SHAKEY’S PIZZA ASIA VENTURES, INC. (PSE: PIZZA) COMPANY PRESENTATION MAY 2019
Company Overview FULL-YEAR FINANCIALS SNAPSHOT Shakey’s Pizza Asia Ventures, Inc. is the Philippines’ #1 full-service pizza chain with over Revenues (In USD Mill) • 60% market share in that category. It is also the single-largest brand of full-service casual 167 145 dining chain restaurants in the Philippines.* 134 115 100 90 A strong and well-established brand thanks to a differentiated menu, iconic and well-loved • products, a distinct store environment, and highly guest-centric service. Apart from the Philippines, also owns the Shakey’s trademark in perpetuity for the Middle • East, Asia (excluding Japan and Malaysia), China, Australia, and New Zealand. It does not pay 2014 2015 2016* 2017 2018 2019F** any royalties and is instead able to collect from local and international franchisees. Net Income (In USD Mill) The Company listed on the Philippine Stock Exchange in 2016 under the trading symbol • PIZZA. It currently has a market capitalization of c.USD0.4 billion. 16 18 15 13 Store Network: 200+ stores across the Philippines – a mix of company-owned and • 9 8 franchised. Different store formats including those located in malls and those that are free- standing. Key Management: Vicente L. Gregorio - President & CEO, Manuel T. del Barrio - Vice • 2014 2015 2016* 2017 2018 2019F** President & CFO, Jorge Q. Concepcion - Shakey’s Philippines General Manager, Alois *Based on recurring figures Brielbeck - In-House Commissary General Manager **Consensus of active brokers *Source: Euromonitor, 2018 2018 SYSTEM-WIDE SALES & STORE NETWORK BREAKDOWN OWNERSHIP STRUCTURE Mindanao Public 4% Visayas Company- 29% 10% Owned Franchised Delivery & 56% Metro Century 44% Others Manila Pacific 42% GIC 43% Group Dine-In Luzon Private 53% 58% (ex-MM) Equity 43% 18% 2
The Overall Scenario Well-positioned to take advantage of the growing foodservice industry 4 F’s in the consumer economy to benefit from strong economic growth Restaurants and hotels are growing household Fashion Furnishings 20% consumption of a typical middle-income household sectors budget goes to food consumed outside home . This totals more than PHP500 billion annually, showing a strong propensity to spend. Fun Food Full-service pizza chain restaurants show faster growth The consumer than the whole full-service 12.1 11.52 10.77 9.52 10.05 9.03 foodservice industry restaurant sector has been growing in 13% vs 6% recent years 2011 2012 2013 2014 2015 2016 CAGR from 2013-2018 In USD Billions Source: NSO, Nielsen, Euromonitor, BSP 3
Shakey’s has 43 years of strong brand legacy and counting 1987 The Prieto family became the 1999 1999 master franchisor in the Philippines First Shakey’s Pizza Acquired Parlor opened in Shakey’s Sacramento, California trademark for the First store Philippines in the in perpetuity Philippines 2003 2003 Acquired Shakey’s 228 Positioned as trademark for Middle an American East, Asia (ex Japan, stores by fast casual Malaysia) including end 2018 dining China, Australia, and New restaurant Zealand in perpetuity Century Pacific for families Group (CPGI) and Arran (GIC) acquired control 4
INVESTMENT HIGHLIGHTS
Summary of Investment Highlights • Dominates the full-service pizza chain market with 64%* market share Market 1 • 22%* market share in the full-service (pizza and non-pizza) category - #1 in Leadership that space as well • Well-loved brand with more than 40 years of history in the Philippines Brand Strength 2 • Iconic products served in a distinct store environment & Ownership • No royalty payments, plus additional revenues from franchisings • Multiple sales channels and store formats; simple operations Scalable 3 • Low upfront cost and strong cash generation lead to shorter store-level Business Model payback periods compared to the industry • Extensive track records in food and restaurant operations Experienced 4 • Entry of Century Pacific Group as strong and committed shareholders Management provides synergies with other food businesses • Superior profitability and margins versus peers Industry-Leading 5 • Gearing levels improve as debt remains stable while EBITDA and equity grow Financials • Operating cash flows sufficient for CapEx and other investments *Source: Euromonitor, 2018 6
