Burger King Brasil. Corporate Presentation May 2018

Transcription

1 Burger King Brasil Corporate Presentation May

2 Disclaimer This presentation contains general information regarding the business and strategies of BK Brasil Operações e Assessoria a Restaurantes S.A. and its controlled companies ( BK ). The information contained herein is in summarized form and does not purport to be complete. Due to this fact, one cannot rely in its completeness or accuracy and no representations or warranties, implicit or explicit, is made concerning as to the completeness or accuracy of the information contained herein. This presentation contains forward-looking statements, which involves risks and uncertainties and should not be construed as a guarantee of future performance. Investors should be aware that such forward-looking statements may be affected by current or future facts or expectations regarding our industry, our market share, our reputation, business, financial situation and perspectives. Although we believe that the forward-looking statements and estimates are based in reasonable assumptions, they are subject to several risks and uncertainties and were made only based on information currently available to us, and, therefore, we cannot guarantee future results. The above mentioned considerations are not exhaustive and other risks and uncertainties may cause results that may be substantially different from those contained in the forward-looking statements. Due to the abovementioned uncertainties, no investment decision should be made relying only on these forward-looking statements. This presentation should not be construed as recommendation to potential investors. 2

3 Burger King at a Glance 3

4 Burger King Brasil: A leading player in a growing market Overview Geographic Footprint (1) (3) Burger King opened its first restaurant in Brazil in 2004, and currently has more than 709 restaurants in the country (1) (3) 20-year Master franchisee with exclusive rights to develop and manage Burger King brand in Brazil since 2011 Significant market share gains since nd player in burger and 3 rd largest QSR in number of restaurants Market leader in brand preference on target segment (2) Clear growth and expansion opportunities Restaurants (1) (3) Owned Restaurants Franchisees Owned restaurants 40 Franchisees Elected best Burger King LatAm franchisee in 2017 Financial Highlights Shareholding Structure Owned Restaurants (3) Others 11.8% 9.2% 9.1% 9.6% 1,784 1, % % 12.8% 8.3% 10.1% 55.5% Q18 Net revenues Adj. EBITDA Adj. EBITDA Margin (4) Source: Ipsos Brasil/Burger King Brasil Note: 1 As of March º Quarter of 2017: Quantitative study, online data collection; respondents profile in the target: Men / Women, in the regions: SP, RJ, BH, CTB, POA, SAL and BSB, 95% of confidence level, 520 cases in the target, study handled by Ipsos as per request of Burger King 3 Does not include dessert centers 4 Excludes pre-operating expenses, expenses related to M&A, impairment and SOP expenses Brasil 4

5 A track-record of growth in Brazil Building Foundations ( ) Gaining Scale ( ) Getting the right people on-board Net opening of 240 owned restaurants Net opening of 149 owned restaurants Acquisition of 50 restaurants (4 franchisees) Acquisition of 41 restaurants (1 franchisee) Expansion to new regions SAP implementation Sub-franchisee project First debenture issuance R$150 mm Enhanced focus on operational efficiency Two CRA (1) issuances totaling R$300 mm Continuous Improvement (2017 onward) IPO at B3 (Novo Mercado), with a capital increase of R$0.8 billion Acquisition of 1 franchisee with 51 restaurants and 20 dessert center New POS platform implemented Roll-out of new platforms: mobile app, delivery, self-order kiosks Increasing focus on free standing and dessert center openings Start-up of BKB s JV Q18 Note: 1 CRA is a registered and freely traded debt security Owned Restaurants Franchisee 5

