Q3 2017 Industry Commentary

Same-Store Sales Discussion

During the third quarter of 2017 (“Q3 2017”), the restaurant industry saw mostly weak same-store sales (“SSS”) results. On average, restaurant same-store sales decreased 1.5% yearover-year (“YOY”) in Q3 2017. Of the 64 companies we follow, only 21, or 33%, enjoyed positive same-store sales growth. Data over the last several quarters have showed a consistent slowdown for the industry. Q3 2017 extended the streak of
industry SSS decreases to six quarters.

QSR: As the chart below illustrates, QSR continued to be a bright spot in the restaurant industry in Q3 2017, with 14 of the 23 concepts we track turning in positive same-store sales growth. The segment as a whole was up 0.4% YOY, continuing its steady growth. Mexican concepts led the segment at 3.6%
growth as Taco Bell (+3.0%) and Del Taco (+4.1%) both turned in strong results. Chicken concepts continued to struggle in Q3 2017 and were down 3.7% on average, led by another large decrease at Pollo Tropical (-10.9% following -7.7% in Q2) and a third consecutive negative quarter for Popeye’s (-2.6%). Domino’s strong performance continued for yet another quarter – its +8.4% growth was the second worst result of the
past 12 quarters…

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