Franchise Guide Table of Contents

Capriotti’s is a 41-year-old heritage brand in the 1. The Industries fast-casual restaurant sector with a following of 2. Who is Capriotti’s? raving fans lovingly known as CAPAddicts. 3. Brand Growth 4. The Capriotti’s Brand 5. What Makes Capriotti’s So Scrumptiously Different? Many are driven to open their own location after 6. Our Franchise Partners falling in love with the food. 7. Support for Our Franchise Partners 8. Restaurant Formats 9. Qualifications for Prospective Franchise Partners 10. Process and Next Steps 11. FAQs 12. Contact Fast-Casual Industry

Capriotti’s occupies space in the $47 billion fast-casual restaurant sector. Sandwich concepts make up 18 percent of that. Fast-casual is a subset of limited- service restaurants, which include quick-serve restaurants (QSR).

The fast-casual sector leads all other restaurant sectors – full-service and QSR – in growth.

Fast-casual is anticipated to make up 22 percent of the limited-service market by 2021.

Sandwich concepts account for $31 billion in limited-service sales and $8.5 billion in fast-casual sales. Franchise Industry

The franchise industry in 2017 grew faster than the overall economy for a seventh consecutive year. The industry shows no signs of slowing down.

The franchise industry is expected to have grown by $36 billion in 2017.

Franchising is a powerful economic engine providing more than 120 different industries a way to sell products or services to consumers through independently owned and operated franchises. Who is Capriotti’s?

An award-winning fast-casual sandwich restaurant, Capriotti’s is a fast-growing chain where franchise partners earn exceptional returns by selling the best tasting, highest- quality food in a comfortable and inviting atmosphere. Capriotti’s has more than 100 locations in 18 states, with $58 million in system-wide sales, as of 2017.

More than 70 percent of the system is made up of multi-unit franchisees, proving that partners are reinvesting in the brand. The top quartile of Capriotti’s owners average nearly $1.1 million in sales annually, which is higher than other sandwich competitors. Our leadership

Our leadership team has fostered the momentum to open 500 franchise locations by 2025. Ashley Morris & Jason Smylie

Ashley Morris and Jason Smylie became CEO and President, respectively, after buying the company in 2008. They tripled the number of locations to 106 stores today. The friends and business partners had been Capriotti’s multi-unit operators in Las Vegas since 2005. David Shelly Barr Sun

Barr, who serves as Vice Chair of the International Franchise Association’s Board of Sun is Chair of the IFA and CEO, CFE and co-founder of BrightStar Franchising LLC. Sun

Directors, brings a wealth of experience as multi-unit franchisee for Yum! Brands, is an investor in other franchise companies, including TITLE Boxing Club. In 2009, she operating 23 KFC and Taco Bell restaurants. Barr is also an investor in TITLE Boxing Club was named Entrepreneur of the Year by the IFA. Sun is the author of the book, Grow and is managing director and partner for Franworth, a franchise growth equity firm. He Smart, Risk Less – A Low-Capital Path to Multiplying Your Business through Franchising, also serves on the board of several franchise companies, including BrightStar Care, The in which she shares her experience and knowledge of franchising success.

Spice & Tea Exchange and The Bistro Group. David Jane Bloom McPherson

David Bloom serves as Chief Development Officer, overseeing all aspects of franchise Jane McPherson is Capriotti’s Senior Vice President of Marketing responsible for development, operations and training. Bloom’s background includes senior leadership marketing and technology. She brings more than 20 years of marketing experience positions in a variety of high growth franchise brands. His early career in the franchise and deep knowledge of the franchise restaurant category. At Quiznos Subs, industry began as a multi-unit franchisee and included such milestones as serving as McPherson was the Senior Director of Marketing, where she was responsible for

Senior Vice President of Brand Expansion for Quiznos, growing it from a small regional driving 900 percent growth for the brand. Leading the revitalization of the TCBY and brand to opening over 5,000 locations in 28 countries. In subsequent senior roles, he Mrs. Fields brands, she also served Vice President of Marketing at Famous Brands was responsible for the rapid growth of numerous enterprises, including Clockwork International. With additional experience in a venture funded early stage technology

