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July 29, 2019 Introductions

Colby Hutchinson Jennifer Swan Melissa Doolin-Koehne & Resorts First Watch Restaurants TDn2K @swanstyle1 @loverofguac [email protected] [email protected] [email protected] H U M A N F I N A N C I A L G U E S T C A P I T A L C A P I T A L FEEDBACK PERFORMANCE PERFORMANCE PERFORMANCE

2.6 million employees 31,000+ units 61,000 units 193 Brands $72 Billion Sales 200 brands

Founded 1995 Founded 2009 Founded 2013

272 Brands 230 Companies 43,000 Restaurants

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State of the Workforce Trends in Industry Trends Training What do you think?

Respond at: PollEv.com/chart19 What do you feel your company is winning in? Poll Everywhere

CFOs Forecasting a Recession

38% 67% 84% PREDICT PREDICT PREDICT

Recession Recession Recession Q1 2020 Q3 2020 Q1 2021

Source: CFO Global Outlook- Duke University Average guest check grew more than visits

% with positive comp sales % with positive comp traffic 64% 53% 56% 54% 50% 48%

30% 27% 22% 21% 15% 5%

Total Quick Fast Casual Family Casual Upscale Industry Service Dining Dining Casual

Source: TDn2K Source: Black Box Intelligence The Game is Changing

Industry Average Performance 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2

Comp Sales 0.6% 1.1% 1.4% 0.9% 0.2% Comp Traffic -1.8% -1.4% -1.6% -2.0% -2.9% Comp PPA/PTA Growth 2.5% 2.6% 3.0% 2.9% 3.1%

Comp Food Sales 0.8% 1.5% 1.6% 0.8% -0.2% Comp Beverage Sales -0.8% -1.0% -1.0% -2.9% -3.2%

Comp Dine-In Sales -1.3% -1.3% -1.9% -2.5% -3.3% Comp To-Go Sales 7.5% 8.0% 9.2% 10.1% 9.5%

Source: TDn2K Black Box Intelligence How to Prepare for 3rd Party Delivery

Be ready for high volumes of delivery orders

Customize your delivery offerings

Make necessary staffing changes - Ended in September 2018 - Down in June ‘19

- Driven by Avg. Daily Rate

Source: Smith Travel Research Flattening occupancy predicted in 2020

Occupancy ADR RevPAR Chain Scale % change % change % change Luxury -0.2% 2.4% 2.2% Upper Upscale -0.3% 2.2% 1.9% Upscale -0.3% 1.8% 1.5% Upper Midscale -0.2% 1.8% 1.6% Midscale -0.2% 1.7% 1.4% Economy -0.3% 2.1% 1.8% Total U.S. -0.2% 2.2% 1.9%

Source: STR Chain Scale forecasts, June 2019 How to Prepare for Declines in Traffic & Occupancy Basic Revenue management training for managers is essential

Training to Maximize ADR & Average Guest Check

Make necessary staffing changes

Domination by parent companies JD Power guest satisfaction rankings | Economy

Microtel (Wyndham) 797 (Wyndham) America's Best Value InTown Suites (Wyndham) (Wyndham) Economy Average 756 Howard Johnson (Wyndham) 668 650 700 750 800 850 900

Source: JD Power, July 2019 JD Power guest satisfaction rankings | Midscale

Wingate (Wyndham) 846 (IHG) * LaQuinta (Wyndham) * ^ Sleep Inn (Choice Hotels) Best Western (BWH) AmericInn (Wyndham) (Wyndham) Midscale Average 810 Baymont (Wyndham) Quality Inn (Choice Hotels) (Wyndham) 782

650 700 750 800 850 900

Source: JD Power, July 2019 JD Power guest satisfaction rankings | Upper Midscale

Drury 876 Hampton Inn (Hilton) Home2 Suites (Hilton) * Fairfield Inn (Marriott) TownePlace Suites (Marriott) Express (IHG) Upper Midscale Average 835 Best Western Plus (BWH) Country Inn & Suites (Carlson) Wyndham Garden (Wyndham) Comfort Suites (Choice Hotels) Holiday Inn (IHG) Comfort Inn (Choice Hotels) Clarion (Choice Hotels) 797 650 700 750 800 850 900

