recapitalizations of franchisors: partnership considerations · executive summary bird dog’s...

Recapitalizations of Franchisors: Partnership Considerations

Executive Summary

● Bird Dog’s perspective is that of a private equity firm

⏜ We will also discuss attributes of franchisors (and franchisees) that private equity firms look for when assessing investment opportunities

● The Bird Dog team has decades of investing and operational experience in the franchise industry

⏜ Invested over $200 million in equity capital across nine franchise brands

⏜ Franchisor and franchisee transactions in both the food and non-food segments of the industry

● Private equity firms are very active in the franchise space and could present a viable option as a partner

2

Bird Dog Capital Group, LLC (“Bird Dog”) is pleased to share with you our thoughts on considerations to evaluate when choosing a partner

Getting Started

3

The first part of the process is critical and could determine which path you ultimately take

Liquidity

Legacy

Lifestyle● Retirement● Partner for growth● Generational transition

● Price● Structure● Initial needs and future needs

● Values that are important to you● Changes to your brand● Sustainability of your brand

● What are you solving for?

Preparation

● Financial statements

⏜ Audited statements are preferred; however, internals may be relied upon

⏜ Adjustments for owner’s expenses

o Consider getting a transaction advisory services firm to perform a quality of earnings review

⏜ Performance relative to budget

● Diligence checklist

⏜ Operational metrics (key performance indicators)

⏜ Financial forecast

⏜ Legal, Human Resources, Insurance, IT, and Environmental (if applicable)

● Forming your team

⏜ Consider hiring an investment banker / broker

⏜ Engage legal counsel

⏜ Prepare key members of your management team

4

By failing to prepare, you are preparing to fail

The Recapitalization Process

5

A summary of the steps you can expect

Prepare for Sale Solicit BidsNegotiate

DocumentsExit

● Typically 30 to 60 days

● Non-binding initially

● Evaluate proposals and keep select bidders in the process

● Negotiate terms for LOI

● Documents necessary to consummate the transaction are dependent upon structure

● Obtain all necessary approvals and close

o Regulatory

o Landlord

o Others

Action Items (15 to 30 week Process)

Hire Advisor

Prepare Data Room

LOI & Definitive

Docs

Develop Sales

Materials

IOIs, Mgmt.

Preso & Diligence

Responses

Implement Post-

Acquisition or

Transition

Valuation Considerations

6

There are numerous factors that can impact the valuation you could expect

• Same Store Sales performance• Price and trafficSSS

• Product / service mix• StabilityMargins

• Organic• AcquisitionGrowth

Valuation

• Revenue• EBITDASize


7


• Current debt outstanding• Working capital

Balance Sheet

• Date of last remodel• Location / trade areaAssets

• Brand awareness• Brand integrity

Brand Equity

Valuation

• Business lifecycle• Tenure of managementHistory


8


• General economic conditions• Credit marketsEconomy

• Litigation history and pending• Revenue and profits concentrationRisks

• All cash transaction• Owner participation in structureStructure

Valuation

• Strength of management• Areas that need augmentation

Org Chart


9

Some prospective partner will analyze metrics of publicly-traded companies, precedent transactions and develop financial models to arrive at valuationCOMPARABLES BY SERVICE FORMAT

