Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment...

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Restaurants I Industry Spotlight Q3 2017 Restaurants I Q3 2017 Investment Banking I Industry Spotlight

Transcript of Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment...

Page 1: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

Restaurants I Q3 2017

Investment Banking I Industry Spotlight

Page 2: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

Charlie Hurt

Managing Director

(404) 279-4518

[email protected]

Red Farha

Principal

(704) 808-5129

[email protected]

Investment Banking

John Shoffner

Managing Director

(704) 688-1813

[email protected]

John Boisture

Director

(704) 688-4522

[email protected]

Bill Tyson

Co-Head, Capital Markets

(804) 916-1481

[email protected]

Eric Welsch

Sponsor Relationship Mgmt.

(216) 274-5793

[email protected]

Sponsor Coverage

Mike Brothers

Managing Director (DCM)

(312) 704-7362

[email protected]

Katie Marano

Vice President (DCM)

(312) 704-7328

[email protected]

Debt & Equity Capital Markets

Mike Ryan

Managing Director (ECM)

(615) 687-3123

[email protected]

Susannah Lunke

Director (ECM)

(615) 687-3047

[email protected]

Craig Wolf

C&R Group Head

(312) 704-2994

[email protected]

Jeff Hoffmann

National Restaurant Vertical

(312) 704-6246

[email protected]

Corporate Banking

Consumer & Retail Investment Banking

Representative Transactions

Key Contacts Consumer & Retail Investment Banking

Fifth Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital raising, and strategic alternatives in the following sectors:

Consumer Food, Beverage & Agribusiness

Restaurants Retail

Apparel, Accessories & Footwear

Building Products

Interior Furnishings

Personal & Household Products

Recreational Products

Consumer Services

Entertainment, Lodging & Leisure

Agricultural Inputs

Beverages

Dairy Products

Foodservice Distribution

Ingredients and Flavors

Packaged Food/ Snack

Protein Processing

Casual Dining

Coffee & Specialty

Family Dining

Fast Casual

Fine Dining & Polished Casual

Franchisees

Quick Service (QSR)

Apparel, Accessories & Footwear

Discount & Off-Price

Furniture & Furnishings

Grocery & Pharmacy

Internet & e-Commerce

Mass Merchandise

Specialty

$425,000,000

has been acquired by

Sell-Side Advisor

has received an investment from

Financial Advisor

Planet Fitness Midwest

$650,000,000

Senior Unsecured Notes

Co-Manager

$442,000,000

Senior Secured Credit Facilities

Joint Lead Arranger

$51,000,000

Senior Secured Credit Facilities

Lead Arranger

$74,000,000

Senior Secured Credit Facilities

Franchisee

Lead Arranger

$250,000,000

First and Second Lien Credit Facilities

Lead Arranger

has been acquired by

a portfolio company of

Financial Advisor

Page 3: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017 Economic Dashboard

National Unemployment Rate Real GDP Growth Additions to Non-Farm Payrolls

Retail Gas Prices Consumer Sentiment Index Housing Starts

Source: Bureau of Economic Analysis Source: Bureau of Labor Statistics Source: Bureau of Labor Statistics

Source: University of Michigan Source: Energy Information Administration Source: United States Census Bureau

(in $’s per gallon)

(in thousands of employees)

(in thousands of units)

5.0%

2.3%2.0%

2.6%2.0%

0.9% 0.8%1.4%

3.5%

2.1%1.4%

2.6%

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

'14 '15 '16 '17

4.0%

5.0%

6.0%

7.0%

0

100

200

300

400

75

80

85

90

95

100

105

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

750

850

950

1,050

1,150

1,250

1,350

Page 4: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

Same Store Sales (SSS) Growth

Food Prices ($ per pound)

