Back to School Conference Cara Operations Limited Bill Gregson, CEO September 15, 2015
Forward-Looking Statements This presentation contains forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to the Company s future outlook and anticipated events or results and may include information regarding the financial position, business strategy, growth strategy (including the objectives to grow System Sales and Operating EBITDA as a percentage of System Sales over the next five to seven years), budgets, operations, financial results, taxes, dividends, plans and objectives of the Company. Particularly, information regarding future results, performance, achievements, prospects or opportunities of the Company or the Canadian / International markets are forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate or believes, or variations of such words and phrases or state that certain actions, events or results may, could, would, might, will or will be taken, occur or be achieved. These statements and other forward-looking information are based on opinions, assumptions and estimates made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking information is necessarily based on a number of the opinions, assumptions and estimates that, while considered reasonable by the Company as of the date such statements are made, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forwardlooking information, including but not limited to the following factors described in greater detail in Risk Factors section of the Company s long form prospectus dated March 31, 2015 (the Prospectus ): absence of a prior public market; potential volatility of Subordinate Voting Share price; payment of dividends; financial reporting and other public company requirements; significant ownership by the Principal Shareholders; future sales of Shares by the Principal Shareholders; dilution; limited control; quarterly operating results may fluctuate; securities analysts research or reports could impact price of Subordinate Voting Shares; broad discretion over the use of proceeds from the Offering; limited voting rights of the Subordinate Voting Shares; taxation of the Company; the impact of sales tax upon the Company s restaurants; the restaurant industry; competition; quality control and health concerns; security breaches of confidential guest information; public safety issues; damage to the Company s reputation; availability and quality of raw materials; reliance on suppliers; growth of the Company; franchisees; franchise fees and other revenue; franchisee relations; revenue reporting risks; opening new restaurants; potential inability to consummate acquisitions; integration of acquisitions and brand expansion; seasonality; weather; regulations governing alcoholic beverages; laws concerning employees; dependence on key personnel; attracting and retaining quality employees; unionization activities may disrupt the Company operations; reliance on information technology; intellectual property; lawsuits; regulation; and Company s insurance may not provide adequate levels of coverage. These factors and assumptions are not intended to represent a complete list of the factors and assumptions that could affect the Company. These factors and assumptions, however, should be considered carefully. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forwardlooking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forwardlooking information contained herein, except as required by applicable securities laws. Further details and defined terms not otherwise defined in here may be found in the Prospectus. 1
Who is Cara? Leading Canadian Full-Service Restaurant Operator with Iconic Brands Expansion opportunities units & geography (opportunity to build out) Franchised-focused model (89% franchised) Higher-margin corporate stores (opportunity to build out) Multiple Brand Strategy Combined with Single Brand Focus Provides Competitive Advantage Successful Transformation Positions Cara for Success IPO in April 2015 Significant Opportunities for Growth Over Next 5-7 Years Management Team with Depth and Breadth of Experience 2
