Attached files
| file | filename |
|---|---|
| EX-4.2 - EX-4.2 - LRI HOLDINGS, INC. | d49485dex42.htm |
| EX-4.3 - EX-4.3 - LRI HOLDINGS, INC. | d49485dex43.htm |
| EX-10.2 - EX-10.2 - LRI HOLDINGS, INC. | d49485dex102.htm |
| EX-10.5 - EX-10.5 - LRI HOLDINGS, INC. | d49485dex105.htm |
| EX-10.6 - EX-10.6 - LRI HOLDINGS, INC. | d49485dex106.htm |
| EX-10.4 - EX-10.4 - LRI HOLDINGS, INC. | d49485dex104.htm |
| EX-10.1 - EX-10.1 - LRI HOLDINGS, INC. | d49485dex101.htm |
| EX-10.3 - EX-10.3 - LRI HOLDINGS, INC. | d49485dex103.htm |
| 8-K - FORM 8-K - LRI HOLDINGS, INC. | d49485d8k.htm |
| EX-4.1 - EX-4.1 - LRI HOLDINGS, INC. | d49485dex41.htm |
 Logan’s Roadhouse
September 2015
Exhibit 99.1 |
 1 Disclaimer This presentation has been prepared by LRI Holdings, Inc. (together with its subsidiaries, the “Company”) for the exclusive
review of any party who has authorized access to this presentation
and who is subject to non-disclosure obligations (any such party, the “Recipient”). Although the Company believes the information is accurate in all material respects, the Company does not make any representation or warranty, either
express or implied, as to the accuracy, completeness or
reliability of the information contained in this presentation. This presentation includes certain forward-looking statements and projections provided by the Company, including statements regarding
the Company’s operational initiatives, cost savings
initiatives and financial projections. Any such statements reflect various estimates and assumptions by the Company (not all of which are included herewith) concerning projected results. Whether or not any such forward-looking
statements are in fact achieved will depend upon future events,
some of which are not within the control of the Company. This presentation is not an offer to sell or a solicitation of an offer to purchase any security, and may not be relied on in connection
with the purchase or sale of any security. This presentation has
been prepared solely for informational purposes only. The Recipient should not construe the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The Recipient should consult its own
counsel and tax and financial advisors as to legal and related
matters described herein, and, by accepting this presentation, the Recipient confirms that it is not relying upon the information contained herein to make any decision. This presentation does not purport to be
all-inclusive or to contain all of the information that the
Recipient may require. Each Recipient acknowledges that the Company considers this presentation and all information contained herein to include confidential,
sensitive and proprietary information. Each Recipient agrees that
it shall use reasonable precautions in accordance with its established procedures to keep the presentation and all information contained herein confidential, subject to the terms of any non-disclosure agreement between the
Company and the Recipient. This confidentiality undertaking is
intended to be for the benefit of the Company and is enforceable by the Company. This presentation includes certain non-GAAP financial measures of the Company. Such non-GAAP financial measures are not recognized
under accounting principles generally accepted in the United
States, or “GAAP”. Because not all companies calculate these measures identically (if at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Further, any non-GAAP
financial measures presented in this presentation should not be
considered as substitutes for the information contained in the historical financial information of the Company prepared in accordance with GAAP. The Company believes that these measures are helpful to both management and
investors in understanding and analyzing financial performance.
See non-GAAP reconciliations in the appendix for a reconciliation of Adjusted EBITDA to net income (loss). Reconciliations for forward-looking non-GAAP financial measures are not being provided due to the
number of variables in projected results, and thus we do not
currently have sufficient data to estimate the individual adjustments for any such reconciliations. |
 2 Situation Overview Same Store Sales declined as the brand lapped periods with significant promotional and discounting
activities (BOGOs, coupons, etc.)