LTM Share Price Performance

Restaurant Sector Insights

Source: S&P Capital IQ, Company Filings, Technomic

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

Sep-14 Sep-15 Sep-16 Sep-17

Cattle Chicken Pork

Already-Weak Comp Performance Exacerbated by Natural Disasters

SSS growth declined in August by 2.0%, driven by a 3.9% decline in guest traffic – a modest improvement over July (down 2.7%) but indicative of the broader Sector’s challenges

Restaurants with operations around the Gulf Coast expect to see significant drops in traffic as consumers recover from the storms

Even for those restaurants that have remained open, “business as usual” will not be restored for weeks or months

Hurricane Harvey’s impact on the Texas oil industry has caused gas prices to rise across the country, denting consumer wallets

Restaurants Turning to Delivery Service to Compete with Meal Kits

Restaurants have begun testing their own e-Commerce platforms to respond to new competitive tensions

Both BJ’s and T.G.I. Friday’s have announced tests for alcohol delivery services this quarter

Cracker Barrel announced plans to expand its own off-premise offerings as well

Coffee-oriented Businesses Lead M&A Deals in the Third Quarter

Nestle acquired a controlling interest in coffee maker and café operator Blue Bottle Coffee

Caribou Coffee, owned by JAB Holdings, acquired Bruegger’s Enterprises for an undisclosed price

The deal comes only months after JAB acquired Panera Bread, its seventh major coffee-related acquisition

Casual Dining Restaurant Deals Flood the Market

Multiple operators are reviewing strategic alternatives, often resulting in a sale, including Ruby Tuesday and Bravo Brio

Given the availability of Casual Dining assets, private equity buyers have been selective about their investments

“Non-traditional” buyers emerged in this round of consolidation as PE and strategic buyers have shied from challenged assets

$1.17

$0.89

$0.57

(2.0%)

0.0%

2.0%

4.0%

6.0%

8.0%

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2015 2016 2017

Full Service Restaurants Limited Service Restaurants

(10.0%)

0.0%

10.0%

20.0%

30.0%

Sep-16 Dec-16 Mar-17 Jun-17 Sep-17

Full Service Restaurants Limited Service Restaurants S&P 500

+9.4% +14.8% +16.7%

Page 5: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

(20.0%)

0.0%

20.0%

40.0%

60.0%

80.0%

Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

Full Service Restaurants Limited Service Restaurants S&P 500

10.0x

15.0x

20.0x

25.0x

30.0x

Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

Full Service Restaurants Limited Service Restaurants S&P 500

Public Equity Market Valuation Trends

5-Year Forward P/E Performance [1] 5-Year Share Price Performance

Sub-Sector Indices’ Share Price Performance [1]

Source: S&P Capital IQ as of September 29th, 2017 * Each index is comprised of the companies noted on page 12 [1] Forward P/E multiples in charts do not match the table, as 5-year performance chart is market capitalization weighted

+73.7%

+38.5%

+73.4%

18.3x 17.9x

24.7x

Median

Number of Enterprise Value Median Multiple Median Multiple

Sector/Sub-Sector Companies $ in Millions Revenue EBITDA LTM P/E Revenue EBITDA Forward P/E

Full Service Restaurants 24 $1,102 1.0x 8.8x 20.6x 0.9x 7.0x 19.5x

Casual Dining 13 2,052 1.0x 8.8x 20.0x 0.9x 7.0x 19.5x

Family Dining 4 1,102 1.3x 12.0x 24.4x 1.3x 10.6x 24.1x

Fine Dining & Polished Casual 7 328 0.9x 8.8x 20.6x 0.9x 6.5x 16.4x

Limited Service Restaurants 24 3,569 3.6x 15.0x 25.6x 3.6x 13.4x 28.2x

Coffee & Specialty 3 6,967 3.6x 15.5x 25.2x 3.7x 13.4x 25.6x

Quick Service 12 3,569 3.8x 15.0x 26.0x 3.6x 14.0x 28.2x

Fast Casual 9 289 0.8x 10.5x NA 0.8x 7.1x 33.2x

S&P 500 500 NM 2.4x 12.3x 26.6x 2.3x 11.2x 18.3x

Median TEV / LTM Multiples Median TEV / Forward Multiples

Page 6: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017 Public Equity Market Valuation Trends (Cont’d)

