RESTAURANTS

INDUSTRY UPDATE │ JUNE 2017

www.harriswilliams.de

Harris Williams & Co. Ltd is a private limited company authorised and regulated by the Financial Conduct Authority, incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales under company number 7078852. Directors: Mr. Ned Valentine, Mr. Paul Poggi, Mr. Thierry Monjauze and Mr. Aadil Khan.

Harris Williams & Co. Ltd Niederlassung Frankfurt (German branch) is registered in the Commercial Register (Handelsregister) of the Local Court (Amtsgericht) of Frankfurt am Main, Germany, under registration number HRB 96687, having its business address at Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany. Permanent Representative (Ständiger Vertreter) of the Branch Niederlassung: Mr. Jeffery H. Perkins. RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

OVERVIEW

CONTENTS WHAT WE’VE BEEN UP TO . Economic Trends On May 22, 2017, Cleveland Avenue acquired PizzaRev, adding to the . Public Company Summary continued momentum of HW&Co.’s food and beverage group. . Limited Service . Full Service Company Description: . Debt Markets . M&A Activity PizzaRev franchises and operates over 45 fast casual build-your-own pizza restaurants in the and Mexico, offering highly-customizable and high-quality pizzas cooked in under three minutes. The concept, OUR PRACTICE which also offers salads, desserts, and alcoholic and non-alcoholic Harris Williams & Co. is a leading advisor to middle market beverages, differentiates itself from fast casual competitors through companies. Our restaurant customization, atmosphere, food quality, and innovation. experience covers a broad range of concepts and business Key Value Drivers for PizzaRev: models. This particular report focuses on trends and metrics in . Strong franchise system with base of the following areas: experienced, enthusiastic, and well- . Service . Fast Casual capitalized franchise partners. . Pizza Beverage . Significant white space for growth both a partnership of . domestically and internationally. . Differentiated Casual . Casual . Differentiated concept offering a fully & . Family Dining customizable, better-for-you offering, and an . Fine Dining attractive, “stay and enjoy” atmosphere. has been acquired by CONTACTS . Category innovator with industry-leading Glenn Gurtcheff offerings, menu enhancements, and Managing Director technology integration. [email protected] +1 (612) 359-2702 Tim Alexander WHAT WE’RE READING Managing Director [email protected] Bacon Up More than 20 Percent Since January as Wholesale Pork Belly +1 (612) 359-2716 Prices Soar – Pork belly prices are up over 70% since the start of the year Ed Arkus reflecting low supply and rising demand. American consumers continue to Managing Director [email protected] be drawn to all things bacon, ranging from bacon cheeseburgers to +44 20 7518 8905 bacon ice cream. Restaurants are expected to at least partially absorb Ryan Budlong the cost increase as they seek to drive store traffic. (Link to Article) Managing Director [email protected] Sense360 Proves Restaurant Delivery Apps Do Not Cannibalize In-Store +1 (415) 217-3409 Visits – Recent analysis on consumer behavior indicates that delivery Will Bain applications are not detrimental to in-store traffic. The study was Director comprised of over 20 million visits to full service and quick service [email protected] restaurants, over one million of which were from consumers with delivery +44 20 7518 8906 applications installed on their mobile devices. The study did note, Brant Cash however, that consumers with delivery applications have different Director [email protected] consumption patterns than those who do not. (Link to Article) +1 (612) 359-2709 Ryan Freeman The Paradox of American Restaurants – Restaurant quality and variety Director have never been better in America. However, consumer demand has [email protected] struggled to keep pace with the increase in restaurant supply. This +1 (612) 359-2703 imbalance has caused many restaurants to struggle, particularly those Andy Warczak concepts in the middle of the value spectrum. Competition not only Vice President comes from other restaurant options, but also convenience stores, meal [email protected] delivery services, and grocery stores. (Link to Article) +1 (612) 359-2714

www.harriswilliams.de

PAGE | 1 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

ECONOMIC TRENDS

EMPLOYMENT1 CONSUMER CONFIDENCE2

(in millions)

12.0% 150 110

10.0% 145 Employment Total 100

8.0% 140 90

6.0% 135 80

4.0% 130 70 Indexed Value

Unemployment Unemployment Rate 2.0% 125 60

0.0% 120 50 Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 Jun-17 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Total Employment Unemployment Rate

LABOR PARTICIPATION RATE1 WAGE GROWTH VS CONSUMER PRICE INDEX1

64.0% 4.0%

63.5% 3.0%

2.0% 63.0% 1.0% 62.5%

0.0% YoY Growth YoY Growth Rate 62.0% Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Labor Labor Participation Rate -1.0% 61.5% -2.0% Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Consumer Price Index Wage Growth