EBITDA

Price Equity Enterprise P/E P/E/G EV / EBITDA EV / Revenue Margin

CY2017 CY2018 CY2017 CY2018 IQ_LTM CY2017 CY2018 IQ_LTM CY2017 CY2018 IQ_LTM

Name 11/10/17 Value Value CY17 CY18 CY17 CY18 LTM CY17 CY18 LTM CY17 CY18 LTM

Affordable Upscale & Fine Dining

ARKR Ark Restaurants Corp. $0.00 $84 $103 0.0x 0.0x 0.0x 0.0x 9.9x 0.0x 0.0x 0.7x 0.0x 0.0x 6.8%BBRG Bravo Brio Restaurant Group, Inc. $2.15 $33 $76 11.0x 9.6x 2.0x 1.7x 3.2x 2.9x 3.0x 0.2x 0.2x 0.2x 5.9%CAKE The Cheesecake Factory Incorporated $44.31 $1,966 $2,090 17.1x 16.7x 1.3x 1.3x 7.8x 8.2x 8.0x 0.9x 0.9x 0.9x 11.8%DFRG Del Frisco's Restaurant Group, Inc. $13.15 $279 $319 18.0x 16.6x 1.5x 1.4x 7.9x 7.1x 6.7x 0.9x 0.9x 0.8x 11.2%FOGO Fogo de Chao, Inc. $10.75 $304 $414 14.0x 12.9x 0.9x 0.8x 8.0x 7.7x 6.9x 1.3x 1.3x 1.2x 16.8%JAX J. Alexander's Holdings, Inc. $9.85 $145 $163 28.1x 21.9x 0.0x 0.0x 8.4x 6.6x 6.3x 0.7x 0.7x 0.7x 8.4%KONA Kona Grill, Inc. $2.05 $21 $55 NM NM 0.0x 0.0x 14.9x 12.5x 6.7x 0.3x 0.3x 0.3x 2.0%RUTH Ruth's Hospitality Group, Inc. $19.90 $599 $624 19.2x 17.3x 1.4x 1.3x 10.3x 9.9x 9.0x 1.6x 1.5x 1.4x 15.2%

Mean $429 $480 15.3x 13.6x 0.9x 0.8x 8.8x 6.9x 5.8x 0.8x 0.7x 0.7x 9.8%

Median $212 $241 17.1x 16.6x 1.1x 1.0x 8.2x 7.4x 6.7x 0.8x 0.8x 0.7x 9.8%

Casual Dining

BJRI BJ's Restaurants, Inc. $31.20 $644 $809 22.6x 19.9x 1.4x 1.3x 6.9x 7.5x 6.7x 0.8x 0.8x 0.8x 11.3%BLMN Bloomin' Brands, Inc. $16.98 $1,550 $2,666 12.7x 12.3x 1.1x 1.1x 6.9x 6.5x 6.6x 0.6x 0.6x 0.6x 9.4%EAT Brinker International, Inc. $33.74 $1,562 $2,916 10.7x 10.2x 0.7x 0.7x 6.8x 6.9x 6.8x 0.9x 0.9x 0.9x 13.7%BWLD Buffalo Wild Wings, Inc. $118.85 $1,844 $2,237 23.9x 21.5x 1.5x 1.3x 8.7x 8.3x 7.9x 1.1x 1.1x 1.1x 12.8%CHUY Chuy's Holdings, Inc. $22.75 $385 $367 23.3x 21.4x 1.4x 1.3x 9.5x 9.1x 8.2x 1.0x 1.0x 0.9x 11.0%CBRL Cracker Barrel Old Country Store, Inc. $154.64 $3,726 $3,972 18.6x 17.0x 2.9x 2.6x 9.9x 10.0x 9.0x 1.4x 1.3x 1.3x 13.7%DRI Darden Restaurants, Inc. $82.64 $10,220 $11,010 19.7x 17.9x 2.1x 1.9x 11.3x 10.6x 9.6x 1.5x 1.4x 1.3x 13.2%PLAY Dave & Buster's Entertainment, Inc. $48.84 $2,007 $2,288 18.7x 16.9x 1.2x 1.1x 8.7x 8.3x 7.4x 2.1x 2.0x 1.7x 24.4%DENN Denny's Corporation $12.30 $803 $1,097 22.5x 20.3x 0.0x 0.0x 11.8x 10.8x 10.4x 2.1x 2.1x 2.0x 17.7%DIN DineEquity, Inc. $46.63 $839 $2,137 11.3x 11.3x 0.0x 0.0x 9.5x 10.1x 10.4x 3.5x 3.5x 3.6x 36.7%DAVE Famous Dave's of America, Inc. $3.65 $25 $31 NM NM NM NM 10.2x 12.6x 10.1x 0.3x 0.4x 0.4x 3.2%LUB Luby's, Inc. $2.62 $76 $106 0.0x 0.0x 0.0x 0.0x 9.0x 0.0x 0.0x 0.3x 0.0x 0.0x 3.1%RRGB Red Robin Gourmet Burgers, Inc. $46.95 $607 $879 20.8x 17.5x 1.9x 1.6x 6.5x 6.4x 5.9x 0.7x 0.6x 0.6x 10.2%RT Ruby Tuesday, Inc. $2.37 $143 $309 0.0x 0.0x 0.0x 0.0x 8.3x 0.0x 0.0x 0.3x 0.0x 0.0x 4.1%TXRH Texas Roadhouse, Inc. $49.04 $3,487 $3,437 25.3x 22.9x 2.0x 1.8x 11.9x 11.6x 10.6x 1.6x 1.5x 1.4x 13.3%

