investment banking i industry spotlight · 2020-02-28 · 2017 demonstrated signs of the cycle...

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Restaurants I Industry Spotlight

Q1 2018

Restaurants I Q1 2018

Investment Banking I Industry Spotlight

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Q1 2018 Fifth Third Consumer & Retail Investment Banking

Dedicated Sector Focus

Consumer & Retail Restaurants & Franchising Food, Beverage & Agribusiness

Apparel & Accessories

Broadlines

Convenience Stores

e-Commerce

Grocery & Pharmacy

Hardlines

Specialty Retail

Casual & Family Dining

Coffee & Specialty

Fast Casual

Fine Dining & Polished Casual

Fitness & Wellness

Franchisors & Franchisees

Quick Service Restaurants (QSR)

Agricultural Inputs

Beverage Distributors

Beverage Producers

Food Distribution

Food Retail

Front-Line Processing

Value-Added Manufacturing

Fifth Third’s Consumer & Retail Investment Banking team offers merger & acquisition (M&A), capital raising and other

strategic and financial advisory services to the middle market, corporate clients and financial sponsors

Investment Banking

Financial Advisor

Recapitalization by

March 2018

Charlie Hurt

Managing Director

Atlanta, GA

(404) 279-4518

[email protected]

Red Farha

Vice President

Charlotte, NC

(704) 808-5129

[email protected]

John Shoffner

Managing Director

Charlotte, NC

(704) 688-1813

[email protected]

John Boisture

Director

Charlotte, NC

(704) 688-4522

[email protected]

Financial Advisor

Acquisition by

December 2017

Financial Advisor

Acquisition of

Portfolio Company of

January 2017

Planet Fitness Midwest

Financial Advisor

Investment by

$15,000,000

June 2016

Financial Advisor

Acquisition by

$425,000,000

February 2016

Capital Markets

Craig Wolf

C&R Corporate Banking

Chicago, IL

(312) 704-2994

[email protected]

Jeff Hoffmann

Restaurants Corp. Banking

Chicago, IL

(312) 704-6246

[email protected]

Mike Brothers

Debt Capital Markets

Chicago, IL

(312) 704-7362

[email protected]

Mike Ryan

Equity Capital Markets

Nashville, TN

(615) 687-3123

[email protected]

Joint Lead Arranger

$750,000,000

Senior Credit Facilities

October 2017

Sole Lead Arranger, Sole Bookrunner &

Admin. Agent

$300,000,000


July 2017

Joint Bookrunner & Co-Manager

$1,500,000,000

Senior Unsecured Notes

July 2017

Joint Lead Arranger

Portfolio Company of

$4,900,000,000 Credit Facilities

$1,000,000,000 Senior Notes

August 2017

Joint Lead Arranger

$1,500,000,000


June 2017

3


Q1 2018

85%

90%

95%

100%

105%

110%

115%

120%

125%

130%

Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18

Consumer & Retail Sector Dashboard

Source: Bloomberg

Equity Returns by Sector (LTM)

Consumer Sentiment

Relative Equity Performance (LTM)

Retail Gas Prices ($/gallon) Case Schiller Index % Δ Disposable Income

34.4%

29.3%

26.2%

14.8%

7.4%

6.0%

2.9%

(10.0%)

(11.2%)

Personal Products

Retail - Multiline

Apparel

Restaurants

Retail - Specialty

Beverage

Retail - Food

Food

Household Products

LTM YTD

S&P 14.8% (0.7%)

Cons. Staples (3.6%) (9.0%)

Cons. Discretionary 19.6% 3.2%

60

65

70

75

80

85

90

95

100

105

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

Mar

-17

Sep

-17

Mar

-18

120

130

140

150

160

170

180

190

200

Jan

-13

Jul-

13

Jan

-14

Jul-

14

Jan

-15

Jul-

15

Jan

-16

Jul-

16

Jan

-17

Jul-

17

Jan

-18

1.50

2.00

2.50

3.00

3.50

4.00

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

Mar

-17

Sep

-17

Mar

-18

(6%)

(4%)

(2%)

