Prepared by:

1. Trends & Directions in the Fast Casual Segment January 2012 Prepared by:

2. Introduction • Fast Casual Restaurants (FCR) causing significant “buzz” • Weathered industry downturn rather well • Impacting entire industry • Important to better understand situation, outlook

3. Objectives • Assess FCR status • Understand success drivers • Discuss evolution, influence • Present recommendations

4. Situation

5. Fast Casual: An LSR Subset 2011 Total LSR: $198B* • QSR • Fast food • <$9.00 check • Fast service system • Strong takeout orientation • FCR • Better quality offerings • $9-13 check • Fair price • Even split: takeout / on-premise *Sales, including alcohol.Source: Technomic

6. Bakery Café, Mexican/Southwest, Specialty Are Largest FCR Subsegments 2011 FCR Sales = $27B *Ethnic, pizza, soup, salad, seafood, all other.Source: Technomic

7. FCR Has Many Success Stories Source: 2006, 2011 Technomic Top 500 reports.

8. 6 of 10 Fastest-Growing Chains Are FCRs Total % Growth (2005-2010) Chains over $200MM in sales.Source: 2006-2011 Technomic Top 500 reports.

9. FCR: The Bright Spot in the Restaurant Industry Growth to 2011 Growth rates nominal.Source: Technomic

10. FCR Has Taken Share FCR Share of LSR $7 $16 $27 = Fast Casual Sales ($B) (P) = PreliminarySource: Technomic

11. FCR Over-Indexes on Growth Contribution Share of Total LSR 2011 Sales Share Growth Share(‘06 – ‘11) Note: All data preliminary.Source: Technomic

12. FCR Drivers

13. FCR Drivers

14. FCRs Over-Indexes on Higher Income Groups… Key FCR Customer • Higher income groups less impacted by recession Index: 100 = 17% visited within the last week (all consumers).*November 2011Source: Technomic; U.S. Census

15. …and on Younger Consumers • Younger consumers have fewer cooking skills, but still want quality foods • Tend to come from more affluent households Index: 100 = 17% visited within the last week (all consumers).Source: Technomic

16. FCR Has Many Consumer Appeals Source: Technomic

17. FCR Competes Strongly with CDR on Food Attributes Performance Index Craveable Foods Food Quality Ratings are for Top 5 chains in each category. Index: 100 = All chain average.Source: Technomic Analysis of Consumer Brand Metrics

18. FCR Menus Imply Culinary Touch Concept Menu Item • Mediterranean Veggie Sandwich on tomato basil with peppers, feta, cucumber, lettuce, tomatoes, red onions and cilantro hummus. • Teriyaki Charburger with grilled pineapple. 100% lean beef. • Wild Salmon “Lite” Burrito. Nori seaweed, poblano brown rice, avocado, cucumber, cabbage, fat-free chili, sesame aioli, whole wheat tortilla. Source: Technomic Menu Monitor.

19. Health & Nutrition, Innovation are Strong FCR Appeals Innovativeness Healthy Option Availability Ratings are for Top 5 chains in each category. Index: 100 = All chain average.Source: Technomic Analysis of Consumer Brand Metrics

20. “Fresh” Helps Define Fast Casual • “Fresh” implies “better-for-you”

21. FCR Outperforms MSR, QSR on Atmosphere Features Décor Ambiance/Atmosphere • CDR leads via full dining experience Ratings are for Top 5 chains in each category. Index: 100 = All chain average.Source: Technomic Analysis of Consumer Brand Metrics

22. FCR Price Points Attractive to Consumers *Includes 15% tip.Source: Technomic MenuMonitor

23. Unique Décors of FCRs Shula Burger (Florida) Tocabe Restaurant (New York) Urban Masala (California)

24. FCR in an Attractive Position Polished CDR Polished $20-50 $20-50 FCR Food Quality/Craveability Traditional CDR $9-$13 $12-20 QSR <$9 MSR $6-12 Price = Per-Person Check AverageSource: Technomic