6 Relationship with Burger King Corporation The relationship with RBI/BK Corporation is guided by the Master Franchisee and Development Agreement ( MFDA ) Summary of MFDA Economics Key MFDA Aspects BK Corporation BKB is fully compliant with the MFDA Rights A 20-year MFDA agreement with BKC: signed in 2011 and may be extended for another 20 years Royalties on net sales Franchise fee per opening Legacy Franchisees Royalties on net sales Franchise fee per opening year agreement postopening (restaurant level) BK Brasil Royalties on net sales Franchise fee per opening Sub-franchisees (Pre 2011)¹ (Post 2016) Exclusive right to develop, open and operate Burger King restaurants in Brazil Right to manage the advertising fund in Brazil Right of establishing required and optional menu items, proving that all Core Menu items are offered at the restaurants and all products / suppliers are approved by BKC BKB can operate other brands in Brazil that do not offer hamburger or sandwich as main component of its gross sales Service fee on net sales Royalties on net sales Franchise fee per opening Obligations Target of minimum number of restaurants to build and operate Source: Burger King Brasil Note: 1 Restaurants owned by franchisees that have an agreement with Burger King Corporation pre

7 Key strategic pillars to support growth

8 Key strategic pillars Positive Demographics and Favorable Sector Dynamics Strong Brand with Unique Attributes Unique Management Model and Excellence in Execution Significant Avenues for Growth and Expansion in Brazil Experienced Management Team 8

9 Positive demographics and favorable sector dynamics Socio-economic factors ~50% of Brazilians fall within Burger King s target market (A / B / C1) (1) Since 2005, 50 million households entered Burger King s target market Food has become an entertainment and leisure destination Increase of female participation in the workforce Increasing number of single households Percentage of single households (%) Demographic factors 85% of the Brazilian population lives in urban areas (179 million inhabitants) 37 million people live in the country s ten largest cities The hectic urban lifestyle requires city-dwellers to spend more time away from home Increasing number of single households should boost out-ofhome food expenditure in Brazil On par with the USA as of 1964 and with Chile as of % 9.0% 10.7% 12.5% 13.8% % 11.0% 13.8% 18.3% 22.8% % 27.4% 27.8% 26.8% 27.8% Sources: Euromonitor, IBGE, PNAD Note: 1 Average household income per social class A: R$20,888; B1: R$9,254; B2: R$4,852; C1: R$2,705; C2: R$1,625; D-E: R$768 9

10 Favorable demographics and sector dynamics Burger is one of the fastest-growing segments in the Brazilian fast food sector Foodservice market share Fast food market share Foodservice segment CAGR ( ) 14.3% 28% 6% 7% 54% 12.8% 10.8% R$392bn 21% R$84bn 13% 9.3% 38% Fast Food Full-service Others Bars / Coffees Self Service 33% Burger Bakery Others Burger Fast Food Full Service Total Foodservice The Brazilian fast food market is largely fragmented and dominated by independent players Brazilian fast food outlets by type 91% Chained fast food represents 63% in the US 9% Burger King is the 3 rd l rgest fast food company in Brazil, with first opening in 2004 Number of Restaurants in Brazil (2017) 2, rd Burger King Rank in Brazil Fast Food th rd Independent Fast Food Chained Fast Food Year of the first Opening Sources: Euromonitor and Geofusion (for Number of Restaurants in Brazil) 10

11 Strong brand with unique attributes Authentic Experience Indulgent Tasty Flame- Grilled Have it Your Way Made-to- Order Free Refill 11

12 Fast Food Burger King Strong brand with unique attributes More AB Social Class¹ Younger (15-34 years) Democratic AB 57% C+ 43% 15 to 34 69% 35 to 44 22% Female 46% Male 54% 45+ 9% AB 53% C+ 47% 15 to 34 60% 35 to 44 20% % Female 47% Male 53% Sources: Company, Crest NDP (3Q16, 4Q16, 1Q17, 2Q17) Note: 1 Average household income per social class A: R$20,888; B1: R$9,254; B2: R$4,852; C1: R$2,705; C2: R$1,625; D-E: R$768 12

13 Brand Awareness Strong brand with unique attributes Positive evolution of brand pyramid increasingly positive awareness level, with room to increase frequency Brand Pyramid Comparison (%) % % 2017 Preferred Last Month Trial Considers Awareness Sources: Online trademark monitoring study conducted by Ipsos at Burger King's request, with a sample base of 840 cases, calculated in December 2015, Q4 16 and Q4 17, respondents profile: Men / Women, in the cities of São Paulo, Rio de Janeiro, Belo Horizonte, Curitiba, Porto Alegre, Brasília and Salvador a confidence level of 95% 13

