Carrols Restaurant Group, Inc. Initial Public Offering December 2006 Forward-Looking Statements
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Carrols Restaurant Group, Inc. Initial Public Offering December 2006 Forward-Looking Statements Carrols Restaurant Group, Inc. Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Our presentation includes, and our response to various questions may include, forward-looking statements about the Company’s revenues and earnings and its future plans and objectives. Any such statements are subject to risks and uncertainties that could cause the actual results and the implementation of the Company’s plans and operations to vary materially. These risks are discussed in the Company’s filings with the S.E.C., including, without limitation, the Form S-1 initially filed on September 22, 2006, as amended. 1 Initial Public Offering Summary ► Issuer Carrols Restaurant Group, Inc. ► Common Shares Offered 15,000,000 • Primary 5,666,666 • Secondary 9,333,334 ► Over-Allotment 15% of the offering for 30 days (all secondary shares) ► Use of Proceeds Net proceeds used to repay indebtedness under the term loan facility ► Proposed Ticker / Exchange “TAST” / NASDAQ ► Estimated Price Range $14.00 - $16.00 ► Expected Pricing December 14, 2006 ► Underwriters: • Bookrunners Wachovia Securities Banc of America Securities LLC • Managers RBC Capital Markets Raymond James 2 Senior Management Presenters Alan Vituli Chairman of the Board & Chief Executive Officer Dan Accordino President, Chief Operating Officer & Director Paul Flanders Vice President, Chief Financial Officer & Treasurer 3 Investment Highlights ► One of the largest restaurant companies in the United States ► Strong Hispanic Brands with strong restaurant level economics ► Well positioned to capitalize on population and demographic trends ► Significant growth opportunities ► Largest Burger King franchisee ► Infrastructure in place to support expansion ► Experienced management team with significant equity stake 4 One of the Largest Restaurant Companies in the United States Company-Operated / Franchised 4 1 129 1 Carrols Restaurant Group 25 1 12 • LTM revenue of $737 million 2 83 • LTM Consolidated Adjusted 5 EBITDA of $95 million • 542 company-operated 9 restaurants in 16 States 37 5 20 1 / 2 0 / 1 Ecuador 135 0 / 2 72/2 Puerto Rico 0 / 22 Store counts as of 9/30/06. Where two numbers appear in a country or state, the first number is company-operated restaurants and the second number is restaurants franchised by Carrols to third parties. 5 Experienced Management Team with Significant Equity Stake ► Management team collectively will own 10.8% of the outstanding stock (excluding options) immediately after the offering Key Management Name Position Year Joined Alan Vituli Chairman of the Board & CEO 1986 Daniel T. Accordino President, COO & Director 1972 Paul R. Flanders Vice President, CFO & Treasurer 1997 Joseph A. Zirkman Vice President, General Counsel & Secretary 1993 Timothy J. LaLonde Vice President & Controller 1997 Michael A. Biviano Executive Vice President - Taco Cabana 1973 James E. Tunnessen Executive Vice President - Pollo Tropical 1971 Lewis S. Shaye Vice President & Chief Concept Officer 2005 6 Overview of Concepts Hispanic Brands 8 Key Characteristics of Our Hispanic Brands Increasing Influence of Hispanic Consumers Company-Owned Population Growth Restaurant Model in Core Markets Proven Product Broad Consumer Development Appeal Capabilities High Brand Freshly Prepared Recognition in Food with Hispanic Core Markets Flavors AUVs Among Competitive Prices Highest in with Convenience Quick-Casual / QSR and Value Large Dinner Day-Part 9 Well Positioned to Capitalize on Growing Hispanic Consumer Trends (In Millions) (In Billions) Projected Hispanic Population Growth Growing Hispanic Disposable Income(1) 80 400 $1,200 336 $992 309 60 $1,000 282 GR 60 300 CA 48 $800 % $686 8.2 40 36 200 $600 $504 $400 20 100 $222 $200 0 0 $0 2000 2010 2020 1990 2000 2004 2009 U.S - Hispanic U.S. - Total Pop. Source: See footnotes. 10 Core and Growth Markets have Favorable Demographic Trends (In Millions) Population Growth in Core Markets Florida 30 Texas 30 28.0 23.5 20.9 20 20 16.0 11.9 10 10 6.7 5.5 2.7 0 0 2000 2020 2000 2020 FL - Hispanic FL - Total Pop. TX - Hispanic TX - Total Pop. Sources: Texas State Data Center and Office of the State Demographer, Population by Race/Ethnicity in 2000 and Projections of the Population by Race/Ethnicity from 2010 to 2040 for Texas assuming net migration equal to one- half of 1990-2000. Demographic Estimating Conference Database, updated July 2006, Office of Economic & Demographic Research. 