Source: JD Power, July 2019 JD Power guest satisfaction rankings | Upscale Best Western Premier (BWH) * 862 Cambria Hotels (Choice Hotels) * AC Hotels (Marriott) * (Hilton) House (Hyatt) Springhill Suites (Marriott) Hyatt Place (Marriott) (Marriott) Courtyard (Marriott) Staybridge (IHG) Homewood Suites (Hilton) Upscale Average 840 Residence Inn (Marriott) Wyndham (Wyndham) Doubletree (Hilton) (IHG) Radisson (Jing Jang) * Four Points (Marriott) 650 700 750 800 850 900 Source: JD Power, July 2019 JD Power guest satisfaction rankings | Upper Upscale

Hard Rock * 866 Gaylord (Marriott) * Marriott (Marriott) Kimpton (IHG) (Marriott) Hilton (Hilton) Hyatt Regency (Hyatt) Upper Upscale Average 847 Embassy Suites (Hilton) (Marriott) * Omni Hotels Westin Hotels (Marriott) (Marriott) (IHG) Sheraton (Marriott) 829 650 700 750 800 850 900 Source: JD Power, July 2019 JD Power guest satisfaction rankings | Luxury

Ritz-Carlton (Marriott) 881 Lowes Hotels Park Hyatt (Hyatt) * Four Seasons Fairmont () Luxury Average 861 JW Marriott (Marriott) Grand Hyatt (Hyatt) St. Regis (Marriott) * Waldorf Astoria (Hilton) (Marriott) Intercontinental (IHG) Trump Hotels * * Andaz (Hyatt) * Conrad (Hilton) * 841 650 700 750 800 850 900

Source: JD Power, July 2019 New Brands Emerge Robust pipelines indicate future growth

Active Properties Rooms Room Count In Pipeline In Pipeline 1,269,288 2,790 471,000 886,994 2420 371,000 InterContinental Hotels Group 784,678 1,828 267,000 Wyndham Worldwide 705,043 1,400 176,000 Jin Jiang International 680,000 3,161 345,000 Accor 648,998 1,031 184,000 Choice Hotels 564,828 1,050 85,500 Huazhu (formerly China Lodging Group) 379,675 924 90,000

Source 10k from SEC Financial Reporting Workforce Trends Biggest Challenges & Opportunities in 2019 Staffing pressure is real

3.6% national unemployment rate (May 2019)

38 states have unemployment rates of 4.0% or lower

Source: Bureau of Labor Statistics Open Positions: 900,000 per month

Bureau of Labor Statistics Restaurants report they are understaffed

69% 93% hourly FOH hourly BOH

Source: TDn2K Severe management understaffing reported in restaurants

52% 19% Managers General (non-GM) Managers

Source: TDn2K Turnover in lodging has reached critical levels

Up to

Increase in GM Turnover GM Turnover * Estimated for new from 2016 hotels

Current Open postions

* Source: Bill Crawford, American Hotel & Lodging Assoc. Travel Weekly Jan, 2019 Turnover Remains Extremely High

Restaurants Lodging

105% 94%

52% 53% 40% 28%

Front of House Back of House Unit Level Manager Voluntary Terminations Increasing

Percentage Of All Terminations That Were Voluntary 2017 2018 75% 77% 69% 67% 63% 67%

FOH Hourly BOH Hourly Manager*

Source: TDn2K People Report Hourly Staff Are Leaving Quicker

Hourly Front-Of-House Hourly Back-Of-House 2017 2018 2017 2018

60% 60% 50% 53% 43% 42% 40% 40% 29% 25% 19% 20% 20% 17%

0% 0% Less than 30 days Less than 90 days Less than 30 days Less than 90 days

Source: TDn2K People Report Cost Of Turnover Per Employee

$1,816 $10,361 $13,996

Per hourly Per restaurant Per General employee manager Manager (excluding GM)

Source: TDn2K People Report How are unemployment and turnover impacting your training?