Mean $1,861 $2,284 16.4x 14.9x 1.2x 1.0x 9.1x 7.9x 7.3x 1.2x 1.2x 1.1x 13.2%

Median $839 $2,137 19.2x 17.3x 1.3x 1.2x 9.0x 8.3x 7.9x 1.0x 1.0x 0.9x 12.8%


10

Public trading comparables, continued

Quick Casual - Performance IssuesCMG Chipotle Mexican Grill, Inc. $279.45 $7,890 $7,341 41.7x 29.7x 2.7x 2.0x 17.8x 15.9x 12.5x 1.7x 1.6x 1.5x 9.4%LOCO El Pollo Loco Holdings, Inc. $10.10 $390 $469 16.4x 15.7x 1.2x 1.1x 7.6x 7.5x 7.2x 1.2x 1.2x 1.1x 15.5%FRGI Fiesta Restaurant Group, Inc. $16.75 $450 $508 NM 23.7x NM 1.8x 8.3x 7.1x 7.5x 0.7x 0.8x 0.8x 9.0%NDLS Noodles & Company $4.40 $181 $243 NM 107.3x NM 14.3x 15.4x 9.0x 7.6x 0.5x 0.5x 0.5x 3.3%PBPB Potbelly Corporation $11.90 $295 $274 38.6x 34.7x 1.9x 1.7x 7.0x 7.4x 6.9x 0.7x 0.6x 0.6x 9.3%

Mean $1,841 $1,767 32.2x 42.2x 2.0x 4.2x 11.2x 9.4x 8.3x 1.0x 0.9x 0.9x 9.3%Median $390 $469 38.6x 29.7x 1.9x 1.8x 8.3x 7.5x 7.5x 0.7x 0.8x 0.8x 9.3%

Quick CasualBOJA Bojangles', Inc. $12.15 $450 $604 15.5x 16.3x 1.2x 1.3x 8.2x 8.3x 8.7x 1.1x 1.1x 1.1x 13.7%FRII Freshii Inc. $4.61 $142 $114 32.6x 19.3x 1.4x 0.8x 49.7x 15.5x 10.4x 6.9x 6.3x 4.7x 13.8%HABT The Habit Restaurants, Inc. $9.20 $187 $183 62.9x 85.6x 2.5x 3.4x 6.4x 6.5x 5.9x 0.6x 0.6x 0.5x 8.9%PNRA Panera Bread Company $0.00 $0 $0 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 14.9%SHAK Shake Shack Inc. $38.35 $1,005 $983 74.0x 69.2x 3.0x 2.8x 18.2x 17.2x 14.2x 2.9x 2.8x 2.1x 16.0%WING Wingstop Inc. $38.10 $1,109 $1,244 52.2x 47.9x 2.7x 2.5x 34.3x 30.8x 26.0x 12.2x 11.9x 10.7x 35.6%ZOES Zoe's Kitchen, Inc. $12.50 $244 $282 NM NM NM NM 12.3x 13.3x 10.3x 0.9x 0.9x 0.8x 7.5%

Mean $448 $487 39.5x 39.7x 1.8x 1.8x 18.5x 13.1x 10.8x 3.5x 3.4x 2.8x 15.8%Median $244 $282 42.4x 33.6x 2.0x 1.9x 12.3x 13.3x 10.3x 1.1x 1.1x 1.1x 13.8%

