG 6.4%, YUM US (TB, KFC & PH) positive, PLK US high-20% end of July, DPZ US sustained momentum through end of 2Q, PZZA NA 30.3%, TXRH -13%, CAKE -32%, Outback US -13.4%. Next Week in Restaurants: SYY reports F4Q earnings on 8/11, BMO. PFGC reports F4Q20 earnings on 8/12, BMO. RRGB (8/11) and EAT (8/12) also report earnings. Notable News: 1) Based on data from NPD Group, restaurant industry transactions were -11% for the week ended 7/26 (-12% week prior), incl. QSR -11% (-11% week prior) & FSR -24% (-27% week prior); 2) Domino’s appointed Stu Levy as its new CFO, previously EVP, Supply Chain Services; 3) DoorDash launched DashMart, a new channel that offers convenience store items, with DashMart stores owned & operated by DoorDash; and 4) Beyond Meat 2Q foodservice sales were down ~61%, with strategic accounts/QSRs down ~40% & independents down ~60% (in 4Q19, QSRs were ~30% of foodservice sales).

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

7 August 2020

Weekly Restaurant News

Starbucks: Starbucks announced the return of its Pumpkin Spice product line and introduced new Maple Pecan K-Cup pods (and Roast & Ground), Salted Caramel Mocha flavored creamer and Sachets available in Spiced Apple Cider and Lemon Ginger Bliss. (press release Starbucks; 4 August 2020) Chipotle: From 8/6-8/23, Chipotle’s real change feature (allows guests to round-up their change to the nearest dollar for donation) on its app and website will highlight the Thurgood Marshall College Fund, an American non-profit organization that supports students that attend its 47 member-schools that include publicly-supported historically black colleges and universities. Chipotle is also partnering with the organization’s Talent Sourcing Program to help source diverse talent. (press release Chipotle; 6 August 2020) Chipotle: Chipotle introduced a new clothing line, Chipotle Goods, featuring apparel made with organic cotton and dyed with upcycled avocado pits from its restaurants. The clothing line was first made available to rewards members on 8/3 before launching to the public on 8/4. All profits from Chipotle Goods will go toward supporting organizations that aim to make fashion or farming more sustainable. (press release Chipotle; 3 August 2020) Domino’s: Domino’s appointed Stu Levy as its CFO, succeeding Jeff Lawrence. Levy joined Domino’s in 2019 as EVP, Supply Chain Services, and was previously Chief Transformation Officer for Republic Services, a provider of waste collection services. Cindy Headen, previously VP, Procurement & Product Management, will succeed Levy. The changes are effective 8/20. (press release Domino’s; 6 August 2020) Domino’s: Domino’s opened its first unit in Croatia. (press release Domino’s; 5 August 2020) Baskin-Robbins: Baskin-Robbins is offering discounted Cappuccino Blasts for a limited time, starting at $3 for a small, $4 for a medium and $5 for a large. (news article Brand Eating; 5 August 2020) Baskin-Robbins: Baskin-Robbins brought back its Mom’s Makin’ Cookies ice cream as its August flavor of the month. (press release Baskin-Robbins; 4 August 2020) : Tasty Restaurant Group, operator of more than 180 Burger King & Hut units, agreed to acquire five Burger King locations in Iowa for $1, assuming all assets & liabilities. (news article NRN; 5 August 2020) : Tim Hortons is hosting a Hockey Challenge to celebrate the return of the NHL, encouraging guests to submit three players that they believe will score a goal and claim prizes if they choose correctly. (Tim Hortons; 3 August 2020) : Popeyes has brought back its Red Hot Honey Sauce as part of a new $5 Hot Honey Chicken box offering. (news article Chew Boom; 3 August 2020) : Pizza Hut is offering a new Double It Box deal, featuring two square medium in one box. (news article Chew Boom; 6 August 2020) Bloomin’ Brands: Bloomin’ Brands promoted Sheilina Henry to Group VP, Diversity & Inclusion, a newly created role. Henry has been with Bloomin’ since 2012, most recently as Regional VP, Training & Development. (press release Bloomin’ Brands; 6 August 2020) Restaurant Industry: Total foodservice jobs in July increased by ~500K from June, accounting for ~27% of total job gains (~1.8MM). Since losing ~6.1MM foodservice jobs in March & April, ~57% have come back. The employment data includes workers paid by their employers through 7/12. (press release Bureau of Labor Statistics; 7 August 2020) Checkers & Rally’s: Checkers & Rally’s expanded its education benefits to offer all eligible employees at corporate-owned stores the opportunity to earn an accredited high school diploma and workforce training certificates in select fields. (news article QSR Magazine; 7 August 2020)