Home Services, which has system-wide revenues in excess of $2.5 billion; Bridge company and a top U.S. marketing agency, McPherson blends start-up style creativity

International Academies based in Nairobi, Kenya, which has schools throughout Africa with big brand corporate discipline to marketing and technology at Capriotti’s. and India; and Famous Brands International, which has approximately 900 franchised locations in over 30 countries. Brand Growth

With locations open in 18 states and growing quickly, Capriotti’s is well on its way to reaching the 500 restaurant mark by 2025. Having expanded the Capriotti’s presence in our home market of Las Vegas, we also recently expanded in key markets such as Chicago, Indianapolis, Nashville, Salt Lake City and Minneapolis. We signed more than 50 franchise agreements in 2017.

But, Capriotti’s still has prime territories available for development, including locations in the Mid-Atlantic, Midwest, Middle South and Mountain West regions. In addition to domestic expansion, we have our sight set on international growth. Franchise partners outside the United States should have a high-level of restaurant or retail development and operational expertise in country. Additionally, the right franchise partners are individuals who align with our brand’s mission and values, and are as passionate as we are about the extraordinary food at Capriotti’s. The Capriotti’s Brand

Capriotti’s began in 1976 by brother and sister duo Lois and Alan Margolet in While attending the University of Nevada in Las Vegas, best friends Ashley Morris and

Wilmington, Delaware, based on the idea of creating a unique sandwich shop for “real Jason Smylie became so enthralled by Capriotti’s that they broke their apartment lease turkey lovers.” They named their shop after their grandfather, Philip Capriotti, who to move closer to a restaurant. In 2005, the duo opened their own franchise location loved to cook. The company took off, spreading across the country simply based on and quickly became multi-unit operators, opening their second location that same word of mouth. year and the third location in 2007. In 2008, they bought the entire company. Ashley

and Jason nearly tripled the size of Capriotti’s which now has 106 locations open

Capriotti’s became famous for its nightly tradition of slow-roasting whole, all-natural across the country. turkeys in-house and hand-shredding them each morning to feature in a variety of fan-favorite subs. This includes The Bobbie, the shop’s acclaimed best-seller, made with Although the brand has experienced tremendous growth, Capriotti’s still insists its homemade turkey, cranberry sauce, stuffing and mayo on a soft roll. The Bobbie was mission – To share our passion, one sandwich at a time – and values exist at every voted “The Greatest Sandwich in America” by AOL users in 2009. location that carries its name. Capriotti’s core values

Capriotti’s core values, which flow from the leadership at the corporate level to each member of every restaurant’s staff, include:

Passion – Be the Best Family – Care About People Integrity – Walk the Talk Profitability – Everyone Wins Genuineness – 100 Percent Real What Makes Capriotti’s So Scrumptiously Different?

We are obsessed with food and exceeding expectations. For example, The Bobbie, Capriotti’s signature sub, was voted “The Greatest Sandwich in America” by thousands of readers across the country and reported by AOL.com. Additional accolades for our food include being ranked by No. 1 QSR Brand for Highest Quality and Taste by Sandelman & Associates in a 2014 study. Why? Because we prepare our food the hard way: • Slow-Roasted Homemade Turkey

• Meatballs Made from Scratch

• Homemade Tuna Made Fresh Daily

• Premium Grilled Steak & Chicken

• Slow-Cooked Hand-Pulled Roast Beef

• Fresh Coleslaw Made Daily Our Franchise Partners

Besides being committed to the quality of our food, we are also committed to our family of franchise partners. In 2014, Forbes ranked Capriotti’s Sandwich Shop as one of The 10 Best Food Franchises for Your Buck.