0%

2%

4%

6%

8%

Feb

-13

Au

g-1

3

Feb

-14

Au

g-1

4

Feb

-15

Au

g-1

5

Feb

-16

Au

g-1

6

Feb

-17

Au

g-1

7

Feb

-18

4


Q1 2018

95%

100%

105%

110%

115%

120%

125%

130%

Feb

-13

Au

g-1

3

Feb

-14

Au

g-1

4

Feb

-15

Au

g-1

5

Feb

-16

Au

g-1

6

Feb

-17

Au

g-1

7

Feb

-18

Apparel Food & BeveragePersonal Care Food ServicesJewelry & Watches

Same Store Sales (SSS) Growth

Consumer Spending as a % of Real GDP

Personal Expenditure – Primary Consumer Segments

Restaurant Sector Insights

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

Positive Same Store Sales (SSS) Growth Returned in Q4

For the first time in nearly two years, both full and limited service operators generated positive SSS growth in Q4 2017

Comp growth may have troughed during Q3 2017 after nearly two years of downward momentum on sales

Recent momentum in GDP growth, take-home pay and business sentiment have led to a stronger consumer outlook

Restaurant operators are expecting softer SSS growth during Q1 2018

Political Uncertainty Continues to Have an Impact On Restaurants

The Department of Labor introduced two rule changes that may have a positive impact of restaurant operators

– DOL proposed a rule that would allow restaurants to pool tips (subject to a minimum wage threshold)

– Withdrawal of guidance on a joint-employer rule that had introduced significant risk to the franchise business model

• However, the DOL reversed its guidance

The Tax Reform and Jobs Act should benefit operators given the immediate expensing of CapEx and reduced corporate tax rates

Fed interest rate policy may cause a reflationary environment, creating an offset to improved consumer discretionary spending

Labor will prove a significant issue as minimum wage increases are taking effect across the country – technology continues to be viewed as a substitute for labor

Despite Several Headwinds, Consumers Seem Optimistic

The labor market continues to show momentum in wage growth

Unemployment remains low relative to historical levels, and job-seekers are re-entering the market

Retailers experienced their best holiday season in nearly 5 years

A meaningful portion of disposable income from tax reform has historically flowed to restaurants

(4.0%)

(2.0%)

0.0%

2.0%

4.0%

6.0%

8.0%

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

2015 2016 2017

Full Service Restaurants Limited Service Restaurants

64%

65%

66%

67%

68%

69%

70%

71%

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

5


Q1 2018

(10.0%)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Full Service Restaurants Limited Service Restaurants S&P 500

10.0x

15.0x

20.0x

25.0x

30.0x

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

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 March 29th, 2018 * Each index is comprised of the companies noted on page 13 [1] Forward P/E multiples in charts do not match the table, as 5-year performance chart is market capitalization weighted

+68.2%

+55.6%

+63.5%

16.6x

17.9x

22.7x

Median

Number of Enterprise Value Median EV Multiple Median Multiple

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

Full Service Restaurants 20 $1,278 1.2x 11.0x 21.6x 1.1x 9.3x 19.3x

Casual Dining 11 1,998 1.2x 11.0x 21.6x 1.1x 9.3x 17.9x

Family Dining 6 1,278 1.4x 13.7x 16.1x 1.8x 10.8x 21.5x

Fine Dining & Polished Casual 3 256 0.8x 8.7x 21.6x 0.8x 7.9x 19.3x

Limited Service Restaurants 22 2,967 3.6x 12.9x 20.0x 3.9x 11.5x 23.3x

Coffee & Specialty 3 6,967 3.6x 14.7x 17.4x 5.6x 14.0x 23.3x

Quick Service 7 2,967 4.2x 12.5x 22.5x 3.9x 11.5x 20.6x

Fast Casual 12 365 0.9x 12.9x NA 0.9x 11.4x 34.3x

S&P 500 500 NM 2.5x 12.6x 26.7x 2.3x 10.7x 17.3x

Median TEV/LTM Multiples Median TEV/Forward Multiples

6


Q1 2018

21.9%

27.3%

8.1%

13.3%

10.9%

9.9%

14.8%

13.6%

20.0%

10.0%

13.6%

12.4%

2.4%

2.6%

0.7%

1.1%

0.3%

23.3x

20.6x

34.3x

21.5x

17.9x

19.3x

14.0x

11.5x

11.4x

10.8x

9.3x

7.9x

Public Equity Market Valuation Trends (Cont’d)

Source: S&P Capital IQ as of March 29th, 2018 * Each index is comprised of the companies noted on page 13