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7 August 2020

Checkers: Checkers announced it has appointed Lenny Comma to its Board of Directors. Comma was Chairman and CEO of from January 2014 to June 2020. (press release Checkers; 3 August 2020) BurgerFi: In celebration of National Frozen Custard Day on 8/8, BurgerFi is offering a free Custard Cup with the purchase of any burger or . (news article Chew Boom; 7 August 2020) Restaurant Industry: Based on data from Black Box Intelligence, July restaurant industry SSS were -15.1% (-18.7% in June), including traffic -19.9% (-23.9% in June). (press release Black Box Intelligence; 6 August 2020) DoorDash: DoorDash announced it will host a Main Street Strong Restaurant Conference on 10/8 in partnership with the National Restaurant Association, featuring keynote speakers and breakout sessions that aim to help restaurant operators navigate through the pandemic. (press release DoorDash; 6 August 2020) DoorDash: DoorDash introduced DashMart, a new channel that offers convenience store items, including household essentials and grocery products, currently available in eight cities with more to come over the coming months. DashMart stores are owned & operated by DoorDash. (press release DoorDash; 5 August 2020) 7-Eleven: 7-Eleven is introducing a new line of fresh pastries baked in store. (news article Chew Boom; 6 August 2020) : Krispy Kreme will offer various promotions the week of 8/10 as part of an Educator Appreciation Week, including one free glazed donut and regular size coffee for teachers. (press release Krispy Kreme; 5 August 2020) Restaurant Industry: Il Mulino, the upscale NYC-based restaurant chain, filed for bankruptcy protection for seven of its 16 units (not in NYC), in part to ensure it maintains control over the locations after a lender, BSP Agency, allegedly attempted to take over operations. (news article Restaurant Business; 5 August 2020) Steak ‘n Shake: Steak ‘n Shake hired advisors to auction off 15 units it had closed during the last 12 months. (press release Steak ‘n Shake; 5 August 2020) Cracker Barrel: Cracker Barrel announced a new, simplified menu, featuring dishes across three categories, including Home Cooked Classics starting at $7.99, Down Home Daily Dinners Under $10 and Cracker Barrel Favorites. (press release Cracker Barrel; 4 August 2020) ’: Bojangles’ introduced a new MTN DEW Southern Shock, sold exclusively at its restaurants. (press release Bojangles’; 4 August 2020) Bojangles’: Bojangles’ introduced a refreshed logo, packaging and in-store visuals, as well as new advertising featuring Dale Earnhardt Jr. (press release Bojangles’; 3 August 2020) Restaurant Industry: A survey conducted by the City Hospitality Alliance shows 83% of bars, restaurants and nightclubs could not pay full rent in July and 37% were unable to pay rent at all, with 71% of landlords refusing to waive any rent, 61% denying any deferral of payments and 90% refusing to formally renegotiate leases. (news article Restaurant Business; 4 August 2020) Restaurant Industry: Clark County, NV, which includes the Las Vegas Strip & UNLV, approved a 15% cap on fees charged to restaurants by third-party delivery companies. (news article Restaurant Business; 4 August 2020) Beyond Meat: Beyond Meat’s US grocery sales increased nearly 200% in 2Q, though foodservice sales decreased by ~61%, including strategic/QSR accounts down ~40% and independent restaurant accounts down ~60%. QSRs represented ~42% of foodservice sales in 2Q, up from ~30% in 4Q19. (news article CNBC; 4 August 2020) Focus Brands: Focus Brands, the parent company of Auntie Anne’s, , , Jamba, Moe’s Southwest Grill, McAlister’s Deli & Schlotzsky’s, announced it hired Dawn Ray as its first