Quick ServiceARCO Arcos Dorados Holdings Inc. $10.25 $2,163 $2,557 25.5x 24.2x 1.2x 1.1x 9.8x 8.9x 8.4x 0.8x 0.8x 0.7x 8.0%TAST Carrols Restaurant Group, Inc. $10.90 $386 $624 72.7x 45.3x 3.6x 2.3x 7.7x 7.2x 6.6x 0.6x 0.6x 0.5x 7.8%TACO Del Taco Restaurants, Inc. $12.14 $470 $626 22.0x 20.2x 1.4x 1.3x 9.4x 8.8x 8.2x 1.3x 1.3x 1.2x 14.1%DPZ Domino's Pizza, Inc. $173.33 $7,583 $10,682 30.0x 25.1x 1.7x 1.5x 20.2x 19.0x 16.7x 3.9x 3.8x 3.4x 19.5%JACK Jack in the Box Inc. $99.99 $2,942 $4,120 23.6x 20.2x 1.7x 1.5x 11.8x 11.5x 11.4x 2.6x 2.7x 3.0x 21.7%MCD McDonald's Corporation $165.59 $132,006 $157,953 25.4x 23.7x 2.6x 2.4x 16.2x 15.3x 15.3x 6.7x 7.0x 7.7x 40.9%NATH Nathan's Famous, Inc. $95.00 $398 $468 0.0x 0.0x 0.0x 0.0x 16.7x 0.0x 0.0x 4.6x 0.0x 0.0x 27.5%PZZA Papa John's International, Inc. $59.53 $2,086 $2,465 21.8x 20.1x 1.7x 1.5x 12.4x 12.3x 11.7x 1.4x 1.4x 1.3x 11.4%FRSH Papa Murphy's Holdings, Inc. $5.70 $97 $196 21.9x 22.8x 2.7x 2.9x 13.9x 10.2x 9.3x 1.6x 1.7x 2.0x 11.4%QSR Restaurant Brands International Inc. $65.12 $15,468 $28,980 32.6x 24.5x 1.9x 1.4x 14.5x 13.6x 12.4x 6.5x 6.3x 5.8x 44.6%SONC Sonic Corp. $24.11 $970 $1,596 18.8x 17.2x 1.2x 1.1x 10.6x 10.5x 10.3x 3.3x 3.5x 3.5x 31.5%WEN The Wendy's Company $14.50 $3,512 $6,051 33.1x 26.6x 2.6x 2.1x 15.5x 14.9x 13.7x 4.9x 4.9x 4.8x 31.2%YUM Yum! Brands, Inc. $79.59 $26,821 $35,688 28.4x 25.1x 2.2x 2.0x 17.4x 17.3x 17.3x 5.8x 6.1x 7.5x 33.1%

Mean $14,992 $19,385 27.4x 22.7x 1.9x 1.6x 13.5x 11.5x 10.9x 3.4x 3.1x 3.2x 23.3%Median $2,163 $2,557 25.4x 23.7x 1.7x 1.5x 13.9x 11.5x 11.4x 3.3x 2.7x 3.0x 21.7%

Snacks & BeveragesDNKN Dunkin' Brands Group, Inc. $56.54 $5,107 $7,261 23.3x 21.4x 1.8x 1.7x 15.1x 15.0x 14.6x 8.6x 8.5x 8.3x 54.8%JMBA Jamba, Inc. $7.96 $122 $108 15.3x 0.0x 0.0x 0.0x NM 0.0x 0.0x 1.3x 0.0x 0.0x -4.4%SBUX Starbucks Corporation $57.04 $81,658 $82,907 26.9x 23.8x 1.7x 1.5x 15.4x 15.0x 13.4x 3.7x 3.6x 3.3x 22.2%



11

Valuation can be driven by the composition of the system

COMPARABLES BY FRANCHISE STATUS

EBITDAPrice Equity Enterprise P/E P/E/G EV / EBITDA EV / Revenue Margin

Name 11/10/17 Value Value CY17 CY18 CY17 CY18 LTM CY17 CY18 LTM CY17 CY18 LTMHighly Franchised (>70%)

