Restaurant mroi

1. Optimizing Marketing and Media Strategy for Retail Food Service Through Effective Marketing Measurement and Accountability 1

3. About Us  Bottom-Line Analytics LLC is a consulting group that focuses on Marketing and Social Media analytics  Our modeling experts have a total of over 100 years of direct experience with marketing optimization modeling. This includes direct experience in over 35 countries and dozens of product categories  We are dedicated to the principles of innovation, excellence and uncompromising customer service  Most important, however, we are dedicated to getting tangible and positive business results for our clients 3 Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

6. The Marketing Measurement Challenge • In the early 1900’s JohnWanamaker turned a phrase marketers still reference today: “Half the money I spend on advertising is wasted, I just don’t know which half” • In the 1930’s, Albert Einstein said “Insanity is doing the same thing over and over again and expecting different results” • In the 1990’s a new era of marketing accountabilitywas born, with an appropriate quote, by F. John Reh “You can not manage what you don't measure” 6 Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

7. BLA Focuses on Measuring & Optimizing The Where And The What Revenues Offline Media, Direct, Creative & Message Online Media, Direct & Message Pricing, Capacity & Customer Transactions Macro Variables and Market Factors Competition Social Media Influential Factors – Independent Variables 7 Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

9. 9 • Visualize- The Vision – A tool which will enable you to accurately ascribe ROI to each of your various marketing initiatives – The ability to simulate and forecast any of a number of future Business Plans and/or Business Scenarios – An ability to know what marketing programs are working and not working – The ability to accurately quantify volume gains from specific competitors, due to cannibalization or that which is purely incremental • Realize – How to drive 3-10% more revenue with current or existing marketing budgets through model-based marketing spending optimization – A business and marketing plan that can be factually defended and linked directly to profitable revenue and growth – A business plan where you are confident that your marketing dollars are working at maximum efficiency – A system whereby wasted and unproductive marketing initiatives can be eliminated Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

11. 11 QSR Restaurant Case Study • Client Profile - $6.3B annual revenues, 1,800 outlets nationwide, 100% franchise-owned – Franchisees fund national-corporate marketing and product development via a 10% assessment against their net income and fund 100% of local marketing efforts – Client spent $85M in marketing & media initiatives: • National Media: $46M • Local Media $39M • New Product Launches & Initiatives: $4M – The client used a broad spectrum of different messages supported across media, including brand, breakfast, promotional & new products • Study Objectives – Develop a fact-based assessment of Media and Marketing activities – Develop recommendations to maximize growth by achieving the most effective balance between national-corporate, local and new product marketing investments and across all regions, media and marketing channels • The case example has been masked to preserve confidentiality Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

12. 12 Client Questions How Effective Are Our Media and Marketing Activities? 1. What proportion of marketing program/channels contributed to total revenue sales? 2. Which regions were most impacted by marketing and which marketing programs worked best in each region? 3. What were the key drivers of growth and what role did new-products play in driving that growth? 4. What messages drove a greater response - brand, new product, breakfast or promotional? 5. What is the ROI of individual marketing programs/channels? What Can We Do To Improve In The Future? 6. Which marketing activities represent the best opportunities for increased funding and which should we cut back? 7. What is the optimal total spend and how should that be allocated across markets and programs/channels? 8. What Is the optimal marketing spend across individual markets? Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

13. 13 1. What Proportion Do Marketing Programs/Channels Contribute To Annual Sales?  Marketing efforts drove 19% of QSR sales. National TV drove 6.4%, local TV generated 5.9% of sales. Breakfast messages generated 4.9% of total sales, while new-product media messages garnered a 2% share; social media drove 8.8% of sales. 65.6% Decomposition of Sales 3.7% 0.8% 8.8% 1.1% 0.8% 1.9% 2.2% 3.6% 0.4% 2.6% 00..58%% 0.3% 1.8% 4.1% 00..37%% 19.1% Marketing Activities Base Vol Customer Traffic Growth Store Expansion Social Media WOM Healthy Menu Launch Media New Salad Buffet Media and Promo FSI's Ad Quality Local Radio Local OOH Long Term TV Ad Effect Nat Brand TV Short-Term Effect. Brand Message Nat Brand TV Short-Term Effect. Breakfast Message Nat Brand TV Short-Term Effect. Promo Message Local TV Short-Term Effect, Promo Message Local TV Short-Term Effect, Breakfast Message Online Banners Online Search

14. 14 2. Which RegionsWere Most Impacted By Marketing And Consolidated Sales Decomposition by Region WhichMarketing ProgramsWorked Best In Each Region?  The West Region is the most marketing driven of all of the regions. This is due to the higher success of new product launches . The SE region is most affected by local TV advertising, whereas FSI’s have a relatively greater impact in the NE region. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Decomposition of Sales by Region Northeast Central Southeast SouthWest West Online Search Online Banners Local TV Short-Term Effect Nat Brand TV Short-Term Effect Long Term TV Ad Effect Local OOH Local Radio Ad Quality FSI's New Salad Buffet Media and Proomo Healthy Menu Launch Store Expansion Customer Traffic Growth Base Vol Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