Source: S&P Capital IQ as of September 29th, 2017 * Each index is comprised of the companies noted on page 12

14.0x

13.4x

10.6x

7.1x

7.0x

6.5x

25.5x

21.8x

21.3x

28.8x

17.5x

15.1x

3.3%

3.1%

2.0%

2.3%

0.8%

0.0%

25.9%

40.2%

13.7%

9.6%

12.9%

11.7%

15.6%

18.7%

11.4%

20.2%

15.4%

13.6%

EV / Forward EBITDA 5-Year Est. EPS Growth LTM EBITDA Margin P / 2017 EPS

Quick Service

Coffee & Specialty

Fast Casual

Family Dining

Fine Dining & Polished

Casual

Casual Dining

3-Year Avg. SSS Growth

Median: 8.9x Median: 21.6x Median: 2.1% Median: 13.3% Median: 15.5%

Page 7: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

8.0x

9.3x

8.7x

7.2x

8.1x8.4x 8.3x 8.4x

9.3x

9.9x 9.7x10.0x 10.2x

8.8x 8.7x9.0x

8.3x8.8x 9.0x

8.7x 8.7x 8.9x

9.6x9.3x

10.2x

8.5x

6.0x

8.0x

10.0x

12.0x

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD8/2016

YTD8/2017

Financial Buyers Strategic Buyers

0

4,000

8,000

12,000

16,000

20,000

24,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q 2016 3Q 2017

Under $25mm $25 to $500mm Above $500mm Undisclosed

U.S. M&A Volume and Valuation Trends

Median Transaction Multiples (Enterprise Value / LTM EBITDA)

Transaction Volume

Note: This data represents the entire U.S. market (all industries) Source: PitchBook, S&P Capital IQ, and S&P Capital IQ LCD

Recession Recession

’16 vs. ’17

▼ 15%

‘07 to ‘11 Median Financial = 8.4x Strategic = 8.8x

‘12 to ‘16 Median Financial = 9.3x Strategic = 8.9x

Page 8: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

8.6x10.0x 10.2x 9.5x

10.9x 11.1x9.8x 9.3x 9.5x

11.4x9.8x 9.5x

8.2x

9.8x 10.6x11.7x 11.1x

12.3x 11.7x10.0x

0.0x

5.0x

10.0x

15.0x

2009 2010 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017

Middle Market > $1 Billion

$0

$100

$200

$300

1Q

200

9

2Q

200

9

3Q

200

9

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9

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10

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4Q20

12

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Middle Market > $1 Billion

0

250

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1,000

1Q

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9

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The M&A market has remained fairly active for restaurants, though valuation has bifurcated between categories

Limited service franchisors have traded in the 14x – 21x range

Full service operators have traded in a wider, less predictable range

– DRI’s acquisition of Cheddar’s was driven by 10+ years of 20% growth

– Ignite was acquired out of Chapter 11 bankruptcy

– Bob Evans was separated from its branded foods division

Strategic buyers have been more active than financial buyers in limited service

Availability of debt financing and low cost of capital

Ability to generate synergies

Mature businesses with less attractive organic growth prospects

Recent focus on fast-Mexican concepts drives deal activity

JACK continues to evaluate strategic alternatives for Qdoba as the recent struggles of CMG are potentially weighing down valuation

Private equity firm Freeman Spogli & Co. acquired West Coast-based burrito and Tex-Mex chain Café Rio in September

Restaurant Sector M&A Trends

U.S. Consumer & Retail M&A Announced Deal Value ($ in billions) [1,2]

U.S. Consumer & Retail M&A Announced Deal Volume

U.S. Consumer & Retail M&A Closed Deal Average EV / EBITDA Multiple [1,2]