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SVP of Corporate Communications. Ray most recently served as an SVP at Burson Cohn & Wolfe Memphis, a communications agency. (press release Focus Brands; 4 August 2020) White Castle: White Castle is now accepting entries for its Cravers Hall of Fame, seeking to recognize its most loyal fans, and will feature the stories of the 2020 inductees on its packaging in 2021 to celebrate the brand’s 100th birthday and 20th anniversary of the Hall of Fame. (press release White Castle; 4 August 2020) Smashbuger: brought back its Colorado Burger and is offering a BOGO for $0.13 deal on 8/6 to celebrate the brand’s 13th anniversary. (press release Smashburger; 4 August 2020) BurgerFi: BurgerFi is offering a hormone-free cheeseburger with fries for $10 on 8/30. (news article Chew Boom; 4 August 2020) Restaurant Industry: Based on NPD Group data, restaurant industry transactions were -11% for the week ended 7/26 (-12% week prior). QSR transactions were -11% (-11% week prior) & FSR transactions were -24% (-27% week prior). (press release NPD Group; 3 August 2020) Restaurant Industry: The National Restaurant Association wrote a letter urging the House & Senate to decrease the threshold of quarterly sales losses necessary to qualify for PPP loans under the new stimulus package proposal to 20% from 50% currently, noting that 55% of restaurants will not be eligible for a second loan at the 50% threshold. (press release National Restaurant Association; 3 August 2020) Restaurant Industry: Texas bars are now eligible to qualify as a restaurant if alcohol comprised less than 51% of sales based on sales from 4/1 through the date of submission of an application to the Texas Alcoholic Beverage Commission. Restaurants are currently allowed to operate (at 50% indoor capacity), while bars were forced to reclose in June. (news article Restaurant Dive; 3 August 2020) Panera: Panera announced customers can now get unlimited 3% cash back on Apple Card when they use the Apple Card with Apple Pay on orders through Panera’s digital channels. (press release Panera; 3 August 2020) Sonic: Sonic launched a new Toasted S’mores Shake, available until 8/30. (press release Sonic; 3 August 2020) : Little Caesars is offering a pepperoni pizza and a Stuffed Crazy Bread for $7.99 through online orders until 8/30. (news article Chew Boom; 3 August 2020) Restaurant Industry: NCR Corporation, restaurant POS & technology provider, launched a contactless ordering & payment feature for its NCR Aloha platform, allowing guests to scan a QR code to view a menu, place an order and pay from their own device. (press release NCR Corporation; 3 August 2020) : Whataburger promoted Ed Nelson to CEO on 8/1. Nelson has been with the brand for 16 years and was named President in July 2019. (press release Whataburger; 3 August 2020) Whataburger: Whataburger is offering a BOGO free deal on Whataburgers through online orders until 8/9. (news article Chew Boom; 3 August 2020) McAlister’s Deli: McAlister’s Deli is hosting a Free for You & Me Sweepstakes from 8/3-8/31, allowing anyone who enrolls in its rewards program (or refers a friend if an existing member) to enter to win free McAlister’s meals for 1 year. (press release McAlister’s Deli; 3 August 2020) Wawa: Wawa is building a freestanding, 1,850 square foot drive-thru only unit in PA, the first of its kind. The company will also add a drive-thru feature to a new store under construction in NJ. The convenience store opened its 900th store in June. (news article Restaurant Business; 3 August 2020)

