Industry Data Report New Unit Investment

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Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers Industry Data Report New Unit Investment 2018-2019 RR s New Unit Investment Industry Data Report provides average building cost estimate details (excluding land) for 47 national restaurant chains. New Build Summary Building Specs New Build Ratios Franchise Requirements New build AUV Land needs Sales-to-investment Initial/development fees Building & site work Building size Average sales per s.f. Royalty fees Equipment & signs Total seats Total investment per s.f. Franchise/renewal term Small wares & inventory Transfer fees Soft costs Territory protection Initial franchise fee Incentive/financial requirements Report highlights: (1) the sales-to-investment ratio for $1B+ chains continues to trend down after peaking in 2013, driven by construction cost increases and a slight decline in new build AUV s; (2) RR's New Build vs. Buy Ratio rose for the 2nd consecutive year as construction cost inflation increases appeal of acquiring existing stores while store-level acquisition multiples have been relatively flat; (3) franchisors stepped-up development incentives which include franchise fee reductions to improve new build economics; (4) increasing use of non-traditional building formats should help to improve future new build returns; and (5) 9 chains introduced new or tweaks to existing building designs. Table of Contents Pages New Unit Investment Costs Detail Executive Summary 2-4 Estimated Investment Cost Detail by Chain 5 Estimated Investment Cost Detail by Chain (Secondary Format) 6 New Build Cost Components as a % of Total Investment 7 Build vs Buy Ratio by Chain 8 New Building Prototypes Summary 9 New Franchisee Financial Requirements 10 Development Incentives by Chain 11-16 Franchise Terms by Chain 17-23 RR Overview 24 Data in spreadsheet form available at http://www.chainrestaurantdata.com Copyright: This Restaurant Research LLC document is copyrighted material. Due to the No Electronic Theft (NET) Act of 1997, electronic forwarding or other forms of redistribution, without the express permission of Restaurant Research LLC, are violations of law and could be subject to fines of up to $250,000 and up to five years of imprisonment, even when no financial gain or commercial advantage accrues to the forwarder/re-distributor. Copyright 2018 Restaurant Research LLC. All rights reserved.

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers New Unit Investment Executive Summary IDR: New Unit Investment Source: RR Estimates Page 2

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers New Unit Investment Rankings (Best to Worst % Change) by Segment IDR: New Unit Investment Source: RR Estimates Page 3

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers IDR: New Unit Investment Source: RR Estimates Page 4

Chipotle Moe's Southwest Grill Panera Bread Corner Bakery Café Qdoba Fast Casual T.G.I. Friday's Buffalo Wild Wings Applebee's Texas Roadhouse Red Robin Chili's Grill & Bar Casual Golden Corral IHOP Denny's Cracker Barrel Perkins Family Domino's Papa John's Pizza Hut Little Caesars Pizza Firehouse Subs Jersey Mike's Jimmy John's Subway Sub-Sandwich Starbucks Krispy Kreme Dunkin Donuts Tim Horton's Coffee/Bakery Five Guys Checkers/ Rally's McDonald's Sonic Drive-In Zaxby's Wendy's Burger King Taco Bell Arby's Culver's Jack in the Box Dairy Queen Carl's Jr. Hardee's Sandwich Wingstop KFC Popeyes Bojangles' Church's Chicken Current Building Design Name Intro Year Building Format New Build Costs Excluding Land (Sorted by Sales to Investment) Annual Sales Per New Unit Building & Site Equipment & Signs Construction & Initial Start-up Costs (1) Building Requirements Sales and Investment Ratios (No Land) Small Wares & Inventory Soft Costs (2) Franchise Fee Franchisor Incentives (3) Total Invest. No Land Land (Sq. Feet) Building (Sq. Feet) Seats Avg. Sales Per Sq. Foot Total Invest. Per Sq. Foot Sales to Invest. QSR FSR Average Notes: (1) For a single traditional store unless otherwise noted. Figures are based on the average of the high and low range as indicated in the FDD, public filings, company web sites and/or franchisee estimates. (2) Soft costs include pre-construction costs such as architectural and engineering fees, permits, training expenses, opening advertising and utility deposits, but excludes liquor license due to the extreme range in costs. (3) Franchisor cash incentives plus any waiver of standard initial franchisee fee for existing franchisee's next unit, free equipment and/or food credits. McDonald's Corp. typically owns the land & building and contributes approximately 40% of construction costs in return for higher rent. (4) Chipotle and Cracker Barrel do not franchise. To make a fair comparison with other franchised concepts, the average segment initial franchise fee has been added to total costs.

Arby's Bojangles' Buffalo Wild Wings Burger King Checkers/ Rally's Church's Denny's Dunkin Donuts Firehouse Subs Jimmy John's Panera Bread Pizza Hut Popeyes Red Robin Building Format Annual Sales Per New Unit Building & Site Work New Build Costs - Secondary Format (Sorted Alphabetically) Equipment & Signs Construction & Initial Start-up Costs Building Requirements Sales and Investment Ratios (No Land) Small Wares Soft Franchise Franchisor Total Invest. Land Building Sales to Avg. Sales Total Invest. & Inventory Costs (1) Fee Incentives (2) Seats No Land (Sq. Feet) (Sq. Feet) Invest. Per Sq. Foot Per Sq. Foot (1) Soft costs include pre-construction costs such as architectural and engineering fees, permits, training expenses, opening advertising and utility deposits, but excludes liquor license due to the extreme range in costs. (2) Franchisor cash incentives plus any waiver of standard initial franchisee fee for existing franchisee's next unit, free equipment and/or food credits.

