Oak Ridge Financial Research Mark Smith [email protected] 763.923.2278

June 5, 2018

Chanticleer Holdings, Inc. Company Description: Chanticleer Holdings is a restaurant holding company operating and franchising better burger restaurants under the Little Big Burger, American Burger Company and BGR brands and the company also operates and Just Fresh restaurants. The company operates and franchises 55 locations in the United States and internationally. The company was founded in 2005 and has its headquarters in Charlotte, NC.

Initiate coverage on BURG with a BUY rating and $5 price target

(BURG - $3.08) BUY Key Points Financial Summary Chanticleer Holdings (BURG) owns, operates and franchises five distinct restaurant chains with a focus on the better burger segment. Historically an operator of the Hooters brand, BURG has made acquisitions of fast casual restaurants with an emphasis on “better burger” chains over the last five years. After Rev(mil) 2017A 2018E 2019E aggressively acquiring brands from 2012-2015 the company spent the last two years integrating the brands, reducing G&A and focusing on margins. With a solid base of Mar $9.9A $10.0A $11.3E units (even though there are some dispositions looming) the company is embarking Jun $10.8A $10.7E $12.6E on a growth strategy of building new company-operated units and expanding through Sep $10.7A $11.0E $13.3E franchising. We think the focus on profitability and cash flow will benefit Dec $10.1A $11.2E $13.7E shareholders over the coming years and view the growth opportunities favorably. FY $41.4A $42.9E $50.9E The company is transitioning to a growth stage with a focus on profitability. P/Sales 0.27x 0.26x 0.22x Much of the focus on growth is in the Little Big Burger (LBB) brand due to the superior unit economics and cash on cash returns. We model company-operated

LBB units will grow at 58% and 47% rates, respectively in 2018 and 2019 following 50% growth in 2017. We model relatively conservative comp growth of 3.3% for the better burger segment in 2018 with flattish comps in 2019. Similarly, we model EPS 2017A 2018E 2019E continued strong comp growth for Hooters in 2018 (7.0% estimate) with flattish Mar ($0.78)A ($0.82)A ($0.28)E comps in 2019. We think the company will likely dispose of the Just Fresh chain but Jun ($0.56)A ($0.32)E ($0.19)E keep the results in our model with negative comps continuing through the end of Sep ($0.62)A ($0.27)E ($0.16)E 2019. As the company enters the growth phase we project modest revenue growth Dec ($0.48)A ($0.26)E ($0.18)E in 2018 and think the growth will be more apparent in 2019 with revenue expected to grow in the high teens. Likewise, we expect similar growth trajectories for EBITDA. FY ($2.40)A ($1.63)E ($0.80)E P/E na na na Unit economics set BURG’s brands apart and will drive strong returns, in our view. With strong unit economics we think all unit growth will come from the better burger segment restaurants. LBB offers the most attractive unit economics; with a smaller footprint and initial cash outlay LBB drives cash on cash returns exceeding 60%. We note that those unit economics are some of the best in the industry. The Price: $3.08 $25.46other burger brands, ABC and BGR offer strong return potential with projected cash 52-Week Range: $5.14-$1.81 $30.68-$12.78on cash returns of 25% and 35%, respectively. Restaurant level margin has Target: $5.00 opportunity$27 to expand at each better burger chain as the company recognizes more Rating: BUY HOLDsynergies and becomes more efficient. We model restaurant-level margin conservatively with lower expansion over the next two years due to new restaurant Shares Outstanding: 3.7 mil 27.9openings mil and openings in new geographies which may impede initial margins. Mkt. Capitalization: $11.3 mil $712 mil Ave. Volume: 36,000 226,2We00 view BURG as an undiscovered growth opportunity. Chanticleer is an Instit. Ownership: 2% 83underfollowed% and undervalued micro-cap stock, in our view. BURG’s attractive unit BV / Share: $2.65 $6.10economics are the most appealing part of the story coupled with the high growth Debt / Tot. Cap.: 53% 39expected% from these brands. We think there are continued opportunities to improve Est. LT EPS Growth: 20% 12four%- wall economics and that as the system is optimized the strength of the returns will be more apparent. We project net unit growth for the company in the high teens over the next few years and note that the burger category and Little Big Burger in particular are expected to grow at significantly higher rates. We project revenue growth of 3.6% and 18.7% in 2018 and 2019, respectively after roughly flat growth last year. We think EBITDA will turn consistently positive and grow at a high rate over the next several years. As the company expands and results improve we think the trading multiples will expand as well. We derive our $5 price target by applying an 11.5x EV/EBITDA multiple to our 2019 adjusted estimate. With ample upside to our price target we are initiating coverage with a BUY rating.