EV / 2018P EBITDA 5-Year Est. EPS Growth LTM EBITDA Margin P / 2018 EPS

Quick Service

Coffee & Specialty

Fast Casual

Family Dining

Fine Dining & Polished

Casual

Casual Dining

3-Year Avg. SSS Growth

Median: 11.1x Median: 21.0x Median: 0.9% Median: 12.1% Median: 13.6%

(0.1%)

7


Q1 2018

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 2017 YTD3/17

YTD3/18

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

$338

$513$600 $652 $640

$531 $521$565

$629$624

$677 $693

$848

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17*

Cu

mu

lati

ve

Dry

Po

wd

er

($ i

n b

illi

on

s) 2017

2016

2015

2014

2013

2012

2011

2010

Overhang by vintage

U.S. corporate cash balances continue to reach record levels and are driving activity in strategic buyer M&A

Historically, M&A cycles have not extended past seven years; 2017 was year eight of the current cycle

2017 demonstrated signs of the cycle slowing, however the bull equity market and excess capital continue to support heightened activity

− 2018 tax policy changes and cash repatriation expected to support continued M&A activity

Transaction Volume

Recession Recession

▼ 15%

▲30%

S&P 500 – Aggregate Corporate Cash & Equivalents Global Private Equity Capital Overhang by Year

Record levels of uncalled dry powder continue to accumulate in North American and European private equity funds

U.S. M&A Volume and Valuation Trends

($ in billions) ($ in billions)

Note: This data represents the entire U.S. market (all industries) Source: PitchBook, S&P Capital IQ, and S&P Capital IQ LCD * Pitchbook as of June 30th, 2017

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

Over $1.9 trillion

8


Q1 2018

10.0x 10.2x9.5x

10.9x 11.1x9.8x 9.3x 9.5x

7.9x9.6x9.5x

8.2x9.8x

10.6x11.7x 11.1x

12.3x13.3x

12.0x 11.6x

0.0x

5.0x

10.0x

15.0x

2010 2011 2012 2013 2014 2015 2016 2017 1Q2017 1Q2018

Middle Market > $1 Billion

$0

$50

$100

$150

$200

$250

1Q

201

0

2Q

201

0

3Q

201

0

4Q

201

0

1Q

201

1

2Q20

11

3Q

201

1

4Q

201

1

1Q

201

2

2Q

201

2

3Q

201

2

4Q

201

2

1Q

201

3

2Q

201

3

3Q

201

3

4Q

201

3

1Q

201

4

2Q

201

4

3Q

201

4

4Q

201

4

1Q

201

5

2Q

201

5

3Q

201

5

4Q

201

5

1Q

201

6

2Q

201

6

3Q

201

6

4Q

201

6

1Q

201

7

2Q20

17

3Q

201

7

4Q

201

7

1Q

201

8

Middle Market > $1 Billion

Restaurant M&A accelerated in 2017

Increased activity in full & limited service

All types of transactions (growth-oriented recaps, LBO’s, go-private and corporate carve-outs)

Reflects the market’s view that restaurants continue to be value opportunities, versus:

− Retail: difficult to predict timing, intensity of down-cycle

− Consumer products: continue to be expensive

− Food: dominated by strategic buyers with deep pockets

Bifurcation in valuations continued despite continued activity

High-performing assets continued to get “premium” multiples

Challenged assets continued to see multiple compression

The above data supports trends that were consistent throughout 2017:

Limited service franchisors continue to command the highest valuations

Fast casual deal activity continues to be driven by growth investments in the lower middle market

Full service is once again attractive, but for different reasons than limited service (focus on IRR vs. growth)

Buyers are making smaller bets on full service businesses

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

0

250

500

750

1,000

1Q

201

0

2Q

201

0

3Q

201

0

4Q

201

0

1Q

201

1

2Q

201

1

3Q

201

1

4Q

201

1

1Q

201

2

2Q

201

2

3Q

201

2

4Q

201

2

1Q

201

3

2Q

201

3

3Q

201

3

4Q

201

3

1Q

201

4

2Q

201

4

3Q20

14

4Q

201

4

1Q

201

5

2Q

201

5

3Q

201

5

4Q

201

5

1Q

201

6

2Q

201

6

3Q

201

6

4Q

201

6

1Q20

17

2Q

201

7

3Q

201

7

4Q

201

7

1Q

201

8

Median Middle Market: $14.1

Median Middle Market: 9.8x

Median > $1 Billion: $27.1

Median > $1 Billion: 11.1x

9


Q1 2018

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

Restaurant Sector Precedent M&A Transactions

Source: Company Filings, S&P Capital IQ [1] * Excluded from mean and median [2] Green shading indicates strategic acquisition [3] Qdoba’s EBITDA was estimated assuming that ~17% of JACK’s total SG&A is attributable to Qdoba operations [4] SET:TU acquired a 25% minority stake from Golden Gate Capital