AT HOME AND RESTAURANT SPENDING3 COMMODITY PRICE INDICES1,4

180 60.0% 160 140 55.0% 120 100 50.0% 80 60

45.0% Indexed Value 40

% % Total of Spend 20 40.0% 0 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Corn Wheat Beef Crude Food Away from Home Food at Home Chicken Pork Milk

PAGE | 2 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

PUBLIC COMPANY PERFORMANCE5,6

SUMMARY INFORMATION

Median Median # of Median EV/LTM TEV/'17E Median Segment Companies P/E EBITDA EBITDA SSS Growth Quick Service 7 24.4x 16.0x 15.3x (0.1%) Fast Casual 11 43.0x 13.8x 11.6x (1.1%) Pizza 3 35.4x 15.1x 14.1x 2.0% Beverage/Snack Retail 4 26.8x 16.3x 15.1x (0.4%) Limited Service 25 28.9x 15.9x 14.6x (0.4%)

Differentiated Casual 5 22.9x 8.8x 8.6x 0.3% Casual Dining 7 23.8x 8.4x 8.0x (1.2%) Family Dining 3 35.7x 10.8x 10.7x (1.1%) Fine Dining 3 22.4x 9.6x 8.5x 0.3% Full Service 18 22.9x 9.1x 8.6x (0.3%)

SOLEBURY’S Q1 2017 RESTAURANT EARNINGS RECAP

Solebury’s quarterly restaurant industry earnings recap tracks the performance of select public restaurant concepts relative to industry research analysts’ expectations. Solebury Capital is a leading independent capital markets advisory firm, providing clients with independent advice, highly-informed judgment, and transaction management services. Harris Williams & Co. and Solebury Capital are subsidiaries of PNC. Report SSS Revenue EBITDA EPS FY 2017 Price Chg. Issuer Date Below In-line Above Below In-line Above Below In-line Above Below In-line Above Guidance 1-Day

5/4/2017 P 40bps P 9.8% P 1.9% P 37.5% ↑ 11.3%

5/4/2017 P 110bps P -0.2% P 5.0% P 14.3% Reiterated 11.2%

5/4/2017 P -270bps P 2.7% P 3.4% P 25.0% Mixed 9.2%

4/27/2017 P -22bps P 1.4% N/P P 8.6% N/A 2.5%

4/25/2017 P 234bps P 1.5% N/P P 24.0% Reiterated 2.4%

5/3/2017 P 48bps P 0.0% P 12.7% P 12.5% Reiterated 1.6%

5/4/2017 P 37bps P -0.9% N/P P 12.5% Reiterated 0.8%

4/25/2017 P 0bps P 1.5% N/P P -0.5% N/A -0.1%

5/4/2017 P -60bps N/A P 0.0% Mixed -3.2%

4/26/2017 P 34bps P -0.3% P -14.3% P -14.8% ↓ -3.7%

5/9/2017 P -70bps P 1.2% P -4.6% P -14.3% ↓ -5.2%

5/8/2017 P 160bps P 1.4% P 9.1% P 0.0% Reiterated -6.6%

5/8/2017 N/A P -1.5% P -15.8% P -10.7% N/A -7.4%

5/10/2017 P -70bps P -10.1% P -202.7% P -433.3% Mixed -8.0%

5/2/2017 P 2bps P -0.9% P 1.5% P 17.6% Reiterated -11.6%

5/2/2017 P -220bps P -1.6% P 16.7% P 0.0% ↓ -16.4%

5/25/2017 P -150bps P -2.2% P 14.4% P 0.0% ↓ -12.5%

Mean -123bps 1bps 95bps -3.9% -0.4% 2.8% -59.3% - 8.1% -118.3% -0.1% 19.0% -2.1% Median -70bps 1bps 48bps -1.9% -0.3% 1.5% -15.0% - 7.1% -14.5% 0.0% 16.0% -3.2%

N/A: Not Applicable N/P: Not Provided Guidance Relative to Expectations: ↑ Above − In-line ↓ Below

PAGE | 3 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

PUBLIC COMPANY PERFORMANCE – LIMITED SERVICE5,6

MEDIAN SAME-STORE SALES GROWTH

QSR Fast Casual Pizza Beverage/Snack Retail

7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 2.0% 1.0% (0.1%) 0.0% (1.0%) (0.4%) (2.0%) (1.1%) Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117

LTM SAME-STORE SALES GROWTH (QUARTERLY AVERAGE)