We are happy you’re interested in joining the Capriotti’s family. Check out what some of our partners have to say about their experience with Capriotti’s: Kim Schneese Wilmington, Delaware

On being part of the growing Capriotti’s brand:

Kim has been with Capriotti’s since the company’s start, growing up in the restaurants as her mother was best friends with the company’s founder, Lois Margolet. After working in the original Union Street Capriotti’s, her mother bought the Silverside location in 1997, the fourth Capriotti’s ever opened. Kim worked with her mother in the restaurant until taking ownership in 2015.

“I’ve had the unique opportunity to experience first-hand where the company began,” said

Kim. “This perspective has allowed me to stay true to our founding quality standards while also playing an important role in the evolution of the brand. It’s exciting to see the growth we have experienced and the innovation paving the way for Capriotti’s future.” James Gimbel Davenport, Iowa

On owning a Capriotti’s with confidence:

In 2007 on a trip to Las Vegas, James stopped by Capriotti’s and instantly fell in love with the sandwiches. James was hooked, and ate at Capriotti’s every time he was in Vegas. In 2010, he decided he would become a Capriotti’s franchisee so he could have the restaurant where he lived in Iowa. Seven years later, he owns four successful

Capriotti’s locations in his home state.

“From the moment I tried Capriotti’s, I knew I found something special,” said James. “For me, it was more than just a sandwich I loved – it was an opportunity for me to run a successful business and feel confident about the quality products I’m selling.” Bill Byrd Atlanta, Georgia

On Capriotti’s thorough design process:

Bill Byrd is no stranger to franchising or opening restaurants. He is president and co- owner of PTMD Restaurants, a franchisee of dozens of KFC and Taco Bell restaurants.

He decided to invest in a Capriotti’s because he was drawn to the brand’s supportive family atmosphere. He and his son Jason opened their first Capriotti’s in 2016.

“The design process went very well,” Bill said. “We got a lot of support from Capriotti’s laying it out, helping coordinate and manage the contractor. They came out twice to make sure it was being built to spec. The support we got was phenomenal. Having built many brands before, I feel we got more support from Capriotti’s than we did anywhere else.” Andy Poch & Craig Garofalo Chicago, Illinois

On Capriotti’s staying current with the times:

After attending culinary school at Kendall College, the two best friends managed a variety of well-known high-end restaurants around the country and abroad. Since Andy had never tried the restaurant before, Craig took him on a road trip over the Wisconsin border to try Capriotti’s at three locations. Andy was instantly drawn in by Capriotti’s commitment to quality, unique flavors and fresh ingredients. The duo opened their first

Capriotti’s in 2016 and second restaurant in January 2018.

“Capriotti’s has taken the care to grow the brand and bring it into modern times, we get to see the continuing evolution, which keeps us relevant and current in the fast-casual sector.

Capriotti’s also stays true to its roots. We will never bend on who we are, making everything fresh on a daily basis, sourcing the best ingredients every day and being genuine.” Support for Our Franchise Partners

Capriotti’s treats franchise partners like family, and therefore provides support to get them up and running successfully. Like a family, that support is always available.

Site Selection and Construction – Our domestic franchise partners are provided with state-of-the-art site selection tools and best-in-class support from design to the buildout of your Capriotti’s.

Grand Opening – Our team of experts will work to support you through a program focused around public relations, advertising, in-shop experience, and local shop marketing. CAPMastery Program – An online and field program that provides significant support to franchise partners for marketing, retail sales, operations and growth strategies throughout every stage of their ownership.

Technology– Capriotti’s works with a number of the largest technology firms in our industry to develop systems that will aid our franchise partners in delivering our award-

winning food to our guests quickly and help them run their businesses efficiently:

Improved POS system that integrates inventory management, recipes,

and sales data with store schedules and labor costs. Aided by the system,

Capriotti’s corporate team performs regular reviews of franchise partners’

operations at no cost to the shop owner.