Please see important disclosures on pages 9 to 11.

June 5, 2018

INVESTMENT THESIS

We are initiating coverage with a BUY rating and $5 price target. We think BURG is an emerging growth story that is underfollowed and not well understood. Over the last two years the company has done significant work in integrating new brands. We think the heavy lifting is now complete and the company’s new focus on profitable growth will drive strong returns for investors. We like the unit growth story and particularly the high return potential from the units that are being emphasized for growth. With industry leading cash on cash returns, growth coming from company-operated and franchised restaurants and an improving balance sheet we expect improved cash flow, a move to profitability and high growth. As the company proves out the concepts and executes on the growth story we think the growth to consistent positive EBITDA with high revenue growth will command higher multiples from investors. We derive our $5 price target by applying an 11.5x EV/EBITDA multiple to our 2019 adjusted estimate. We think a higher multiple will be justified as the company proves out the growth story.

Company Overview

BURG operates and franchises restaurant brands with an emphasis on the “Better Burger” segment. The company was founded in 2005 and went public the same year as an investment company. The name Chanticleer comes from the founders’ alma mater, Coastal Carolina University, the Chanticleers. The initial investment of the company was in Hooters of America (HOA), the parent of the Hooters restaurant chain. Chanticleer purchased HOA with two private equity partners following the death of the founder and remains a shareholder today with Mike Pruitt, CEO of BURG, sitting on the board of HOA. The company raised additional capital in 2012 to begin building out Hooters restaurants and made acquisitions of fast casual brands in the following years. The focus of the company today is on the fast casual brands and particularly the better burger chains. In 2017 the company changed its ticker to BURG to reflect the focus of the company going forward.

Today the company operates restaurants domestically and internationally through five different brands, Hooters, Just Fresh, Little Big Burger, American Burger Company and BGR. We think the company will continue to evolve with focus and emphasis on the better burger brands and dispositions of Hooters and Just Fresh. The company is currently in negotiations to sell one of its eight Hooters restaurants and we think is looking to opportunistically sell other Hooters restaurants as well as the Just Fresh chain. We think any future dispositions will give the company additional capital and streamline operations. Recent history has shown three distinct periods for the company, 2012-2015 was an acquisition phase with the company buying new chains, 2016-2017 was an integration phase as the company digested and integrated new brands and the company has entered a growth phase in 2018. We note that integration of new acquisitions and especially a lot of acquisitions typically is not a hurdle free period. We think the shares have suffered as the company has figured out what works and what has not worked. We think the highlights that are currently underappreciated are the cuts to G&A expense, improved margin and an improving balance sheet. As the company turns its focus to growth we are encouraged by the focus on profitable growth. We like the focus on return on capital, disposing of non or under-performing assets and expanding growth through franchising which is low risk with little capital needs.

Number of Restaurants

30 28 Hooters

25 Just Fresh

20 20 19 Little Big Burger

15 15 15 13 13 13 American Burger 12 12 Company 11 10 10 9 9 9 10 8 8 8 8 8 BGR 7 7 7 7 7 7 6 5 5 5 Franchised

0 2015 2016 2017 2018E 2019E

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 2 June 5, 2018

Little Big Burger

LBB focuses on high-quality burgers that are cooked to order. The brand’s genesis was in the Pacific Northwest where it developed a cult-like following and built a strong reputation. All burgers are made fresh and cooked to order with a focus on locally sourced ingredients. A differentiating factor and fan favorite is the company’s truffle fries which are paired with Camden’s catsup or fry sauce. The chain sells sodas, root beer floats and beer and ciders. The contemporary atmosphere is inviting and comfortable to guests. LBB has the smallest footprint of the “Better Burger” chains in BURG’s portfolio at approximately 1,400 square feet. The small size and relatively low-cost cash investment to open the units drives high cash on cash returns. AUV is estimated at $700k with targeted EBITDA margin of 20% out of initial investment (adjusted for TI allowances) of $213k to drive returns exceeding 60%.

The majority of the LBB restaurants are still located in the Pacific Northwest (11 out of 14) with the majority in the greater Portland market. However, the company has expanded into San Diego, Austin and Charlotte. We expect more geographic expansion in the coming years through company-operated growth as well as franchisees entering the system. We think the chain is an attractive franchise opportunity and with most of the groundwork done and initial franchised locations open we think unit growth could be significant as more franchisees come on board.