9.7% 6.6% 3.3% 4.0% 3.5% 1.2% 1.3% 1.2% 1.7% 1.8% 1.6% 1.8% 0.4% 0.7% 0.6% 1.0% 0.2% 0.0% 0.3%

(0.2%) (1.3%) (2.4%) (3.4%) (5.7%) (8.1%)

UNIT COUNT GROWTH (YOY)

57.6% 44.3%

22.8% 20.9% 18.1% 17.2% 11.8% 8.5% 7.6% 10.9% 10.3% 9.4% 7.1% 6.3% 3.7% 1.5% 1.2% 1.0% 1.1% 2.3% 0.7% 3.3% 0.0%

(5.9%) (4.9%)

LTM EBITDA MARGIN

53.0% 44.0% 38.7% 35.0% 29.7% 28.8% 30.0% 23.0% 22.0% 20.0% 15.5% 15.4% 14.8% 15.4% 12.0% 11.3% 8.0% 8.5% 10.1% 9.8% 8.0% 9.6% 2.3% 4.0%

(8.1%)

PAGE | 4 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

PUBLIC COMPANY VALUATION – LIMITED SERVICE5,6

MEDIAN EV/LTM EBITDA TREND*

QSR Fast Casual Pizza Beverage/Snack Retail S&P 500

20.1x 20.2x 18.8x 17.9x 17.4x 16.7x 16.3x 16.1x 15.7x 15.8x 15.9x 16.3x 16.3x 14.2x 14.6x 13.2x 13.4x 13.2x 13.2x 13.9x 11.7x 12.3x 11.6x 10.7x 10.4x 10.2x 10.9x 9.2x 8.3x 8.2x

2012 2013 2014 2015 2016 2017 YTD

EV/LTM EBITDA

34.7x 31.1x 27.1x 24.4x 22.6x 18.5x 17.7x 17.2x 16.0x 16.0x 15.2x 15.1x 15.1x 15.9x 16.3x 11.9x 11.1x 12.4x 11.5x 9.6x 10.7x 7.3x 6.7x

NM N/A

INDEXED SHARE PRICE CHANGE

QSR Fast Casual Pizza Beverage/Snack Retail S&P 500 450 400 350 300 299 250 245 200 178 150 115 100 50 115

0

06 '1206

09 '1209

12 '1212

03 '1303

06 '1306

09 '1309

12 '1312

03 '1403

06 '1406

09 '1409

12 '1412

03 '1503

06 '1506

09 '1509

12 '1512

03 '1603

06 '1606

09 '1609

12 '1612

03 '1703 06 '1706

YEAR OVER YEAR SHARE PRICE CHANGE

61.2% 61.0% 50.3% 48.5% 27.3% 26.4% 14.6% 13.4% 6.5% 3.3% N/A 5.5% 2.1%

(4.1%) (2.1%) (3.5%) (4.3%) (11.0%) (5.3%) (8.3%) (24.3%) (34.1%)

(60.1%) (57.1%) (67.2%)

* Median of the Component Companies’ Median EV/LTM EBITDA Multiple.

PAGE | 5 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

PUBLIC COMPANY PERFORMANCE – FULL SERVICE5,6

MEDIAN SAME-STORE SALES GROWTH

Differentiated Casual Dining Family Dining Fine Dining Casual

5.0% 4.0% 3.0% 2.0% 1.0% 0.3% 0.0% 0.3% (1.0%) (2.0%) (1.1%) (3.0%) (1.2%) (4.0%) Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117

LTM SAME-STORE SALES GROWTH (QUARTERLY AVERAGE)

3.1% 3.1%

1.4% 0.9% 1.2% 1.1%

(0.1%) (0.1%) (0.8%) (0.7%) (1.7%) (1.7%) (1.8%) (1.9%) (2.1%) (3.3%) (3.1%) (3.6%)

UNIT COUNT GROWTH (YOY)

15.5% 14.3% 11.9% 9.2% 6.9% 6.0% 5.0% 4.1% 3.0% 1.9% 0.8% 0.6% 0.7% 1.1%

(1.1%) (3.5%) (2.8%) (7.6%)

LTM EBITDA MARGIN

38.5%

24.3% 18.3% 18.3% 14.2% 14.2% 15.7% 12.6% 12.5% 12.3% 13.1% 13.3% 13.4% 12.0% 9.8% 10.1%