Source: Fifth Third Securities, S&P Capital IQ [1] Middle Market transactions defined by transactions with an enterprise value below $1 billion [2] U.S. Consumer & Retail transactions include Consumer Discretionary and Consumer Staples transactions, and exclude outlier multiples

Median Middle Market: $14.0

Median Middle Market: 10.0x

Median > $1 Billion: $26.2

Median > $1 Billion: 10.0x

Page 9: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

Announced Enterprise LTM

Date Acquirer Target Value (EV) Revenue EBITDA Revenue EBITDA

08/24/17 Caribou Coffee Company Bruegger's Enterprises - - - - -

08/04/17 J. Alexander's Ninety Nine Restaurants, Inc. $199 $304 $30 0.7x 6.6x

06/06/17 Landry's Ignite Restaurant Group (OTCPK:IRGT) 55 550 17 0.1x * 3.3x *

04/05/17 Axum Capital Partners Back Yard Burgers - - - - -

04/05/17 JAB Holding Co. Panera Bread Co. 7,500 2,885 424 2.6x 17.7x *

03/27/17 Darden Restaurants (NYSE:DRI) Cheddar's Scratch Kitchen 780 - 75 - 10.4x

03/23/17 Oak Hill Capital Partners Checkers Drive-In Restaurants, Inc. 525 - - - -

02/21/17 Restaurant Brands International Inc. (NYSE:QSR) Popeyes Louisiana Kitchen, Inc. 1,815 267 89 6.8x * 20.5x *

01/24/17 Golden Gate Capital Bob Evans Farms, LLC 565 - - - 5.5x

10/26/16 Restaurant Brands New Zealand Ltd. (NZSE:RBD) Pacific Island Restaurants 105 120 19 0.9x 5.5x

10/10/16 [3]Thai Union Group Public Company Limited (SET:TU) Red Lobster Master Holdings, L.P. 1,265 2,479 144 0.5x 8.8x

09/08/16 Roark Capital Group Jimmy John's Franchise, LLC - - - - -

09/02/16 CenterOak Partners LLC Wetzel's Pretzels, LLC - - - - -

05/25/16 MTY Food Group (TSX:MTY) Kalaha Corp. (Multi-Concept Franchisee) 302 729 - 0.4x -

05/09/16 JAB Holding Co. Krispy Kreme Doughnuts, Inc. 1,298 519 73 2.5x 17.8x *

07/14/15 BC Partners Cote Restaurants 391 172 38 2.3x 10.4x

07/07/15 Casual Dining Group Las Iguanas 131 - - - -

05/22/15 NRD Capital Frisch's Restaurants, Inc. 173 216 24 0.8x 7.3x

03/12/15 Levy Acquistion Group (n.k.a. NasdaqCM: TACO) Del Taco Holdings 500 385 59 1.3x 8.5x

09/29/14 JAB Holding Co. and BDT Capital Partners, LLC Einstein Noah Restaurant Group 163 163 16 1.0x 10.3x

08/26/14 Burger King (n.k.a. NYSE:QSR) Tim Hortons Inc. 14,620 3,400 840 4.3x * 17.4x *

Median - Strategic 0.8x 8.8x

Median - Financial 1.3x 7.9x

Median - All 0.9x 8.5x

EV / LTM

Restaurant Sector Precedent M&A Transactions

Restaurant Sector Precedent M&A Transactions ($ in millions) [1,2]

M&A Deals in the Headlines

Source: Company Filings, S&P Capital IQ [1] * Excluded from mean and median [2] Green shading indicates strategic acquisition [3] SET:TU acquired a 25% minority stake from Golden Gate Capital

J. Alexander’s Acquires Ninety Nine Restaurants, Inc.

EV ($MM): $199

Revenue Multiple: 0.7x

EBITDA Multiple: 6.6x

Nestlé Acquires Blue Bottle Coffee

EV ($MM): $700 (Est.)