BGR - Burgers Grilled Right

BGR is the largest brand by units with 23 total restaurants, 11 company-operated and 12 franchised. The domestic restaurants are located primarily on the East coast with a concentration in the mid-Atlantic; restaurants are located in Maryland, DC, Virginia, New Jersey, New York, Tennessee, Georgia, and South Carolina with one additional unit in Utah. Internationally franchisees operate two units in Kuwait. BGR restaurants focus on a gourmet burger cooked over an open flame and cooked to order. Some of the premier burgers served at BGR include Pretzel Bacon Cheese, Korean BBQ and Wellington. The restaurants typically offer additional items including Ahi Tuna, Chicken Club, Hawaiian Chicken, Chili Cheese Dogs, Chicken Tenders, Sliders and a variety of salads. Sides include options such as fries, tots, onion rings and some non-traditional items like grilled asparagus. Shakes and ice cream are also available at most locations. Limited time offer menu items help drive additional sales and prove as a testing area for new menu items.

American Burger Company

American Burger Company (ABC) restaurants focus on burgers, fries and shakes marketed in a nostalgic “made in America” theme. This fast casual concept features warm and relaxing atmosphere and a menu with American favorites of made to order burgers, chicken sandwiches, wings and salads, side items like French fries, onion rings, mac and cheese, and slaw. Additionally, the restaurants offer desserts including ice cream, milk shakes and Lugnuts, warm donuts with powdered sugar. The original restaurant was opened in Smithtown, NY and subsequent restaurants have been opened in North and South Carolina.

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 3 June 5, 2018

Just Fresh

Just Fresh is a fast casual concept focused on healthy, fast and real food made from premium ingredients. Menu items include, wraps, quinoa bowls, salads, smoothies, sandwiches, soups, sides, breakfast and other baked items and sides. The concept as expanded day parts compared to the other fast casual restaurants in the BURG portfolio with breakfast and brunch options. Locations are all in North Carolina and the restaurant has experienced a few recent closures. The chain has experienced weaker comps over the last year and a half as emphasis and focus was put on the better burger segment, but we think this is a unique brand with opportunity for improved results. Management has stated a desire to dispose of its majority stake in the chain and we think it is a monetization opportunity. We model continued negative comps and no new units for the chain.

Hooters

Hooters is the first chain Chanticleer operated and is deep in the company’s roots. The company currently operates eight Hooters restaurants in the Pacific Northwest, South Africa and the UK. The company is currently working on a deal to sell a location in Nottingham and we think future sales of locations are likely. Hooters restaurants are full service with a menu that focuses on chicken wings, seafood, sandwiches, burgers, salads and beer. The company has seen increased competition in the wing segment over the last decade but remains a very recognized brand. Recently comps have turned positive and we think can remain positive for the next several quarters, additionally the company has seen a boost in revenue from favorable fx. In the domestic restaurants the company recognizes gaming revenue from slot machines located in the restaurants.

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 4 June 5, 2018 Industry Overview

The restaurant industry is a highly competitive industry with over one million restaurant locations in the US alone and industry sales of approximately $800B. Currently the restaurant industry’s share of the food dollar is approximately 50%- the highest it has ever been. The restaurant industry employs nearly 17mm people and is a major staple of the US economy. The industry continues to see evolving trends regarding nutrition, convenience and experience. Online ordering and delivery continue to grow in the industry and we expect this trend to continue. Additionally, the fast casual segment of the industry has seen the most growth over the last several years and the trend looks to continue for several more years as customers seek out convenience, a lower average check and opportunities for unique dining experiences.

The better burger segment has seen more competition as it has taken significant share from quick service burger restaurants over the last decade. Customers tend to care about the quality of food, how it is prepared, where it comes from and opportunities to customize their meals. There have been significantly more entrants into this category and we think opportunities for acquisitions are abundant to quickly grow units, expand geographic reach and gain new menu items, knowledge and synergies. Many of the larger better burger chains remain regional chains with only a few, such as , becoming more nationwide.

Competition

The better burger category is largely fragmented with many regional chains and mom and pops. However, some chains have expanded to nationwide status including Five Guys (private), (private) and (RRGB – NC). There has been tremendous growth in the category with a few public competitors including (SHAK – NC), Habit (HABT – NC), (FAT – NC), and Good Times (GTIM – NC). Over the last few years publicly traded better burger chains have traded at premium multiples to the rest of the restaurant industry and although the multiples have declined, are still rich, in our view. We expect continued growth for the next several years in competitors and then we expect significant consolidation in the space.