14 Unique management model and excellence in execution Both corporate and restaurant-level management has a strong focus on execution excellence, sustained by aggressive well-aligned compensation structure Team + Strong Management Model Management by Objectives Vision Corporate Restaurants Strategic Plan (5 Years) Annual Budget + Goals Deployment Routines: Quarterly Monthly Weekly Daily Daily Routine Quarterly Routine OCC controlling KPIs Sunday-to-Sunday In-restaurant visits to assure quality and service level Operational (Daily Control) BKB Compensation Restaurant Variable Incentive Plans Fixed Compensation Variable Compensation Variable compensation with strong relevance within total compensation Meritocracy at all levels Corporate MBO Achievements: Financial Performance Operating Performance Development of Leadership Compensation Restaurants Financial Result People Guest Food Safety Controls Less Relevant More Relevant Variable Compensation in All Levels Source: Burger King Brasil 14

15 Management model has increased overall customer satisfaction Management model has driven improvement in customer satisfaction Overall Client Satisfaction NPS (%) 32.0% 34.3% 38.7% 45.8% 57.3% 67.8% 73.8% Q18 Speed of Service NPS (%) 56.9% 65.1% 45.3% 30.2% 5.4% 9.3% 19.4% Q18 Source: Burger King Brasil 15

16 Significant avenues for growth New restaurant openings Focus on free-standing and dessert centers Sub-franchisees Expansion Organic expansion Free Standing Dessert Center New POS and Sales Tablet Improvement in SSS and profitability, leveraging on technology SSS (2017) EBITDA Mg. Expansion (2017) 13.8% 220 bps Mobile App Self-Order Kiosks Delivery Additional growth opportunities Further consolidation of existing franchisees Sub Franchisees Expansion Acquisition of Current Franchisees Opportunities in New Brands 130 restaurants operated by legacy Franchisees and Sub-franchisees Acquisition of 51 restaurants from one Legacy Franchisee (in 2Q2018) Opportunities in new brands + Ability to leverage platform to develop other food concepts selectively Source: Burger King Brasil 16

17 Active Restaurant Portfolio Management Sub-Franchisee Sub-franchise project and portfolio management In 2016 BKB created the sub-franchise project in order to leverage its organic expansion Rationale Strong Control of the Franchisee Operation Increase national footprint open restaurants in BKB s non-target markets REV Construction Monitoring Take advantage of fiscal benefits ( SIMPLES ) and operate restaurants that would not meet BKB s required returns Approved POS Supply Chain & Agreements Accelerate brand awareness in markets where BKB would take longer to reach Layout of Restaurant Training Platform Restaurant starts performing well Restaurant not performing well (i.e. mature restaurants with negative 4-Wall EBITDA) Profitability Committee Restaurant continues not performing well Sub-franchisee conversion Rationale Suitability to subfranchisee Restaurant location Established three years ago, the Committee determines measures to be implemented in order to increase restaurant s profitability Restaurant closes Profitability evolution Source: Burger King Brasil 17

18 Technology to increase appeal to new generations Several initiatives expected to sustain increase in SSS and improve further return levels Key technological initiatives New POS and Sales Tablet Mobile App Customize brand experience Reward loyal guests and stimulate new purchases Enhance digital position and surpass competition ' Optimize push notification Optimize the purchase of digital media SSS: Traffic and ticket improvement Self-Order Kiosk Delivery Profitability improvement Source: Burger King Brasil 18

19 New mobile app improving guest experience BK APP Guests will be able to order Burger King from anywhere Self Order & Pay Feature will allow users to order and pay directly through the app Guests will have more autonomy in the purchase without having to wait in line Map with the location of restaurants nearby Restaurants Map Have it your way Authentic Experience Main Objectives Improves average ticket Profitability Improvement Improve guest experience Communicate new functionalities New plan for couponing National roll-out in 2018 Enhance CRM with Big Data Source: Burger King Brasil 19

