Recapitalizations of Franchisors: Partnership Considerations - - PowerPoint PPT Presentation

Recapitalizations of Franchisors: Partnership Considerations

Executive Summary

• Bird Dog’s perspective is that of a private equity firm

⏜ We will also discuss attributes of franchisors (and franchisees) that private equity firms look for when assessing investment opportunities

• The Bird Dog team has decades of investing and operational experience in

the franchise industry

⏜ Invested over $200 million in equity capital across nine franchise brands ⏜ Franchisor and franchisee transactions in both the food and non-food segments of the industry

• Private equity firms are very active in the franchise space and could present

a viable option as a partner

2

Bird Dog Capital Group, LLC (“B “Bird Dog”) ”) is is ple pleased to to share wit ith you our th though ghts ts on considerati tions to evaluate when choosing g a partn tner

Getting Started

3

Th The f e first p part o

• f t

the p e proc

• ces

ess i is c critical a and c cou

• uld d

det eter ermine w e which p path you you ul ultimately take

Li Liqu quidi dity Le Legacy Li Lifestyle

• Retirement
• Partner for growth
• Generational transition
• Price
• Structure
• Initial needs and future needs
• Values that are important to you
• Changes to your brand
• Sustainability of your brand
• What are you solving for?

Preparation

• Financial statements

⏜ Audited statements are preferred; however, internals may be relied upon ⏜ Adjustments for owner’s expenses

• Consider getting a transaction advisory services firm to perform a quality of

earnings review ⏜ Performance relative to budget

• Diligence checklist

⏜ Operational metrics (key performance indicators) ⏜ Financial forecast ⏜ Legal, Human Resources, Insurance, IT, and Environmental (if applicable)

• Forming your team

⏜ Consider hiring an investment banker / broker ⏜ Engage legal counsel ⏜ Prepare key members of your management team

4

By By failing to prepare, you are preparing to fail

The Recapitalization Process

5

A A sum ummary of the he steps you u can n expect

Pr Prepare fo for Sale So Solici cit Bids Ne Negotiate Do Docume ments Ex Exit

• Typically 30 to 60

days

• Non-binding initially
• Evaluate proposals

and keep select bidders in the process

• Negotiate terms for

LOI

• Documents necessary

to consummate the transaction are dependent upon structure

• Obtain all necessary

approvals and close

• Regulatory
• Landlord
• Others

Ac Acti tion Items (1 (15 to 30 week Process)

Hire Advisor Prepare Data Room LOI & Definitive Docs Develop Sales Materials IOIs, Mgmt. Preso & Diligence Responses Implement Post- Acquisition

• r

Transition

Valuation Considerations

6

Th Ther ere a e are n e numer erou

• us f

factor

• rs t

that c can i impact t the v e valuation

• n you

you c cou

• uld ex

expec ect

• Same Store Sales performance
• Price and traffic

SSS SSS

• Product / service mix
• Stability

Ma Margins

• Organic
• Acquisition

Gr Growth th

Va Valuation

• Revenue
• EBITDA

Si Size

Valuation Considerations

7

Th Ther ere a e are n e numer erou

• us f

factor

• rs t

that c can i impact t the v e valuation

• n you

you c cou

• uld ex

expec ect

• Current debt outstanding
• Working capital

Ba Balance Sh Sheet

• Date of last remodel
• Location / trade area

As Assets

• Brand awareness
• Brand integrity

Br Brand Eq Equit ity

Va Valuation

• Business lifecycle
• Tenure of management

Hi History

Valuation Considerations

8

Th Ther ere a e are n e numer erou

• us f

factor

• rs t

that c can i impact t the v e valuation

• n you

you c cou

• uld ex

expec ect

• General economic conditions
• Credit markets

Ec Economy my

• Litigation history and pending
• Revenue and profits concentration

Ri Risks

• All cash transaction
• Owner participation in structure

St Structure

Va Valuation

• Strength of management
• Areas that need augmentation

Or Org Cha Chart

Valuation Considerations

9

So Some prospective par artner will an anal alyze metrics of publicly-tr traded companies, pr prece cedent transact ctio ions and develo lop p fin inancia cial l models ls to to arriv ive at valu luatio ion

