Tim Pulido, President & CEO with 30 years of restaurant industry experience, presents his outlook for 2012 and the brand strategies necessary to win in the New Normal.

1. Winning in the New Normal:
Restaurant Brand Strategies For Growth
1
Tim Pulido President & CEO

2. Agenda
• 2012 Industry Outlook
• Call to Action: Relevance
Differentiation
• The Four Step Plan:
-Know Your Customers
-Know Your Brand
-Know Your Competition
-Know Who, Why, When, Where,
2
and How Before Building What

3. “May We Live in
Interesting Times”
Confucius
3

4. News Headlines
20%
Unemployment/Underemployment US
16%
15.2%
-Unemployment improving but stubbornly
12%
9.1%
high at 8.3%/Underemployment at 15.2%.
8%
5.0% 8.3%
4%
0%
- December 2011 Conference Board
Consumer Confidence at 64.5 is improving
Jan '07
Jan '08
Jan '09
Jan '10
Jan '11
May
May
May
May
May
Sep
Sep
Sep
Sep
Sep
ConsumerConfidence–US
but still 37 points below 2007
120
100
Dec 2011
80
64.5
60 - Disposable income growth is flat
40
20
(Nov. 2011 -0.1%)
0
Jan '05
Jan '06
Jan '07
Jan '08
Jan '09
Jan '10
Jan '11
May
May
May
May
May
May
May
Sep
Sep
Sep
Sep
Sep
Sep
Sep
-Housing appears to have bottomed out –
Still no real growth in sales or new builds
“Are Consumers More Confident
or Just Tired of Austerity?” -US debt credit downgrade + European
November, 2011 sovereign debt crisis create perfect
storm for equity market volatility.
4
“Retailers Face Reality That Many -Net: Consumers receive mixed signals and
People Can’t Trade Back Up” remain very cautious about spending
October 4, 2011

5. 2012 Consumer Outlook
8 0ut of 10 Consumers Struggling/Getting by
Current Financial Situation
20% 28% 23% 26%
56% 47% 50% 49%
24% 26% 26% 25%
Dec-11 Dec-10 Dec-09 Dec-08
Struggling Getting by Living comfortably + well off 5
Source: Technomic Consumer Survey (Dec 2011)

6. 2012 Consumer Outlook
Outlook for 2012 Remains Bleak
Consumer Expectations for the Economy
25% 28% 21%
39%
14%
32% 34%
32%
64%
43% 38% 30%
Dec-11 Dec-10 Dec-09 Dec-08
Worsen Stay the same Improve 6
Source: Technomic Consumer Survey (Dec 2011)

7. 2012 Consumer Outlook
The New Normal - Consumers worried about economy,
personal finance, and their job
- Practicing re-allocative budgeting:
not buying on impulse, making
considered trade-offs
- 70% plan to spend less by trading
down or reducing frequency
- Want complete package of quality,
experience and value when splurging
Implications:
- Discounting to drive traffic will only
The "new normal“, coined by the brain
trust at the giant bond fund take you so far. Must provide
PIMCO, declares that the US economy quality/experience, more than price.
will be at most 2% growth for
- Consumer will punish brands that 7
foreseeable future. The heart of the
problem is job creation. fail to deliver given “scarcity” of
NPR, July 2011 disposable income

8. 2012 Restaurant Outlook
Technomic Forecasts Bottom Reached --
Real growth returning (barely)
Restaurant Performance
Nominal Real
Segment 2011(P) 2012 (F) 2011(P) 2012 (F)
Limited Service 2.5% 3.0% 0.0 0.5%
Full Service 2.5% 2.5% 0.0 0.0
Total 2.5% 2.8% 0.0 0.3%
Net: The economic pie is not growing. Limited
discretionary income will only go to those brands that •8
have a meaningful brand and value proposition.
2011 inflation: 2.5%
2012 inflation: 2.5%
(P)= projection (F)= forecast Source: Technomic Jan 2012

9. 2012 Restaurant Outlook
Real Foodservice Growth Barely Returns,
Still Far Away from “Normal”
Real
Growth
2007
13.% 2007 2012
3.4% 1.1%
15%
10%
9
5%
0%
-5%
-10%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Change V. 2001 Year Over Year Change (F)
• Industry down 12.4 percentage points (real) from 2007

10. 2012 Restaurant Outlook
Over Saturation of Restaurants in U.S.
Marketplace (25 Year Trend)
Number of Restaurants Restaurants have
580K
600 doubled unit counts in
past 25 years
US Marketplace (all types)
Number of Restaurants in
500
400
290K Far in excess of
in the Thousands.
300
population growth
200
Industry is over-
100 saturated: recession
0
and anemic recovery
1986 2011F will drive shake out 10
and consolidation
Source: GE Capital 2011 Chain Restaurant Industry Review

11. 2012 Restaurant Outlook
• Since 2007 most restaurant business have squeezed the
P&L, cutting food, labor, G&A and slashed new store
development
• The recession and financial crisis has led to store
closings, lease concessions, bank workouts and
restructurings
• Now there is little left on the P&L to cut. Today
restaurants must find ways to grow customer traffic and
develop new stores to survive.
• Given over capacity, businesses must build and 11
differentiate their brands. The alternative is to close or
be consolidated.