11 Industry Leading Average Unit Volumes ($ in Millions) AUVs of Selected Quick-Service and Quick-Casual Hispanic Concepts Pollo Tropical $2.1 Taco Cabana $1.6 El Pollo Loco $1.6 Chipotle $1.4 Taco Bell $1.2 Baja Fresh $1.2 Taco Bueno $1.2 Del Taco $1.1 Rubio's $1.0 Qdoba* $0.9 Moe's* $0.9 La Salsa $0.8 * Technomic Estimate. All of this data is from Technomic except Pollo Tropical and Taco Cabana 2005 AUVs per Carrols’ S-1 for company-owned restaurants. 12 Strong Restaurant Level Economics for Hispanic Brands ($ in Thousands) Summary of Unit Economics for Hispanic Brands* 2005 AUV (Company-Owned)(2) $2,092 $1,614 2005 Restaurant Level EBITDAR(3) $600 $393 Margin % (3) 28.7% 24.3% Land, Building & Site Improvements(4) $2,200 $1,950 Estimated Rent (8.5% Cap. Rate)(5) $187 $166 Restaurant Level EBITDA $413 $227 Margin % (3) 19.7% 14.1% Equipment(4) $375 $425 Estimated Fully-Capitalized Investment $2,575 $2,375 Fully-Capitalized Return(6) 23.3% 16.5% Cash-on-Cash Return(7) 110.1% 53.5% * Based on the estimated current cost of equipment and the high end of the ranges of estimated current land, building and site improvement costs in core Florida and Texas markets provided in the Carrols’ S-1. Actual results may vary from these estimates. 13 Pollo Tropical 14 Pollo Tropical: Overview ($ in Thousands per Restaurant) ► Acquired in 1998 2005 Sales by Day-Part ► 73 company-owned restaurants • Primarily in Florida Dinner* 54% • Opened in New York City metro $958 $1,134 Lunch area (March 2006) 46% ► 26 franchised restaurants • Puerto Rico (22), Ecuador (2), Florida (universities) (2) * Includes 2.9% for late night. ► AUV of $2.1 million in 2005 among 2005 Sales by Destination highest in quick-casual / QSR Counter segments 58% ► Strong dinner day-part ► Large home meal replacement $872 $1,220 business Drive- through ► Average check of $8.72 in 2005 42% 15 Pollo Tropical: Brand Characteristics ► Broad selection of food items reflecting tropical and Caribbean influences: • Fresh marinated grilled chicken • Roast pork • Sandwiches • TropiChops • Shrimp • Grilled ribs • Authentic sides • Salads ► Family meals ► Open display cooking on large, open- flame grills ► Airy, inviting and tropical atmosphere ► Competitive prices with convenience and value 16 Pollo Tropical: Menu Offerings(8) 17 Taco Cabana 18 Taco Cabana: Overview ($ in Thousands per Restaurant) ► Acquired in late 2000 2005 Sales by Day-Part ► 141 company-owned restaurants Dinner 26% $413 Breakfast • Primarily in Texas 16% $266 Other ► 3 franchised restaurants 21% $339 $374 • New Mexico (2), Georgia (1) $221 Late Night Lunch 23% ► AUV of $1.6 million in 2005 among 14% highest in quick-casual / QSR 2005 Sales by Destination segments Counter ► Dinner represents largest sales 52% day-part Drive- $768 $846 ► Large home meal replacement through business 48% ► Average check of $7.08 in 2005 19 Taco Cabana: Brand Characteristics ► Pioneered the Mexican patio-café concept in San Antonio, TX in 1978 ► Fresh, high quality Tex-Mex and traditional Mexican style food and beverages featuring: • Flame-grilled beef and chicken fajitas served on sizzling iron skillets • Quesadillas, enchiladas, burritos, tacos, and other Tex-Mex dishes • Fresh-made flour tortillas • Frozen margaritas and beer ► Family meals ► Open display cooking ► Festive Mexican theme with patio, semi- enclosed and interior seating ► Majority of restaurants open 24 hours 20 Taco Cabana: Menu Offerings(9) 21 Burger King Operations 22 Largest Burger King Franchisee ($ in Thousands per Restaurant) ► Largest franchisee in the Burger 2005 Sales by Day-Part King system with 328 (4%) of the Breakfast ~7,500 U.S. and Canadian Lunch 15% (10) 33% restaurants $348 $153 ► Average check of $5.03 and AUV of Afternoon $1.0 million in 2005 comparable to & Late $265 $282 BKC system-wide average(10) Night 25% Dinner 27% ► Benefit from the marketing power of BKC’s global multi-billion dollar restaurant chain 2005 Sales by Destination ► Contributed $31.8 million in Drive- segment EBITDA in 2005 Through 62% ► Diversifies revenues and cash flows $653 $395 and helps maintain an infrastructure Counter to support expansion of the 38% Hispanic Brands 23 Operating and Financial Strategies Significant Growth Opportunities ► Develop new Hispanic Brand restaurants ► Increase comparable restaurant sales ► Continue to improve income from operations and leverage existing infrastructure ► Utilize financial leverage to support growth 25 Develop New Hispanic Brand Restaurants ► 2007 plan: 7-10 Pollo Tropicals and 10-12 Taco Cabanas ► Develop new restaurants in core markets • Staff of seasoned real estate personnel responsible for new restaurant development • Benefit from increased brand awareness and convenience of location • Leverage field supervision, training, purchasing and marketing expenditures ► Expand into new and contiguous markets within Florida and Texas ► Expand Pollo Tropical into new geographic regions • Target markets with significant size and attractive demographics 26 Increase