Managing Pricing in Today’s Economic Climate

© 2019 Technomic, Inc.

No Big Improvement

Source: Technomic Top 500 Reports

2

Top 500 chains sales growth vs. previous year

4.5%

0.1%

2.6%

3.7%

5.6%

3.8% 4.2%

5.5%

4.4%3.9% 3.9%

0.9%

-2.9%

0.0%

2.8% 2.9%2.4%

3.6% 3.6%

1.4% 1.0% 1.3%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

LSR FSR

© 2019 Technomic, Inc.

As Traffic Lags, Chains Focus On Check AverageYOY Monthly Change %

Top 200 U.S. Chain Performance

Source: Technomic, Inc. Transaction Insights

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Dec2017

Jan2018

Feb2018

Mar2018

Apr2018

May2018

June2018

July2018

Aug2018

Sept2018

Oct2018

Nov2018

Dec2018

Check

Sales

Traffic

© 2019 Technomic, Inc.

Restaurant Growth Outpacing Population

4

YOY cumulative growth

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Population Top 500 UnitsSource: Technomic, Ignite Company

U.S. Census

© 2019 Technomic, Inc.

Fewer Consumers in Sweet Spot

Source: U.S. Bureau of Labor Statistics

U.S. Census

5

Share of households (by age of the head of the household) vs. AFH spending

6%

16%

20% 21%

17%

10% 10%

6%

16% 16%18% 19%

14%

11%

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

0%

5%

10%

15%

20%

25%

<25 25-34 35-44 45-54 55-64 65-74 75+

2007 2017 AFH Spend

© 2019 Technomic, Inc.

Labor Expenses

*March of respective year

Source: U.S. Bureau of Labor Statistics

6

569647

696647

840912

2014 2015 2016 2017 2018 2019

CAGR

10%

Accommodation & Foodservice Job Openings (000)*

$9.15 $9.20 $9.41 $10.01

$10.53 $11.09

2013 2014 2015 2016 2017 2018

CAGR

4%

Restaurant Wages (Median)

© 2019 Technomic, Inc.

Menu Price Inflation Rising

Source: U.S. Bureau of Labor Statistics

Monthly YOY CPI: FAFH

7

1.5%

1.7%

1.9%

2.1%

2.3%

2.5%

2.7%

2.9%

3.1%

2017 2018 2019

© 2019 Technomic, Inc.

Restaurant Inflation Outpaces Retail

8

-5.0%

0.0%

5.0%

10.0%

15.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019

CPI: Food at Home CPI: Food Away From Home

1.4%

3.0%

*March of respective year

Source: U.S. Bureau of Labor Statistics

© 2019 Technomic, Inc.

Fuel PricePressures Impacting?

9© 2019 Technomic, Inc.

© 2019 Technomic, Inc.

3.3%2017-18 growth

Top 500 restaurants

55%2018 YOY Third-party

sales growth

10

Source: Technomic 2019 Top 500 Report and Transaction Insights. Included

Third-arty brands: Grubhub, DoorDash, Postmates, UberEats, Caviar

3rd Party Delivery Changes the Equation

© 2019 Technomic, Inc.

Key Issues

11

●Traffic Declining

●Price, mix driving growth

●Unit Saturation & demographics not favorable

●Competition over labor increases costs

●Price inflation outpacing retail

●Fuel prices impacting consumers

●3rd party delivery eating profits

© 2019 Technomic, Inc.

Manage Your Pricing Strategy without Impacting Traffic

Mark Kelnhofer

President & CEO,

Return On Ingredients

Moderated by: Richard Shank, Director

of Consumer Insights, Technomic, Inc.

Jessica Sattler

Director, Research, Insights

and Marketing Analytics,

PF Chang's