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Auntie Anne’s: Auntie Anne’s is auctioning off a WiFi-enabled Recline-to-Dine Chair that allows a customer to order pretzel delivery simply by reclining their chair. (news article Restaurant Business; 3 August 2020) Restaurant Industry: Restaurant consultant Aaron Allen & Associates estimates that as many as one-third of restaurants could close due to the pandemic (231K of 660K total). (news article Bloomberg; 31 July 2020) : Subway is now an official partner of the NFL, which will grant it exclusive marketing rights & activation opportunities as well as a sponsorship of NFL Flag, the largest US flag football league, and NFL Play 60, an initiative that promotes youth activity and health. (press release NFL; 31 July 2020) El Pollo Loco: El Pollo Loco introduced a $20 Familia Dinner. (news article Chew Boom; 31 July 2020) : Hooters opened the fourth location of its fast casual spinoff concept, Hoots, in Chicago. (news article QSR Magazine; 31 July 2020) Earnings/Business Updates

Papa John’s: PZZA’s results over the last several months have been nothing short of impressive, with 2Q North America SSS of 28%, International SSS of 5.3% (13.3% excluding closed stores) & adj. EPS of $0.48. Strong performance has continued into July (6/29-7/26), with North America SSS accelerating to 30.3%, supported by tailwinds for the pizza category from the pandemic, contribution from delivery aggregators, benefits from new menu innovation and the launch of the Shaq-a-Roni pizza, which has exceeded expectations. PZZA attributed half of SSS performance to the pandemic, though exuded confidence in its ability to maintain sales captured as it has attracted 3MM+ new digital customers into its ecosystem and expects a prolonged period of customer behavior changes. International SSS improved to 13.9% in July or 17.2% excluding closed stores. PZZA expects to accelerate new unit growth as early as next year, driven by both North America and international development. Despite the rich valuation, we believe new unit growth & refranchising support the bull case and unlock further value creation. PZZA is one of a few restaurant companies emerging from this pandemic in a materially stronger position, largely eliminating what we viewed as the most significant risks to the business pre-COVID, which were franchisee economics and mass unit closures. PZZA: Shaq-Like Strength (7 August 2020) Restaurant Brands International: RBI reported 2Q adj. EBITDA of $358MM (including $12MM negative ad fund expense to reverse over time), adj. EPS of $0.33, Tim Hortons global SSS of -29.3%, Burger King global SSS of -13.4% & Popeyes global SSS of 24.8%. Tim Hortons Canada SSS were -29.9% in 2Q, which have improved to down mid-teens as of the end of July, Burger King US SSS were -9.9% in 2Q, and trends have further improved to approximately flat as of the end of July, reasonably in-line with McDonald’s. Popeyes US SSS continued to outperform, with 2Q SSS of 28.5%, and trends have sustained through the end of July. Similar to commentary from global peers, RBI plans to close an outsized number of underperforming stores to optimize its portfolio, with its total global portfolio count to be reasonably in-line with 2019 in FY20, and expectations for a return to its normalized growth in 2021, with its master franchisee JV structure likely supporting greater visibility into the pipeline for development. Sentiment likely remains more negative given Tim Hortons challenges, though we believe Popeyes is an underappreciated asset and unit growth story should remain intact given RBI’s infrastructure. QSR: Lukewarm Coffee Doesn’t Wake Up Shares (7 August 2020) Jack in the Box: JACK reported F3Q20 adj. EPS of $1.37, adj. EBITDA of $72.9MM and SSS of 6.6% (company 4.1%; franchise 6.9%). SSS accelerated throughout the quarter, with SSS in the last four weeks of F3Q likely 10%+, and JACK has sustained momentum into F4Q. JACK noted all five dayparts were positive by the end of F3Q, with impressive performance driven by new menu innovation, value, operational execution and delivery growth. Larger order sizes and gains on the premium side of its menu have supported increased average checks.

