The coronavirus pandemic is expected to significantly impact the restaurant industry. Full-service and casual dining restaurants will be hit hardest as takeout sales cannot replace lost dine-in revenue. Quick service restaurants are more resilient as they are built for off-premise sales like drive-thrus. Franchised businesses and delivery-centric brands have advantages over independent restaurants during this downturn. Coffee shops and dayparts like breakfast and lunch that rely on commutes will see declines while dinner and delivery may benefit.

1. CORNONAVIRUS IMPACT: RESTAURANTS
KEY INSIGHTS
Apr 2020
This presentation is meant exclusively for clients of REV Partners & other authorized users. No part of it may be circulated, quoted or reproduced
for distribution, without prior written approval. The material was used during an oral presentation; it is not a complete record of the discussion.

2. INSIGHT#1
Significant SSS declines & margin impact
- 20%-30% sales decline in Q2 and 5%-10% sales decline in Q3 expected
- 750 – 1000 bps declines in margins can be expected
- Franchised businesses have lesser risk of earnings declines

3. INSIGHT#2
QSRs more resilient segment
- Fast food outlets built for off premise sales; common to have 70%+ sales via drive-thru
- Value matters in times of economic downturns

4. INSIGHT#3
Full-service & Casual dining will be hit hardest
- Takeaway sales cannot offset the lost dine-in sales (used to be between 5%-15% pre crisis)
- Lockdown limits value proposition of FSRs and CDRs
- Value & price important during a downturn

5. INSIGHT#4
Franchised businesses will outperform independent units
- Flight to brands and perceived quality in a downturn
- Franchised fast food typically less cyclical

6. INSIGHT#5
Delivery-centric brands have a clear advantage
- Pizza segment could see increase in demand as the lockdown continues

7. INSIGHT#6
Coffee segment could witness significant declines
- Disruption to work and to morning routines will impact sales
- Potential demand migration to (cheaper) at-home substitutes

8. INSIGHT#7
2020 unit growth will disappear
- Efforts to conserve cash with elimination-slowdown of new units; non-essential capital expenditures cut or delayed
- Maintenance capex only where essential

9. INSIGHT#8
Third-party food delivery apps will strengthen position
- Limited dine-in options combined with convenience of delivery will turbo charge growth in many markets

10. INSIGHT#9
Increased risks for franchisee models
- Ad fund contributions / marketing fees could be lowered
- Royalty abatements (or deferrals) and rent deferrals will be on the table
- Increased risk of bankruptcy

11. INSIGHT#10
Some dayparts likely to be under pressure
- Breakfast (attached to travel and daily commutes) and, to a lesser extent, lunch: Most exposed to lockdowns
- Dinner most likely to benefit from delivery or drive-thru

12. ACKNOWLEDGEMENT, THANKS, TERMS & CONDITIONS
We are indebted and grateful to various companies and sources that have been cited in the document for their data and insights. We are especially grateful to pexels for the images used
in this report and MS Research for some insights. his report is not meant to be a substitute for professional advice, and must not be relied upon as such without explicit, written consent.
No representation or warranty (express or implied) is given as to the accuracy or completeness of information contained in this publication. REV Partners, or its employees and agents do
not accept or assume any liability, responsibility or duty of care for any consequences of anyone acting in reliance on the information contained in this publication or for any decision
based on it. If you would like to discuss the report, please contact the author.
meet@revpartners.comwww.revpartners.com www.twitter.com/revpartners