Centralized Distribution Solutions 2007 ACI-NA Concession Conference

1. Centralized Distribution Solutions2007 ACI-NA Concession Conference Presented By Dan Bent HMSHost HMSHost Confidential Information - Do Not Distribute

2. Topics • Internal Distribution Challenges • Critical components • Differences in an airport environment • Models In Use • Direct • Cross-Docking • Redistribution • 3rd Party (Cross-docking and/or redistribution) • Strategies To Ensure Success HMSHost Confidential Information - Do Not Distribute

3. Components Of Internal Distribution Quality/ Freshness Terminal Storage Space Shrink/Loss Prevention Invoice • Requisition Inspecting Inventory • Ordering Purchase Order Bill Of Lading Bonded Facilities • Picking Ticket Receiving Credit Memos Temperature/ Time Control Recovery Drops ServSafe Certification Recalls Pars Returns HAACP Tailgate Delivery In-Store Delivery Distributors Redistribution Concealed Damage Hot Shot Deliveries Development Cross Contamination Cross Docking Manufacturers Time-sensitive Deliveries Cold Chain Commissary Delivery Window Chain Of Control Production Space Labeling/ Nutritionals Product Tampering Substitutions Fill Rates HMSHost Confidential Information - Do Not Distribute

4. Key Differences In Airport Environment • Security Requirements • Key Drop Deliveries Not Allowed • Background Checks/Badging • Importance Of Chain Of Control • Significant Space Constraints • Volumes Much Greater Than Streetside Operations • Remote Production Needs Due To Limited Concourse Space HMSHost Confidential Information - Do Not Distribute

5. Internal Logistics Process - Direct Delivery • In Direct Delivery, the commissary or store: • Places order with the vendor. • Order is delivered directly to the store. • Store inspects, receives and stores the products. • Store makes any adjustments to invoices and sends invoices to accounting for processing. HMSHost Confidential Information - Do Not Distribute

6. Internal Logistics Process - Cross Docking • In Cross Docking, the commissary is a “Pass Through.” • Commissary or store places order. • Order is delivered on pallets to the commissary. • Commissary inspects fresh perishable items & spot-checks rest of the order (e.g., temperature, counts) and then sends to store. • Receiving associate at store checks in delivery. • Store manager makes any adjustments to invoices and sends to accounting for processing. HMSHost Confidential Information - Do Not Distribute

7. Internal Logistics Process – Redistribution • In Redistribution, the store places orders with commissary using a Requisition Form. • Commissary orders from vendors. • Commissary inspects, receives and stores products. • Commissary makes any adjustments to invoices and sends invoices to accounting for processing. • Upon receiving a Requisition from a store, commissary picks, packs, and delivers the products to the store. HMSHost Confidential Information - Do Not Distribute

8. Internal Logistics Process – 3rd Party • In 3rd Party, the store places orders and a 3rd Party receives them and either cross docks (most common) or redistributes. • Commissary or store places order. • Commissary or store provides documentation of order to 3rd Party. • 3rd Party inspects fresh perishable items & spot-checks rest of the order (e.g., temperature, counts). • 3rd Party may X-ray product if have equipment. • 3rd Party delivers the products to tenants’ commissary and/or stores. HMSHost Confidential Information - Do Not Distribute

9. Each Model Contains Trade Offs Cross Docking 3rd Party Direct Delivery Redistribution • Pros • Efficient labor • Less handling • Relationship with distributor • Cons • Excess inventory • - Not adequate concourse storage space • Pros • Centralized receiving • Cons • - Excess inventory • - Not adequate concourse storage space • Pros • Less trucks on tarmacs • Cons • - Quality Assurance issues • Additional layer/costs • Pros • Greatest control • Improved buying • Cons • More labor than direct or cross-docking HMSHost Confidential Information - Do Not Distribute

10. Optimal Model Dependent On Airport • Different models help meet the unique needs of the airports - any model (or hybrid) can act as a “Central Distribution Solution” • Assign central responsibility • Implement clear processes • Centralize expertise for QA and par management HMSHost Confidential Information - Do Not Distribute

11. Strategies To Ensure Success • Make Quality Assurance Job #1 • Inspect product • Maintain the cold chain • Designate a centralized resource • Proactively Manage Your Vendors • Understand brand requirements (may vary) • Monitor and document (e.g., fill rates, etc…) • Create a regular dialogue • Process Makes Perfect • Develop, document, train & inspect standards • Become a Learning Organization (e.g., HMSHost has Commissary Group from branches meet on best practices). Development HMSHost Confidential Information - Do Not Distribute