12. 2012 Restaurant Outlook
Winning in the New Normal Requires
Relevancy and Differentiation
• So what does it take to be an outperforming restaurant
company? It is our belief that brands and concepts that
are best able to develop, communicate, execute, and then
continuously innovate upon their own differentiated
value equation are best-positioned to outperform their
peers over time…
• Our collective consumer research and industry experience
leads us to believe that a successful value equation stems
from a solid strategic vision and often touches on some
combination of consumer relevance. 12
Piper Jaffray Industry Note, p. 7 January 4, 2012

13. Call to Action
2012 Business Challenges
Consumer Relevance Brand Differentiation
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14. The Four Step Plan
• The Four Step Plan: To Insure We:
-Know Your Customers
-Gain Meaningful
-Know Your Brand Customer Insights
-Communicate Your
-Know Your Competition Brand’s Pt. of Difference
-Translate the Brand into
-Know Who, Why, When, 14
Where, and How Before all tactics
Building What

15. Step 1: Know Your Customer
Get Into Customers
Heads and Understand
What Makes Them Tick
15

16. Step 1: Know Your Customer
Gain Meaningful Customer Insights
• How do customers feel about my brand?
• What are their attitudes and use of my concept?
• Why do my customers behave the way they do in
context of broader consumer trends?
-Be brand / concept specific
-Insights come from a rigorous review of research
-Look for 2-3 word clarity and insight
16

17. Know Your Customer
Example: McDonald’s knew moms disliked
their food, hated the sticky white
ambiance, and felt they were dragged there
by their kids.
Brand Insight: McDonald’s Had Hostage Moms
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18. Know Your Customer
McDonald’s Responds to Hostage Moms
• Wholesome Menu Options
• Fresh Salads
• Whole white meat vs. mystery meat
• Healthy Kids meals (Apple Dippers/Milk)
• Ronald McDonald promotes exercise & fun
• High Impact Store Design
• Upgraded Ambiance
• Adult place + kid place
• McCafe: Create Mom’s Space
in the Store
• A Mom’s place for connection with
her friends
Net: Actions are Directed by 18
Customer Insight

19. Step 2: Know Your Brand
Communicate
your brand’s
pt. of difference
Why should your
brand be chosen?
19

20. Know Your Brand
Brand Building Blocks
A brand lives in the • Experience
hearts and minds of its Aspirational + memorable + trustworthy
customers and
prospective customers. • Management
It is how your company is Alignment + relevance
perceived.
• Identity
Name + logo + color pallet + design
• Brand Strategy
Marketplace + Differentiation 20

21. Know Your Brand
Brand Strategy … is the Foundation
creates Focus & Clarity
• Clearly define who
your customers
are, as well as their Customer Concept
key wants and needs.
• Ensure concept
addresses identified
key needs. Competition
• Define concept niche 21
vs. competition
The Three C’s

22. Know Your Brand
Insure Concept Fulfills Customer Needs
Example : 7 out of 10 guests are female at Mimi’s Café, a
casual dining concept. Women from the Red Hat Lady’s
Club to the PTA congregate at Mimi’s as a place to eat fresh
food and for female social connection.
Key Needs:
-Fresh, light meals
-Portion control
-Cozy ambiance
-Opportunities for indulgence
-Place to connect with friends
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-Charming, whimsical ambience

23. Know Your Brand
Mimi’s Responds to Female Customer Needs:
Be Gathering Place that Understands Women
Menu Innovation is focused against target needs
• New Fresh & Fit Menu (Lower calorie/fat content)
• New Just Enough (Smaller Portion) offerings
• New Small Plates (Smaller Portions/Sharing Size)
• Expanded Café Salads, Fish Market Menu (fresh/healthier)
• New Gourmet François section (French indulgence)
• New Petite Treats(smaller portion indulgence)
• Expanded wine offerings (alcoholic indulgence)
Marketing media selected to reach target
•
• Leverage social media to set brand
as the place for connection for affluent, educated
female guest target
Remodel package designed for women
• New French Sidewalk café remodel design
• New Look/New Bar/New Bakery
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• Fresh cut flowers on every table
• It is all about the charm!