Management

Michael Pruitt: Mr. Pruitt is the President, Chief Executive Officer, and Chairman of Chanticleer since 2005. He founded Avenel Financial Group in 1999 and has a history of evaluating investment opportunities and management team members. Mr. Pruitt graduated with a BA degree in Business from Coastal Carolina University and remains active with the university.

Eric Lederer: Mr. Lederer is the Chief Financial officer of Chanticleer Holdings Inc. and has held this position since June of 2012. Prior to his role as CFO Mr. Lederer served as Controller. He previously served as the Controller of OneTravel Holdings and other privately held companies in the entertainment industry and at a NYC CPA firm. He received his Accounting degree from Lehigh University.

Mark Roberson: Mr. Roberson is the Chief Operations Officer and has held that position since May 2015. Mr. Roberson joined BURG from Pokertek, a publicly traded gaming technology company, where he served as CEO and as CFO. With over 20 years of financial and operational management experience, including public company experience, Mr. Roberson brings significant insight and experience to the company. He received his MBA from Wake Forest and a BS from Southern Methodist University and UNC-Greensboro.

Richard Adams: Mr. Adams serves as President and COO of American Roadside Burgers, Inc. and has held that position since November 2013. Joining Chanticleer through the acquisition we think Mr. Adams brings a wealth of knowledge to the better burger segment with his experience at the chain as well as prior experience at CKE Restaurants, and .

Growth Strategy

Now that BURG has done the majority of the heavy lifting in integrating the acquisitions, improving margin and cutting G&A, the company is ready to begin and expand its growth strategy. Growth has already started with five new better burger openings in 2017 (four new LBB and one new BGR) driving net unit growth of company-operated better burger restaurants despite the closures of some BGR and ABC units. We project the majority of the unit growth will come from new LBB units with only a few new BGR units added over the next two years. We think company-operated LBB locations can approximately double in the next year as we model 58% growth in 2018 and 47% growth in 2019. Our model assumes LBB becomes the largest chain, by locations, for BURG by mid-2019. We think the reason for the majority of the growth coming

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 5 June 5, 2018 from LBB expansion is due to the superior unit economics and returns from these locations. LBB locations are relatively inexpensive to build and produce higher margin and cash on cash return than any other chain in the system with their industry leading unit economics. The better burger segment is expected to grow at 32% and 30% rates in 2018 and 2019, respectively.

Restaurant Revenue $35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$0 2015 2016 2017 2018E 2019E

Better Burger Just Fresh Hooters

Franchise growth is expected to increase in the coming years after building out the infrastructure to support it. There are currently 13 franchised locations (12 BGR and one LBB) and we expect this to increase to 15 by year-end 2018 and 20 at the end of 2019. We think these estimates could prove conservative if franchisees hit their expected returns or if new deals are signed. We note that franchise expansion does not have a significant impact on the revenue for the company as they recognize only the upfront fees (new accounting standards underrepresent this impact) and royalties from these units. We project franchise revenue will increase 16.1% in 2018 and 30.4% in 2019 but note that the ~$200k in incremental revenue comes with very high margin and minimal risk or capital allocation.

We note that the high growth of the better burger business is largely hidden in the income statement by continued declines in revenue from the Just Fresh and Hooters businesses. We note that much of the decline in revenues from these businesses is due to closures or dispositions, but we model negative comps for the next two years at Just Fresh and flattish comps at Hooters in 2019. Our model reflects consolidated restaurant revenue growth of 3.5% and 18.8% in 2018 and 2019, respectively, but that would be 10.7% and 33.3% excluding Just Fresh and Hooters. Our model does not reflect any further dispositions of restaurants other than what is currently announced, but we think selling some or all of the Just Fresh and/or Hooters chains would have a positive impact on the model with increased revenue growth, higher margin and improved balance sheet. Additionally, we do not model any incremental acquisitions, but we think revenue could be boosted by acquiring another fast casual chain or by acquiring franchised restaurants.

Balance Sheet and Cash Flow

BURG has a leveraged balance sheet following a period of expansion through acquisitions. The company had approximately half a million dollars in cash and restricted cash at the end of the last quarter and debt of approximately $9mm plus an additional $650k in redeemable preferred stock. With a debt/total capital ratio of 54% (debt/adjusted EBITDA is not applicable given the only slightly positive EBITDA on a ttm basis) we view the balance sheet as levered. However, we think the company has ample cash flow and potential cash from dispositions to service the debt and lower leverage significantly in the coming months. We note the disposition of the Nottingham Hooters restaurant could lower debt significantly and any further dispositions could clean up the balance sheet. We think refinancing the debt and cleaning up the capital structure could boost the share price and assuage some investors concerns. We think debt/adjusted EBITDA will be approximately 3.0x at the end of 2019, a healthy and conservative level. Given the makeup of current restaurant expansion with many of the 2018 units being built with financial partners we think the capital needs are minimal at approximately $1.8mm capital expenditures for new units. The company recently raised $1.4mm in a registered direct equity raise with insiders and institutional investors.