Adjusted EBITDA declined due to a combination of lower sales
year-over-year, higher occupancy costs and rising beef
costs, which impacted all protein-centric casual dining brands
Financial Results
Assembled a management team with the experience and capability to execute a
successful turnaround Bolstered key areas including operations,
marketing, finance and IT Management
Improved beef quality and food preparation
Implemented training to enhance service and improve guest
experience Replaced BOGOs and discount coupons with LTOs that
convey unmatched everyday value Significant improvement in OSAT
scores as a direct result of recent strategic initiatives Recent
Accomplishments
Return to our Roadhouse roots by delivering the highest level of guest
experience with consistent, high- quality menu items in an
engaging, come-as-you-are environment Vision for The
Brand
Reduced cash interest burden frees up capital to accelerate strategy with
accretive investments (e.g. restaurant remodels and marketing
initiatives) and de-risks the turnaround Liquidity / Capital
Requirements |
 3 Understanding Our Past is Critical to Plotting Our Roadhouse Vision Founded on the principles of offering something for everyone at an exceptional value, all delivered in a laid-back, fun environment Logan’s is the Real American Roadhouse™, an oasis for weary travelers Creating craveable food from high- quality ingredients Engages the spirit with distinctive music and an upbeat vibe that re- energizes people Your local stop for renewal Brand positioned inconsistently since its founding Reduced quality to cut costs Reliance on discounting reduced margins, attracted less loyal customers and failed to drive adequate traffic De-emphasis on liquor, beer and wine (“LBW”) Casual dining homogenization Mimicked leading chains by offering expansive, unimaginative and generic causal dining menu offerings A return to our roots by better defining the signature Logan’s experience Menu that appeals to existing and new customers alike Focus on authentic roadhouse cooking Focus on beverage – the right drink, any occasion Redefining the traditional Logan’s “Roadhouse” atmosphere Our Founding DNA Migration to “Sea of Sameness” Path Forward |
 4 Implemented Initiatives to Meaningfully Improve Guest Experience In Q3 2015 we upgraded the beef program to serve USDA Midwest beef in order to meet core customer expectations $1.5 million or 25 bps annual investment in COGS to improve steak OSAT scores Reduced the number of menu items to remove complexity in kitchen, improving finished plate quality while reducing wait time for guests In March 2015, we implemented a strategy to improve communication, reduce hourly management turnover and provide consistency for guests From April to August 2015, we implemented initiatives to reduce span of control at division and regional levels to facilitate management discipline and monitoring Implemented PeopleMatter systems to improve hiring, onboarding, training and performance Developed “Grill Master” program to enhance skills of our chefs
and improve food quality
Reduced labor hours per 100 guests from ~44.5 in 2014 to ~43.0
in 2015 while increasing guest overall satisfaction in the process
Return to Quality Food
Provide Better Service
Survey Items Current Period Last 3 Months Current L12M Last Year L12M Overall Satisfaction 72% 72% 70% 68% Taste of Food 74% 73% 71% 69% Steak OSAT 70% 69% 67% 65% Tenderness of Steak 68% 68% 65% 62% Doneness of Steak 71% 71% 68% 66% Implementation of higher quality beef and an investment in the “Grill Master” training program has led to: 500 bps improvement in taste of food 600 bps improvement in tenderness of steak 500 bps improvement in “doneness” of steak 400 bps improvement in temperature of food Results: Improvement in OSAT Scores is a Strong Leading Indicator for Future Traffic Growth
Source: Customer Surveys. |
 5 Elimination of Deep Discounting BOGOs have been replaced with a strategy to provide great food at an everyday value Despite near term sales benefits, BOGOs do not drive margin or customer satisfaction Near-term sales gains are offset by brand erosion Server attentiveness falls during BOGO weeks due to smaller tips, and service suffers as a result – OSAT scores fall during BOGO weeks Recent initiatives are starting to pay dividends as we are selling more full- priced meals per week relative to the previous year, an indication that we are attracting higher quality guests Reduced discounts represent a $0.52 - $1.37 million EBITDA improvement initiative Over the past two years the percentage of non-deal sales has grown from ~76% to ~84% Non-Deal Sales $37 $34 $43 $36 $37 $47 $43 $43 $49 $40 $39 $46 $36 $34 $44 $35 $40 $50 $46 $45 $51 $41 $40 $47 $20 $30 $40 $50 $60 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 FY2014 FY2015 (1) (1) Period adjusted for extra week. ($Millions) GEST Overall Satisfaction vs. BOGO Usage ($Millions) FY2015 Year-to-date non-deal sales growth of ~$14 million $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 $2.0 58% 60% 62% 64% 66% 68% 70% 72% 74% 76% Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 BOGO weeks and Redemption $ GEST OSAT Last Bogo Annual Labor Day Promo 78% |