15. 15 3. What Are The Key Drivers Of Growth? What Role Did New- Products Play In Driving That Growth?  The QSR sales increased 6.7% YOY. The two new item launches together accounted for 3.2 points of that growth, or nearly half. Improved national TV ad quality was a notable positive driver  Negative effects were due to a +3% price increase and reductions in outdoor and local TV ad spending Contributions to Annual Sales Variance 3.2 -3.2 -3% -2% -1% 0% 1% 2% 3% 4% Healthy Menu Launch Base Vol Ad Quality Local Radio Store Expansion FSI's Customer Traffic Long Term TV Ad Effect New Salad Buffet Media and Promo Online Adv National TV Short-Term Effect Local TV Short-Term Effect Local OOH Price Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

16. 4. What Messages Drove A Greater Response, Brand, New Product, Breakfast Or Promotional?  New product and breakfast messages stand out as delivering the highest ROI per dollar of $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $- Brand Messages Breakfast Messages New Product Messages Promotional Messages $1.11 $1.49 $2.68 $1.26 ROI of Marketing Campaigns & Messages (Profit Per Expenditure $) investment. 16 Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

17. 17 5. What Is The ROI Of IndividualMarketing Programs/Channels?  The QSR generates a 29% ROI on $85.1MM of Marketing spend  Across the mix, all activities generate positive returns except outdoor advertising and FSI’s. The launch of the healthy menu line was most profitable, with above average ROI for Salad Buffet marketing, national TV, local radio and online advertising. Marketing ROI Gross Profit Spend (Cost) Net Returns % ROI New Salad Buffet Media and Promotion $ 6.6 $ 3.6 $ 2.9 45% FSI's $ 14.3 $ 16.4 $ (2.1) -15% Healthy Menu Launch $ 4.8 $ 0.4 $ 4.4 92% Local TV $ 15.9 $ 12.1 $ 3.7 24% National TV $ 57.2 $ 39.2 $ 18.0 31% Local Radio $ 15.5 $ 8.7 $ 6.7 44% Local Outdoor $ 1.7 $ 2.0 $ (0.3) -17% Online Advertising $ 4.4 $ 2.3 $ 2.0 46% Total Local Spending $ 47.5 $ 39.4 $ 8.1 17% Total National Spending $ 73.1 $ 45.6 $ 27.4 38% Total Spend $ 120.6 $ 85.0 $ 35.5 29% Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

18. 18 6. WhichMarketing Activities Represent The Best Opportunities For Increased Funding? Which Should Be Cut Back?  Below shows the relative attractiveness of the QSR’s marketing investments and campaigns. Online media represents the best upside opportunity, while FSIs and Local OOH should be reduced Increase/Maintain Spending Diminishing Returns-Reduce Increase Significantly Significantly Decrease Marketing Investment ROI Matrix Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

19. 19 7. What Is The Optimal Total Spend And How Should That Be Allocated Across Programs/Channels?  The QSR can optimize sales by decreasing FSI’s, National & Local Promotional TV and Online Banners, while keeping total spending constant  Increase spending on the Healthy Menu initiative, Local & National Breakfast TV, Radio and Online Search. This solution is expected to generate an 8% increase in overall sales 100% 80% 60% 40% 20% 0% Marketing Spending Optimization by Channel Current Mktg Contrbution Current Spend Optimal Spend Online Search Online Banners Local TV Short-Term Effect, Breakfast Message Local TV Short-Term Effect, Promo Message Local TV Breakfast Message Local TV Promo Message National TV Promo Message National TV Branded Message National TV Breakfast Message Local OOH Local Radio FSI's New Salad Buffet Media and Proomo Healthy Menu Launch Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

20. 8. What Is The Optimal Total Spend And How Should That Be Allocated AcrossMarkets?  The greatest upside opportunity is to increase relative marketing investments in the Southeast and Marketing Spending Optimization by Region West Regions 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Current Mktg Contribution Current Spend Optimal Spend West SouthWest Southeast Central Northeast 20 Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

21. 21 0 5,000 10,000 15,000 20,000 25,000 30,000 1/6/2000 3/6/2000 5/6/2000 7/6/2000 9/6/2000 11/6/2000 1/6/2001 3/6/2001 5/6/2001 7/6/2001 9/6/2001 11/6/2001 1/6/2002 3/6/2002 5/6/2002 7/6/2002 9/6/2002 11/6/2002 1/6/2003 3/6/2003 5/6/2003 7/6/2003 9/6/2003 11/6/2003 1/6/2004 3/6/2004 Model Actual Overall R^2 = 96.7%, Holdout R^2 = 94.0% ,MPE=+/- 2.4% Model Validation Sales $Mil One year after this project, due to significant increases in breakfast media and new-product investments, this QSR increased same-store sales 11% and net income 17%  Our models do a good job of predicting sales Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

23. 23 The Plan • Developing the analytics and measurement tools • Building measurement and accountability into business plans • Measuring and monetizing the customer experience with social media measurement • Developing a measurement and accountability culture • Entering and realizing the path to superior profits and growth Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

24. Contact • Michael Wolfe – Principal - Bottom-Line Analytics LLC – mjw@bottomlineanalytics.com – (o) 770.485.0270 – (C) 678.314.8446 • DavidWeinberger – Chief Marketing Officer - Bottom-Line Analytics LLC – David@bottomlineanalytics.com – (O) 770.649.0472 24

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