COMPARABLES BY SERVICE FORMAT EBITDA Price Equity Enterprise P/E P/E/G EV / EBITDA EV / Revenue Margin CY2017 CY2018 CY2017 CY2018 IQ_LTM CY2017 CY2018 IQ_LTM CY2017 CY2018 IQ_LTM Name 11/10/17 Value Value CY17 CY18 CY17 CY18 LTM CY17 CY18 LTM CY17 CY18 LTM Affordable Upscale & Fine Dining KR Ark Restaurants Corp. $0.00 $84 $103 0.0x 0.0x 0.0x 0.0x 9.9x 0.0x 0.0x 0.7x 0.0x 0.0x 6.8% BBRG Bravo Brio Restaurant Group, Inc. $2.15 $33 $76 11.0x 9.6x 2.0x 1.7x 3.2x 2.9x 3.0x 0.2x 0.2x 0.2x 5.9% AKE The Cheesecake Factory Incorporated $44.31 $1,966 $2,090 17.1x 16.7x 1.3x 1.3x 7.8x 8.2x 8.0x 0.9x 0.9x 0.9x 11.8% DFRG Del Frisco's Restaurant Group, Inc. $13.15 $279 $319 18.0x 16.6x 1.5x 1.4x 7.9x 7.1x 6.7x 0.9x 0.9x 0.8x 11.2% FOGO Fogo de Chao, Inc. $10.75 $304 $414 14.0x 12.9x 0.9x 0.8x 8.0x 7.7x 6.9x 1.3x 1.3x 1.2x 16.8% JAX

• J. Alexander's Holdings, Inc.

$9.85 $145 $163 28.1x 21.9x 0.0x 0.0x 8.4x 6.6x 6.3x 0.7x 0.7x 0.7x 8.4% NA Kona Grill, Inc. $2.05 $21 $55 NM NM 0.0x 0.0x 14.9x 12.5x 6.7x 0.3x 0.3x 0.3x 2.0% RUTH Ruth's Hospitality Group, Inc. $19.90 $599 $624 19.2x 17.3x 1.4x 1.3x 10.3x 9.9x 9.0x 1.6x 1.5x 1.4x 15.2% Mean $429 $480 15.3x 13.6x 0.9x 0.8x 8.8x 6.9x 5.8x 0.8x 0.7x 0.7x 9.8% Median $212 $241 17.1x 16.6x 1.1x 1.0x 8.2x 7.4x 6.7x 0.8x 0.8x 0.7x 9.8% Casual Dining BJRI BJ's Restaurants, Inc. $31.20 $644 $809 22.6x 19.9x 1.4x 1.3x 6.9x 7.5x 6.7x 0.8x 0.8x 0.8x 11.3% MN Bloomin' Brands, Inc. $16.98 $1,550 $2,666 12.7x 12.3x 1.1x 1.1x 6.9x 6.5x 6.6x 0.6x 0.6x 0.6x 9.4% EAT Brinker International, Inc. $33.74 $1,562 $2,916 10.7x 10.2x 0.7x 0.7x 6.8x 6.9x 6.8x 0.9x 0.9x 0.9x 13.7% LD Buffalo Wild Wings, Inc. $118.85 $1,844 $2,237 23.9x 21.5x 1.5x 1.3x 8.7x 8.3x 7.9x 1.1x 1.1x 1.1x 12.8% CHUY Chuy's Holdings, Inc. $22.75 $385 $367 23.3x 21.4x 1.4x 1.3x 9.5x 9.1x 8.2x 1.0x 1.0x 0.9x 11.0% BRL Cracker Barrel Old Country Store, Inc. $154.64 $3,726 $3,972 18.6x 17.0x 2.9x 2.6x 9.9x 10.0x 9.0x 1.4x 1.3x 1.3x 13.7% DRI Darden Restaurants, Inc. $82.64 $10,220 $11,010 19.7x 17.9x 2.1x 1.9x 11.3x 10.6x 9.6x 1.5x 1.4x 1.3x 13.2% AY Dave & Buster's Entertainment, Inc. $48.84 $2,007 $2,288 18.7x 16.9x 1.2x 1.1x 8.7x 8.3x 7.4x 2.1x 2.0x 1.7x 24.4% ENN Denny's Corporation $12.30 $803 $1,097 22.5x 20.3x 0.0x 0.0x 11.8x 10.8x 10.4x 2.1x 2.1x 2.0x 17.7% DIN DineEquity, Inc. $46.63 $839 $2,137 11.3x 11.3x 0.0x 0.0x 9.5x 10.1x 10.4x 3.5x 3.5x 3.6x 36.7% AVE Famous Dave's of America, Inc. $3.65 $25 $31 NM NM NM NM 10.2x 12.6x 10.1x 0.3x 0.4x 0.4x 3.2% LUB Luby's, Inc. $2.62 $76 $106 0.0x 0.0x 0.0x 0.0x 9.0x 0.0x 0.0x 0.3x 0.0x 0.0x 3.1% RRGB Red Robin Gourmet Burgers, Inc. $46.95 $607 $879 20.8x 17.5x 1.9x 1.6x 6.5x 6.4x 5.9x 0.7x 0.6x 0.6x 10.2% Ruby Tuesday, Inc. $2.37 $143 $309 0.0x 0.0x 0.0x 0.0x 8.3x 0.0x 0.0x 0.3x 0.0x 0.0x 4.1% XRH Texas Roadhouse, Inc. $49.04 $3,487 $3,437 25.3x 22.9x 2.0x 1.8x 11.9x 11.6x 10.6x 1.6x 1.5x 1.4x 13.3% Mean $1,861 $2,284 16.4x 14.9x 1.2x 1.0x 9.1x 7.9x 7.3x 1.2x 1.2x 1.1x 13.2% Median $839 $2,137 19.2x 17.3x 1.3x 1.2x 9.0x 8.3x 7.9x 1.0x 1.0x 0.9x 12.8%