DENN Denny's Corporation $12.30 $803 $1,097 22.5x 20.3x 0.0x 0.0x 11.8x 10.8x 10.4x 2.1x 2.1x 2.0x 17.7%DIN DineEquity, Inc. $46.63 $839 $2,137 11.3x 11.3x 0.0x 0.0x 9.5x 10.1x 10.4x 3.5x 3.5x 3.6x 36.7%DNKN Dunkin' Brands Group, Inc. $56.54 $5,107 $7,261 23.3x 21.4x 1.8x 1.7x 15.1x 15.0x 14.6x 8.6x 8.5x 8.3x 54.8%DPZ Domino's Pizza, Inc. $173.33 $7,583 $10,682 30.0x 25.1x 1.7x 1.5x 20.2x 19.0x 16.7x 3.9x 3.8x 3.4x 19.5%JACK Jack in the Box Inc. $99.99 $2,942 $4,120 23.6x 20.2x 1.7x 1.5x 11.8x 11.5x 11.4x 2.6x 2.7x 3.0x 21.7%MCD McDonald's Corporation $165.59 $132,006 $157,953 25.4x 23.7x 2.6x 2.4x 16.2x 15.3x 15.3x 6.7x 7.0x 7.7x 40.9%PZZA Papa John's International, Inc. $59.53 $2,086 $2,465 21.8x 20.1x 1.7x 1.5x 12.4x 12.3x 11.7x 1.4x 1.4x 1.3x 11.4%QSR Restaurant Brands International Inc. $65.12 $15,468 $28,980 32.6x 24.5x 1.9x 1.4x 14.5x 13.6x 12.4x 6.5x 6.3x 5.8x 44.6%SONC Sonic Corp. $24.11 $970 $1,596 18.8x 17.2x 1.2x 1.1x 10.6x 10.5x 10.3x 3.3x 3.5x 3.5x 31.5%WEN The Wendy's Company $14.50 $3,512 $6,051 33.1x 26.6x 2.6x 2.1x 15.5x 14.9x 13.7x 4.9x 4.9x 4.8x 31.2%


Moderately Franchised (30% - 70%)BWLD Buffalo Wild Wings, Inc. $118.85 $1,844 $2,237 23.9x 21.5x 1.5x 1.3x 8.7x 8.3x 7.9x 1.1x 1.1x 1.1x 12.8%EAT Brinker International, Inc. $33.74 $1,562 $2,916 10.7x 10.2x 0.7x 0.7x 6.8x 6.9x 6.8x 0.9x 0.9x 0.9x 13.7%PNRA Panera Bread Company $0.00 $0 $0 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 0.0x 14.9%


Minimally Franchised (<30%)BLMN Bloomin' Brands, Inc. $16.98 $1,550 $2,666 12.7x 12.3x 1.1x 1.1x 6.9x 6.5x 6.6x 0.6x 0.6x 0.6x 9.4%BJRI BJ's Restaurants, Inc. $31.20 $644 $809 22.6x 19.9x 1.4x 1.3x 6.9x 7.5x 6.7x 0.8x 0.8x 0.8x 11.3%CAKE The Cheesecake Factory Incorporated $44.31 $1,966 $2,090 17.1x 16.7x 1.3x 1.3x 7.8x 8.2x 8.0x 0.9x 0.9x 0.9x 11.8%CBRL Cracker Barrel Old Country Store, Inc. $154.64 $3,726 $3,972 18.6x 17.0x 2.9x 2.6x 9.9x 10.0x 9.0x 1.4x 1.3x 1.3x 13.7%DRI Darden Restaurants, Inc. $82.64 $10,220 $11,010 19.7x 17.9x 2.1x 1.9x 11.3x 10.6x 9.6x 1.5x 1.4x 1.3x 13.2%PLAY Dave & Buster's Entertainment, Inc. $48.84 $2,007 $2,288 18.7x 16.9x 1.2x 1.1x 8.7x 8.3x 7.4x 2.1x 2.0x 1.7x 24.4%RRGB Red Robin Gourmet Burgers, Inc. $46.95 $607 $879 20.8x 17.5x 1.9x 1.6x 6.5x 6.4x 5.9x 0.7x 0.6x 0.6x 10.2%RT Ruby Tuesday, Inc. $2.37 $143 $309 0.0x 0.0x 0.0x 0.0x 8.3x 0.0x 0.0x 0.3x 0.0x 0.0x 4.1%TXRH Texas Roadhouse, Inc. $49.04 $3,487 $3,437 25.3x 22.9x 2.0x 1.8x 11.9x 11.6x 10.6x 1.6x 1.5x 1.4x 13.3%



12

Since January 1, 2017, there have been 415 announced M&A transactions in the restaurant industry with a total reported value of over $21 billion($ in millions)