20 Experienced management team BKB & affiliates since Previous Experience Years of Experience Iuri Miranda CEO Clayton Malheiros CFO Rafael Espírito Santo COO Ariel Grunkraut CMO Gustavo Fehlberg Development Márcia Baena People & Management Fábio Alves Legal William Giudici Franchise Source: Burger King Brasil 20

21 Strong governance Board of Directors Compliance Marcelo Penna Renato Ribeiro Rodrigo Galindo Audit committee with external independent auditor Carlos Eduardo Martins Chairman Independent Bi-annual FCPA compliance and annual audit by big 4 accounting firm Anonymous whistleblower channel Guilherme Lins Marcos Grodetzky Joshua Kobza Internal controls and effective monitoring + extension to vendors Committee Periodicity Overview Sales Engineering Investments Building Projects Profitability Monitoring Weekly Approval / analysis of sales for new restaurants Weekly Approval of project layouts for own and sub-franchises restaurants and remodeling Weekly Approval of new restaurants, both own and sub-franchises, and candidates for sub-franchisees Weekly Approval of the construction company for new restaurants Monthly Monitoring of the monthly evolution of Capex of projects approved for the year (ex-capex of restaurants) Monthly Monitoring of restaurants below profitability (following specific PDCAs) Monthly Analysis and monitoring of restaurants opened for up to 3 months Directors COO / CMO / Development Development CEO / CFO / COO / Development Development Development CEO / CFO / COO / CMO / Development COO / Development Auditing Monthly Discussions on corporate governance, statutes, and policies - G&A Management Monthly Detailed monitoring of the evolution and forecast of corporate G&A All Compensation Source: Burger King Brasil Semiannually Discussions on stock-option, promotions and compensation CEO Cash Flow Source: Burger King Brasil Monthly Monitoring of current and forecasted cash position, investments, debt amortization schedule, and overall liquidity CFO 21

22 Financial highlights

23 Financial highlights Restaurant breakdown (Annual) (# of restaurants) Restaurant breakdown (Quarterly) ((# of restaurants) Owned Restaurants Dessert centers breakdown (Annual) (# of dessert centers) 1Q17 2Q17 3Q17 4Q17 1Q18 Franchisees Dessert centers breakdown (Quarterly) (# of dessert centers) Owned dessert centers 1Q17 2Q17 3Q17 4Q17 1Q18 Franchisees Source: Burger King Brasil 23

24 Financial highlights Net revenue and same-store sales growth (Annual) (R$ mm, %) Net revenue and same-store sales growth (Quarterly) (R$ mm, %) 2.9% % % 1, % 1, % % 12.9% % % Adj. EBITDA (1) and Adj. EBITDA margin (Annual) (R$ mm) Adj. EBITDA (1) and Adj. EBITDA margin (Quarterly) (R$ mm) 1Q17 2Q17 3Q17 4Q17 1Q % 15.9% 9.2% 9.1% 9.6% % 11.4% % % Source: Burger King Brasil Note: 1 Adjusted to not consider pre-operating expenses, expenses related to M&A, impairment and SOP expenses 1Q17 2Q17 3Q17 4Q17 1Q18 24

25 Financial highlights Net debt and net debt / EBITDA (Annual) (R$ mm, xebitda) Net debt and net debt / EBITDA (Quarterly) (R$ mm, xebitda) 3.1x 2.6x 2.2x x x x (706) (3,4x) (2.9x) (3.4x) (636) (706) 1Q17 2Q17 3Q17 4Q17 1Q18 Net income and net margin (Annual) (R$ mm, %) Net income and net margin (Quarterly) (R$ mm, %) -1.1% 4.2% 1.8% -5.4% -3.9% -6.7% 0.2% % 1.6% (35.9) (36.8) (20.0) (4.9) (93.5) Q17 2Q17 3Q17 4Q17 1Q18 Source: Burger King Brasil 25