Valuation Considerations

10

Pu Public tr trading g comparables, conti tinued

Quick Casual - Performance Issues MG Chipotle Mexican Grill, Inc. $279.45 $7,890 $7,341 41.7x 29.7x 2.7x 2.0x 17.8x 15.9x 12.5x 1.7x 1.6x 1.5x 9.4% LOCO El Pollo Loco Holdings, Inc. $10.10 $390 $469 16.4x 15.7x 1.2x 1.1x 7.6x 7.5x 7.2x 1.2x 1.2x 1.1x 15.5% FRGI Fiesta Restaurant Group, Inc. $16.75 $450 $508 NM 23.7x NM 1.8x 8.3x 7.1x 7.5x 0.7x 0.8x 0.8x 9.0% NDLS Noodles & Company $4.40 $181 $243 NM 107.3x NM 14.3x 15.4x 9.0x 7.6x 0.5x 0.5x 0.5x 3.3% PBPB Potbelly Corporation $11.90 $295 $274 38.6x 34.7x 1.9x 1.7x 7.0x 7.4x 6.9x 0.7x 0.6x 0.6x 9.3% Mean $1,841 $1,767 32.2x 42.2x 2.0x 4.2x 11.2x 9.4x 8.3x 1.0x 0.9x 0.9x 9.3% Median $390 $469 38.6x 29.7x 1.9x 1.8x 8.3x 7.5x 7.5x 0.7x 0.8x 0.8x 9.3% Quick Casual JA Bojangles', Inc. $12.15 $450 $604 15.5x 16.3x 1.2x 1.3x 8.2x 8.3x 8.7x 1.1x 1.1x 1.1x 13.7% FRII Freshii Inc. $4.61 $142 $114 32.6x 19.3x 1.4x 0.8x 49.7x 15.5x 10.4x 6.9x 6.3x 4.7x 13.8% ABT The Habit Restaurants, Inc. $9.20 $187 $183 62.9x 85.6x 2.5x 3.4x 6.4x 6.5x 5.9x 0.6x 0.6x 0.5x 8.9% RA Panera Bread Company $0.00 $0 $0 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 14.9% AK Shake Shack Inc. $38.35 $1,005 $983 74.0x 69.2x 3.0x 2.8x 18.2x 17.2x 14.2x 2.9x 2.8x 2.1x 16.0% WING Wingstop Inc. $38.10 $1,109 $1,244 52.2x 47.9x 2.7x 2.5x 34.3x 30.8x 26.0x 12.2x 11.9x 10.7x 35.6% ES Zoe's Kitchen, Inc. $12.50 $244 $282 NM NM NM NM 12.3x 13.3x 10.3x 0.9x 0.9x 0.8x 7.5% Mean $448 $487 39.5x 39.7x 1.8x 1.8x 18.5x 13.1x 10.8x 3.5x 3.4x 2.8x 15.8% Median $244 $282 42.4x 33.6x 2.0x 1.9x 12.3x 13.3x 10.3x 1.1x 1.1x 1.1x 13.8% Quick Service CO Arcos Dorados Holdings Inc. $10.25 $2,163 $2,557 25.5x 24.2x 