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Technomic’s Market Diligence Practice
A Brief Introduction To Technomic, Our Expertise and Experience

Overview & The Technomic
Advantage

Overview
Technomic understands the process of foodservice industry asset acquisition entails a number of
critical phases. Broadly speaking these include :
 Target Screening & Identification
 Market Diligence
 Post Acquisition
Technomic’s Market Diligence Program provides savvy investors with a unique set of acquisition
tools designed to assist them through all phases the + objective of any M&A transaction is to
create value. When considering acquisition of assets within the Foodservice Industry, credible
and comprehensive market diligence can make the difference between a sound investment and
one which carries unnecessary risk. that offers unparalleled industry insight using Technomic’s
exclusive industry analysis tools, expertise and experience.

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The Technomic Advantage
With over 40 years of experience, Technomic has we have long been recognized as the leader in
foodservice industry research and consultancy, providing assistance to both chain restaurant
operators and the businesses that interface with them. To sustain our station as the foremost
foodservice industry research firm and consultancy in the world, Technomic leverages its
unequaled resource advantage:
 World class research assets
 Comprehensive and expansive knowledge resources and libraries
 Unparalleled expertise gained over a unique history of foodservice industry experience
 Unmatched access to senior industry thought leaders
 History of consistently delivering extraordinary results for clients
 Highly flexible and responsive project initiations
 Robust best-practice methodologies and work processes
 Vast experience in industry due diligence projects
The Technomic Advantage means our clients get results faster and results that are more
meaningful.

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Knowledge Resources
In addition to world-class secondary research, Technomic relies on a number of proprietary
analytical tools to provide investing clients with the information they need to succeed. These
tools include Technomic’s:
 Menu Monitor - an online searchable resource for in-depth menu tracking providing instant access to
thousands (3,500) of current U.S. (1,900) and international menus (1,600), as well as powerful
analysis tools.
 Consumer Brand Metrics - provides ongoing consumer assessments of leading foodservice brands.
Performance ratings are based on descriptive attributes in major categories, such as food/beverage,
unit appearance, value, brand image, convenience, and service/hospitality.
 Digital Resource Library - an online database delivering comprehensive operator intelligence on
thousands (3,700) of detailed foodservice company profiles that are updated continuously for leading
U.S. (2,450) and international chains (1,250), as well as industry financials with expert insights from
Technomic reports and news briefs.
 Smart Support – integrates Technomic analytics to deliver quick responses to specific questions,
providing the information needed to conduct competitive analyses and understand data points.
 Price Monitor - utilizes menu price-tracking resource that facilitates analysis of competitive chain
menus in relevant U.S. and Canadian markets. Technomic obtains menus for each chain in selected
DMAs and compiles data for analysis by meal part, item and price.

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Client List
Our due diligence engagements are individually designed to meet your needs and circumstances.
Following are a number of clients that have already utilized our services in assessing various chain
restaurants:
Client Acquisition
American Securities Capital Partners Fast-casual Mexican chain
Brazos Private Equity Partners Casual dining chain
Caxton-Iseman Midscale restaurant chain
Falfurrias Capital Partners Quick-service chicken chain
Bakery chain , Foodservice management firm,
JP Morgan Capital Partners
Cash-and-carry retailer
Madison Dearborn Partners Quick-service hamburger chain
PNC Riverarch Quick-service hamburger chain
Sterling Investment Partners Quick-service pizza chain
Sterling Partners Bakery chain
Thomas Weisel Partners Fast-casual restaurant group
Three Cities Research Casual-dining chain , Fast-food chain
ValueAct Capital Southwest restaurant chain
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Target Screening & Identification