26 Financial highlights CAPEX (Annual) CAPEX (Quarterly) (R$ mm) Acquisition Openings, maintenance and others 1Q17 2Q17 3Q17 4Q17 1Q18 Openings, maintenance and others Operating cash flow (R$ mm) 24 4 (18) 15 4 (34) (69) 5 Operating Cash Flow 1Q17 Operational result Net financial result Depreciation and amortization Others Change in working capital Change in other assets / liabilities Operating Cash Flow 1Q18 Source: Burger King Brasil 26

27 Appendix

28 Consolidated balance sheet (R$ million) Assets Current assets Liabilities and Equity Current liabilities Cash and cash equivalents Loans and financings Marketable securities 1, Trade and rental payables Trade receivables, net Payroll and social charges Financial instruments Corporate payables Inventories Taxes payable Recoverable taxes Deferred revenue, net Advances paid Derivative financial instruments Other receivables Other payables Total current assets 1, Total current liabilities Non-current assets - - Non-current liabilities Marketable securities Loans and financings Recoverable taxes Provision for legal claims Judicial deposits Taxes payable Other receivables Contingent consideration of acquisitions Property and equipment, net Deferred income tax and social contribution Intangible assets, net Other payables Total non-current assets 1, Total non-current liabilities Equity Capital Capital reserve and stock option plan Accumulated losses (194.4) (198.2) Total equity 1, Total Assets 2, ,428.5 Total liabilities and equity 2, ,428.5 Source: Burger King Brasil 28

29 Consolidated balance sheet (R$ million) Assets Current assets 03/31/ /31/ /31/ /31/2017 Liabilities and Equity Current liabilities Cash and cash equivalents Loans and financings Marketable securities ,076.4 Trade and rental payables Trade receivables, net Payroll and social charges Financial instruments Corporate payables Inventories Taxes payable Recoverable taxes Other payables Advances paid Total current liabilities Other receivables Total current assets 1, ,338.4 Non-current liabilities Loans and financings Non-current assets Provision for legal claims Marketable securities Taxes payable Recoverable taxes Deferred income tax and social contribution Judicial deposits Other payables Other receivables Total non-current liabilities Property and equipment, net Intangible assets, net Equity Total non-current assets 1, ,077.1 Capital Capital reserve and stock option plan Accumulated losses (185.6) (194.4) Total equity 1, ,617.2 Total Assets 2, ,415.6 Total liabilities and equity 2, ,415.6 Source: Burger King Brasil 29

30 Consolidated income statement (R$ million) Var. % Net operating revenue 1, , % Gross revenue from sales and services 1, , % Gross revenue deduction (148.9) 0.0 (118.7) % 0.0% Cost of good sold (687.9) (526.3) 30.7% Gross profit 1, % 0.0% Total selling expenses (935.2) (776.2) 20.5% Personnel expenses (308.2) (252.9) 21.9% Royalties and marketing fund (160.1) (135.8) 17.9% Expenses with occupancy and utilities (221.9) (169.9) 30.6% Pre-operating expenses (6.1) (6.3) -1.9% Depreciation and amortization (110.2) (94.2) 17.0% Other selling expenses (128.7) (117.1) 9.9% Total general and administrative expenses (95.5) (76.0) 25.6% General and administrative expenses (66.4) (57.4) 15.6% Depreciation and amortization (9.5) (9.2) 3.4% Expenses with merger and acquisitions (2.1) (2.8) -24.1% Gain (loss) from write-off of property, equipment and impairment (12.2) (6.1) 101.7% Gain (loss) on claims 0.3 (0.2) - Cost of stock option plan (5.5) (0.3) - Profit (loss) before financial income % 0.0% Financial results (56.3) (100.5) -44.0% Financial expenses (84.7) (142.1) -40.4% Financial income % 0.0% Profit (loss) before income tax and social contribution (85.7) % - Income tax and social contribution (5.2) (7.7) -32.5% Current - (0.4) - Deferred (5.2) 0.0 (7.4) % 0.0% Net income (loss) 3.8 (93.5) - Source: Burger King Brasil 30