1.2x 1.1x 9.8x 8.9x 8.4x 0.8x 0.8x 0.7x 8.0% AST Carrols Restaurant Group, Inc. $10.90 $386 $624 72.7x 45.3x 3.6x 2.3x 7.7x 7.2x 6.6x 0.6x 0.6x 0.5x 7.8% ACO Del Taco Restaurants, Inc. $12.14 $470 $626 22.0x 20.2x 1.4x 1.3x 9.4x 8.8x 8.2x 1.3x 1.3x 1.2x 14.1% PZ Domino's Pizza, Inc. $173.33 $7,583 $10,682 30.0x 25.1x 1.7x 1.5x 20.2x 19.0x 16.7x 3.9x 3.8x 3.4x 19.5% JACK Jack in the Box Inc. $99.99 $2,942 $4,120 23.6x 20.2x 1.7x 1.5x 11.8x 11.5x 11.4x 2.6x 2.7x 3.0x 21.7% D McDonald's Corporation $165.59 $132,006 $157,953 25.4x 23.7x 2.6x 2.4x 16.2x 15.3x 15.3x 6.7x 7.0x 7.7x 40.9% ATH Nathan's Famous, Inc. $95.00 $398 $468 0.0x 0.0x 0.0x 0.0x 16.7x 0.0x 0.0x 4.6x 0.0x 0.0x 27.5% ZA Papa John's International, Inc. $59.53 $2,086 $2,465 21.8x 20.1x 1.7x 1.5x 12.4x 12.3x 11.7x 1.4x 1.4x 1.3x 11.4% SH Papa Murphy's Holdings, Inc. $5.70 $97 $196 21.9x 22.8x 2.7x 2.9x 13.9x 10.2x 9.3x 1.6x 1.7x 2.0x 11.4% SR Restaurant Brands International Inc. $65.12 $15,468 $28,980 32.6x 24.5x 1.9x 1.4x 14.5x 13.6x 12.4x 6.5x 6.3x 5.8x 44.6% NC Sonic Corp. $24.11 $970 $1,596 18.8x 17.2x 1.2x 1.1x 10.6x 10.5x 10.3x 3.3x 3.5x 3.5x 31.5% EN The Wendy's Company $14.50 $3,512 $6,051 33.1x 26.6x 2.6x 2.1x 15.5x 14.9x 13.7x 4.9x 4.9x 4.8x 31.2% M Yum! Brands, Inc. $79.59 $26,821 $35,688 28.4x 25.1x 2.2x 2.0x 17.4x 17.3x 17.3x 5.8x 6.1x 7.5x 33.1% Mean $14,992 $19,385 27.4x 22.7x 1.9x 1.6x 13.5x 11.5x 10.9x 3.4x 3.1x 3.2x 23.3% Median $2,163 $2,557 25.4x 23.7x 1.7x 1.5x 13.9x 11.5x 11.4x 3.3x 2.7x 3.0x 21.7% Snacks & Beverages KN Dunkin' Brands Group, Inc. $56.54 $5,107 $7,261 23.3x 21.4x 1.8x 1.7x 15.1x 15.0x 14.6x 8.6x 8.5x 8.3x 54.8% JMBA Jamba, Inc. $7.96 $122 $108 15.3x 0.0x 0.0x 0.0x NM 0.0x 0.0x 1.3x 0.0x 0.0x