5 min - Table Activity Why are your employees leaving and what can you do about it? Why are employees leaving?

Hourly employees Management

Job abandonment Higher compensation

Personal Reasons Immediate promotion at another company

Higher Paying Job Poor Work/Life Balance

Source: TDn2K People Report Old ‘Seasoned’ is the New Orange Work-Life Balance is important 11% of General Manager’s strongly agree that their job allows them to spend enough quality time with family and friends

Source: GM Connect – powered by Gallup and TDn2K Source: GM Connect – powered by Gallup and TDn2K Restaurants Offering More Money To Attract Talent

Source: TDn2K The Best Have Better Servers & GM’s

(Sales & traffic)

28.6% 48%

23.5% for

Turnover 17%

Net Sentiment Net Genereal Genereal Manager -5.1% Knowledge Server +31%

Best Rest Best Rest

Source: TDn2K People Report What is Working to Increase Retention

Most Effective Retention Measure 2nd Most Effective 3rd Most Effective

Non- Improved Improve growth Flexible managers selection/recruit. & development scheduling

Managers Improve growth Improved Increase Pay (excluding GM) & development training

Increase General Improved Improved employee Managers training selection/recruit. recognition

Source: TDn2K

Why did you pick what you did?

5 min - Table Activity Trends in Training

2019 Results Investments in Training & Development Increasing

(Investment as % of sales) 1.75% 1.50%

1.10%

2014 2016 2018 One-Third of Companies Increased Training Headcounts

Restaurants Lodging Use of External Resources is Increasing (percentage of companies) 75%

67%

2017 2019 Many Companies Increasing External Training Spend

Restaurants Lodging 75%

39% 39%

25%

Increased Spend vs. Prior Year Expect a Spend Increase Next Year Training Reporting to Human Resources More Often Use of E-Learning Solutions is increasing Most Restaurants Planning Investment in E-Learning Next Year

91%

33%

Restaurants Lodging 9.9 Hours a Day

6.3 hours 3.6 hours

Source: 2019 Brand Internet Trends Report Most E-Learning Still Done Through Desktops at Work (Percentage of companies offering each option)

Restaurants Lodging 86% 72% 68%

43% 36% 29%

Desktop / laptop Tablets provided by the Employees' smart computer at work employer at work phones How do companies handle e-learning on/off clock for non-exempt staff?

5 min - Table Activity Investment in Leadership Development for Managers lowers turnover 10% or more of total training Less than 10% of total training

122% 108%

81% 87%

- 27% - 35%

BOH Turnover FOH Turnover Investments in HR Training for Managers lowers turnover 10% or more of total training Less than 10% of total training

111% 103% 86% 74%

- 25% - 29%

BOH Turnover FOH Turnover Restaurants Where HR Spends More Time Involved in New Hire Orientation Have Lower Turnover

1.5 or more hours of orientation Less than 1.5 hours of orientation

99% 94% 77% 67%

- 22% - 27%

BOH Turnover FOH Turnover Restaurants With Higher Use of Written Manuals/Books for Hourly Training Have Lower Turnover Used in 5% or more of all training Used in less than 5% of training

112% 103% 85% 74%

- 27% - 29%

BOH Turnover FOH Turnover Restaurants Allocating More “On the Job” Training to New Hourly Hires Have Lower Restaurant Level Turnover 60% or more of all training Less than 60% of all training

115% 113% - 16% 88% 84%

48% 32% - 27% - 29%

Front of House Turnover Back of House Turnover Unit Manager Turnover Restaurants Allocating More In-Person Training During New Hire Orientations Have Lower Unit Level Mgr Turnover 50% or more of all training Less than 50% of all training 64%

29%

- 35%

Unit Level Manager Restaurants Allocating More Instructor-Led Training to Existing Managers Have Lower Turnover

25% or more of all training Less than 25% of all training 109% 95% - 12% 63% 65% 39% 27% - 46% -30%

Front of House Turnover Back of House Turnover Unit Manager Turnover

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