Monthly Executive Meeting 2/24/17

Meeting Notes:

Alcides: The idea of the commentary was to post his expectations.
They are not met. He was expecting that the business would have time for ramp up.
But it is that he doesn't see in the near future, any possibility that we can get close to what is going to happen.
By doing this, he doesn't feel like we are doing the right things.
Negative figures for 3 quarters.
What has to be done in order to see a different future.
we are going for the second store, then the attention will be divided into two. Starting a new store is heavy.
JR: Working on the food cost.
Sales are okay
They are doing a pretty good job. Not seeing the complaints.
AF: Every single percent in food cost is the diff of red or black
this number is low.
He does understand that if we put our eyes on the pp
one day with $700

JR: that's the day there was snow.

AF: our best numbers are Sat and Friday. Mondays or Tuesdays are worse days. By looking at what is happening daily we can understand how we can focus our interest.
No promotions or interest for clients to come on Mondays.
We might have 2 different types of clients. People working having their lunch. Mon-Fri
We need to look at them differently who come Sunday after the church. They need to go quickly and cheaply. Do we have different ways of approaching and promoting sales.
This is what makes it work towards the end of the month.

JR: Andy is in the process now, digital billboards and stand alone billboards. Moving towards a mobile app and changing loyalty program with a company where they can handle they volume. Company they are looking to move towards has a lot of tools that will help us generate more foot traffic in the restaurant. When you are driving in a 3-4 mile radius. geo trageting.

The biggest problem they have is sales. 35-36% on food cost. Increasing sales. Finding more ways to generate foot traffic. Just purchased a mobile food cart. Sporting events in Spartanburg, generate sales and brand exposure.

MR: net income was at a loss. We did carry expenses through prior to opening business. There are certain things we can't control, we have to carry through and come out with the sales. I don't know if that is calculated for second location. Food costs, started off a little high. Been more in control. JR you and I talked about doing daily inventory and counts.

JR: we are. WE have the capability tracks inventory. The POS tracks everything that is coming in and out of the rest. They are working to try and figure out what is wrong with it. It is nots as accurate as we would hope for. Food cost will be automated. Food cost is the scariest thing for new manager. underordering is a problem because they can't do that. That's one of the things they can talk about. He is looking at all orders. and is working with them. Storm came through and hurt us for 2-3 days. Food cost is the hardest for the managers to crack. The eventually get it. He is watching it and looking at all of them. We just find out, a couple items we are being overcharged for. It started in Dec and Jan. There should be credits coming back to the accounts this week as a result. Some of it was pretty significant. Also find out that when we first opened up a 1k food credit. Supposed to get 4500 for fries. That will come through this week 2k as well. for the second store, is there any way we can manage the leases, start paying the leases a little closer.

MR: is there anything different we can do to share the expense. we do end up carrying the expenses through. We track this on an annual basis and we want to make sure we know what is going on. Commitment day is the day you sign the lease. Our target day is 120 days of free rent to build the rest out and not have to pay rent. Speed of the state getting the plans approved and getting permits to us. Some times it will take a month. other stores it takes. Typically about 90 days is what they offer. They start at 50 days knowing they will go to 90. There is not a whole lot you can do. They won't review your plan until you sign the lease.

MR: are you the one that goes through all that negotiation?

JR: yes, he does it. he knows how to negotiate them. She has done a really good job. the leases we get are as good as we are going to get. Tenant improvement allowance. It is not something we do in a day. several weeks of back and forth.

MR: initial project is more time consuming. They have to negotiate all those terms. We are pretty well versed in that.

JR: for whatever reason, because it is the end of the year it takes forever. March rolls quickly. Nov to Feb is the longest time frame. We have seen that countless times.

SC is slow. compared to NC.

AF: just hearing out. How are we in this process of opening the new store. Expected date of the launching. Early April. So how long?

JR: March start hiring. hire 2 weeks out. TEA areas, towns that are in the area take longer to find the employees. hiring is usually not an issue. They had a harder time in Spartanburg. They will retain some of the good ones and weed out bad.

