FDD Talk Daily: Annual Food Costs and Labor Costs for Company-Owned Schlotzsky’s Restaurants

Highlights of Schlotzsky’s Item 19 Financial Performance Representations (2012 FDD) – Part 5

Annual Food Costs and Labor Costs for Company-Owned Schlotzsky’s Restaurants

• The table below presents annual Food Costs and Labor Costs for Restaurants that the parent company owns and operates and does not reflect the operation of Franchised Restaurants.

• The Food Costs and Labor Costs shown below only include Restaurants that the parent company operated for the full 12 months of 2011.

• The term “Food Costs” includes food, beverage, paper product, and fuel surcharge costs.

• The term “Labor Costs” includes crew employees, managers, federal and state taxes, contract employees, vacation pay, and benefit (such as Medical and Life Insurance and 401K) costs. Manager bonus or crew incentives are not included in the Labor Costs.

• As a multi-unit operator, the parent company may have a number of advantages that an individual franchisee may not have, such as increased financial resources; greater experience with real estate, operations, and staffing; increased buying power, etc.

• The franchisor does not represent that any franchisee can expect to attain these Food Costs and/or Labor Costs.

Food Costs as a % of Net Sales