Large and Growing Industry Canadian foodservice industry generated sales of ~$72 billion in 2014 o Full-service and limited-service restaurants account for $50 billion o Remaining $22 billion made up of caterers, drinking places, accommodation foodservice, institutional foodservice, retail foodservice and other foodservice (1) (C$ billion) Canadian Restaurant Industry (2) (2003 2013) $32.5 $34.1 $35.2 $37.3 $38.4 $40.4 $40.8 $42.2 $43.4 $45.7 $15.4 $16.0 $16.4 $17.9 $18.4 $19.5 $20.1 $21.2 $22.0 $23.1 $47.9 $24.1 $50.4 $25.3 $17.1 $18.1 $18.8 $19.3 $20.0 $20.9 $20.7 $20.9 $21.5 $22.5 $23.7 $25.1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Full Service Limited Service (1) Restaurants Canada (2) Statistics Canada; based on gross receipts excluding provincial sales tax and excise duties 3
Canada's Largest Full-Service Restaurant Company Canada s largest full-service restaurant operator with 5 brands in the top 13 (based on sales) Third largest restaurant operator in Canada Top Full-Service Chains (By 2014 Canadian Sales) Top 10 Restaurant Operators (By 2014 Canadian Sales) Restaurant Chain Sales (C$ millions) Restaurant Operator Sales (C$ millions) Cara Full-Service Combined $1,422 1. $1,012 2. $546 3. $473 4. $345 5. $275 6. $234 7. $204 8. $203 9. $172 10. $169 11. $168 12. $158 1. (Restaurant Brands Intl.) $6,957 2. $4,331 3. $1,689 4. $1,406 5. $1,356 6. $1,169 7. $1,012 8. $989 9. $985 10 $656 TOTAL INDUSTRY $50,400 13. $157 TOTAL FULL-SERVICE $25,100 Source: Technomic, Statistics Canada 4
Limited-Service Full-Service Leading Restaurant Operator with Iconic Brands Corporate Hybrid Franchised Store breakdown: 29 franchise. 25 corporate (1) (1) On August 31, 2015 Cara announced that it entered into an agreement to acquire a 100% interest in New York Fries. The anticipated close date for the transaction is the fall of 2015. Investors are directed to the Risk Factors section in Cara s long form prospectus dated March 31, 2015. 5
Iconic Brands that have Opportunities to Expand Brands Year Founded Number of Stores Key Competitor Year Founded Current Unit Count Comparison¹ Always so good for so little It s a beautiful thing Your Home for BBQ Home of all you can eat Happiness Always 1954 213 1959 262 1995 92 1980 75* 1978 71 1968 365 units (154 more than Swiss Chalet) 1956 770 units (508 more than Harvey s) ¹Canadian locations only Distribution of Cara Stores by Region: Great Food, Great Friends. Great Beer. 1996 29 Food First 1980 21 The story of food 1989 54 5% 9% 1% 1% 72% 7% 5% Bier is beautiful 1999 7 Bar. Grill. Hub. 2011 3 TOTAL 827 Population Density Per Restaurant¹: Western Canada Ontario Quebec Atlantic 85,001 22,846 135,021 55,161 All results as of June 28, 2015 *Excludes East Side Mario s restaurants located in the United States ¹Population data based on Stats Canada 6
Multiple Brand Strategy Provides Competitive Advantages Brand-Specific Dedicated Team Focus the Best of a Single Brand Strategy Each brand has a dedicated team responsible for developing and delivering a superior brand experience and SRS Growth o o o Operations lead Marketing lead Chef / culinary Centralized resources and shared services allow each brand team to live and breathe the brand 24/7 Providing Scale and Shared Services Infrastructure the Best of a Multi-Brand Strategy Driving Lower Costs Strategic Partnerships IT & Innovation Operational Expertise Strategic sourcing Real estate Other operating costs Construction & renovation Bank financing Marketing Exclusive restaurant partner at 8 of Cara s brands (1) One of Canada s leading gift cards POS, back office systems, and security Centralized data centre and help desk Industry-leading off-premises order and delivery support infrastructure Extensive retail and restaurant knowledge Sharing information and best practices Tools for managing labour and monitoring performance (1) Excludes Casey s and The Landing Group Exclusive foodservice partner for promotional offers 7
IPO Highlights IPO Size Form of Offering $230 million All treasury Highlights Aggregate demand of ~$4 billion 20x over-subscribed Use of Proceeds Initial Marketing Range Pricing Repay debt $19.00 - $22.00 EV/EBITDA (LTM Adjusted): 12.0x 13.5x P/E (LTM Adjusted): 21.8x 24.6x $23.00 IPO Yield 1.8% EV/EBITDA (LTM Adjusted): 14.0x P/E (LTM Adjusted): 25.6x Opening price: $31.26 (+36%) Closing price: $32.90 (+43%) Best IPO debut for a Canadian company since Lululemon in 2007 (1) Implied EV / LTM Adjusted EBITDA of 19.9x, based on closing share price Best IPO Debut Since 2007 Share Price Pro Forma Leverage Voting Structure Retained Interest: - Fairfax - Phelan Family 0.8x Debt / Adjusted EBITDA MVS: 25 Votes (Fairfax & Phelan Family) SVS: 1 Vote Voting: 53% / Economic: 42% Voting: 46% / Economic: 37% + 43% (1) As of April 10, 2015; based on IPOs greater than $100 million 8