Ann. Service Type Ent. Value / LTM EBITDADate Target Buyer(s) Primary Secondary Txn. Value LTM Rev. LTM EBITDA Margin

9/29/14/ Einstein Noah Restaurant Group JAB Beech Inc. / BDT Capital Partners Limited Service Fast Casual $473.6 1.10x 10.1x NA4/5/17 Panera Bread Company JAB Holdings B.V. Limited Service Fast Casual $7,698.8 2.72x 18.7x 14.5%4/4/17 Guckenheimer Services, LLC ISS A/S (CPSE:ISS) Limited Service Fast Casual $225.0 0.69x 15.9x NA9/6/16 CICI Enterprises, LP Arlon Group LLC Limited Service Fast Casual

12/15/15 Togo's Eateries, Inc. Nimes Capital, LLC Limited Service Fast Casual NA NA 7.5x NA7/7/15 Fazoli's System Management, LLC Sentinel Capital Partners, LLC Limited Service Fast Casual NA NA 6.0x NA6/4/15 Biglari Holdings Inc. (NYSE:BH) Biglari Capital Corp. Limited Service Fast Casual $258.9 1.18x 20.2x 5.8%7/1/14 Portillo's Hot Dogs Berkshire Partners Limited Service Fast Casual $1,000.0 NA 13.0x NA

3/25/14 Newk's Eatery Sentinel Capital Partners Limited Service Fast Casual NA NA 13.0x NA1/16/14 CEC Entertainment Inc. Apollo Global Management, LLC (NYSE:APO) Limited Service Fast Casual $1,329.5 1.59x 7.9x 20.1%2/21/17 Popeyes Louisiana Kitchen, Inc. Restaurant Brands International Inc. (NYSE:QSR) Limited Service QSR $1,827.1 6.75x 20.5x 33.0%1/9/17 McDonald's China Management Carlyle Group, Citic Capital, Golden Arches Limited Service QSR

12/20/16 K-MAC Holdings Corp. Lee Equity Partners Limited Service QSR10/26/16 Pacific Island Restaurants, Inc. Restaurant Brands New Zealand Limited Limited Service QSR5/25/16 Kahala Brands, Ltd. MTY Food Group Inc. (TSX:MTY) Limited Service QSR $339.9 2.43x 10.4x 23.4%5/9/16 Krispy Kreme Doughnuts, Inc. JAB Holdings Limited Service QSR $1,348.3 2.52x 18.1x 14.0%

12/7/15 Keurig Green Mountain, Inc. JAB Holdings, Mondelez International and BDT Limited Service QSR $14,261.4 3.20x 13.8x NA12/2/15 Taco Bueno Restaurants, L.P. TPG Growth Limited Service QSR $185.0 NA 8.3x NA5/26/15 Jack's Family Restaurants Onex Corporation Limited Service QSR $640.0 NA 12.0x NA3/12/15 Del Taco Holdings, Inc. Levy Acquisition Corp Limited Service QSR $500.0 1.20x 8.3x NA1/14/15 Brazil Fast Food Corp. - Limited Service QSR $36.6 1.20x 8.1x 14.8%9/12/14 9 Papa Murphy's Franchises Papa Murphy's Limited Service QSR $3.4 NA 6.1x NA8/26/14 Tim Hortons Inc. Burger King Worldwide Inc. Limited Service QSR $11,542.7 3.90x 15.2x NA6/16/14 56 Wendy's Units NPC International Limited Service QSR $58.1 0.80x 6.0x NA3/31/14 Morgan's Foods Inc. Apex Restaurant Management, Inc Limited Service QSR $52.6 0.58x 7.7x 7.6%1/24/14 Checkers Drive-In Restaurants, Inc. Sentinel Capital Partners Limited Service QSR NA NA 7.5x NA1/9/14 PJ United, Inc. TPG Growth Limited Service QSR $123.0 NA 7.5x NA