25. FCR Evolution and Impact

26. FCR Transformation Continues Pioneers 2nd Generation Today’s Leaders Next Generation Evolution

27. FCR Evolving • Brand diversification • Flexible service formats • Service enhancements • “Fast Fine” • Technology • Social consciousness leadership

28. Brand Diversification: ShopHouse Kitchen • Chipotle brand • Southeast Asian cuisine • DC unit

29. Flexible Service Format: Mama Fu’s • Footprint reduced: 3,000 to 2,500 sq. ft. • More efficient design • Takeout, catering focus • Flex Casual™

30. Service Enhancement: Drive-Thru • Increased convenience • Digital menu boards • Calorie counts • Southern California

31. Service Enhancement: FCR Extension into CDR • Family-friendly wing house • 2,800 sq. ft. platform • 98 seats, LCD TVs, memorabilia • More dine-in traffic

32. Fast Fine: an Emerging Subsegment? • Higher price points ($13+) • 100% all-natural, hand-formed Angus patty • Former McDonald’s execs

33. Technology Playing an Increasing Role • Keeps technology-savvy consumers engaged • LCD menu boards • HD flat panel entertainment • Free WiFi

34. FCRs Lead on Social Consciousness

35. FCRs Causing Change in Other Segments • QSR to FCR conversions • FCR spinoffs by CDRs • CDR service incorporation • MCOs enter FCR space • QSR menu enhancements FCR CDR QSR

36. Conversion from QSR to FCR: Captain D’s • Menu overhaul • Update trade dress • Interior remodel • Food runners

37. Conversion from QSR to FCR: BK Whopper Bar • Gourmet sandwiches, premium toppings • Beer available

38. Fast Casual Spinoff: Pie Five • Pizza Inn concept • FC spinoff • Fresh, custom, individual pizzas

39. Fast Casual Spinoff: Uno Due Go • Uno Chicago Grill concept • Delicious food with strong flavor • 700 – 3,000 sq. ft. locations

40. Fast Casual Spinoff: IHOP Express • Incorporates self-service • Menu includes quicker, healthier fare • Orders purchased at the counter • Servers replaced with runners • Open kitchen, interactive syrup bar

41. FCR Service Incorporation: Fresh Express • Built in existing space • Separate entrance • Fast serve menu • Promotes “All Nighters”

42. MCOs Enter FCR Arena • Innovators move from upscale to mainstream • Economy driving shift toward lower price points

43. QSR Menus React to FCR Challenge • Artisan Pizzas: Spinach & Feta • Natural CutFrench Fries • All-NaturalLemonade • Beer, Wine

44. Outlook

45. FCR Will Represent 40% of LSR Dollar Growth 2016(F) LSR: $230B Share of ’11 - ’16 LSR $ Growth • FCR continues to be a major growth engine • To gain 3 share points on QSR Source: Technomic

46. FCR to Outpace QSR Growth 2011-2016 CAGR(Forecast) FCR Subsegments • Expect more innovation, new concept development in specialty FCRs (e.g., Italian, BBQ, Asian) Nominal; assumes 2.5% inflation. Source: Technomic

47. Recommendations

48. Recommendation #1 Address FCR hot buttons in your strategies, tactics • Better-for-you • Food on Display In the context of • Eco-Friendly Fast Service • Uniqueness • Quality Image Lesser Skilled Staff • Natural/ Cleaner Labels • Assemble-to-Order • Freshness Price Parameters • Authenticity Subsegment Uniqueness

49. Recommendation #2 • Characteristics often quickly replicated by others • Develop understanding of “best practices” used by FCRs influencing your category(ies) • Incorporate FCR appeals in targeting of other segments • Menu ideas • Preparation methods • Culinary influence • Sustainability • Image upgrading Recognize, act upon the influence FCRs have on all segments

50. Recommendation #3 • Open to unique ideas, approaches • CDR culinary tactics appropriate • Chef-to-chef interaction important Utilize culinary positioning in targeting FCRs