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JACK reinstated its dividend and communicated confidence in its outlook. Near-term, we expect sentiment to remain positive given the brand’s SSS outperformance and valuation discount to peers. But over the medium to long-term, we believe greater conviction in unit growth is necessary to unlock further value, with any signs of SSS deceleration likely to pressure shares. JACK: New Chapter for JACK (7 August 2020) Wendy’s: WEN reported 2Q adj. EBITDA of $97.4MM (consensus $92.5MM), US SSS of - 4.4% (April -14%, May -1.9% & June 5.1%) and international SSS of -18.4% (April -28.3%, May -15.7% & June -10.7%). 98% of global restaurants are currently operating, including 99% in the US and 90% in international markets. US SSS have continued to accelerate in July with SSS of 8.2% (sell-side 3Q 3.6%), with positive lunch & dinner SSS, continued strength at breakfast & digital gains. 2Q restaurant margins were 14.4%, or 16.4% excluding temporary premium pay, relatively flat YOY despite company SSS -10%, reflecting efficiencies expected to benefit margins going forward. Breakfast mix represented ~8% of sales in 2Q, and the company has committed to a total of ~$15MM in incremental marketing for breakfast in FY20, which we expect will be higher in FY21. We are impressed by recent performance and like the story, though see risk to numbers with incremental marketing & given current valuation, remain Neutral. WEN: Bacon & Spice Make Everything Nice (6 August 2020) Texas Roadhouse: TXRH reported 2Q SSS of -32.8%, including April -46.7%, May -41.9% & June -14.1% and EPS of -$0.48. Trends have further improved in July, with SSS in the first four weeks of 3Q (through 7/28) of -13% (incl. -1.2% drag from July 4th calendar shift), including -11.2% for restaurants open for dine-in at some capacity (95%+ of company restaurants). TXRH expects to open ~14 company restaurants in 2H, for a net total of ~20+ restaurants in FY20, with the company noting a strong pipeline of development opportunities and suggesting it could return to 30+ opens in FY21. Based on current sales levels, TXRH expects restaurant margins in the low to mid-teens in 2H20, though ongoing sales improvement likely supports margins at the high end of the guide. We view TXRH as well positioned for a faster sales & profit recovery relative to peers, and together with confidence in the long-term unit growth potential, we expect a return to FY19 earnings power in FY21 and double-digit earnings algorithm starting in FY22. TXRH: Steak Well Done (4 August 2020) US Foods: US Foods reported 2Q adj. EPS of -$0.25, adj. EBITDA of $88MM and -40.2% organic case volume (-28% total). Organic independent restaurant case volume was -42.1% for the quarter, though has improved to the down 20-25% range, with volumes in markets where restaurants opened the earliest outperforming, down 10-12% by the end of June. The company has also signed an additional $500MM in annualized new business, mostly from national restaurant chains. (press release US Foods; 4 August 2020) Restaurant Group: (TAST), RBI’s largest US franchisee with ~1,030 Burger King US and 65 Popeyes US restaurants, reported 2Q results & provided a business update. Burger King 2Q SSS were -6.4% (April -21.7%, May -2.9% & June: +2.5%) and Popeyes 2Q SSS were +17.1% (April +1.6%, May +20.5% & June +13.3%). In July, Burger King SSS were +2.1% (US system approximately flat as of the end of July) and Popeyes SSS were +13.9% (US system high-20% as of the end of July). TAST intends to focus on improving profitability within its portfolio, managing capex & continuing to reduce leverage. The company plans to remodel ~25 units/year over the next three years while pausing acquisitions as it deleverages. (press release Carrols Restaurant Group; 6 August 2020) Noodles: Noodles reported 2Q SSS of -30.9%, with monthly trends: April -48.2%; May - 30.1%; and June -17.8%. July trends have continued to improve, with SSS -13% for the two weeks ended 7/14 and -4.4% for the two weeks ended 7/28. Digital sales grew 135% in 2Q and accounted for 74% of sales. (press release Noodles; 6 August 2020) Potbelly: Potbelly reported 2Q SSS of -41.5%, noting improvement throughout the quarter to down mid-20% in June. The company has been cash flow positive at the store level since 5/31, and continues to have discussions with landlords, resulting in 16 permanent closures and 187 renegotiated leases as of early August. PBPB now expects to close fewer than 50 total units, down from the 100 previously expected. Digital mix tripled YOY to 46%, and the company