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 6 June 5, 2018

Outlook

We project high growth over the next several years for the better burger segment at BURG. We expect unit growth from company-operated and franchised locations will boost revenue and the bottom line. Although we expect stagnant results from the Just Fresh and Hooters chains, we think it is likely these chains or a portion of them could be sold which would improve growth as well as strengthen the balance sheet. We think the better burger category of the restaurant industry has become more competitive and we think BURG can take share through its synergies and strong brands over the coming years. We note that there is upside to our model if new LBB units hit their target unit economics which would boost bottom line results. As the company expands geographically we prefer to model new units conservatively.

We project vastly improving bottom line results over the next two years. We think the company is at an inflection point of beginning to drive consistent positive EBITDA which we think shareholders will view favorably. With consistent and growing EBITDA we think investors can more confidently value the shares. We project adjusted EBITDA to improve to $723k and $2.3mm in 2018 and 2019, respectively, from ($65)k in 2017. Although we are not naïve enough to think the road to consistent EBITDA will not be bumpy, we project more consistent results. We note than any additional closures, dispositions or acquisitions would have a significant impact on the model due to the relatively small base of restaurants. Additionally, we think any changes to the restaurant base could lead to one-time charges or gains. Although we model the company reporting slight tax expense, we do not project cash taxes to be paid for a significant number of years due to NOLs. We model adjusted loss per share improving to ($1.63) and ($0.80) in 2018 and 2019, respectively, from ($2.40) last year.

Valuation

We derive our $5 price target by applying an 11.5x multiple to our 2019 adjusted EBITDA estimate of $2.3mm. We think an 11.5x multiple is justified given the high sales and EBITDA growth as well as current trading multiples for similar restaurant companies. BURG’s high growth restaurant peers are currently trading at 11.5x 2018 EBITDA estimates. We include the following restaurant companies in the peer group; CHUY, CMG, GTIM, HABT, LOCO, NDLS, PBPB, RRGB, SHAK, and ZOES. We think BURG is in the early stages of a high growth period. We like the restaurant-level economics and the return metrics on the new stores and think there is an opportunity for growth through franchisees. Although it is small, we think investors will be rewarded for investing in BURG and are initiating our coverage with a BUY rating.

Ticker EV/Sales EV/EBITDA CHUY 1.3 11.3 CMG 2.5 20.4 FRGI 1.1 10.6 GTIM 0.5 6.6 HABT 0.6 6.5 LOCO 1.2 8.2 NDLS 0.9 13.0 PBPB 0.7 8.5 RRGB 0.6 6.1 SHAK 4.3 23.7 ZOES 0.7 11.4 1.0 11.5 BURG 0.5 8.5 Source: Capital IQ and Oak Ridge Financial research

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 7

June 5, 2018

Chanticleer Holdings, Inc. - Income Statement 2 0 16 A M a rA J unA S e ptA D e c A 2 0 17 A M a rA J un S e pt D e c 2 0 18 E Mar J un S e pt D e c 2 0 19 E R e v e nue Res taurant revenue $ 40,640,158 $ 9,653,154 $ 10,524,787 $ 10,479,275 $ 9,837,950 $ 40,495,166 $ 9,769,508 $ 10,480,941 $ 10,760,667 $ 10,916,349 $ 41,927,465 $ 11,049,014 $ 12,336,437 $ 13,014,729 $ 13,388,881 $49,789,060

Gaming inco me, net 441,621 106,067 107,520 115,268 113,665 442,520 93,155 104,617 117,458 118,780 434,010 98,474 109,325 120,160 120,205 448,164