Target Screening & Identification Program
When a buyer or investor decides to engage in an acquisition, the first step is a comprehensive
screening process to identify potential targets. Technomic’s Target Screening and Identification
Program delivers powerful insights incorporating benchmarking analytics based upon either
broad segments of the foodservice industry or specific chains. The benchmarking variables
Technomic utilizes include (but are not limited to):
Technomic Target Screening Benchmark Variables
• Visits by daypart • Unit Sales –AUV
• Check average • System Sales CAGR
• Visit frequency • Estimated number of transactions
• Drive-through/Dine-in usage mix • Sales by daypart
• Estimated sales by food type • Share of visits by food type
• Brand Performance Metrics • Sales by demographic
• Menu Gap Analysis • Takeout/Delivery usage mix

Clients are provided a “Screening Scorecard” which enables them to quickly and easily identify
and prioritize potential acquisition targets. Deliverables for the TSI Program are available on
quarterly, semi-annually or single point in time (“Snap Shot”) basis. Having this information
available enables clients to make informed decisions regarding opportunities within the
restaurant industry space. Once targets are identified, clients can proceed with confidence to the
next phase. 8

Market Diligence Program
Once an acquisition target has been identified, credible and comprehensive market diligence can
make the difference between a sound investment and one which carries unnecessary risk.
Technomic’s Market Diligence Program offers unparalleled industry insight using Technomic’s
exclusive industry analysis tools, expertise and experience.
 Process Fundamentals
 Process Inputs
 Process Initiation Meeting
 Process Deliverables
 Process Deliverables - Samples

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Process Fundamentals
Technomic’s Market Diligence Program makes use of an integrated, structured approach built
upon four fundamentals which represent critical internal and external inputs:

Foundational Foodservice Chain Custom Client
Understanding Segment Analytics Perspectives
Overall Insight Chain Specific Information &
Foodservice Segment Performance Analysis
Industry & Specific Review and Custom
Performance Performance Analysis Tailored to
Review & Review and Client Needs
Analysis Analysis

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Process Inputs

Foundational Foodservice Segment Chain Analytics Custom Client
Understanding Insight Perspectives
• Overall Foodservice • Segment Specific • Custom • Custom Market
Industry Performance Performance Review & Research & Diligence
Review & Analysis Analysis Analysis • Franchisee
• Historical & Projected • Historical & Projected • System & Unit Qualitative/Quantitati
Industry Revenues Segment Revenues Level Economic ve Evaluations
• Historical & Projected • Historical & Projected Benchmarking • Customer
Unit Levels Segment Unit Levels • User Profiles Quantitative/Qualitati
• Historical Traffic Levels • Historical Segment Traffic • Consumer ve Evaluations
• Historical Economic Levels Brand Metrics • Strategic Initiative
Determinants of Overall • Historical Economic • Comparative Impact Assessment
Industry Performance Determinants of Overall Competitive • Relevant Merger &
• Demographic Segment Performance Environment Acquisition Activity
Determinants of • Demographic Analysis • Financial
Industry Performance Determinants of Segment • Menu Analysis Benchmarking
• Historical Levels of Performance • Forecasting
Operator Sentiment • Segment Trends &
Influences

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Process Initiation Meeting
The Process initiates with a Process Initiation Meeting. We believe this meeting is critical to the
process because it sets the tone for a successful project. The Process Initiation Meeting enables
both Technomic and client to:
 Gain a thorough understanding of the underlying business rationale and strategy associated with the
potential acquisition;
 Identify key issues and drivers
 Clarify points in question
 Set time lines
 Establish lines of communication
 Finalize issues related to related to:
– Scope
– Methodology
– Deliverables
Only when there has been a mutually satisfactory Process Initiation Meeting can Technomic
began work in earnest.

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Deliverables
Because Technomic crafts deliverables to meet the specific needs of it clients, each set of
deliverables is slightly different. However, deliverables typically include a written report (available
in PDF or hard copy formats) presented to clients consisting of:
 Table of Contents
 Executive Summary
 Technomic’s evaluation, insight and analysis related to:
– Foundational Understanding
– Segment Insights
– Chain Analytics
– Unique Perspectives
 Conclusions and Implications
 Appendix
After the report is completed, Technomic reviews (either by conference call or in person at a
mutually agreed upon location) its findings and answer any questions clients may have. Sample
deliverables are found on the following page.