Transactions completed or announced over the past four years

Announced Enterprise LTM

Date Acquirer Target Value (EV) Revenue EBITDA Revenue EBITDA

03/08/18 Spice Private Equity AG Bravo Brio Restaurant Group, Inc. (NasdaqGS:BBRG) $101 $505 $27 0.2x * 3.8x *

02/20/18 Rhone Capital Fogo de Chao, Inc. (NasdaqGS:FOGO) 560 311 53 1.8x 10.6x

02/01/18 Elysium Management Huddle House, Inc. - - - - -

12/19/17 Apollo Global Management (NYSE:APO) Qdoba Restaurant Corporation [3]305 457 38 0.7x 8.0x

11/28/17 Roark Capital Group Buffalo Wild Wings, Inc. (NasdaqGS:BWLD) 2,885 2,061 255 1.4x 11.3x

11/08/17 Panera Bread Co. / JAB Holding Co. Au Bon Pain Corporation - - - - -

10/16/17 NRD Capital Management Ruby Tuesday, Inc. (NYSE:RT) 314 1,046 37 0.3x 8.5x

09/06/17 FAT Brands (NasdaqCM:FAT) Ponderosa Franchising / Bonanza Restaurant Companies 11 4 2 2.8x 6.9x

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

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 - - - -

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

10/10/16 Thai Union Group Public Company Limited (SET:TU) Red Lobster Master Holdings, L.P. [4]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 - - -

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 481 438 45 1.1x 10.7x

08/26/14 Burger King (n.k.a. NYSE:QSR) Tim Hortons Inc. 13,419 3,050 767 4.4x * 17.5x *

07/12/14 Hony Capital PizzaExpress 1,539 637 151 2.4x 10.2x

07/01/14 Berkshire Partners The Portillo Restaurant Group, Inc. 1,000 303 97 3.3x 10.3x

05/23/14 Roark Capital Group Corner Bakery 300 375 29 0.8x 10.3x

05/20/14 Sentinel Capital Partners, LLC TGI Friday's Inc. 790 1,129 113 0.7x 7.0x

05/15/14 Golden Gate Capital Red Lobster Seafood, Co. 2,113 2,641 230 0.8x 9.2x

03/13/14 Chatham Credit Management Furr's Restaurant Group 23 113 3 0.2x 8.4x

02/07/14 A5 Fund, Cerberus Capital Fox and Hound Restaurant Group Inc. 130 - - - -

01/16/14 Apollo Global Management (NYSE:APO) CEC Entertainment, Inc. (NYSE:CEC) 1,309 818 166 1.6x 7.9x

Median - Full Service 0.8x 9.0x

Median - Limited Service 1.2x 8.3x

Median - All 1.2x 8.8x

EV / LTM

10


Q1 2018 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 *1Q18 preliminary PitchBook data

0

500

1,000

1,500

$0

$50

$100

$150

$200

1Q

12

2Q

12

3Q

12

4Q12

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q17

3Q

17

4Q

17

1Q

18*

Deal Value ($) # of Deals Closed

$145.0 $100.0

$278.6 $200.0

$300.0

$135.0 $92.5

$400.0 $240.7

$280.0 110 125

169 155206 202

214 211

55 39

2010 2011 2012 2013 2014 2015 2016 2017 1Q2017 1Q2018

Median Deal Size ($) # of Exits

$45.5 $49.7 $53.0

$74.5$62.1

$120.3

$69.1 $66.5

$6.9

$42.9

546 656 741 685 795915 844 789 203 183

2010 2011 2012 2013 2014 2015 2016 2017 1Q2017 1Q2018

Capital Invested ($) # of Deals Closed

Private Equity deal flow was down on a volume basis but up slightly on a value basis during the first quarter of 2018

The two biggest concerns for dealmakers in 2018 continue to be the high-priced environment and lack of quality targets

Total market acquisition multiples were elevated through 2017:

– Median EV/EBITDA: 10.5x

– Median debt/EBITDA: 5.7x

Middle market deal values also pushed forward in 2017:

– Average EV / EBITDA: 8.1x

– Average debt / EBITDA: 4.4x

Strength in fundraising continues to raise the amount of dry powder to record levels