31 Consolidated income statement (R$ million) 1Q16 2Q16 3Q16 4Q16 Net operating revenue Gross revenue from sales and services Gross revenue deduction (28.2) 0.0 (30.0) (32.5) 0.0 (28.1) 0.0 Cost of good sold (117.8) (125.5) (133.6) (149.4) Gross profit Total selling expenses (182.2) (183.5) (199.8) (210.7) Personnel expenses (58.9) (62.0) (66.4) (65.6) Royalties and marketing fund (30.8) (32.4) (34.1) (38.5) Expenses with occupancy and utilities (43.9) (36.3) (45.2) (44.6) Pre-operating expenses (1.2) (1.1) (1.3) (2.6) Depreciation and amortization (20.1) (24.2) (23.7) (26.2) Other selling expenses (27.4) (27.6) (29.1) (33.1) Total general and administrative expenses (13.9) (14.8) (18.1) (29.3) General and administrative expenses (10.5) (11.2) (14.0) (21.6) Depreciation and amortization (2.5) (2.5) (2.2) (2.1) Expenses with merger and acquisitions (0.6) (0.7) (0.8) (0.7) Gain (loss) from write-off of property, equipment and impairment (0.2) (0.3) (1.0) (4.5) Gain (loss) on claims 0.0 (0.1) (0.0) (0.1) Cost of stock option plan (0.3) Profit (loss) before financial income (5.6) (0.6) Financial results (18.1) (19.3) (16.9) (46.2) Financial expenses (29.2) (35.6) (22.5) (54.8) Financial income Profit (loss) before income tax and social contribution (23.7) 0.0 (18.0) 0.0 (17.5) 0.0 (26.5) 0.0 Income tax and social contribution 1.7 (1.4) (2.2) (5.4) Current (259.0) (100.0) (1.0) 0.0 Deferred (1.4) 0.0 (2.2) 0.0 (5.4) 0.0 Net income (loss) (22.1) (19.4) (19.7) (32.0) Source: Burger King Brasil 31

32 Consolidated income statement (R$ million) 1Q17 2Q17 3Q17 4Q17 Net operating revenue Gross revenue from sales and services Gross revenue deduction (34.5) 0.0 (27.5) 0.0 (40.2) 0.0 (46.7) 0.0 Cost of good sold (150.1) (162.2) (170.0) (205.6) Gross profit Total selling expenses (222.8) (225.2) (236.7) (250.5) Personnel expenses (76.0) (71.6) (79.5) (81.1) Royalties and marketing fund (37.7) (41.7) (42.6) (38.0) Expenses with occupancy and utilities (53.0) (54.5) (55.3) (59.2) Pre-operating expenses (0.5) (1.0) (1.3) (3.3) Depreciation and amortization (23.6) (24.4) (27.9) (34.3) Other selling expenses (31.9) (32.0) (30.1) (34.6) Total general and administrative expenses (19.2) (18.0) (22.4) (35.8) General and administrative expenses (16.4) (14.3) (14.9) (20.7) Depreciation and amortization (1.8) (1.7) (3.9) (2.2) Expenses with merger and acquisitions (0.4) (0.3) (0.8) (0.7) Gain (loss) from write-off of property, equipment and impairment (0.8) (1.7) (0.4) (9.4) Gain (loss) on claims Cost of stock option plan (2.6) (2.9) Profit (loss) before financial income (2.2) Financial results (15.8) (14.6) (18.7) (7.2) Financial expenses (24.0) (18.6) (27.0) (15.1) Financial income Profit (loss) before income tax and social contribution (18.1) (4.8) Income tax and social contribution (1.9) (1.6) (0.1) (1.6) Current Deferred (1.9) 0.0 (1.6) 0.0 (0.1) 0.0 (1.6) 0.0 Net income (loss) (20.0) 6.9 (4.9) 21.8 Source: Burger King Brasil 32