Management fee income 100,000 24,990 24,993 24,999 25,018 100,000 25,000 25,000 25,000 25,000 100,000 25,000 25,000 25,000 25,000 100,000 Franchis e revenue 520,222 75,786 108,017 105,823 105,550 395,176 107,853 103,758 119,572 127,699 458,882 131,124 133,608 162,276 171,415 598,424 S a le s 4 1,7 0 2 ,0 0 1 9 ,8 5 9 ,9 9 7 10 ,7 6 5 ,3 17 10 ,7 2 5 ,3 6 5 10 ,0 8 2 ,18 3 4 1,4 3 2 ,8 6 2 9 ,9 9 5 ,5 16 10 ,7 14 ,3 16 11,0 2 2 ,6 9 7 11,18 7 ,8 2 8 4 2 ,9 2 0 ,3 5 7 11,3 0 3 ,6 12 12 ,6 0 4 ,3 7 0 13 ,3 2 2 ,16 4 13 ,7 0 5 ,5 0 1 5 0 ,9 3 5 ,6 4 8 year-o ver-year % change 11.3% -2.5% 0.1% -2.3% 2.2% -0.6% 1.4% -0.5% 2.8% 11.0% 3.6% 13.1% 17.6% 20.9% 22.5% 18.7% Costs and expenses Restaurant expenses Res taurant co s t o f s ales 13,392,078 3,191,390 3,579,558 3,605,212 3,316,761 13,692,921 3,276,175 3,532,357 3,593,948 3,641,702 14,044,181 3,630,252 4,075,359 4,278,265 4,398,785 16,382,661 Restaurant operating expenses 22,641,949 5,674,560 5,855,410 6,119,561 5,782,594 23,432,125 5,586,149 5,935,027 6,152,576 6,176,287 23,850,039 6,226,771 6,822,325 7,295,634 7,453,179 27,797,908 Total restaurant costs and expenses 3 6 ,0 3 4 ,0 2 7 8 ,8 6 5 ,9 5 0 9 ,4 3 4 ,9 6 8 9 ,7 2 4 ,7 7 3 9 ,0 9 9 ,3 5 5 3 7 ,12 5 ,0 4 6 8 ,8 6 2 ,3 2 4 9 ,4 6 7 ,3 8 4 9 ,7 4 6 ,5 2 4 9 ,8 17 ,9 8 8 3 7 ,8 9 4 ,2 2 0 9 ,8 5 7 ,0 2 3 10 ,8 9 7 ,6 8 4 11,5 7 3 ,8 9 9 11,8 5 1,9 6 4 4 4 ,18 0 ,5 6 9 Res taurant pro fit 4,606,131 787,204 1,089,819 754,502 738,595 3,370,120 907,184 1,013,557 1,014,143 1,098,361 4,033,245 1,191,991 1,438,752 1,440,830 1,536,917 5,608,491 Res taurant margin 11.3% 8.2% 10.4% 7.2% 7.5% 8.3% 9.3% 9.7% 9.4% 10.1% 9.6% 10.8% 11.7% 11.1% 11.5% 11.3%

General and administrative expenses 5,801,034 1,375,620 1,084,422 952,959 1,132,494 4,545,495 1,193,417 1,110,000 980,000 1,020,000 4,303,417 1,157,500 1,100,000 1,000,000 1,170,000 4,427,500 P re-o pening expens es 145,130 14,435 90,761 34,349 179,737 319,282 102,882 115,000 135,000 110,000 462,882 140,000 135,000 165,000 170,000 610,000 Depreciatio n and amo rtizatio n 2,341,698 593,380 602,659 572,798 513,963 2,282,800 540,679 540,000 552,000 559,000 2,191,679 562,000 570,000 584,000 600,000 2,316,000 Loss on disposal of property and equipment 0 0 633,962 838,928 922,726 2,395,616 1,677,055 0 0 0 1,677,055 0 0 0 0 0

Total operating expenses 8 ,2 8 7 ,8 6 2 1,9 8 3 ,4 3 5 2 ,4 11,8 0 4 2 ,3 9 9 ,0 3 4 2 ,7 4 8 ,9 2 0 9 ,5 4 3 ,19 3 3 ,5 14 ,0 3 3 1,7 6 5 ,0 0 0 1,6 6 7 ,0 0 0 1,6 8 9 ,0 0 0 8 ,6 3 5 ,0 3 3 1,8 5 9 ,5 0 0 1,8 0 5 ,0 0 0 1,7 4 9 ,0 0 0 1,9 4 0 ,0 0 0 7 ,3 5 3 ,5 0 0 Operating inco me (2,619,888) (989,388) (1,081,455) (1,398,442) (1,766,092) (5,235,377) (2,380,841) (518,068) (390,827) (319,160) (3,608,896) (412,911) (98,314) (734) (86,462) (598,422) Operating margin -6.3% -10.0% -10.0% -13.0% -17.5% -12.6% -23.8% -4.8% -3.5% -2.9% -8.4% -3.7% -0.8% 0.0% -0.6% -1.2%