Significant Growth Opportunities Grow System Sales to $2.5 to $3 billion and increase Operating EBITDA to $175 to $240 million (7% to 8% System Sales) over next 5 7 years 6 5 4 3 2 1 Drive SRS Growth 2.5% - 4.0% annual SRS Growth Add New Franchise & Corporate Locations 30-50 net new locations annually Pursue Acquisitions / New Concepts Add selective limited-service concepts; establish presence in fast casual segment Further expansion of existing brands into Quebec Further Improve Network Health & Profitability Increase royalty recovery rate from 3.7% to closer to 5% Increase corp. restaurant contribution margin from 3.7% to 10% - 15% Operating Leverage on Sales Growth Support infrastructure is highly scalable making revenue growth achievable with limited additional overhead costs required New Retail Licensing Opportunities New licensing opportunities in addition to current Swiss Chalet Dipping Sauce mix (C$ Annual) Over perform on SRS & Units plus Acquisitions 30 net new units per year @ $2M 2.5% SRS per year 2014 Annual Sales System Sales $3.0B $0.5B $0.4B $0.4B $1.7B 9
Successful Turnaround Includes Positive SRS Growth Q4 SRS Growth was best quarterly SRS Growth in the last 8 years Consolidated SRS Growth 10
Positive Trends Also Appear in Segmented Results Key sales and profit metrics are steadily improving Total System Sales (Rolling 12p) & Segmented Contribution (by Quarter) 11
Making Early Progress Towards Long-Term Targets (1) Certain information was reclassified i n the 2014 results between corporate and central contribution 12
Landing Group Acquisition Overview Overview Cara purchased 55% of Landing Group December 2014 TBD Remaining 45% interest was acquired June 2015 TBD Landing Group Overview 3 existing locations in Southern Ontario (Harpers, Hunters & Williams Landing) Upscale casual restaurants concepts Exciting bar-restaurant atmosphere with unique indoor/outdoor configurations High volume, high margin model Reasons to Acquire Reasons to Acquire TBD TBD To test (successfully) that synergies can be generated from smaller-scale transactions A proven, high-volume concept that is complementary Cara s to existing brands expansion plans TBD are underway and can be executed faster with 100% Cara control Integration of entrepreneurial founder, Steve Pelton, into Cara s broader business (e.g. Milestones) Strong corporate stores results 13
Potential NYF Acquisition¹ Overview August 31, 2015 Purchase Agreement signed to acquire 100% Anticipated closing Fall 2015 NYF Overview Founded 1984 and has since established leadership position in Canadian french fry and poutine market 120 locations in Canada (16 corporate) plus 36 abroad 2014 System Sales = $75 million Reasons to Acquire Great brand Complements Cara s existing brands and diversifies Cara into shopping malls (~90% of stores in malls) Deal fits acquisition strategy accretive, Cara control, strong operations team and synergy opportunity (1) On August 31, 2015 Cara announced that it entered into an agreement to acquire a 100% interest in New York Fries. The anticipated close date for the transaction is the fall of 2015. Investors are directed to the Risk Factors section in Cara s long form prospectus dated March 31, 2015. 14
Cara Role Background Cara s Management Team - Depth and Breadth Bill Gregson, Board Chair & CEO The Brick, Board Chair & CEO (2009 2013) Forzani, President & COO (1997 2008) Largest shareholder & voting control (MVS) Ken Grondin, Chief Financial Officer Ken Otto, President Family Division & Chief Development Officer Grant Cobb, Sr. VP, Casual Dining Division Steve Pelton, CEO Landing Group, Sr. VP Milestones The Brick, CFO (2011-2013) Parkland Fuel Corporation, CFO (2009 2011) Nygard Int l, CFO (2001-2009) Boston Pizza, COO (2011 2014) Boston Pizza, Various Senior Roles (2004 2011) Cara, COO of Airport Terminal Restaurants Division (1998 2004) Prime Restaurants, Various Senior VP Roles (2008 2014) Prior to Prime, managed several large foodservice businesses including Casey s and Pat & Mario s Landing Group, Co- Founder (2011-2015) South of Temperance, Co-Founder (2010 2012) Finance Legal IT HR Family Dining Brands Real Estate & Design Construction Franchising Casual Dining Brands Landing Group Milestones 15
Questions? 16