33 Consolidated income statement (R$ million) 1Q18 1Q17 Var. % 4Q17 Var.% Net operating revenue % % Gross revenue from sales and services % % Gross revenue deduction (44.1) 0.0 (34.5) % 0.0% (46.7) % 0.0% Cost of good sold (185.2) (150.1) 23.4% (205.6) -9.9% Gross profit % 0.0% % 0.0% Total selling expenses (265.8) (222.8) 19.3% (250.5) 6.1% Personnel expenses (89.7) (76.0) 18.0% (81.1) 10.6% Royalties and marketing fund (45.3) (37.7) 20.0% (38.0) 19.0% Expenses with occupancy and utilities (64.0) (53.0) 20.9% (59.2) 8.2% Pre-operating expenses (0.9) (0.5) 65.1% (3.3) -72.8% Depreciation and amortization (27.7) (23.6) 17.3% (34.3) -19.0% Other selling expenses (38.2) (31.9) 19.8% (34.6) 10.3% Total general and administrative expenses (28.6) (19.2) 48.9% (35.8) -20.2% General and administrative expenses (23.7) (16.4) 44.2% (20.7) 14.3% Depreciation and amortization (1.9) (1.8) 4.1% (2.2) -13.8% Expenses with merger and acquisitions (0.9) (0.4) 117.6% (0.7) 30.3% Gain (loss) from write-off of property, equipment and impairment (1.1) (0.8) 35.8% (9.4) -88.8% Gain (loss) on claims Cost of stock option plan (1.1) (2.9) -61.7% Profit (loss) before financial income (2.2) % % 0.0% Financial results 8.0 (15.8) - (7.2) - Financial expenses (11.6) (24.0) -51.7% (15.1) -23.0% Financial income % #NOME? 148.6% Profit (loss) before income tax and social contribution (18.1) % #NOME? -53.7% Income tax and social contribution (2.1) (1.9) 5.9% (1.6) 27.3% Current (1.4) Deferred (0.6) 0.0 (1.9) % 0.0% (1.6) % 0.0% Net income (loss) 8.8 (20.0) % Source: Burger King Brasil 33

34 Cash flow (R$ million) 1Q18 1Q17 Cash flow from operating activities (34.4) (68.7) Cash generated by operating activities Earnings before income tax and social contribution 10.9 (18.1) Depreciation and amortization of property and equipment and intangible assets Interest, charges, exchange differences and monetary variations (3.2) 21.5 Others Changes in assets and liabilities Trade receivables,net 2.0 (11.3) Inventories (10.2) (5.3) Recoverable taxes (2.9) 6.0 Advances paid 0.9 (9.3) Trade and rental payables (35.7) (29.4) Payroll and social charges (12.0) (4.4) Payment of interest on loans and financings (8.2) (33.3) Others changes in assets and liabilities (20.0) (18.2) Net cash used in investing activities 90.8 (20.8) Purchases of property and equipment (40.4) (26.0) Purchases of intangible assets (5.0) (2.8) Investment in marketable securities (142.2) (44.9) Redemption of marketable securities Others Cash flows from financing activities (31.7) (21.5) Share premium increase, net of issuance costs (2.0) - Investments payable - (2.4) Payment of loans and financings (principal) (29.7) (19.1) Net increase in cash and cash equivalents 24.7 (111.0) At the beginning of the year At the end of the year Source: Burger King Brasil 34

35 Adjusted EBITDA and leverage (R$ million) EBITDA and adjusted EBITDA EBITDA - R$ Million 1Q18 1Q17 Var.% 4Q17 Var.% Income (Loss) for the period 8.8 (20.0) % (+) Financial income (loss) (8.0) (+) Depreciation and amortization % % (+/-) Income tax and social contribution % % EBITDA % % EBITDA Margin 6.7% 6.0% 70b ps 12.8% -610b ps (+) Others expenses* % (+) Cost of stock option plan % (+) Merge and acquisition expenses % % (+) Pre-operating expenses % % Adjusted EBITDA % % Adjusted EBITDA Margin 7.5% 6.3% 120b ps 15.9% -840b ps * Include write-off of property and equipment (damages, obsolescence, gain (loss) from asset divestment and impairment). Net debt and leverage Net debt - R$ Million Mar/18 Mar/17 Var.% Dec/17 Var.% Loans and financings % % Current % % Non-current % % Cash and cash quivalents and marketable securities 1, % 1, % Cash and cash equivalents and marketable securities (current) 1, % 1, % Marketable securities (non-current) % % Net debt (635.9) (706.3) - Adjusted EBITDA % % Net debt/ Total Adjusted EBITDA 1 (12 M) (2.9x) 2.6x - (3.4x) 0.5x Source: Burger King Brasil Note: 1 Adjusted EBITDA is a non-accounting measure adopted by the Company, which corresponds to EBITDA adjusted by pre-operating expenses, expenses with mergers and acquisitions mergers, and other expenses, which the Company s Management believes are not part of the normal course of business and/or distort any analysis of the Company s operating performance, including: (i) write-off of property and equipment (damages, obsolescence, gain (loss) from asset divestment and impairment); and (ii) costs with the stock option plan) 35