Interes t inco me (expens e) (2,347,018) (404,136) (504,706) (309,538) (646,248) (1,864,628) (635,081) (620,000) (615,000) (625,000) (2,495,081) (615,000) (615,000) (610,000) (605,000) (2,445,000) Other inco me, net 819,335 (350,588) 267,491 37,839 62,935 17,677 (2,114) 0 0 0 (2,114) 0 0 0 0 0 P re ta x inc o m e (4,147,571) (1,744,112) (1,318,670) (1,670,141) (2,349,405) (7,082,328) (3,018,036) (1,138,068) (1,005,827) (9 4 4 ,16 0 ) (6,106,091) (1,027,911) (7 13 ,3 14 ) (6 10 ,7 3 4 ) (6 9 1,4 6 2 ) (3,043,422) P retax margin -9.9% -17.7% -12.2% -15.6% -23.3% -17.1% -30.2% -10.6% -9.1% -8.4% -14.2% -9.1% -5.7% -4.6% -5.0% -6.0%

Inco me tax expens e (benefit) 198,462 3,797 109,531 56,070 (813,826) (644,428) (336,197) 23,097 29,709 32,792 (250,600) 28,604 44,334 49,463 45,427 167,829 % o f pretax inco me -4.8% -0.2% -8.3% -3.4% 34.6% 9.1% 11.1% -2.0% -3.0% -3.5% 4.1% -2.8% -6.2% -8.1% -6.6% -5.5%

Net inco me (4,346,033) (1,747,909) (1,428,201) (1,726,211) (1,535,579) (6,437,900) (2,681,839) (1,161,165) (1,035,536) (976,952) (5,855,491) (1,056,515) (757,649) (660,198) (736,889) (3,211,251) Less: Income attributable to noncontrolling interest 270,228 20,843 56,328 168,772 125,521 371,464 84,407 75,000 90,000 85,000 334,407 88,000 80,000 90,000 87,000 345,000

EPS (2 .0 0 ) (0 .7 8 ) (0 .5 6 ) (0 .6 2 ) (0 .4 8 ) (2 .4 0 ) (0 .8 2 ) (0 .3 2 ) (0 .2 7 ) (0 .2 6 ) (1.6 3 ) (0 .2 8 ) (0 .19 ) (0 .16 ) (0 .18 ) (0 .8 0 ) Diluted s hares 2,169,503 2,210,624 2,432,313 2,501,534 2,959,284 2,525,037 3,165,972 3,430,000 3,450,000 3,462,000 3,376,993 3,520,000 3,560,000 3,580,000 3,595,000 3,563,750

Number o f res taurants perio d end: Better Burger 27 28 31 29 28 28 29 32 34 37 37 40 42 46 48 48 J us t Fres h 7 7 7 7 6 6 5 5 5 5 5 5 5 5 5 5 Ho o ters 9 9 9 8 8 8 8 7 7 7 7 7 7 7 7 7 To tal 43 44 47 44 42 42 42 44 46 49 49 52 54 58 60 60 Franchis ed 12 14 14 13 13 13 13 13 14 15 15 16 17 19 20 20 Adjusted EBITDA 33,631 (288,823) 245,927 57,633 (79,770) (65,033) (41,145) 136,932 296,173 349,840 722,720 289,089 606,686 748,266 683,538 2,327,578

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 8 June 5, 2018

Analyst Certification I, Mark E. Smith, certify that the views expressed in this research report accurately reflect my personal views about the subject company and its securities. I also certify that I have not been, am not, and will not be receiving direct or indirect compensation related to the specific recommendations expressed in this report.

Important Disclosures:

The analyst or a member of his/her household does not hold a long or short position, options, warrants, rights or futures of this security in their personal account(s).

As of the end of the month preceding the date of publication of this report, Oak Ridge Financial did not beneficially own 1% or more of any class of common equity securities of the subject company.

There is not any actual material conflict of interest that either the analyst or Oak Ridge Financial is aware of.

The analyst has not received any compensation for any investment banking business with this company in the past twelve months and does not expect to receive any in the next three months.

Oak Ridge Financial has been engaged for investment banking services with the subject company during the past twelve months and does anticipate receiving compensation for such services in the next three months.

Oak Ridge Financial has not served as a broker, either as agent or principal, buying back stock for the subject company’s account as part of the company’s authorized stock buy-back program in the last twelve months.

No director, officer or employee of Oak Ridge Financial serves as a director, officer or advisory board member to the subject company.

Oak Ridge Financial Rating System: Oak Ridge Financial utilizes a two-tier rating system for potential total returns over the next 12 months. Buy: The stock is expected to have total return potential of at least 15%. Catalysts exist to generate higher valuations and positions should be initiated at current levels. Investors requiring time to build positions may consider current levels attractive. Hold: The stock is expected to have total return potential of less than 15%. Fundamental events are not present to make it a Buy. The stock may be an acceptable longer-term holding.