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers IDR: New Unit Investment Source: RR Estimates Page 7

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers IDR: New Unit Investment Source: RR Estimates Page 8

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers Bojangles New Prototypes/Design Updates Chipotle Dunkin Donuts Firehouse Subs Hardee s/ Carl s Jr. IHOP Red Lobster Red Robin Wendy's IDR: New Unit Investment Source: RR Estimates Page 9

Data, Analysis & Insight for a Stronger Industry Building Bridges between Franchisees, Franchisors & Financiers IDR: New Unit Investment Source: RR Estimates Page 10

Development Incentives Development Incentives/Unique Programs Fast Casual Moe's Southwest Grill Qdoba Casual Applebee's Buffalo Wings Wild Chili's Grill & Bar Red Robin Family Denny's Golden Corral

Development Incentives Development Incentives/Unique Programs IHOP Perkins

Development Incentives Development Incentives/Unique Programs Pizza Little Caesars Papa John's Pizza Hut Firehouse Subs Sub-Sandwich Jersey Mike's Jimmy John's Subway Coffee/Bakery Dunkin Donuts

Development Incentives Development Incentives/Unique Programs Tim Horton's Sandwich Arby's Burger King Carl's Jr. Checkers/ Rally's Chick-fil-A Culver's Dairy Queen Hardee's Five Guys

Development Incentives Development Incentives/Unique Programs Jack in the Box McDonald's Taco Bell Wendy's Zaxby's Chicken Church's KFC

Development Incentives Development Incentives/Unique Programs Popeyes Wingstop Source: FDD, company reports and websites.

Franchise Terms & Development Incentives (Sorted Alphabetically) Initial Fee Includes $1B+ Chains and Other Select s Development Fee/ Deposit Development Fee Credit? Term Territory Protection Renewal Fee Renewal Term Transfer Fee Royalty Corner Café Bakery Moe's Southwest Grill Panera Bread Qdoba Fast Casual Applebee's Buffalo Wings Wild Chili's Grill & Bar

Franchise Terms & Development Incentives (Sorted Alphabetically) Initial Fee Includes $1B+ Chains and Other Select s Development Fee/ Deposit Development Fee Credit? Term Territory Protection Renewal Fee Renewal Term Transfer Fee Royalty Outback Red Robin T.G.I. Friday's Texas Roadhouse Casual Denny's Golden Corral IHOP

Franchise Terms & Development Incentives (Sorted Alphabetically) Initial Fee Includes $1B+ Chains and Other Select s Development Fee/ Deposit Development Fee Credit? Term Territory Protection Renewal Fee Renewal Term Transfer Fee Royalty Perkins Family Domino's Little Caesars Papa John's Pizza Hut Pizza Firehouse Subs

Franchise Terms & Development Incentives (Sorted Alphabetically) Initial Fee Includes $1B+ Chains and Other Select s Development Fee/ Deposit Development Fee Credit? Term Territory Protection Renewal Fee Renewal Term Transfer Fee Royalty Jersey Mike's Jimmy John's Subway Sub- Sandwich Dunkin Donuts Krispy Kreme Tim Horton's Coffee/ Bakery

Franchise Terms & Development Incentives (Sorted Alphabetically) Initial Fee Includes $1B+ Chains and Other Select s Development Fee/ Deposit Development Fee Credit? Term Territory Protection Renewal Fee Renewal Term Transfer Fee Royalty Arby's Burger King Carl's Jr. Checkers/ Rally's Chick-fil-A Culver's Dairy Queen Hardee's

Franchise Terms & Development Incentives (Sorted Alphabetically) Initial Fee Includes $1B+ Chains and Other Select s Development Fee/ Deposit Development Fee Credit? Term Territory Protection Renewal Fee Renewal Term Transfer Fee Royalty Five Guys Jack in the Box McDonald's Sonic Drive-In Taco Bell Wendy's Zaxby's Sandwich

Franchise Terms & Development Incentives (Sorted Alphabetically) Initial Fee Includes $1B+ Chains and Other Select s Development Fee/ Deposit Development Fee Credit? Term Territory Protection Renewal Fee Renewal Term Transfer Fee Royalty Bojangles' Church's KFC Popeyes Wingstop Chicken Source: FDD, company reports and websites.

Visit www.chainrestaurantdata.com or contact us at (860) 352-2198 or info@chainrestaurantdata.com Ask us about custom research projects Ask to be added to complimentary RR Thermometer email distribution list Copyright: This Restaurant Research LLC document is copyrighted material. Copyright 2017 Restaurant Research LLC. All rights reserved. Disclosure: Restaurant Research LLC often sells report subscriptions to concepts under our coverage. Disclaimer of Liability: Although the information in this report has been obtained from sources Restaurant Research LLC believes to be reliable, RR does not guarantee its accuracy. The views expressed herein are subject to change without notice and in no case can be considered as an offer or solicitation with regard to the purchase or sales of any securities. Restaurant Research s analyses and opinions are not a guarantee of the future performance of any company or individual franchisee. RR disclaims all liability for any misstatements or omissions that occur in the publication of this report. In making this report available, no client, advisory, fiduciary or professional relationship is implied or established. This report is intended to provide an overview of the restaurant industry, but cannot be used as a substitute for independent investigations and sound business judgment.