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7 August 2020 relaunched a loyalty program, which drove a 53% YOY increase in membership, with 2MM+ members currently. (press release Potbelly; 5 August 2020) Fiesta Restaurant Group: Fiesta Restaurant Group reported 2Q SSS of - 31.6% (April -49.2%, May -27.9% & June -17.8%) and Cabana SSS of -13.2% (April - 26.2%, May -14.5% & June: -18%). Pollo Tropical July SSS were -13.8% and July SSS were -14.4%. The company continues to operate all of its units off-premise only. (press release Fiesta Restaurant Group; 5 August 2020) Chuy’s: Chuy’s reported 2Q SSS of -39% (April -55.2%, May -44.8% & June -21.6%). SSS in July were -26.3%, with the company attributing the deceleration to increasing COVID case counts in states such as Texas & Florida. Off-premise was 35-40% of the sales mix in June and July, more than double pre-COVID levels, and the company currently has 92 of its 101 open and operating in various capacities. (press release Chuy’s’ 6 August 2020) J. Alexander’s: J. Alexander’s reported 2Q SSS for J. Alexander’s/Grill Restaurants: April - 81%; May -61.5%; & June -28.2%, and SSS for Stoney River Steakhouse and Grill: April - 78.3%; May -62%; & June -33.7%. Trends have continued to improve in July, with SSS for J. Alexander’s/Grill of -25.8% for Stoney River Steakhouse and Grill -25.2%. The company has added online ordering through ChowNow, implemented contactless menus as an option and is piloting contactless payment at select units. (press release J. Alexander’s; 4 August 2020) Recent Research

■ JACK: New Chapter for JACK (7 August 2020) ■ PZZA: Shaq-Like Strength (7 August 2020) ■ QSR: Lukewarm Coffee Doesn’t Wake Up Shares (7 August 2020) ■ WEN: Bacon & Spice Make Everything Nice (6 August 2020) ■ Food Distributors: Assuming Coverage of SYY, PFGC & USFD (5 August 2020) ■ TXRH: Steak Well Done (4 August 2020) ■ SHAK: Can’t Shake Off Urban Challenges (31 July 2020) ■ YUM: Let’s Taco-Bout Recovery (31 July 2020) ■ DNKN: A Latte to Like (31 July 2020) ■ CAKE: Have Off-Premise CAKE & Eat On-Premise Too (30 July 2020) ■ SBUX: Frap Half Full (29 July 2020) ■ MCD: All About the 3Ds (29 July 2020) ■ BLMN: Bloomin’ Faster Than Feared (24 July 2020) ■ US Restaurants: Into the 2Q20 Prints (24 July 2020) ■ CMG: Recovery in the Fast ChipotLane (23 July 2020) ■ DPZ: Delivery & Carryout Gives Domino’s Wings (17 July 2020) ■ US Restaurants: Reviewing Exposure to COVID-19 Hotspots (14 July 2020) ■ US Restaurants: Phone to Table: Full Service Edition (9 July 2020) ■ TXRH: Still Meat Left On This Bone; Initiate Outperform (9 July 2020) ■ DRI: Speak Softly & Carry A Big Breadstick; Initiate Outperform (9 July 2020) ■ CAKE: Not Hungry for Dessert Yet; Initiate Neutral (9 July 2020) ■ BLMN: Waiting for the Flower to Bloom; Initiate Neutral (9 July 2020) ■ US Restaurants: Reassessing Appetite (9 July 2020)

