MORE INSIGHTS. MORE OFTEN. BETTER RETURNS. Richard Church [email protected] (203) 307-2581 Chipotle Mexican Grill: Leavening Panera Bread’s Sales? April 29th, 2016 DISCERN platform reveals: • Over 80% overlap between Chipotle and Panera in all regions within a 5-mile trade area • Other potential dining alternative beneficiaries from Chipotle challenges Chipotle Mexican Grill’s recent issues with food contamination and the resultant heavy losses of customers are widely known and do not appear to have ended judging by its first quarter earnings release. In its April 26 release Chipotle reported another significant decline in its same-store sales of 29.7%. Conversely, Panera reported a 6.2% increase for the same fiscal period. Key Takeaway As Chart 1 illustrates there appears to be a meaningful correlation between the trend of Chipotle’s same-store sales and Panera’s as Chipotle’s food contamination issues surfaced. This would largely be attributable to the high competition intensity between the chains as the illustrations below show. Chart 1. Chipotle & Panera Bread Comp-Store Sales Spread 30% 20% 10% CMG 0% PNRA -10% Spread -20% -30% 1Q15 2Q15 3Q15 4Q15 1Q16 Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/26/2021 MORE INSIGHTS. MORE OFTEN. BETTER RETURNS. Illustration 1, which is from DISCERN’s database of retailer and restaurant locations, quantifies to what extent Chipotle and Panera overlap within their respective five mile trade area geographies. The data shows that Chipotle and Panera compete within the same five mile trade area in 86% of the total trade areas, a significant amount of restaurant overlap for 2 large competitors within the fast casual restaurant sector. Illustration 1. Trade Area Overlap The illustrations below provide regional views of Chipotle and Panera’s competition overlap and the percentage overlap within the regions. Similar to the national metrics the amount of overlap is high with each region above 80% on a five mile trade area. Illustration 2. Geographic Concentration - Southeast Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/26/2021 MORE INSIGHTS. MORE OFTEN. BETTER RETURNS. Illustration 3. Geographic Concentration – Mid-Atlantic Illustration 4. Geographic Concentration – Northeast Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/26/2021 MORE INSIGHTS. MORE OFTEN. BETTER RETURNS. Illustration 5. Geographic Concentration – Southwest Illustration 6. Geographic Concentration – West Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/26/2021 MORE INSIGHTS. MORE OFTEN. BETTER RETURNS. Illustration 7. Geographic Concentration – Midwest At an even more granular local level as presented in Illustration 9 using Overland Park, KS as an example the competition intensity between Chipotle and Panera is clear. Illustration 8. Local Market Study Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/26/2021 MORE INSIGHTS. MORE OFTEN. BETTER RETURNS. DISCERN Retail, the industry’s first Insights-as-a-Service product designed to optimize consumer retail investment decision-making on 900+ public and private consumer retailers, 1,500+ banners and 400,000+ U.S. store locations. Subscribers gain more insights, faster ‘awareness to decision’ time, and a sustainable information advantage using DISCERN’s service. DISCERN, the leader in Insights-as-a-Service for investment professionals and corporate executives, delivers personalized insights through data, signals and visuals. Financial decision-makers gain a sustainable information advantage through DISCERN’s next- generation financial platform, which leverages cognitive analytics to produce more insights and accelerates the time from ‘awareness to decision.’ DISCERN’s unique Signals-as-a- Service® delivers personalized signals to subscribers about investment-related anomalies and events. Seven of the 10 largest fund managers in the United States are DISCERN customers. Founded in 2009, the company is privately held and funded by Artiman Ventures and individual investors. DISCERN operates its headquarters in the Silicon Valley with an office in New York. Signals as a Service® is a registered trademark owned by DISCERN. All other trademarks and registered trademarks in this document are the properties of their respective owners. Availability DISCERN Retail is available as a cloud-based subscription service that can be set up in minutes, and is instantly configurable and accessible through any browser-enabled device. For a demo and more information, please visit http://www.discern.com/consumer-retail DISCLOSURE This document has not been prepared, is not intended, and should not be interpreted as a research report regarding any securities of any company. The research included in this document is intended solely for the use of institutional investors and is provided without warranty of any kind, either expressed or implied. The information and opinions expressed in this research, including the information used to compile charts and tables, are based on current public Downloaded from www.hvst.com by IP address 192.168.160.10 on 09/26/2021.