3.8% 3.3%

PAGE | 6 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

PUBLIC COMPANY VALUATION – FULL SERVICE5,6

MEDIAN EV/LTM EBITDA TREND*

Differentiated Casual Dining Family Dining Fine Dining S&P 500 Casual

13.9x 12.3x 12.2x 12.0x 12.0x 11.6x 11.1x 11.4x 10.9x 11.0x 10.8x 10.4x 10.4x 10.2x 10.5x 10.6x 9.7x 9.7x 9.8x 9.9x 9.6x 9.6x 9.0x 9.2x 8.2x 8.2x 8.5x 8.3x 7.5x 7.9x

2012 2013 2014 2015 2016 2017 YTD

EV/LTM EBITDA

12.8x 13.1x 12.2x 12.0x 10.8x 11.3x 9.2x 9.1x 9.1x 9.6x 8.7x 8.8x 8.4x 8.5x 7.8x 7.6x 8.2x 7.0x

INDEXED SHARE PRICE CHANGE

Differentiated Casual Dining Family Dining Fine Dining S&P 500 300 Casual

250 201 179 200 178 150 156 100 152 50

0

06 '1206

09 '1209

12 '1212

03 '1303

06 '1306

09 '1309

12 '1312

03 '1403

06 '1406

09 '1409

12 '1412

03 '1503

06 '1506

09 '1509

12 '1512

03 '1603

06 '1606

09 '1609

12 '1612

03 '1703 06 '1706

YEAR OVER YEAR SHARE PRICE CHANGE

42.1% 42.8% 37.6% 36.4% 18.8% 11.7% 9.7% 12.4% 4.5% 6.4%

(2.5%) (8.8%) (15.0%) (16.3%) (32.4%) (48.0%) (44.3%) (44.0%)

* Median of the Component Companies’ Median EV/LTM EBITDA Multiple.

PAGE | 7 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

PUBLIC COMPANY PERFORMANCE5,6

SUMMARY

Price at As a % of Market Enterprise % LTM Revenue Growth LTM Margins P/E EV / LTM EV / 2017E ($ in millions, except per share data) Ticker 6/30/17 52-wk High Cap Value Franchised* Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple Revenue EBITDA Revenue EBITDA

Quick Service Restaurant , Inc. BOJA $16.25 72.7% $595 $796 57% $536 $83 6.9% NA 19.7% 15.5% 16.4x 1.49x 9.6x 1.42x 9.8x Inc. JACK 98.50 86.9% 2,898 4,251 73% 1,625 358 5.1% 3.6% 27.8% 22.0% 24.4x 2.62x 11.9x 2.76x 11.9x McDonald's Corporation MCD 153.16 98.5% 124,836 151,183 85% 24,394 9,451 (3.8%) (4.7%) 42.3% 38.7% 27.0x 6.20x 16.0x 6.74x 15.3x Restaurant Brands International Inc QSR 62.54 99.4% 14,721 42,012 100% 4,228 1,862 (20.1%) NA 46.9% 44.0% 43.1x 9.94x 22.6x 9.17x 20.1x Sonic Corp. SONC 26.49 88.2% 1,108 1,699 93% 516 153 (16.7%) (2.0%) 37.1% 29.7% 17.9x 3.29x 11.1x 3.59x 11.3x Wendy's Company WEN 15.51 93.1% 3,807 6,178 95% 1,342 387 (24.7%) (17.7%) 37.6% 28.8% 31.9x 4.60x 16.0x 5.14x 15.3x Yum! Brands, Inc. YUM 73.76 80.2% 25,685 35,230 93% 6,340 1,905 20.5% (21.8%) 42.5% 30.0% 18.7x 5.56x 18.5x 6.10x 17.7x

Mean (4.7%) (8.5%) 36.3% 29.8% 25.6x 4.81x 15.1x 4.99x 14.5x Median (3.8%) (4.7%) 37.6% 29.7% 24.4x 4.60x 16.0x 5.14x 15.3x