AF: How about a manager for the second store. we clearly understand the difference for the second store

JR: had someone. contingency plan. Done a good job learning. Still actively trying to find the right fit for there.

AF: the earlier this guy starts the better.

JR: The guy we had him working in Spartanburg. he worked for 3 days and then quit. The only hesitation I had about him was 32 and didn't want to work.

MR: finding a good manager. for the second store there are things we can start applying to help with the cumulative numbers. How do you start up a second store? This is a different type of project.

JR: He's never opened 2 stores back to back with the same franchisee.

MR: what I'm getting at is this. 1 year investment. open up the store in the first year. what we do is we have to look at a cumulative. Second store coming up. Looking at number wise. Second store lease window, and manager issue. Based on that experience, on the second store how do we avoid. It wasn't horrible. but to keep the second one on track.

JR: lease, lease is already done. the terms are right. put off as long as I could to give us more time. what we don't want to do and then lose the space. we have to be safe and get as much time as possible and don't want to alienate the landlord. First store is a little different case. guy in that area who wanted to go back home. Done all the things necessary to
they get a ton of applicants and most are applying for everything. We are hoping to find people with that. Willing to work hard enough to work with. We are daily working on that. daily and reviewing applications daily. if we have to go to the employees we can do that, but that might work out well or not. He was willing to work hard enough to learn it. Has someone that thinks they can do it. its a lot and its hard. nothing can prepare them for a huge opening. plenty of support in the beginning. One of the things he has been showing Patrick. Do the math when you do the food order. you can only spend 1500 and you are over by 200 review the food order. That is what he's been hitting. that is kind of the interim thing. supposed to be having an update on the pos. integrate with the food distributor for the key items only. 13 of the most used items. Update is coming through any time.

MR: any other concerns to address today?

AF: interested in 1 or 2 things more. group of people who would like to join. Franchisee group. Spread his stores in SC cooperative advertising. How is it going? Second point is ... loves this.. working on digital work. connect clients to network of the store. geotargeting. promotion for customer inside of the store. making customer understand. Because of appreciation for the customer. This is a different time. He is 50. From a gen where people printed papers and go to the store with coupons. it is individualized approach for the customer. It's a new world. Those 2 items are making him keen on understanding.

JR: guy is generating a consumer pipeline. part of the rewards program, it tracks, currently pos and loyalty program are not integrated. New system will track that. Set this thing up to send that customer a coupon, we missed you. come get your cheeseburger today. use your loyalty to. This is a big deal. They can integrate it with the pos. They are in the beginning stages of talking about it.

Franchisee association and getting input first before rolling it out. That is going to be a really really big step. lower income areas. people need coupons. even if it a $1 they will use the coupon. a lot of people will use the loyalty cards. I think this is going to be a big deal. They will do a lot to promote it. Part of what the managers will do is dedicating the make sure people are getting part of this app. $95 a month flat rate, no surcharge and no usage charge. They will get more than that back from it. It can do a lot of things. it is a very large company. Starbuck and McD is one of their clients. company that bought the loyalty program tracked customer research and ... this is built towards the customer, not a universal promotion but built specifically for them. if someone offers me something I always help.

AF: this is the key of the development. This is made for you. This is exactly what we need. it will attrack more people. This is key for us. If you really have those customers which are key to us. Tend to return. Why they know promotions are for them. I do have this MVP. present by ordering your food. last time I eat for free. Got my beer. thank you very much. I don't go any other. i go there because they take care of me.

JR: they attract families. only meal I eat by myself is breakfast. point per visit. changing that up to points for money they spend. that is going to draw people in and bring crowds. It will help because that is the most neg thing we got is how they are distributed. They determine the points scale.

AF: he has spare time to invest in that. If they want to test out first. He would be interested in that.

JR: he told them that he will test it out. He is a big supporter of that. This is going to be something that is hard to be pessimistic about.

AF: if you look backwards, this store has made 6k per day. We have shown it has big potential. how do we return. it is not 6 k. for sure this is a differential.

JR: Patrick is the manager. He is great with the customers.. the more he does it and believe in him the more people will come back. I believe in him


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