Revenue Multiple: N/A

EBITDA Multiple: N/A

Acquisition marks a departure from Nestlé’s previous strategy of focusing on in-house coffee brands such as Nespresso and Nescafé

Cements Nestlé’s position as the world’s largest coffee producer and gives the Company entry into the fast growing, super-premium, “third wave” coffee space

Financial terms not disclosed

Transactions completed or announced over the past three years

Ninety Nine Restaurants has weathered sector headwinds and posted market-beating SSS growth over the past three years

JAX cited similar cultures and Ninety Nine’s strong regional presence in the Northeast as key deal drivers

Marathon Partners, one of JAX’s largest shareholders, is challenging the deal

Page 10: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

0

500

1,000

1,500

$0

$50

$100

$150

$200

$250

1Q

11

2Q

11

3Q

11

4Q

11

1Q

12

2Q

12

3Q

12

4Q

12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17*

Deal Value ($) # of Deals Closed

Private equity exits increase significantly Year-over-Year

Q3 saw a strong uptick in PE exits compared to the same quarter in the prior year

Private equity investors, concerned about a market peak, are being opportunistic in seeking portfolio company exits

Private equity buyers are faced with strong industry headwinds

Recent sluggish organic growth in the restaurant industry fuels the need for M&A activity to drive returns

Investors may believe that restaurant margins will decline over time, as Amazon and other startups enter food delivery with a mission of lowering costs for consumers

Buyers have the dry powder necessary to make large acquisitions but remain hesitant

Private equity firms continue to sit on record levels of undeployed capital

While this excess cash can create a drag on returns for financial sponsors, overall concerns of a potential market correction and lack of enthusiasm about organic growth prospects have caused private equity buyers to remain wary in their deal making

Middle Market Private Equity Activity

U.S. Private Equity Deal Flow ($ in billions)

U.S. Consumer & Retail Private Equity Deal Flow ($ in billions)

U.S. Consumer & Retail Private Equity Exits ($ in millions)

Source: Fifth Third Securities, PitchBook ND – No Transaction Values Disclosed *3Q17 preliminary PitchBook data

$145.0 $100.0

$298.5 $196.8

$270.0

$142.2 $92.5

$267.5

$423.0

106 122

163 145

202 200 204

50 46

2010 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017

Median Deal Size ($) # of Exits

$43.3 $50.4 $54.9

$78.5

$57.9

$117.7

$65.3

$16.8 $29.0

544 644 733 663 783882 795 203 140

2010 2011 2012 2013 2014 2015 2016 3Q2016 3Q2017

Capital Invested ($) # of Deals Closed

Page 11: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

MM B-rated MM NR

6.12%

6.29%

Note: This data represents the entire U.S. middle market (all industries) Note: The middle market is defined as deal size < $100 million and borrower sales < $500 million [1] Includes both non-sponsored and sponsored transactions; sufficient data not available for MM NR loans in 1Q15 and 1Q17 Source: Bloomberg, S&P Capital IQ LCD, and Thomson Reuters LPC

U.S. Middle Market Loan Market Trends

Loan Volume: Low Level of Supply Continues ($ in billions) Non-Rated Term Loan Yields Tighten Further [1]

Covenant-Lite Volume Surges in 2Q17 ($ in billions) Leverage Multiples Remain Aggressive on Middle Market LBOs

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

Non-Sponsored Sponsored

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x1st Lien Debt to EBITDA Junior Debt to EBITDA

Page 12: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017 Appendix: Key Disclosures

Casual Dining

BJRI – BJ’s Restaurants, Inc.

BLMN – Bloomin’ Brands, Inc.

BWLD – Buffalo Wild Wings Inc.

CHUY – Chuy’s Holdings, Inc.

DAVE – Famous Dave’s of America Inc.

DIN – DineEquity, Inc.

DRI – Darden Restaurants, Inc.

IRG – Ignite Restaurant Group, Inc.