 6 Beef and COGS Inflation Management 31.4% 32.4% 32.8% 33.6% 34.2% 36.2% 28.0% 30.0% 32.0% 34.0% 36.0% 38.0% 2010 2011 2012 2013 2014 2015 USDA Beef Index COGS % of Sales Rising food costs account for approximately $28 million of EBITDA erosion as compared to 2010
24 25 26 27 28 29 2007 2008 2009 2010 2011 2012 2013 2014 2015P 2016P $0.75 $1.00 $1.25 $1.50 $1.75 Domestic Beef Supply Cattle Price System wide roll-out of simplified menu with diversified protein offering helps shift focus away from high cost beef through
offering attractive new menu items
Lower volatility through opportunistic commodity contracts will lock in a
deflationary food cost plan for 2016 A 75% fixed price agreement
on ribeye and sirloins will bring stability and lower prices starting next spring, which is expected to result in an EBITDA benefit of $2.4 million over the next 12 months Lower prices on seafood have been locked in through September 2016 Improving trends in the cattle market Slaughter is forecasted to increase in 2016 after 8 years of consistent declines
Heifers are still being held back which is a continued sign of herd expansion
signaling better supply for 2017 and 2018 –
– – – |
 7 Supplier Contract Renegotiation Cost Savings Alix Partners has identified ~$12 million of cost savings opportunities, including ~$9 million from supplier contract
renegotiations – We have either implemented or have RFPs with initial indications for all cost savings opportunities listed
In addition, Alix
Partners has identified ~$3 million of cost savings from tiered LBW pricing
Notably successful results are approved or expected in beef,
poultry, shrimp and packaging Developing reporting dashboards and
improving contract administration to sustain cost saving initiatives
Alix Partners’ work is ongoing, and they will continue to monitor and track performance to savings targets
Source: Alix Partners. |
 8 Internal Initiatives Cost Savings ($Millions) EBITDA Improvement Initiatives EBITDA Benefit Range Timing to Full Implementation Base High Menu Optimization $2.92 $4.66 Q2 2016 Reduce Food Waste $2.27 $3.28 Q3 2016 Reduce Discounts from Guest Complaints $0.95 $1.37 Q1 2016 Reduce LBW Waste $1.00 $1.30 Q4 2016 Reduce Server and Bartender Fraud $0.19 $0.21 Q4 2016 Liquor Control Compliance $0.05 $0.05 Q4 2016 COGS Subtotal $7.37 $10.87 Make vs. Buy $0.82 $1.27 Q3 2016 Window Hours Rationalization $0.14 $0.26 Q3 2016 Team Leader Reconciliation $0.15 $0.22 Q3 2016 Reduction of Guide Hours on Off-Peak Times $0.14 $0.20 Stub Period 2015 Select Restaurants Change to Key Drop $0.14 $0.20 Q2 2016 Labor Subtotal $1.37 $2.15 Risk Management / Accident Reductions $0.35 $0.50 Q3 2016 Other $0.10 $0.15 Q1 2016 Opex/Other Subtotal $0.45 $0.65 Total $9.19 $13.67 COGS Labor Opex / Other Source: Alix Partners. We have identified up to $13.7 million in EBITDA improvement through COGS, Labor and Opex management |
 9 Enhance restaurant atmosphere consistent with our Roadhouse culture –
lively atmosphere and
great music Reimage program that draws on our heritage as the “Real American Roadhouse™”
Kitchen engineering project to reduce wait times
Initiatives to Reposition Brand and Drive Traffic
Menu Simplification and Enhancement Leverage grill platform with new menu Introduce tiered menu pricing for food and beverage Deliver an engaging bar experience built on the bartender, physical mood and mainstream flavors
Improve bar program
Offer value oriented promotions
Optimize return on investment and more effectively reach customers through
local marketing approaches
Integrate music distinctively into the restaurant and broader brand
experience Build deeper connections through value-based
community engagement Remodel
Marketing / Customer Engagement |
 10 Partnering with ASCAP Our ASCAP alliance represents an industry-first partnership & an example of a powerful new brand-building
initiative ASCAP = Blue Chip Partner
Instant credibility for Logan’s
Exclusivity limits competitors
Builds “roadhouse” credentials
Access & content for promotions
Leverage music as way to connect with guests