Private equity buyers continue to search for investment thesis

Opportunities for lucrative retail or consumer targets remain scarce

However, larger conglomerates are increasingly seeking divestitures of non-core assets (Johnson & Johnson, Newell Brands)

Buyers have sought out high growth opportunities in consumer services, primarily in fitness studios (e.g. Planet Fitness & Orangetheory)

11


Q1 2018

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

MM B-rated MM NR

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 Remains Yields Continue to Decline for Middle Market Non-rated Issuers [1]

Middle Market Covenant-Lite Volume Surges in 4Q 2017 Leverage Multiples Remain Aggressive on Middle Market LBOs

($ in billions)

6.09%

5.80%

($ in billions)

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

Non-Sponsored Sponsored

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

$10.0

MM Covenant-Lite Volume

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

1st Lien Debt to EBITDA Junior Debt to EBITDA

12


Q1 2018 Appendix: Key Disclosures

Casual Dining

BJRI – BJ’s Restaurants, Inc.

BLMN – Bloomin’ Brands, Inc.

CHUY – Chuy’s Holdings, Inc.

DAVE – Famous Dave’s of America Inc.

DIN – DineEquity, Inc.

DRI – Darden Restaurants, Inc.

RRGB – Red Robin Gourmet Burgers Inc.

TXRH – Texas Roadhouse, Inc.

PLAY – Dave and Buster’s Entertainment, Inc.

EAT – Brinker International, Inc.

Family Dining

BH – Biglari Holdings Inc.

CBRL – Cracker Barrel Old Country Store, Inc.

DENN – Denny’s Corporation

Fine Dining & Polished Casual

CAKE – The Cheesecake Factory Incorporated

DFRG – Del Frisco’s Restaurant Group, 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.

HABT – The Habit Restaurants, Inc.

NDLS – Noodles & Company

PBPB – Potbelly Corporation

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

QSR – Restaurant Brands International Inc.

SONC – Sonic Corp.

WEN – The Wendy’s Company

YUM – Yum! Brands, Inc.

WING – Wingstop Inc.

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Q1 2018 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.

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About Fifth Third Capital Markets

Fifth Third Capital Markets is the marketing name under which Fifth Third Bank and its subsidiary, Fifth Third Securities, Inc., provide certain securities and investment banking products and services. Banking products and services are offered by Fifth Third Bank. Securities products and services are offered by licensed securities representatives of Fifth Third Securities, Inc., who may be employees of Fifth Third Bank. Important notice This document has been prepared by Fifth Third Bank (“Fifth Third”) or one of its subsidiaries for the sole purpose of providing a proposal to the parties to whom it is addressed in order that they may evaluate the capabilities of Fifth Third to supply the proposed services. It is not intended to provide specific investment advice or investment recommendations and does not constitute either a commitment to enter into a specific transaction or an offer or solicitation, with respect to the purchase or sale of any security. The information contained in this document has been compiled by Fifth Third and includes material which may have been obtained from information provided by various sources and discussions with management but has not been verified or audited. This document also contains confidential material proprietary to Fifth Third. Except in the general context of evaluating our capabilities, no reliance may be placed for any purposes whatsoever on the contents of this document or on its completeness. No representation or warranty, express or implied, is given and no responsibility or liability is or will be accepted by or on behalf of Fifth Third or by any of its subsidiaries, members, employees, agents or any other person as to the accuracy, completeness or correctness of the information contained in this document or any other oral information made available and any such liability is expressly disclaimed. This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person in whole or in part without our prior written consent. Past performance is No Guarantee of Future Results. Fifth Third Capital Markets is the marketing name under which Fifth Third Bank and its subsidiary, Fifth Third Securities, Inc., provide certain securities and investment banking products and services. Fifth Third Capital Markets offers investment banking++, debt capital markets+, bond capital markets++, equity capital markets++, financial risk management+, and fixed income sales and trading++. Fifth Third Bank provides access to investments and investment services through various subsidiaries, including Fifth Third Securities. Fifth Third Securities is the trade name used by Fifth Third Securities, Inc., member FINRA/SIPC, a registered broker-dealer and registered investment advisor registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Securities and investments offered through Fifth Third Securities, Inc. and insurance products: + Services and activities offered through Fifth Third Bank ++ Services and activities offered through Fifth Third Securities, Inc © Fifth Third Bank 2018

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