Q4 2017 Industry Commentary

Same-Store Sales Discussion

During the fourth quarter of 2017 (“Q4 2017”), restaurant industry same-store sales (“SSS”) increased for the first time in the past seven quarters. It was not a big increase, 0.2% to be
exact, but gave the industry some momentum going into 2018. Of the 60 companies we follow, 41, or 68%, generated SSS growth – more than double the 33% that posted positive comps in Q3 2017. Data over the last several quarters have displayed a consistent slowdown for the industry; however, the positive performance in Q4 2017 ended a six quarter streak of industry SSS decreases.

QSR: The QSR segment continued to lead the industry with 14 of the 23 concepts we track turning in SSS growth. The segment was up 1.0% year-over-year (“YOY”), continuing its
steady climb. Mexican concepts again led the segment, along with coffee/breakfast concepts, each with 2.2% growth. Baskin Robbins had the highest SSS growth within the segment with
a 5.1% increase YOY. Chicken concepts lagged, down 1.2% on average. Domino’s performance slowed in Q4 2017, with 4.2% growth, after averaging 10.8% over the prior 12 quarters. Indexed SSS by Segment (2007 to Q4 2017) Source: Restaurant Research LLC, Technomic and company
filings

Fast Casual: Q4 2017 saw the fast casual segment post its eighth consecutive sales decrease, with a drop of 1.6%. This downward trend follows 26 quarters of SSS growth from Q3 2009 to Q4 2015. Pie Five delivered another double-digit loss in Q4 2017, down 13.7% for the pizza concept’s seventh straight double-digit decrease. Potbelly and Noodles & Company continued to slip, dropping 2.4% and 0.9%, respectively. Of the eight companies reporting, El Pollo Loco led the group with SSS growth of 1.4% YOY. Chipotle could not get back to the
level of growth it showed in the first half of 2017, delivering a modest 0.9% SSS increase in Q4 2017.

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