#1 Full-Service Restaurant in the Philippines The full-service pizza chain market is dominated by Shakey’s. Full-Service Chain Latest Euromonitor report states that Shakey’s 22.3 % leads the Philippine chained full-service restaurant Others industry with 22.3% market share as of 2018. 41.6% Max's 13.5% TGI Fridays Pizza Hut 2.4% 10.4% Papa John's Others Pancake House Kenny Rogers 4.2% 4.1% 5.7% 1.7% Full-Service Pizza Chain Pizza Hut 29.9% 2018 data shows that Shakey’s dominates the full-service pizza chain 64.2% market by sales since 2011 until present. Source: Euromonitor 7
Strong and Well-Established Brand Shakey’s offers a differentiated menu with iconic and well-loved products. Differentiated menu with iconic products and offerings for all Pizza Soup World-famous thin crust and hand-tossed Home-style soups loaded pizzas with many different choices with flavor and goodness Chicken and Mojos Salad Signature dish - fried chicken paired Extensive choice of salad for with Shakey’s famous mojos * health-conscious customers Pasta Desserts Hearty pasta with a wide range of sauces Wide range of after-meal and toppings paired with garlic bread desserts Starters Ranging from fries, mojos, squid rings, chips, and chicken Bundled offerings catering to families and groups bring up average checks * Thinly-sliced potatoes coated with Shakey’s breading and fried to a golden brown perfection 8
Strong and Well-Established Brand Shakey’s offers a beautiful and distinct store environment to every customer and has full control and ownership of its brand. Though originally from the U.S., PIZZA has owned the Shakey’s brand for the Philippines since 1999. With its over 40 year history in the Philippines, Shakey’s is one of the most recognizable brands in the local food service industry. 2018 Philippine Brand ownership means: Top 100 Restaurant Brands: 1 2 3 No royalty payments, leading to shorter payback period • and sustainably higher margins versus peers Revenue from licensing fees and royalties from • franchisees Freedom to execute and react faster to market changes • Opportunity for expansion into international markets • Source: Asia’s Top 1000 Brands Survey by Campaign Asia, in partnership with Nielsen 9
Proven and Scalable Business Model Multiple sales channels and store formats provide convenience and accessibility to Shakey’s customers and allow for market and expansion flexibility. Dine-In Mall Stores • Most popular sales channel due to unique family and friends experience 120 – 250 sqm • Aim to “WOW” the guest 50% Delivery • Delivery available nationwide • Single delivery hotline number (#77-777) can be used Free-Standing Carryout • Convenient and fast method of sales Stores 300 – 400 sqm Functions 45% • Free-standing stores have function rooms for events such as parties and company gatherings Online Sales • Active online and mobile presence Others with own website and mobile app • http://www.shakeyspizza.ph 120 – 180 sqm 5% SuperCard A very popular paid loyalty card • PHP499 annual fee • 10 10
Proven and Scalable Business Model Shakey’s is a well-established brand, while operating on an asset-light model. Firmly positioned in the fast casual segment (A, B, and upper C • market) that delivers high margins, good volumes, and scale Brand Positioning Benefitting from key consumer trends – eating out more and • upgrading from fast food to casual dining • Own commissary for proprietary raw materials protects key supply chain and maintains Vertical Integration consistency and control over quality • Economies of scale and purchasing synergy • Long-term leases for store locations at attractive rentals Asset-Light Approach • Presence of standalone stores (i.e. those outside malls) lead to low rent-to-sales ratio • Business model and strong discipline leads to typical payback Short Payback Period period of 3-4 years • Low upfront cost and strong cash generation per store 11 11
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