5. BURGER KING® GROWTH POTENTIAL
There is a significant growth potential at current unit economics to grow EBITDA at over 5 times to 180 restaurants

6. REVENUE GROWTH
BURGER KING® tops a Billion Rand

7. REVENUE GROWTH Making BURGER KING® the 8th Biggest QSR in South Africa
*Euromonitor 2018

8. REVENUE GROWTH
With the 2nd highest Average Restaurant Sales

9. REVENUE GROWTH
Peers with significantly higher visibility in the market

10. RESTAURANT PROFITABILITY
BURGER KING® EBITDA profitable since course correcting in 2016

11. RESTAURANT PROFITABILITY
Doubling EBITDA for three consecutive years at 128% CAGR
128%

12. RESTAURANT PROFITABILITY
2018 was a tough trading environment impacted by taxes

13. RESTAURANT PROFITABILITY
Gross Margin Erosion

14. RESTAURANT PROFITABILITY
Beef up 28%, Beverages up 38%, VAT – 0.4%GM

15. RESTAURANT PROFITABILITY
Effectively lost a full financial year of EBITDA profitability

16. RESTAURANT PROFITABILITY
But Restaurant Unit Economics have been sound since 2016, let’s analyse

17. RESTAURANT PROFITABILITY
Average Restaurant Unit Economics

18. RESTAURANT PROFITABILITY
Average Restaurant Unit Economics, but some once offs in our margins

19. RESTAURANT PROFITABILITY
Average Restaurant Unit Economics, FC’s & IL’s mask DT potential

20. RESTAURANT PROFITABILITY
Average Restaurant Unit Economics, our new stores are outperforming forecast

21. RESTAURANT PROFITABILITY
So then let’s visualise the health of the entire network

22. UNIT ECONOMICS – Restaurant EBITDA

23. UNIT ECONOMICS – Restaurant EBITDA - 10 are Non-comping

24. Confidential and proprietary information of BURGER KING®
UNIT ECONOMICS – Restaurant EBITDA Run Rate R R
Confidential and proprietary information of BURGER KING®

25. RESTAURANT PROFITABILITY
As we grow, the G&A gets diluted due to scale

26. RESTAURANT PROFITABILITY
So let’s straight line allocate the G&A to each restaurant based on days trading

27. UNIT ECONOMICS – Restaurant EBITDA after G&A = Company EBITDA

28. UNIT ECONOMICS – @ Run Rate, the additional EBITDA flows through

29. UNIT RESTAURANT PERFORMANCE
Let’s reconcile unit restaurant performance to EBIT

30. UNIT ECONOMICS – Underlying profitability is already there

31. UNIT ECONOMICS – Underlying profitability is already there @ run rate

32. UNIT ECONOMICS – Don’t forget the 4 closures

33. UNIT ECONOMICS – And we are consolidating, relocating & closing

34. So does BURGER KING® NEED CASH?
Generating cash since course corrected in 2016

35. So does BURGER KING® NEED CASH?
Making BURGER KING® self-funding in 2019

36. BK
Turnaround

38. BK TURNAROUND Sales Turnaround Consistent Strategy 1 2 3 4
Consistent marketing strategy and introduction of modern restaurant image have led to significant sales turnaround
Sales Turnaround
Consistent Strategy
Brand
Positioning
Aligned advertising, merchandising, media, and restaurant image to one global brand positioning
We have updated and improved our restaurant design to include a digitally integrated experience 1
Menu
Architecture
Filled key product and promotional gaps to reach guests with different needs, occasions and tastes 2
Product Innovation
We grow new market segments with new product development 3
Data-Driven Decisions
Data driven decisions and adequate testing resulting in impactful marketing with a high return on media spend 4

39. Sales campaigns driving consistent growth
BK TURNAROUND
Sales campaigns driving consistent growth

40. BK TURNAROUND
New restaurant image

41. BK TURNAROUND
Driving Customer Experience

42. Prospects

43. HOW MUCH ROOM FOR GROWTH?
Assuming a baseline EBIT run rate potential at R22m, what does the pipeline add?

44. PIPELINE – 18 sites at an average EBIT of R1.1m

45. HOW MUCH ROOM FOR GROWTH?
18 sites can generate R35m EBITDA and EBIT of R21m for a R121m investment

46. A potential 85 new restaurants at R1m ARS
HOW MUCH ROOM FOR GROWTH?
A potential 85 new restaurants at R1m ARS
Western Cape
Max Stores 49
Current stores 29
Gaps 16
McDonald's 59
Northern Cape
Max Stores 6
Current stores 1
Gaps 3
McDonald's 6
North West
Max Stores 16
Current stores 3
McDonald's 8
Mpumalanga
Max Stores 19
Current stores 4
Gaps 2
McDonald's 9
Limpopo
Max Stores 18
Current stores 2
Gaps 4
KZN
Max Stores 43
Current stores 6
Gaps 15
Gauteng
Max Stores 98
Current stores 41
Gaps 55
McDonald's 116
Free State
Max Stores 14
McDonald's 4
Eastern Cape
Max Stores 24
Gaps 10
McDonald's 15 R0
Urban Market Size
R1 Billion
Limpopo
Mpumalanga
North West
Gauteng
Free State
KZN
Northern Cape
Eastern Cape
Western Cape

47. HOW MUCH ROOM FOR GROWTH?
South Africans spend 4 Billion Rand a month on dining out.
The Quick Service Industry grew by 7% from 2017 to 2018.
Wealthy households spend roughly R a month on Quick Service Food (not including coffee or sweet treats and confectionaries)
Lower Income households spend R50 a month on Quick Service Food.
70% (40 million people) of South Africa’s population eat Quick Service Food.
According to the 2011 census, South African’s spend roughly 2% of their total disposable income on dining out. This has increased to 3% in 2018.
This shows that although the average household income has remained relatively stable, people are increasing their spend on eating out to keep up with inflation.
This indicates that eating out and convenience foods fall high on a typical South African’s budget.
Stats SA 2011

48. Thank You
Questions?