Cause marketing component |
 11 Together We Will Successfully Reposition the Brand We have the right team to execute on our strategy We have identified and begun implementing meaningful cost savings We have improved our food and service quality and our guests have noticed We have developed a marketing plan that will reengage guests and drive traffic We have a strategy that highlights our key points of differentiation and reinforces our brand heritage |
 12 Q4 2015 Financial Summary Key Points Total revenue decreased 4.7% driven primarily by SSS decline of 3.8% and the closure of 5 Company-owned restaurants during the quarter SSS decline driven by an 7.8% decline in traffic due to reduced promotional activity quarter- over-quarter Restaurant-level EBITDA decreased to $14.6 million from $20.6 million primarily as a result of: Rising beef costs reflected in COGS, which increased from 34.9% of sales to 36.9% of sales Occupancy costs increased primarily due to increased rent from sale leaseback ($Thousands) Q4 2015 Q4 2014 (13 Week Basis) Company-Owned Restaurants 230 234 Franchised Restaurants 26 26 Total Restaurants 256 260 Same Store Sales (3.8%) (2.6%) Total Revenues $150,185 100.0% $157,531 100.0% COGS 55,265 36.9% 54,722 34.9% Labor 46,132 30.8% 47,937 30.5% Occupancy 13,404 9.0% 13,031 8.3% Other Operating Expenses 20,176 13.5% 20,679 13.2% Restaurant-Level EBITDA $14,607 9.8% $20,563 13.1% Advertising 3,362 2.2% 2,485 1.6% G&A 7,202 4.8% 6,937 4.4% Adjusted EBITDA $4,645 3.1% $11,740 7.5% |
 13 FY2015 Financial Summary Key Points Total revenue decreased 2.2% driven primarily by SSS decline of 2.4% and the closure of 5 Company-owned stores during the fourth quarter SSS decline driven by a 6.9% decline in traffic due to reduced promotional activity year-over- quarter Restaurant-level EBITDA decreased to $67.6 million from $88.4 million primarily as a result of: Rising beef costs reflected in COGS, which increased from 34.2% of sales to 36.2% of sales Occupancy costs increased primarily due to increased rent from sale leaseback ($Thousands) FY2015 (Unaudited) FY2014 (52 Week Basis) Company-Owned Restaurants 230 234 Franchised Restaurants 26 26 Total Restaurants 256 260 Same Store Sales (2.4%) (4.0%) Total Revenues $614,309 100.0% $628,359 100.0% COGS 221,540 36.2% 214,233 34.2% Labor 188,886 30.9% 191,568 30.6% Occupancy 53,022 8.7% 51,594 8.2% Other Operating Expenses 80,920 13.2% 80,308 12.8% Restaurant-Level EBITDA $67,629 11.1% $88,440 14.1% Advertising 10,874 1.8% 17,833 2.8% G&A 27,321 4.4% 27,348 4.4% Adjusted EBITDA $31,745 5.2% $45,476 7.2% |
 14 FY2014 to FY2015 Adjusted EBITDA Bridge ($Thousands) ($1,903) ($12,147) ($2,427) $27 $45,476 ($1,646) ($2,594) $6,959 $31,745 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 FY2014 Adjusted EBITDA Revenue Change COGS Labor Cost Occupancy Cost Other Operating Expenses Advertising G&A FY2015 Adjusted EBITDA |
 15 Overview of Projected Financials Forecast assumptions are predicated on the Company receiving cash interest relief in the
projection period
Revenue Same Store Sales Growth (“SSS”): ~5.0% in 2016 and 2017
driven by increased traffic and continued growth in average check Costs Moderation of COGS inflation Achievement of cost savings opportunities identified by Alix Partners and the Company LTM Revenue LTM Adjusted EBITDA ($Millions) ($Millions) $614.3 $630.4 $662.7 $500 $550 $600 $650 $700 FY2015* CY2016 CY2017 $31.7 $49.5 $64.4 $0 $10 $20 $30 $40 $50 $60 $70 FY2015* CY2016 CY2017 SSS: (2.4%) 4.9% 5.1% Margin: 5.2% 7.9% 9.7% *Unaudited. |
 16 Appendix – Non-GAAP Reconciliations (In thousands) Thirteen weeks ended August 2, 2015 (a) Thirteen weeks ended August 3, 2014 Fifty-two weeks ended August 2, 2015 (a) Fifty-two weeks ended August 3, 2014 Net income (loss) $ (22,741) $ (42,386) $ (53,567) $ (65,175) Interest expense, net 10,735 11,163 42,530 42,570 Income tax expense (benefit) - 109 8 109 Depreciation and amortization 4,955 5,195 20,252 20,366 EBITDA (7,051) (25,919) 9,223 (2,130) Adjustments Sponsor management fees 250 250 1,000 1,000 Non-cash asset write-offs: Goodwill and tradename impairment - 29,665 - 29,665 Restaurant impairment 7,823 5,096 10,587 7,139 Loss on disposal of property and equipment 598 750 2,643 2,283 Restructuring costs 1,744 161 3,815 14 Pre-opening expenses (excluding rent) - 29 263 282 Hedging (gain) loss - - - - Losses on sales of property - 747 - 758 Non-cash rent adjustment 777 679 3,372 3,647 Non-cash stock-based compensation 121 374 (49) 1,728 Other adjustments 383 (92) 891 1,089 Adjusted EBITDA $ 4,645 $ 11,740 $ 31,745 $ 45,475 (a) Preliminary FY15 information presented as of September 17, 2015 |