• 4.4%

SBUX Starbucks Corporation $57.04 $81,658 $82,907 26.9x 23.8x 1.7x 1.5x 15.4x 15.0x 13.4x 3.7x 3.6x 3.3x 22.2% Mean $28,962 $30,092 21.8x 15.1x 1.2x 1.1x 15.3x 10.0x 9.3x 4.5x 4.0x 3.9x 24.2% Median $5,107 $7,261 23.3x 21.4x 1.7x 1.5x 15.3x 15.0x 13.4x 3.7x 3.6x 3.3x 22.2%

Valuation Considerations

11

Va Valuation can be driven by the composition of the system

COMPARABLES BY FRANCHISE STATUS EBITDA Price Equity Enterprise P/E P/E/G EV / EBITDA EV / Revenue Margin Name 11/10/17 Value Value CY17 CY18 CY17 CY18 LTM CY17 CY18 LTM CY17 CY18 LTM Highly Franchised (>70%) ENN Denny's Corporation $12.30 $803 $1,097 22.5x 20.3x 0.0x 0.0x 11.8x 10.8x 10.4x 2.1x 2.1x 2.0x 17.7% DIN DineEquity, Inc. $46.63 $839 $2,137 11.3x 11.3x 0.0x 0.0x 9.5x 10.1x 10.4x 3.5x 3.5x 3.6x 36.7% KN Dunkin' Brands Group, Inc. $56.54 $5,107 $7,261 23.3x 21.4x 1.8x 1.7x 15.1x 15.0x 14.6x 8.6x 8.5x 8.3x 54.8% PZ Domino's Pizza, Inc. $173.33 $7,583 $10,682 30.0x 25.1x 1.7x 1.5x 20.2x 19.0x 16.7x 3.9x 3.8x 3.4x 19.5% JACK Jack in the Box Inc. $99.99 $2,942 $4,120 23.6x 20.2x 1.7x 1.5x 11.8x 11.5x 11.4x 2.6x 2.7x 3.0x 21.7% D McDonald's Corporation $165.59 $132,006 $157,953 25.4x 23.7x 2.6x 2.4x 16.2x 15.3x 15.3x 6.7x 7.0x 7.7x 40.9% ZA Papa John's International, Inc. $59.53 $2,086 $2,465 21.8x 20.1x 1.7x 1.5x 12.4x 12.3x 11.7x 1.4x 1.4x 1.3x 11.4% SR Restaurant Brands International Inc. $65.12 $15,468 $28,980 32.6x 24.5x 1.9x 1.4x 14.5x 13.6x 12.4x 6.5x 6.3x 5.8x 44.6% NC Sonic Corp. $24.11 $970 $1,596 18.8x 17.2x 1.2x 1.1x 10.6x 10.5x 10.3x 3.3x 3.5x 3.5x 31.5% EN The Wendy's Company $14.50 $3,512 $6,051 33.1x 26.6x 2.6x 2.1x 15.5x 14.9x 13.7x 4.9x 4.9x 4.8x 31.2% Mean $17,132 $22,234 24.2x 21.0x 1.5x 1.3x 13.8x 13.3x 12.7x 4.4x 4.4x 4.3x 31.0% Median $3,227 $5,085 23.5x 20.8x 1.7x 1.5x 13.4x 13.0x 12.1x 3.7x 3.7x 3.5x 31.3% Moderately Franchised (30% - 70%) LD Buffalo Wild Wings, Inc. $118.85 $1,844 $2,237 23.9x 21.5x 1.5x 1.3x 8.7x 8.3x 7.9x 1.1x 1.1x 1.1x 12.8% EAT Brinker International, Inc. $33.74 $1,562 $2,916 10.7x 10.2x 0.7x 0.7x 6.8x 6.9x 6.8x 0.9x 0.9x 0.9x 13.7% RA Panera Bread Company $0.00 $0 $0 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 14.9% Mean $1,135 $1,718 11.5x 10.6x 0.7x 0.7x 5.2x 5.0x 4.9x 0.7x 0.7x 0.7x 13.8% Median $1,562 $2,237 10.7x 10.2x 0.7x 0.7x 6.8x 6.9x 6.8x 0.9x 0.9x 0.9x 13.7% Minimally Franchised (<30%) MN Bloomin' Brands, Inc. $16.98 $1,550 $2,666 12.7x 12.3x 1.1x 1.1x 6.9x 6.5x 6.6x 0.6x 0.6x 0.6x 9.4% BJRI BJ's Restaurants, Inc. $31.20 $644 $809 22.6x 19.9x 1.4x 1.3x 6.9x 7.5x 6.7x 0.8x 0.8x 0.8x 11.3% AKE The Cheesecake Factory Incorporated $44.31 $1,966 $2,090 17.1x 16.7x 1.3x 1.3x 7.8x 8.2x 8.0x 0.9x 0.9x 0.9x 11.8% BRL Cracker Barrel Old Country Store, Inc. $154.64 $3,726 $3,972 18.6x 17.0x 2.9x 2.6x 9.9x 10.0x 9.0x 1.4x 1.3x 1.3x 13.7% DRI Darden Restaurants, Inc. $82.64 $10,220 $11,010 19.7x 17.9x 2.1x 1.9x 11.3x 10.6x 9.6x 1.5x 1.4x 1.3x 13.2% AY Dave & Buster's Entertainment, Inc. $48.84 $2,007 $2,288 18.7x 16.9x 1.2x 1.1x 8.7x 8.3x 7.4x 2.1x 2.0x 1.7x 24.4% RRGB Red Robin Gourmet Burgers, Inc. $46.95 $607 $879 20.8x 17.5x 1.9x 1.6x 6.5x 6.4x 5.9x 0.7x 0.6x 0.6x 10.2% Ruby Tuesday, Inc. $2.37 $143 $309 0.0x 0.0x 0.0x 0.0x 8.3x 0.0x 0.0x 0.3x 0.0x 0.0x 4.1% XRH Texas Roadhouse, Inc. $49.04 $3,487 $3,437 25.3x 22.9x 2.0x 1.8x 11.9x 11.6x 10.6x 1.6x 1.5x 1.4x 13.3% Mean $2,706 $3,051 17.3x 15.7x 1.5x 1.4x 8.7x 7.7x 7.1x 1.1x 1.0x 1.0x 12.4% Median $1,966 $2,288 18.7x 17.0x 1.4x 1.3x 8.3x 8.2x 7.4x 0.9x 0.9x 0.9x 11.8%