11/19/13 CKE Restaurants Roark Capital Group Limited Service QSR $1,700.0 1.30x 8.3x NA10/3/13 Protein Bar Catterton Partners Limited Service QSR $29.0 NA 14.0x NA5/20/14 Flynn Restaurant Group (Applebee's / Taco Ontario Teachers' Pension Plan Limited Service / Casual Dining / $1,400.0 1.00x 7.6x NA2/6/13 Ark Restaurants Corp. (NasdaqGM:ARKR) Landry's, Inc. Limited Service / Fine Dining / $77.0 0.52x 5.3x 10.0%

10/16/17 Ruby Tuesday, Inc. (NYSE:RT) NRD Capital Management, LLC Full Service Casual Dining $362.0 0.40x 9.8x 4.1%8/24/17 Ninety Nine Restaurant, Inc. J. Alexander's LLC Full Service Casual Dining $199.0 0.66x 6.6x 9.9%3/27/17 Cheddar's Casual Cafe, Inc. Darden Restaurants, Inc. (NYSE:DRI) Full Service Casual Dining $780.0 NA 10.4x NA1/24/17 Bob Evans Farms, LLC Golden Gate Capital Full Service Casual Dining

10/10/16 Red Lobster Master Holdings, L.P. Thai Union Group Public Company Limited Full Service Casual Dining $575.0 0.51x 8.8x 5.8%7/23/15 Z'Tejas, Inc. Cornbread Ventures, LP Full Service Casual Dining $3.8 0.11x 7.3x 1.5%6/25/15 PEPPER DINING, INC. Brinker International, Inc. (NYSE:EAT) Full Service Casual Dining $106.5 0.40x 6.5x NA5/22/15 Frisch's Restaurants, Inc. NRD Capital Management, LLC Full Service Casual Dining $177.4 0.80x 7.3x 10.9%5/15/15 18 Buffalo Wild Wings Locations Diversified Restaurant Holdings Full Service Casual Dining $53.7 1.40x 6.8x NA5/20/14 TGI Friday's Inc. Sentinel Capital Partners, L.L.C.; Tri-Artisan Capital Partners, LLCFull Service Casual Dining $800.0 NA 7.5x NA5/15/14 Red Lobster Seafood Co., LLC Golden Gate Capital Full Service Casual Dining $2,113.0 0.85x 9.2x 9.2%4/24/14 On the Border Mexican Grill & Cantina Argonne Capital Group / Fortress Investment Full Service Casual Dining $160.1 0.50x 5.5x NA3/18/14 Mexican Restaurants, Inc. Williston Holding Company, Inc. (OTCPK:WHCA) Full Service Casual Dining $2.8 0.25x 4.9x 5.1%3/13/14 Furr's Restaurant Group, Inc. Chatham Credit Management III, LLC Full Service Casual Dining $22.7 0.20x 8.4x 2.4%7/22/13 Miller's Ale House, Inc. Roark Capital Group Full Service Casual Dining $310.0 NA 9.3x NA6/4/13 Mastro`s Restaurants LLC Landry's, Inc. Full Service Fine Dining $220.0 NA 10.0x NA2/1/17 TAO Group LLC The Madison Square Garden Company Full Service Fine Dining $400.0 1.70x 9.3x NA


13

Below is an illustrative valuation summary, referred to as a “Football Field”, that investors use to help determine valuation

($inmillions)

ValuationValuation Valuation Parameters Company ImpliedValueMethodology Metric Range Statistic Low High ImpliedValuationRange

TradingComparables

EV/NTMEBITDA

10.0x - 12.0x $5.6 $55.9 - $67.0

TransactionComparables

EV/NTMEBITDA

9.5x - 11.5x $5.6 $53.1 - $64.2

DiscountedCashFlow(a)

Projections&Year5EBITDA

7.5x - 9.5x $4.0 $47.5 - $55.4

LBOScenarioProjectionsModeledtoaTargetIRR

20% - 30% $4.0 $35.6 - $43.5

Notes:(a)Assumesadiscountrangetoyieldapresentvalueoffuturecashflows

$25.0 $30.0 $35.0 $40.0 $45.0 $50.0 $55.0 $60.0 $65.0 $70.0 $75.0

● The intersection of the four commonly-used methodologies implies a range of values for the investment firm to consider

Contact Information

14

Jason [email protected](404) 719-2975

Jake [email protected](404) 909-7657

Dan [email protected](770) 490-8391

Chad [email protected](917) 575-7276

www.birddogcapitalgroup.com