Fast Casual , Inc. CMG $416.10 83.4% $11,927 $11,427 0% $4,139 $330 (2.5%) 6.9% 11.6% 8.0% NM 2.76x 34.7x 2.47x 21.2x El Pollo Loco Holdings Inc LOCO 13.85 93.3% 532 636 56% 386 59 7.4% NA 20.2% 15.4% 30.8x 1.65x 10.7x 1.54x 9.6x Fiesta Restaurant Group, Inc. FRGI 20.65 67.4% 559 621 11% 711 85 1.5% 8.1% 19.2% 12.0% NA 0.87x 7.3x 0.90x 6.9x Freshii, Inc. FRII-CA 9.47 82.4% 239 259 99% 17 1 NA NA 83.6% 8.5% NM 15.33x NM 9.38x 18.3x Habit Restaurants, Inc. HABT 15.80 80.0% 410 371 6% 295 30 21.6% 29.1% 15.7% 10.1% NM 1.26x 12.4x 1.09x 11.0x Noodles & Co. NDLS 3.90 37.2% 154 171 14% 490 11 5.7% 10.9% 7.5% 2.3% NA 0.35x 15.2x 0.37x 5.8x Company PNRA 314.64 99.5% 6,713 7,452 56% 2,838 421 4.4% 5.3% 15.8% 14.8% 47.6x 2.63x 17.7x 2.51x 16.7x Potbelly Corp. PBPB 11.50 79.0% 288 273 9% 413 41 7.8% NA 14.4% 9.8% 38.3x 0.66x 6.7x 0.62x 6.8x , Inc. SHAK 34.88 81.2% 1,276 1,219 44% 291 45 40.6% NA 24.3% 15.4% NM 4.19x 27.1x 3.42x 22.7x , Inc. WING 30.90 92.5% 895 1,043 98% 96 34 18.3% 17.6% 69.9% 35.0% 51.5x 10.88x 31.1x 10.17x 26.5x Zoe's Kitchen, Inc. ZOES 11.91 31.3% 232 262 1% 286 23 17.3% 29.7% 13.5% 8.0% NM 0.92x 11.5x 0.83x 11.6x

Mean 12.2% 15.4% 26.9% 12.7% 42.1x 3.77x 17.4x 3.03x 14.3x Median 7.6% 10.9% 15.8% 10.1% 43.0x 1.65x 13.8x 1.54x 11.6x Pizza Domino's Pizza, Inc. DPZ $211.53 95.5% $10,173 $12,476 97% $2,558 $511 13.5% 11.6% 31.1% 20.0% 45.3x 4.88x 24.4x 4.55x 22.3x Papa John's International, Inc. PZZA 71.76 79.3% 2,638 2,974 85% 1,734 197 6.2% 5.3% 18.3% 11.3% 25.4x 1.71x 15.1x 1.64x 14.1x Papa Murphy's Holdings, Inc. FRSH 4.37 56.0% 74 182 89% 126 12 1.5% NA 28.4% 9.6% NA 1.45x 15.1x 1.48x 7.9x

Mean 7.1% 8.5% 25.9% 13.6% 35.4x 2.68x 18.2x 2.56x 14.8x Median 6.2% 8.5% 28.4% 11.3% 35.4x 1.71x 15.1x 1.64x 14.1x

Beverage / Snack Retail DAVIDsTEA, Inc. DTEA $5.85 40.9% $151 $107 0% $167 $7 15.9% NA 45.5% 4.0% NA 0.64x 15.9x 0.60x 8.5x Dunkin' Brands Group, Inc. DNKN 55.12 92.3% 5,080 7,166 100% 830 440 1.8% 4.7% 77.7% 53.0% 24.8x 8.64x 16.3x 8.50x 15.2x Jamba, Inc. JMBA 7.79 67.0% 119 105 92% 82 (7) (56.0%) (28.9%) 33.1% NM NA 1.28x NM NA NA Corporation SBUX 58.31 89.9% 84,439 86,991 50% 21,974 5,053 9.1% 12.0% 24.6% 23.0% 28.9x 3.96x 17.2x 3.74x 15.1x

Mean (7.3%) (4.1%) 45.2% 26.7% 26.8x 3.63x 16.5x 4.28x 12.9x Median 5.4% 4.7% 39.3% 23.0% 26.8x 2.62x 16.3x 3.74x 15.1x

Differentiated Casual BJ's Restaurants, Inc. BJRI $37.25 78.3% $803 $990 0% $1,007 $127 7.4% 8.3% 12.2% 12.6% 20.4x 0.98x 7.8x 0.94x 7.8x Buffalo Wild Wings, Inc. BWLD 126.70 72.4% 2,045 2,499 49% 2,013 286 7.1% 14.8% 13.1% 14.2% 27.3x 1.24x 8.7x 1.18x 8.6x Cheesecake Factory Incorporated CAKE 50.30 74.9% 2,413 2,517 7% 2,285 287 7.0% 6.4% 15.6% 12.5% 17.6x 1.10x 8.8x 1.09x 9.0x Chuy's Holdings, Inc. CHUY 23.40 61.9% 396 384 0% 339 42 13.8% 16.7% 15.1% 12.3% 22.9x 1.13x 9.2x 1.01x 8.6x Dave & Buster's Entertainment, Inc. PLAY 66.51 90.5% 2,798 3,119 0% 1,047 255 15.6% 16.5% 22.6% 24.3% 28.2x 2.98x 12.2x 2.68x 11.2x