Valuation Considerations

12

Si Since Jan anuar ary 1, 2017, there hav ave been 415 an announced M&A tran ansac actions in th the resta taurant t industr try with th a tota tal reported value of over $21 billion

($ in millions) Ann. Ann. Servi vice Type ype Ent.

• t. Value /

LTM LTM EBITDA EBITDA Date te Targe get Buye yer(s) Pri Primary mary Se Secondar

• ndary

Txn.

• Txn. Val

Value ue LTM Rev. v. LTM LTM EBITDA EBITDA Margi gin 9/29/14/ Einstein Noah Restaurant Group JAB Beech Inc. / BDT Capital Partners Limited Service Fast Casual $473.6 1.10x 10.1x NA 4/5/17 Panera Bread Company JAB Holdings B.V. Limited Service Fast Casual $7,698.8 2.72x 18.7x 14.5% 4/4/17 Guckenheimer Services, LLC ISS A/S (CPSE:ISS) Limited Service Fast Casual $225.0 0.69x 15.9x NA 9/6/16 CICI Enterprises, LP Arlon Group LLC Limited Service Fast Casual 12/15/15 Togo's Eateries, Inc. Nimes Capital, LLC Limited Service Fast Casual NA NA 7.5x NA 7/7/15 Fazoli's System Management, LLC Sentinel Capital Partners, LLC Limited Service Fast Casual NA NA 6.0x NA 6/4/15 Biglari Holdings Inc. (NYSE:BH) Biglari Capital Corp. Limited Service Fast Casual $258.9 1.18x 20.2x 5.8% 7/1/14 Portillo's Hot Dogs Berkshire Partners Limited Service Fast Casual $1,000.0 NA 13.0x NA 3/25/14 Newk's Eatery Sentinel Capital Partners Limited Service Fast Casual NA NA 13.0x NA 1/16/14 CEC Entertainment Inc. Apollo Global Management, LLC (NYSE:APO) Limited Service Fast Casual $1,329.5 1.59x 7.9x 20.1% 2/21/17 Popeyes Louisiana Kitchen, Inc. Restaurant Brands International Inc. (NYSE:QSR) Limited Service QSR $1,827.1 6.75x 20.5x 33.0% 1/9/17 McDonald's China Management Carlyle Group, Citic Capital, Golden Arches Limited Service QSR 12/20/16 K-MAC Holdings Corp. Lee Equity Partners Limited Service QSR 10/26/16 Pacific Island Restaurants, Inc. Restaurant Brands New Zealand Limited Limited Service QSR 5/25/16 Kahala Brands, Ltd. MTY Food Group Inc. (TSX:MTY) Limited Service QSR $339.9 2.43x 10.4x 23.4% 5/9/16 Krispy Kreme Doughnuts, Inc. JAB Holdings Limited Service QSR $1,348.3 2.52x 18.1x 14.0% 12/7/15 Keurig Green Mountain, Inc. JAB Holdings, Mondelez International and BDT Limited Service QSR $14,261.4 3.20x 13.8x NA 12/2/15 Taco Bueno Restaurants, L.P. TPG Growth Limited Service QSR $185.0 NA 8.3x NA 5/26/15 Jack's Family Restaurants Onex Corporation Limited Service QSR $640.0 NA 12.0x NA 3/12/15 Del Taco Holdings, Inc. Levy Acquisition Corp Limited Service QSR $500.0 1.20x 8.3x NA 1/14/15 Brazil Fast Food Corp.

• Limited Service

QSR $36.6 1.20x 8.1x 14.8% 9/12/14 9 Papa Murphy's Franchises Papa Murphy's Limited Service QSR $3.4 NA 6.1x NA 8/26/14 Tim Hortons Inc. Burger King Worldwide Inc. Limited Service QSR $11,542.7 3.90x 15.2x NA 6/16/14 56 Wendy's Units NPC International Limited Service QSR $58.1 0.80x 6.0x NA 3/31/14 Morgan's Foods Inc. Apex Restaurant Management, Inc Limited Service QSR $52.6 0.58x 7.7x 7.6% 1/24/14 Checkers Drive-In Restaurants, Inc. Sentinel Capital Partners Limited Service QSR NA NA 7.5x NA 1/9/14 PJ United, Inc. TPG Growth Limited Service QSR $123.0 NA 7.5x NA 11/19/13 CKE Restaurants Roark Capital Group Limited Service QSR $1,700.0 1.30x 8.3x NA 10/3/13 Protein Bar Catterton Partners Limited Service QSR $29.0 NA 14.0x NA 5/20/14 Flynn Restaurant Group (Applebee's / Taco Ontario Teachers' Pension Plan Limited Service / Casual Dining / $1,400.0 1.00x 7.6x NA 2/6/13 Ark Restaurants Corp. (NasdaqGM:ARKR) Landry's, Inc. Limited Service / Fine Dining / $77.0 0.52x 5.3x 10.0% 10/16/17 Ruby Tuesday, Inc. (NYSE:RT) NRD Capital Management, LLC Full Service Casual Dining $362.0 0.40x 9.8x 4.1% 8/24/17 Ninety Nine Restaurant, Inc.