Automation system that integrates third-party delivery and catering

options, which are providing excellent results in building revenues for our

franchise partners. Marketing – Ongoing customer acquisition marketing programs are available to franchise partners. Our branded loyalty app and social following gives us a direct connection to our most loyal customers and enables us to drive incremental visits and reward our most loyal customers. Restaurant Formats

Capriotti’s is a versatile concept that can operate in many different city and suburban locations:

• Most Capriotti’s are end-caps, inline or freestanding

• The brand is open to nontraditional locations, such as airports, casinos and malls (There’s a Capriotti’s currently in a courthouse, casino and truck stop)

• The average size of a Capriotti’s is 1,800 square feet

• Open kitchen design and attractive finishes convey that fact that our food is fresh, made in-house, and made to order

• Seating averages 40 Capriotti’s does not use a set design for kitchens, although the brand strives to limit it and other back-of-the-house operations to 1,000 square feet to maximize space for guest seating. The same kitchen equipment is used system-wide. Our shops feature a mixture of modern design elements that provide a warm, inviting feeling.

Format for restaurants in international markets will be similar but will take into account cultural preferences. Qualifications for Prospective Franchise Partners

Our partners should fit into the “family” environment of the company and align with

Capriotti’s other core values such as passion, profitability and genuineness. The ideal

Capriotti’s franchise partner will have high levels of business acumen and a proven track record of growing a business.

Restaurant experience is preferred, but not required. Prospects should also have an understanding of the customer experience as this is a vital part of the Capriotti’s dining experience. Our owners should love Capriotti’s food and be dedicated to being a great brand ambassador. In addition to possessing these values and experience, prospective franchise partners should have the capital to fund their investment:

Initial Investment: $328,000-$525,500

Franchise fee: $30,000-$40,000

Ongoing royalty: 6-7 percent Process and Next Steps

1. Speak With Our Team

2. Fill Out an Application

3. Attend a Webinar

4. Attend Discovery Day

5. Franchise Approval

6. Execute Agreement Frequently Asked Questions

Where did Capriotti’s begin? Capriotti’s started as a family business with brother and sister Alan and Lois Margolet

1976. They opened the first Capriotti’s in Little Italy in Wilmington, Delaware. They decided to name it after their grandfather, Philip Capriotti, who loved to cook.

Alan and Lois wanted to create a sandwich for “real turkey lovers,” so they started roasting whole fresh turkeys overnight. This ritual, which still goes on at every location today, sets them apart from their competitors. Word spread about their fresh roasted turkey, quality meats and cheese, fresh rolls and produce. Over time, their popularity grew and in 1987, their cousin, Diane Rizzo, joined them in opening additional locations in Delaware. The formula was so successful that franchising was offered.

Today, Capriotti’s Sandwich Shops are located around the country and continue the family tradition started in Delaware more than 40 years ago. How much money can I make? What demographics does Capriotti’s look for? There are many variables that affect the answer to this question. We encourage you to Our customers are regular people who relish and love to talk about food. They use fast- review our detailed Item 19 in our Franchise Disclosure Document and speak with our casual restaurants while working, when crunched for time, or feeding a casual meeting franchisees. or get-together. They are men and women with a household income of $75,000

and more who enjoy the accessibility of sandwiches, salads and the flavors of more How much does it cost to own a Capriotti’s shop? complex meals. The total investment ranges from $350,000 - $815,000. How many employees do I need to run a Capriotti’s location? Will Capriotti’s provide financing for my store? We require that you open with at least 20 employees. A typical Capriotti’s operates Third-party financing is available through our strategic relationships with a variety of with 12-15 employees on the schedule. financial institutions. What are the typical hours of operation? Will Capriotti’s help me find a location? Most locations operate from 11 a.m. to 9 p.m., but hours vary across the system Our best-in-class site selection process will provide you the tools to help you select depending on market and trade area. your Capriotti’s location(s). Our team will guide you through the process from start to finish. ConTACT US

Thank you for your interest in becoming a franchise partner and giving us the opportunity to tell you more about the Capriotti’s family and what we offer.

Domestic Development Opportunities Call or email Bruce for more information at: (702) 374-4746 | [email protected]

International Development Opportunities

Call or email David for more information at: (702) 878 -1202 | [email protected]