Valuation and Price Target Methodology: We derive our $5.00 price target by applying an 11.5x EV/EBITDA multiple to our 2019 adjusted EBITDA estimate of $2.3mm.

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 9 June 5, 2018

Ratings Distribution for Oak Ridge Financial Investment Banking Number of Percent of Number of Percent of Rating Stocks Total Stocks Total Buy 1 100.0% 1 100.0% Hold 0 0.0% 0 0.0%

The above represents our ratings1 distribution100.0% on the stocks1 covered100.0% by Oak Ridge Financial, together with the number (and percentage of) each category for which Oak Ridge Financial provided investment banking services in the previous twelve months.

6/5/18 Buy Target: $5

Date Nature of Report Rating Price Target 06/5/18 Initiation @ $3.08 Buy $5.00

Oak Ridge Financial does not make a market in the subject security at the date of publication of this report.

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 10 June 5, 2018

Risks to Achievement of Estimates and Price Target: • Macroeconomic conditions could affect BURG’s operating results. An economic downturn, high unemployment and financial and market volatility, and the related declines in business and consumer confidence could have a negative impact on customer traffic and sales throughout the restaurant industry. If the economy experiences a downturn or there are uncertainties regarding economic recovery or growth, consumer spending may be affected which would adversely affect BURG’s sales. • BURG may be unable to continue to increase same-store sales at existing restaurants, and new stores-when opened- may be unprofitable for several months. To attain profitability BURG must continually increase its same-store sales at its existing restaurants as well as bring additional- profitable- restaurants online. This ability will be contingent on BURG’s success at advertising and promotion of new and existing menu items as well as consumer acceptance, neither of which is guaranteed. If same-store sales decrease and operating costs increase it will adversely affect their profitability. • The hamburger restaurant market is highly competitive and BURG’s competitors in the QSR and fast casual segments include highly recognizable national and regional hamburger restaurant chains as well as small regional and local hamburger establishments and other fast-food and fast casual restaurants. Many of these competitors have greater financial resources, marketing programs and name recognition than BURG. This could ultimately be adverse to revenue and profitability of BURG restaurants. • Many of BURG’s brands are relatively new business concepts that have only been in existence for the last several years and have a limited geographical reach. These factors coupled with the highly competitive hamburger restaurant market could lead to uncertainty for the brand. There is also no guarantee that BURG’s franchising effort will be successful in offering franchises throughout the U.S. and globally or that when franchises are granted that the restaurants will be successfully developed by the franchisees. • Volatile commodity prices may affect earnings. BURG is highly dependent on beef products. Volatile beef prices, seasonality, cost of feed, animal disease, drought and other weather patterns, increases in demand and other issues have historically had an impact on the company’s operating results. • There is no guarantee that BURG’s restaurants will be successful in new markets. Financial results depend significantly upon the success of existing and new restaurants. The success of one restaurant concept in a given location is not indicative to the success of another. • Expansion strategy depends on the ability to open and operate new restaurants; many factors affect the successful opening of a new establishment, many of which are out of the control of the company. Because of these factors new restaurants may not open at planned times causing growth and revenue uncertainty. • Higher-than-anticipated costs associated with the opening of new restaurants or closing, relocating, or remodeling of current restaurants would affect the company’s operating results. • Readers should recognize that the risks noted here do not represent a comprehensive list of all risk factors or potential issues, nor all factors that may preclude achievement of our forecast or price target. Additional risk factors exist and are outlined in the Company’s SEC filings

Other Disclosures: The information contained in this report is based on sources considered to be reliable, but not guaranteed, to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made as of this date and are subject to change without notice. This report has been prepared solely for informative purposes and is not a solicitation or an offer to buy or sell any security. The securities described may not be qualified for purchase in all jurisdictions. Because of individual requirements, advice regarding securities mentioned in this report should not be construed as suitable for all accounts. This report does not take into account the investment objectives, financial situation and needs of any particular client of Oak Ridge Financial. Some securities mentioned herein relate to small speculative companies that may not be suitable for some accounts. Oak Ridge Financial suggests that prior to acting on any of the recommendations herein, the recipient should consider whether such a recommendation is appropriate given their investment objectives and current financial circumstances. Past performance does not guarantee future results. Additional information is available upon request.

Oak Ridge Financial Research Chanticleer Holdings Inc. (BURG) Page 11