36 MFDA between BK Brasil and Popeyes BK Brasil signed a Master Franchise and Development Agreement (MFDA) with POPEYES in Brazil, further solidifying its leading positioning in the QSR industry in the country BURGER KING Brazil Rationale POPEYES More than 700 restaurants in Brazil 2 nd player in Burger and 3 rd largest QSR in number of restaurants Significant improvement in brand awareness and preference over past years Chicken is the most consumed protein in Brazil Leverage on BK Brasil existing capabilities, infrastructure and scale Attractive opportunity to further optimize capital allocation 2 nd largest global chicken QSR brand, with +2,800 restaurants worldwide Unique brand, with a differentiated product based on a 300-year old culinary tradition Diversification in a profitable, scalable and sizable business 36

37 Popeyes History Since being founded in 1972 in New Orleans, Louisiana, Popeyes has brought the heart and soul of Louisiana cooking to the world 1972 Founded in New Orleans, Louisiana as Chicken on the Run 1976 Popeyes begins franchising; opens ~500 locations over the next 10 years 1999 Popeyes surpasses US$1B in system-wide sales for the first time 2008 Popeyes name changes to Popeyes Louisiana Kitchen 2011 Popeyes opens it 2000 th store in Memphis, TN 2017 RBI Acquires Popeyes 37

38 Popeyes Global Footprint Over 2,800 restaurants around the globe 38

39 Popeyes Global Footprint 12 hours marinated and hand battering and breading are key factors that demonstrate Popeyes commitment to quality and freshness Culinary Integrity Fresh Prep 12-hour Marination Hand Battered & Breaded in restaurant Proprietary recipe Bold Innovation Unique Flavor Trends Special Chicken Cuts Distinct Sauces & Sides Differentiated Menu Brand Authenticity Louisiana Heritage Origin Story Credibility 7 nations formed a unique culture The Popeyes difference leads to: Taste Preference, Higher Quality Perception & Brand Authenticity 39

40 Chicken Fast Food Market in Brazil Protein consumption by category - Brazil Million of metric tons Fast food market estimates - Brazil BRL billion Consumer Trend More than 90% of consumers intend to increase or maintain Chicken QSR consumption in the future Top 3 attributes for Chicken QSR: Quality of chicken Taste Value proposition Current Landscape QSR chicken market in Brazil remains Currently, there are very few considerably underpenetrated vs. chicken QSR players to serve other countries guest demand Currently, there are very few chicken Mainly concentrated in the QSR players to serve guest demand Southeast and South regions of Brazil, with Sao Paulo as the Mainly concentrated in the Southeast key state and South regions of Brazil, mostly in Sao Paulo Source: USDA, Euromonitor, A.T. Kearney 40

41 Popeyes MFDA Key Aspects Chicken Consumption Rights Chicken QSR Potential Obligations A 20-year MFDA agreement with Popeyes Exclusive right to develop, franchise and operate POPEYES restaurants in Brazil Right to manage the advertising fund in Brazil Annual target of minimum number of restaurants to build and operate Opening targets will gradually accelerate over the years, achieving a potential of more than 300 restaurants in the first 10 years of contract. We expect to open first restaurant in 2018 Payment of royalties and contribution to marketing fund in line with levels paid for BURGER KING brand 41

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