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■ US Restaurants: Franchisee Files for Bankruptcy (2 July 2020) ■ SBUX: Then & Now (18 June 2020) ■ YUM: Takeaways from Meetings with YUM (3 June 2020) ■ SHAK: Takeaways from Meeting with SHAK (3 June 2020) ■ DPZ: Takeaways from Meetings with DPZ (3 June 2020) ■ US Restaurants: Restaurant Trends Check In (20 May 2020) ■ US Restaurants: Assessing Appetite in Post-COVID-19 World (13 April 2020) ■ US Restaurants: 20 Themes for 2020 (3 January 2020) US Restaurants Weeklies

■ Food for Thought: Batter Up (31 July 2020) ■ Food for Thought: Tipping Point (24 July 2020) ■ Food for Thought: Plant to Plate (17 July 2020) ■ Food for Thought: S’more Restaurant News (10 July 2020) ■ Food for Thought: Independents Day (2 July 2020) ■ Food for Thought: Medium Roast, Menu Innovation & Masks (26 June 2020) ■ Food for Thought: Summer Sippin’ (19 June 2020) ■ Food for Thought: Delivery – Friend or Foe? (12 June 2020) ■ Food for Thought: We’re Cookin’ (5 June 2020) ■ Food for Thought: Checking in on Chicken, While Pizza Still Partying (29 May 2020) ■ Food for Thought: Restaurant Revival (22 May 2020) ■ Food for Thought: Dine-In Options Starting to Return to the Menu (15 May 2020) ■ Food for Thought: Taking It To-Go (8 May 2020) ■ Food for Thought: Looking for the Flowers (1 May 2020) ■ Food for Thought: Road to Recovery (24 April 2020) ■ Food for Thought: Munch on This (17 April 2020) ■ Food for Thought: Hopping Into the Long Weekend (9 April 2020) ■ Food for Thought: Hoping April Showers Bring May Flowers (3 April 2020) ■ Food for Thought: The Menu Keeps Changing (27 March 2020) ■ Food for Thought: Delivering a Full Plate of News (20 March 2020) ■ Food for Thought: March Madness (13 March 2020) ■ Food for Thought: Talk About Restaurant Takeout (6 March 2020) ■ Food for Thought: Leaping into the Weekend (28 February 2020) ■ Food for Thought: Delivery Du Jour (21 February 2020) ■ Food for Thought: For the Love of Food (14 February 2020) ■ Food for Thought: Something to Snack On (7 February 2020) ■ Food for Thought: Pre-Snack Coverage (31 January 2020) ■ Food for Thought: We Want More (24 January 2020)

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■ Food for Thought: January Not So Dry (17 January 2020) ■ Food for Thought: A Buffet of News this Week (10 January 2020) ■ Food for Thought: What’s on the Menu in 2020 (3 January 2020) ■ Food for Thought: Monthly Moments of 2019 (27 December 2019

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Companies Mentioned (Price as of 07-Aug-2020) Beyond Meat (BYND.OQ, $132.58) Bloomin' Brands (BLMN.OQ, $11.57) Bojangles' (BOJA.OQ^A19) Brinker International Inc. (EAT.N, $28.64) , Inc. (CMG.N, $1186.8) Cracker Barrel (CBRL.OQ, $115.1) Darden Restaurants (DRI.N, $76.49) Domino’s Pizza Inc. (DPZ.N, $392.55) Dunkin’ Brands Group, Inc. (DNKN.OQ, $68.0) Fiesta Rest (FRGI.OQ, $9.02) Jack in the Box Inc. (JACK.OQ, $82.51) McDonald’s Corporation (MCD.N, $203.18) Company (PNRA.OQ^G17) Papa John’s International, Inc. (PZZA.OQ, $97.53) Performance Food Group Company (PFGC.N, $31.34) Gourmt (RRGB.OQ, $9.37) Restaurant Brands International Inc (QSR.N, $55.2) Shake Shack (SHAK.N, $50.22) Starbucks Corporation (SBUX.OQ, $75.66) Sysco Corporation (SYY.N, $56.4) Target Hospitality (TH.OQ, $1.48) Texas Roadhouse (TXRH.OQ, $59.99) (CAKE.OQ, $25.07) The Wendy’s Company (WEN.OQ, $22.25) US Foods Holding Corp. (USFD.N, $22.69) Yum! Brands, Inc. (YUM.N, $90.99)

Disclosure Appendix Analyst Certification I, Lauren Silberman, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most att ractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as Europea n (excluding Turkey) ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin America, Turkey and Asia (excluding and Australia), stock ratings are based on a stock’s total return relative to the average total r eturn of the relevant country or regional benchmark (India - S&P BSE Sensex Index); prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analys t’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cov er multiple sectors.