Mean 10.2% 12.6% 15.7% 15.2% 23.3x 1.49x 9.4x 1.38x 9.1x Median 7.4% 14.8% 15.1% 12.6% 22.9x 1.13x 8.8x 1.09x 8.6x Casual Dining Restaurant Bloomin' Brands, Inc. BLMN $21.23 95.8% $2,128 $3,175 16% $4,232 $416 (2.5%) 0.3% 11.4% 9.8% 43.3x 0.75x 7.6x 0.75x 7.4x Brinker International, Inc. EAT 38.10 68.2% 1,864 3,207 40% 3,222 457 2.6% 3.8% 13.5% 14.2% 12.6x 1.00x 7.0x 1.01x 7.5x Darden Restaurants, Inc. DRI 90.44 95.0% 11,245 12,099 3% 7,170 942 3.4% 4.5% 18.1% 13.1% 23.8x 1.69x 12.8x 1.58x 11.4x DineEquity, Inc. DIN 44.05 50.1% 792 2,028 100% 627 241 (6.3%) (0.9%) 57.8% 38.5% 9.3x 3.24x 8.4x 3.27x 8.5x Gourmet Burgers, Inc. RRGB 65.25 88.0% 840 1,134 16% 1,313 133 3.8% 7.7% 13.9% 10.1% NM 0.86x 8.5x 0.83x 7.5x Ruby Tuesday, Inc. RT 2.01 48.2% 122 302 11% 976 37 (11.9%) (6.1%) 10.8% 3.8% NA 0.31x 8.2x NA NA Texas Roadhouse, Inc. TXRH 50.95 98.2% 3,614 3,562 17% 2,043 271 9.7% 11.8% 15.1% 13.3% 31.6x 1.74x 13.1x 1.62x 12.1x

Mean (0.2%) 3.0% 20.1% 14.7% 24.1x 1.37x 9.4x 1.51x 9.1x Median 2.6% 3.8% 13.9% 13.1% 23.8x 1.00x 8.4x 1.29x 8.0x Family Restaurant Cracker Barrel Old Country Store, Inc. CBRL $167.25 95.5% $4,021 $4,251 0% $2,929 392 1.5% 3.2% NM 13.4% 20.3x 1.45x 10.8x 1.43x 10.5x Denny's Corporation DENN 11.77 82.6% 822 1,118 90% 510 93 2.9% 3.5% 27.7% 18.3% 51.2x 2.19x 12.0x 2.12x 11.0x Luby's, Inc. LUB 2.81 55.4% 82 119 40% 391 13 (9.0%) (0.8%) 8.9% 3.3% NA 0.30x 9.1x NA NA

Mean (1.5%) 2.0% 18.3% 11.7% 35.7x 1.32x 10.6x 1.77x 10.7x Median 1.5% 3.2% 18.3% 13.4% 35.7x 1.45x 10.8x 1.77x 10.7x Fine Dining Del Frisco's Restaurant Group, Inc. DFRG $16.10 85.6% $351 $388 0% $354 $43 4.9% 8.3% 18.0% 12.0% 24.0x 1.09x 9.1x 1.06x 8.1x Fogo de Chao, Inc. FOGO 13.90 81.5% 392 517 0% 296 54 7.4% NA 23.5% 18.3% 17.2x 1.75x 9.6x 1.62x 8.5x Ruth's Hospitality Group, Inc. RUTH 21.75 96.0% 668 691 54% 390 61 3.1% (1.6%) 24.1% 15.7% 22.4x 1.77x 11.3x 1.66x 10.3x

Mean 5.1% 3.4% 21.9% 15.3% 21.2x 1.54x 10.0x 1.45x 9.0x Median 4.9% 3.4% 23.5% 15.7% 22.4x 1.75x 9.6x 1.62x 8.5x

* Percentage Franchised is Based on 2016 YE Units.

PAGE | 8 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

FINANCING MARKET OVERVIEW – RESTAURANTS AND RETAIL7

AVERAGE PRIMARY SPREADS AVERAGE SECONDARY SPREAD

L+600 L+700

L+500 L+600

L+500 L+400 L+400 L+300 L+300 L+200 L+200

L+100 L+100

L+0 L+0 2011 2012 2013 2014 2015 2016 Q1 2017 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17

Weighted Avg. Revolving Institutional

CREDIT STATISTICS LOAN VOLUME (in billions) 1Q 2017: 5.6x 5.6x 3.7x 3.7x

$14 6.0x $12

$10 4.0x $8

$6

2.0x $4

$2

0.0x $0 Debt/ Senior Debt/ EBITDA/ EBITDA - 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 EBITDA EBITDA Cash Interest Capex/ Cash Interest Institutional Pro Rata 2013 2014 2015 2016 Q1 2017