RRGB – Red Robin Gourmet Burgers Inc.

RT – Ruby Tuesday, Inc.

TXRH – Texas Roadhouse, Inc.

PLAY – Dave and Buster’s Entertainment, Inc.

EAT – Brinker International, Inc.

Family Dining

BH – Biglari Holdings Inc.

BOBE – Bob Evans Farms, Inc.

CBRL – Cracker Barrel Old Country Store, Inc.

DENN – Denny’s Corporation

Fine Dining & Polished Casual

BBRG – Bravo Brio Restaurant Group, Inc.

CAKE – The Cheesecake Factory Incorporated

DFRG – Del Frisco’s Restaurant Group, Inc.

FOGO – Fogo de Chao, Inc.

KONA – Kona Grill Inc.

RUTH – Ruth’s Hospitality Group Inc.

JAX – J. Alexander’s Holdings, Inc.

Limited Service Restaurants Full Service Restaurants

Coffee & Specialty

DNKN – Dunkin’ Brands Group, Inc.

JMBA – Jamba, Inc.

SBUX – Starbucks Corporation

Fast Casual

CMG – Chipotle Mexican Grill, Inc.

COSI – Cosi Inc.

HABT – The Habit Restaurants, Inc.

NDLS – Noodles & Company

PBPB – Potbelly Corporation

PNRA – Panera Bread Company

SHAK – Shake Shack Inc.

ZOES – Zoe’s Kitchen, Inc.

FRGI – Fiesta Restaurant Group, Inc.

Quick Service Restaurants (QSR)

BOJA – Bojangles’, Inc.

DPZ – Domino’s Pizza, Inc.

FRSH – Papa Murphy’s Holdings, Inc.

JACK – Jack in the Box Inc.

LOCO – El Pollo Loco Holdings

MCD – McDonald’s Corp.

PZZA – Papa John’s International Inc.

QSR – Restaurant Brands International Inc.

SONC – Sonic Corp.

WEN – The Wendy’s Company

YUM – Yum! Brands, Inc.

WING – Wingstop Inc.

Page 13: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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Restaurants I Industry Spotlight

Q3 2017 Notes & Definitions

S&P 500 Index- A broad index that includes American Companies. EBITDA- A company's earnings before interest, taxes, depreciation, and amortization, is an accounting measure calculated using a company's net earnings, before interest expenses, taxes, depreciation and amortization are subtracted, as a proxy for a company's current operating profitability. Dry Powder- Refers to cash reserves kept on hand to cover future obligations or to purchase assets. GDP- Gross domestic product is the market value of the goods and services produced by labor and property located in the United States Consumer Sentiment Index- The University of Michigan Consumer Sentiment Index is a consumer confidence index published monthly by the University of Michigan. The index is normalized to have a value of 100 in December 1964 National Unemployment Rate- the percentage of the total labor force that is unemployed but actively seeking employment and willing to work. Non-Farm Payroll- Nonfarm payroll employment is a compiled name for goods, construction and manufacturing companies in the US. It does not include farm workers, private household employees, non-profit organization employees, or government employees . It is an economic indicator released monthly by the United States Department of Labor as part of a comprehensive report on the state of the labor market. Housing Starts- are the number of new residential construction projects that have begun during any particular month. The Economist- offers authoritative insight and opinion on international news, politics, business, finance, science, technology and the connections between them LBO -- leveraged buyout (LBO) is the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company. Industrial Production Index (IPI)- is an economic indicator published by the Federal Reserve Board of the United States that measures the real production output of manufacturing, mining, and utilities Capital Goods Orders. Covenant-lite loans- means that debt is being issued, both personally and commercially, to borrowers with less restrictions on collateral, payment terms, and level of income. IRR-Internal Rate of Return.

Page 14: Investment Banking I Industry Spotlight - 53.com Third Securities’ Consumer & Retail Investment Banking Group advises middle market and mid-cap companies on M&A advisory, capital

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