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Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 50% (33% banking clients) Neutral/Hold* 37% (27% banking clients) Underperform/Sell* 12% (20% banking clients) Restricted 1% *For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors. Important Global Disclosures Credit Suisse’s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made available through CS PLUS. 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For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: https://www.credit- suisse.com/sites/disclaimers-ib/en/managing-conflicts.html . Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional. Credit Suisse has decided not to enter into business relationships with companies that Credit Suisse has determined to be involved in the development, manufacture, or acquisition of anti-personnel mines and cluster munitions. For Credit Suisse's position on the issue, please see https://www.credit-suisse.com/media/assets/corporate/docs/about-us/responsibility/banking/policy-summaries-en.pdf . The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities See the Companies Mentioned section for full company names Credit Suisse currently has, or had within the past 12 months, the following as investment banking client(s): SBUX.OQ, PFGC.N, QSR.N, BYND.OQ, TH.OQ Credit Suisse provided investment banking services to the subject company (SBUX.OQ, PFGC.N, QSR.N, BYND.OQ, TH.OQ) within the past 12 months. Within the last 12 months, Credit Suisse has received compensation for non-investment banking services or products from the following issuer(s): MCD.N, PFGC.N, TH.OQ Credit Suisse has managed or co-managed a public offering of securities for the subject company (PFGC.N) within the past 12 months. Within the past 12 months, Credit Suisse has received compensation for investment banking services from the following issuer(s): SBUX.OQ, PFGC.N, BYND.OQ, TH.OQ Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (DNKN.OQ, DPZ.N, YUM.N, MCD.N, WEN.OQ, PFGC.N, QSR.N, BYND.OQ, TH.OQ) within the next 3 months. Credit Suisse currently has, or had within the past 12 months, the following issuer(s) as client(s), and the services provided were non- investment-banking, securities-related: MCD.N, PFGC.N, TH.OQ Credit Suisse or a member of the Credit Suisse Group is a market maker or liquidity provider in the securities of the following subject issuer(s): BYND.OQ, BLMN.OQ, CMG.N, DRI.N, DPZ.N, DNKN.OQ, JACK.OQ, MCD.N, PZZA.OQ, PFGC.N, QSR.N, SHAK.N, SBUX.OQ, SYY.N, TH.OQ, TXRH.OQ, CAKE.OQ, WEN.OQ, USFD.N, YUM.N A member of the Credit Suisse Group is party to an agreement with, or may have provided services set out in sections A and B of Annex I of Directive 2014/65/EU of the European Parliament and Council ("MiFID Services") to, the subject issuer (SBUX.OQ, PFGC.N, QSR.N, BYND.OQ, TH.OQ) within the past 12 months. For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit- suisse.com/disclosures/view/report?i=541131&v=3y791crcej6ymkf51mksxlnlu . Important Regional Disclosures recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html. Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment.

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7 August 2020 2020 7August This research report is authored by: Credit Suisse Securities (USA) LLC ...... Lauren Silberman ; Douglas Eisman Important disclosures regarding companies that are the subject of this report are available by calling +1 (877) 291-2683. The same important

disclosures, with the exception of valuation methodology and risk discussions, are also available on Credit Suisse’s disclosure website at https://rave.credit-suisse.com/disclosures . For valuation methodology and risks associated with any recommendation, price target, or rating referenced in this report, please refer to the disclosures section of the most recent report regarding the subject company.

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