SUMMARY M&A STATS5

QUARTERLY RESTAURANT TRANSACTIONS (U.S. & CANADA)

34 30 28 26 23 22 20 19 19 18 16 17 26 19 17 16 17 14 15 16 14 12 12 13 17 8 14 10 11 14 12 12 13 14 9 11 11 5 10 11 11 11 11 11 10 10 9 5 6 8 8 7 7 6

4 1 3 4 4 3 3 3 2

2012Q2 2013Q1 2013Q3 2014Q1 2015Q2 2015Q4 2016Q2 2017Q1 2012Q3 2012Q4 2013Q2 2013Q4 2014Q2 2014Q3 2014Q4 2015Q1 2015Q3 2016Q1 2016Q3 2016Q4 2017Q2

Private Equity Non-Private Equity

PAGE | 9 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

M&A TRANSACTION INFORMATION5,6

NOTABLE ANNOUNCED TRANSACTIONS

(140 Locations) . ISS A/S, a leading global facility . NPC International Inc. has . New Water Capital has services provider, acquired acquired DavCo, a 140 acquired Custom Made Meals, Guckenheimer Enterprises, Inc. Wendy’s franchise, through a a provider of oven-ready meals for $223 million in April 2017. refranchising transaction with in April 2017. The Wendy’s Company in June . Guckenheimer Enterprises, Inc. 2017. . Custom Made Meals is a provides on-site preparation of leading manufacturer of fresh, appealing and freshly prepared . DavCo is comprised of 140 oven-ready, value-added food at offices across North Wendy’s locations throughout entrees and appetizers sold in America. Maryland and Virginia. more than 6,000 retail grocery locations nationwide.