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Historical & Projected Industry Revenue: Total Restaurants
And Limited Service Restaurants From 2000 To 2013

Technomic Foodservice Segment Time Series: Technomic Foodservice Segment Time Series:
Full Service Restaurants Limited Service Restaurants
Retail Sales Retail Sales
Equivalent % Nominal % Real Equivalent % Nominal % Real
Year ($B) Change Change Year ($B) Change Change
2000 (R)
112.474 6.8% 4.3% 2001(R) 129.515 4.0% 1.0%
2001 (R)
117.939 4.9 1.9 2002(R) 134.782 4.1 1.5
2003 (R) 143.602 6.5 4.8
2002(R) 120.095 1.8 -0.7
2004 (R) 155.227 8.1 4.5
2003(R) 127.218 5.9 4.2
2004(R) 136.075 7 3.4 2005(R) 165.765 6.8 3.5
2005(R) 144.397 6.1 2.9 2006(R) 174.960 5.5 2.4
2006(R) 155.274 7.5 4.3 2007(R) 182.967 4.6 0.9
2008 (R) 188.822 3.2 -1.2
2007(R) 163.366 5.2 1.5 (R)
2009 187.877 -0.5 -3.8
2008(R) 159.282 -2.5 -6.6
2010(R) *** *** ***
2009(R) 149.725 -6 -9.1
2011(R) *** *** ***
2010(R) 147.778 -1.3 -2.5
2012(P) *** *** ***
2011(R) 151.473 2.5 0 (FC)
2013 *** *** ***
2012(P) 157.532 4 1.5
2013(FC) 164.621 4.5 2
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Source: Technomic Data Digest 2012

McDonald's And Wendy’s Are The Top BK Competitors Nationally;
Sonic And Hardee’s Are More Prominent On The Local Level
“If you had not visited Burger King on “Which restaurant(s) (would you have gone to
this occasion, instead of Burger King)?”
which of the following would you have
been most
Top 5 Restaurant Alternatives to Burger King
likely to do instead?”
(unaided mentions)
51% National BK Local BK
A different 66%
restaurant 65% 1 McDonald’s (49%) McDonald’s (45%)
71% 2 Wendy’s (23%) Wendy’s (22%)

42% 3 Subway (12%) Hardees (11%)

At home 28% 4 Taco Bell (11%) Sonic (8%)
32%
24% 5 Arby’s (10%) Taco Bell (7%)
Note: Burger King was mentioned as an alternative to
visiting a competitor burger chain by 6% of respondents.
8%
A prepared meal 6%
3%
5%

National BK Local BK Competitor Casual Burger

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Most recent visit: Burger King
Base: National BK (656); Local BK (500); Competitor (150); Casual Burger (1,699)

Post Acquisition Program
The objective of any M&A transaction is to create value. Once a target company is acquired, the
post-acquisition phase is an excellent opportunity to identify operational, customer and menu
areas which can yield additional value. Technomic’s Post Acquisition Program provides clients
with an expansive toolkit to gain a better understanding of the areas the newly acquired
company may be underperforming in as well as insights and recommendations to address
potential issues.
 Operational Audit
– Labor Standards & Management
– Food Production/Food Cost Standards & Management
– Service Standards & Management
– Performance Benchmarks & Measurement
 Menu Evaluations
– Menu & Category Mix
– Menu Variety
– Food Quality
 Customer Research
– Dining Experience 18

For More Information

300 S. Riverside Plaza
Suite 1200
Chicago, IL 60606

Mathew Mandeltort
Senior Consultant

312-506-3917
mmandeltort@technomic.com
http:epicureancandidate.wordpress.com
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Market diligence product presentation 3 2013 mm(mr) #14691

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Market diligence product presentation 3 2013 mm(mr) #14691