• J. Alexander's LLC

Full Service Casual Dining $199.0 0.66x 6.6x 9.9% 3/27/17 Cheddar's Casual Cafe, Inc. Darden Restaurants, Inc. (NYSE:DRI) Full Service Casual Dining $780.0 NA 10.4x NA 1/24/17 Bob Evans Farms, LLC Golden Gate Capital Full Service Casual Dining 10/10/16 Red Lobster Master Holdings, L.P. Thai Union Group Public Company Limited Full Service Casual Dining $575.0 0.51x 8.8x 5.8% 7/23/15 Z'Tejas, Inc. Cornbread Ventures, LP Full Service Casual Dining $3.8 0.11x 7.3x 1.5% 6/25/15 PEPPER DINING, INC. Brinker International, Inc. (NYSE:EAT) Full Service Casual Dining $106.5 0.40x 6.5x NA 5/22/15 Frisch's Restaurants, Inc. NRD Capital Management, LLC Full Service Casual Dining $177.4 0.80x 7.3x 10.9% 5/15/15 18 Buffalo Wild Wings Locations Diversified Restaurant Holdings Full Service Casual Dining $53.7 1.40x 6.8x NA 5/20/14 TGI Friday's Inc. Sentinel Capital Partners, L.L.C.; Tri-Artisan Capital Full Service Casual Dining $800.0 NA 7.5x NA 5/15/14 Red Lobster Seafood Co., LLC Golden Gate Capital Full Service Casual Dining $2,113.0 0.85x 9.2x 9.2% 4/24/14 On the Border Mexican Grill & Cantina Argonne Capital Group / Fortress Investment Full Service Casual Dining $160.1 0.50x 5.5x NA 3/18/14 Mexican Restaurants, Inc. Williston Holding Company, Inc. (OTCPK:WHCA) Full Service Casual Dining $2.8 0.25x 4.9x 5.1% 3/13/14 Furr's Restaurant Group, Inc. Chatham Credit Management III, LLC Full Service Casual Dining $22.7 0.20x 8.4x 2.4% 7/22/13 Miller's Ale House, Inc. Roark Capital Group Full Service Casual Dining $310.0 NA 9.3x NA 6/4/13 Mastro`s Restaurants LLC Landry's, Inc. Full Service Fine Dining $220.0 NA 10.0x NA 2/1/17 TAO Group LLC The Madison Square Garden Company Full Service Fine Dining $400.0 1.70x 9.3x NA

Valuation Considerations

13

Below is an illustrative valuation summary, referred to as a “F “Football Field”, that in investo tors use to to help lp dete termin ine valu luatio ion

($ in millions) Valuation Valuation Valuation Parameters Company Implied Value Methodology Metric Range Statistic Low High Implied Valuation Range Trading Comparables EV / NTM EBITDA 10.0x - 12.0x $5.6 $55.9

• $67.0

Transaction Comparables EV / NTM EBITDA 9.5x - 11.5x $5.6 $53.1

• $64.2

Discounted Cash Flow (a) Projections & Year 5 EBITDA 7.5x - 9.5x $4.0 $47.5

• $55.4

LBO Scenario Projections Modeled to a Target IRR 20% - 30% $4.0 $35.6

• $43.5

Notes: (a) Assumes a discount range to yield a present value of future cashflows

$2 $25. 5.0 $3 $30. 0.0 $3 $35. 5.0 $4 $40. 0.0 $4 $45. 5.0 $5 $50. 0.0 $5 $55. 5.0 $6 $60. 0.0 $6 $65. 5.0 $7 $70. 0.0 $7 $75. 5.0

• The intersection of the four commonly-used methodologies implies a range
• f values for the investment firm to consider

Contact Information

14

Ja Jason Bedasse Partner jason@birddogcapitalgroup.com (404) 719-2975 Ja Jake LaJoie Partner jake@birddogcapitalgroup.com (404) 909-7657 Da Dan n Lone nergan Partner dan@birddogcapitalgroup.com (770) 490-8391 Cha Chad Magee Partner chad@birddogcapitalgroup.com (917) 575-7276 www www.bi birddo ddogcapi pitalgroup. p.com