24. Know Your Brand
Summary
• By understanding your
customers and how they
perceive and use your brand
, you can prioritize tasks, direct
innovation, design the
concept, and reach your target
with greater relevancy
• Net, you will stand out
you will be the brand that
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“gets” their customer

25. Step 3: Know Your Competition
Define Point of Difference vs. Competition
Strategic Models:
-SWOT Analysis
-Porter Five Forces
-Competitive mapping: Understand your competitive set
and determine an opportunistic niche vs. others
• Get your team out into the marketplace
• Examine and analyze the competition (menus, store
layouts, pricing, promos, their customers) 25
• Understand how your concept is or can be different

26. Know Your Competition
Competitive Mapping: Define axis w/ brand insights
Example: For Shakey’s Pizza the key dimensions were
Kid vs. Adult and High vs. Low Quality Perception
(Food/Ambience)
FRIENDLY FOCUSED
26

27. Know Your Competition
Re-position the brand in the marketplace
27

28. Position Brand vs. Competition
Example: Reposition Shakey’s as
Family Fast Casual vs. QSR/Amusement
Quality experience for adults and fun place for kids
Food first
Entertainment second
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29. Step 4: Know Who, Why, When, Where,
and How Before Building What
It Is All About Integration!
Translate consumer and
brand insights into a brand
positioning that guides every
thing you do that touches the
customer.
Tactics (How) work together
to communicate the “Big Idea”
of your brand 29

30. Know Who, Why, When, Where,
and How Before Building What
Brand Positioning Statement
WHO / WHY / WHEN / WHERE
HOW
Menu / Layout / Store Design / Logo / Service System / Price / Uniform
Integrated Brand Whole
THE WHAT 30

31. Know Who, Why, When, Where,
and How Before Building What
Who: (Example - Shakey’s Pizza)
• Time pressed families, especially with tweeners
• Large Hispanic families are the brand’s heavy users
• Groups, sports teams, schools, birthday parties
• Adults on the go
31

32. Know Who, Why, When, Where,
and How Before Building What
Why: (Example – Shakey’s Pizza)
• Customers want to carve out a
relaxing, fun time w/family & friends
• Want to connect with family
• Escape cooking/stress
• Pizza is for sharing/Kids love pizza
• Kids can really be kids in game room
• Want good value for their money
• Expect to get an emotional return for
their investment of limited 32
discretionary dollars

33. Know Who, Why, When, Where,
and How Before Building What
When:
• Weekday or Weekend
“Indoor Picnic”
• Celebrate Family Events
• Spontaneous
• After school
• After the game
33

34. Know Who, Why, When, Where
and How Before Building What
Where: (Example – Shakey’s Pizza)
• Away from home, but neighborhood destination
• Moms declare “kitchen is closed/Not cooking/cleaning"
• Relaxing/not stuffy dine-in experience
• Place where kids can be kids
34

35. Integrate Who, When, Where & When
Put It All Together in a Positioning Statement
For today’s families who love pizza and want
something special for the kids, Shakey’s is the
gathering place where everyone has fun.
We now have a roadmap. Everything must reflect position:
• Menu Innovation
• Menu Design
• Marketing Medium
• Promotional Materials
• Concept Layout and Décor
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• Service Systems
• Uniforms

36. Positioning Drives “How” Tactics
How: All concept tactics reinforce the brand
Concept Logo, Menu Exterior Store Customer Uniforms,
Element Brand colors, Layout, Design, Interior Flow, Crew
Brand icon, Design, Decor,Materials Service Training,
Offerings, Lighting. System Manage
Concept Pricing Seating, ment
Descriptor,
Color Palette Selection
Positioning Site Criteria
Who
Why
When
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Where

37. Positioning Drives “How” Tactics
What: Shakey’s Pizza Parlor is Family Fast Casual
Revised Brand Logo Fast Casual Menu Layout vs. QSR
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Raise Quality with Gourmet Pizzas Fresh Tossed Salads for Mom

38. Positioning Drives “How” Tactics
What: Shakey’s Pizza Parlor is Family Fast Casual
Store Design: Nod to past, look to the future Uniforms: Quality, Not Fast Food
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Fast Casual Service System Games in back room. Not in your face

39. Net: The Built Concept = The Brand
Brand Positioning Statement
WHO / WHY / WHEN / WHERE
HOW
Menu / Layout / Store Design / Logo / Service System / Price / Uniform
Integrated Brand Whole
THE WHAT
Relevant, Consistent, and Differentiated
Brand Experience 39

40. Wrap Up
The Big Take-Aways
• Focus on customer insights not just consumer trends
• Clearly define your brand point of difference
-Versus customer needs and competition
• Define brand positioning so all tactics will
communicate the big idea
• The Four Steps:
1. Know your customer
2. Know your brand
3. Know your competition 40
4. Know who, why, when, where,
and how before building what

41. Wrap Up
Keys to Success:
• Set your brand apart in a way
that is meaningful to the
customer
• Make sure everything you do
(The How) reinforces and
communicates your point of
difference
41
• It’s all about relevancy and
differentiation