RECENT TRANSACTIONS

Franchise Private Enterprise Location Equity Value EV / LTM Closed Target Seller Buyer Sale Involvement ($ in Millions) Sales EBITDA 6/22/2017 MHD LLC - Freshii, Inc. P $4.2 - - 6/19/2017 Houston Canada, Inc. - MTY Food Group, Inc. 12.1 - - 6/15/2017 Arby's Restaurant Group, Inc. (8 Restaurants) Arby's Restaurant Group, Inc. Irish Beef, Inc. P P - - - 6/12/2017 Republic Foods, Inc. - Restaurant Group, Inc. - - - 6/9/2017 The Works Gourmet Burger Bistro Fresh Brands, Inc. (Canada) MTY Food Group, Inc. 5.8 - - 6/1/2017 Dav Co Restaurants LLC (140 Wendy's Restaurants) The Wendy's Co. NPC Quality Burgers, Inc. P - - - 5/22/2017 Pizza Rev - Cleveland Avenue LLC P - - - 5/15/2017 Roasting Plant, Inc. (Michigan) - Roasting Plant Inc (Detroit; Harper) P - - - 5/9/2017 JW Lee, Inc. - RCI Hospitality Holdings, Inc. 26.0 - - 5/8/2017 , Inc. (16 Pizza Hut Restaurants) Yum! Brands, Inc. PCF Restaurant Group, LLC P - - - 5/8/2017 Les Restaurants Giorgio Amérique Ltée - MTY Food Group, Inc. 0.2 - - 4/28/2017 Bloomin' Brands, Inc. (45 Outback Steakhouses) Bloomin' Brands, Inc. H.I.G. Capital LLC (Private Equity) P P - - - 4/28/2017 Guckenheimer Enterprises, Inc. - ISS A/S 222.8 0.7x - 4/28/2017 Franchise LLC - Balmoral Funds LLC; Gala Capital Partners P P - - - 4/24/2017 Premiere Food Service, Inc. - Creative Dining Services, Inc. - - - 4/23/2017 Pegasus Coffee House, Inc. - Pegasus Coffee Roaster, Inc. - - - 4/13/2017 The Wendys Co. (4 Restaurants) The Wendy's Co. Meritage Hospitality Group, Inc. P - - - 4/4/2017 Custom Made Meals LLC - New Water Capital LP P - - - 3/29/2017 Little Caesar Enterprises Inc (48 Restaurants in AL & GA) Little Caesar Enterprises, Inc. Four Foods Group Holdings LLC P - - - 3/28/2017 Wendy's Co. (8 Restaurants in MI) The Wendy's Co. Meritage Hospitality Group, Inc. P - - - 3/27/2017 Louisiana Kitchen, Inc. Restaurant Brands International, Inc. 1,736.2 6.5x 19.6x 3/23/2017 The Rancher's Grill Steakhouse Star Buffet, Inc. - - - 3/8/2017 Pacific Island Restaurants, Inc. Nimes Capital LLC Restaurant Brands New Zealand Ltd. P P 105.0 - - 2/27/2017 Ben & Florentine Restaurants, Inc. Imvescor Restaurant Group, Inc. 18.7 - - 2/20/2017 The Wendys Co. (30 Restaurants In Virginia Beach) The Wendy's Co. Delight Restaurant Group P - - - 1/31/2017 TAO Group Operating LLC TAO Group Holdings Corp. The Madison Square Garden Co. 400.0 - - 1/19/2017 Restaurants (46 Locations in FL) Goldco, LLC Seven Hospitality LLC P P - - - 1/18/2017 Michel's Watabe Wedding Corp. - - - 1/12/2017 Angelo's Pizzeria, Inc. Greenfield Farms Food, Inc. - - - 12/31/2016 K-MAC Holdings Corp. Brentwood Associates Lee Equity Partners LLC P P - - - 12/30/2016 Uptown Subs (Jwadmarlatt LLC) Deco Pizzeria LLC - - - 12/19/2016 Dick's Wings Restaurants (2 Locations ) DWG Acquisitions LLC ARC Group, Inc. P 0.5 - - 12/19/2016 Strategic Restaurants Acquisition Co. LLC (194 Burger King) Strategic Restaurants Acquisition Co. LLCGPS Hospitality LLC P - - - 12/8/2016 DNC Parks & Resorts At Yellowstone LLC Delaware North Cos., Inc. - - - 12/7/2016 Main Line Delivery.com LLC Square, Inc.; Cav iar, Inc. - - - 11/30/2016 Burger King Corp. (7 Restaurants) 3G Capital Partners LP () Carrols Restaurant Group, Inc. P - - - 11/16/2016 Burger King Corp. (17 Restaurants) 3G Capital Partners LP (New York) Carrols Restaurant Group, Inc. P - - - 11/9/2016 The Grand Central Oyster Bar, Inc. The Best Restaurant Group LLC - - - 11/8/2016 Greer Co's Inc (44 Restaurants) Greer Cos., Inc. Cheddar's Casual Cafe, Inc. P P - - - 11/1/2016 Brinker International, Inc. (11 Chili's Restaurants) Brinker International, Inc. Paradigm Restaurants LLC P - - - 10/26/2016 STONEFIRE Grill, Inc. Goode Partners LLC P - - - 10/20/2016 OCI Enterprises, Inc. (7 Restaurants) OCI Enterprises, Inc. (Indiana) CraftWorks Restaurants & Brewery, Inc. P - - - 10/11/2016 Ruggles Green Texas LLC Hargett Hunter Capital Partners LLC P - - - 9/29/2016 EBC Public House, Inc. Evans Brewing Co., Inc. - - - 9/21/2016 The Malnati Organization LLC BDT Capital Partners LLC P - - - 9/8/2016 Jimmy John's Franchise LLC Weston Presidio Roark Capital Group, Inc. P - - - 9/8/2016 M.H. Enterprises, Inc. Teriyaki Madness - - - 9/6/2016 CiCi Enterprises LP ONCAP Arlon Capital Partners Management Co. LLC. P - - - 9/2/2016 Wetzel's Pretzels LLC Levine Leichtman Capital Partners CenterOak Partners LLC P - - - 9/2/2016 Groupe St-Hubert, Inc. Fairfax Financial Holdings Ltd. 453.6 - 13.1x 8/23/2016 Burger King Corp. (7 Restaurants in Maine) 3G Capital Partners LP (New York) Carrols Restaurant Group, Inc. P - - - 8/22/2016 Concession Management Services, Inc. Concession Management Services, Inc.HMSHost Corp. 36.8 - - 8/17/2016 The Red Sails Inn The Brigantine, Inc. P - - - 8/10/2016 The Wendy's Co. (10 Restaurants) The Wendy's Co. Meritage Hospitality Group, Inc. P - - - 7/26/2016 Kahala Brands Ltd. MTY Food Group, Inc. 301.4 - 11.0x 7/25/2016 The Original ChopShop Co Hargett Hunter Capital Partners LLC P - - - 7/25/2016 Wendy's International LLC (35 Restuarants) The Wendy's Co. NPC Quality Burgers, Inc. P 35.6 0.6x - 7/15/2016 Burger King Corp. (4 Restaurants) 3G Capital Partners LP (New York) Carrols Restaurant Group, Inc. P - - -

PAGE | 10 RESTAURANTS INDUSTRY UPDATE │ JUNE 2017

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