Overview of the US Market By Rodd Willis

Overview of the US Market By Rodd Willis

2016 Culinary Trends in the United States Chef-Driven fast casual Natural Ingredients Environmental Sustainability No Antibiotics Ethnic Inspired Breakfast items Fresh- House Made Sausage Street Food/Food Trucks Anything local Stew cuts/offals are popular Minimally processed Source: National Restaurant Association

2016 Macro Trends in the United States Negative on GMO s Vermont/Labeling Law- More legislation coming Chipolte Lawsuit- Animals being fed a GMO diet Modernizing the Supply Chain Rising Transportation Costs Food Safety Concerns Demand for local products increasing Better Fast Food in high demand Year of the Worker- minimum wage laws The Delivery Revolution- Uber/Amazon

Where is this market headed? Annual population growth in U.S. < 1% Restaurants became 51% of food consumption for first time ever in 2015 $BILLIONS$ of shopping dollars moving to ecommerce away from conventional channels

US Market- Foodservice- $650 Billion Broadline Distribution Niche- Meat Distributors/Produce/Dairy Approx. 10,000 Foodservice Distributors service the US Market National Regional Local

Foodservice (Restaurant) Performance Index values > 100 = expansion Source: Current National demand level Restaurant is highest Association since 2004 Source: National Restaurant Association

Total U.S Restaurant Industry- Metrics 2009 2010 2011 2012 2013 2014 2015 Nominal Growth 0.4% -3.2% 1.8% 2.5% 5.2% 3.8% 4.5% 2015 Industry Overview Sales ($B) $466 Units 529,000 Average Unit Volume ($000) $881 Top 500 Share 59% Note: The results reported here are preliminary and subject to revision. Source: Technomic Top 500 Report

Growth by Restaurant Segment- USA Fast Casual 12.8% 11.7% Fine Dining Polished Casual 6.9% 7.4% 5.2% 6.0% Family Style/Midscale 0.3% 3.1% Casual Dining Quick Service 3.0% 1.7% 2.8% 3.0% 1-Yr Sales Growth: 2015 5-Yr Sales CAGR: 2010 2015

US Market- Retail Grocery- $650 Billion 37,000 Grocery Stores Self Distributing Chains Independent Grocery Wholesalers Specialty/Natural Distributors

Grocery Trends Conventional Brands- growing 1-2% Natural/Organic products growing 11%

Where are the opportunities? Foodservice share will continue outpacing retail grocery share- Millennials driving this trend Natural and Organic products are growing 10x faster than conventional items in Retail grocery Protein categories are very hot right now in both Foodservice and Retail grocery

US Supply Chain is Critical Distributors play a key role in getting product to the end customer (restaurant patron or grocery store shopper) US Supply Chain is Complex and is Channel Specific Foodservice is more product focused Retail grocery is more price-point focused

Distributor/Wholesaler Concerns Margin pressures- big customers demand cost plus Customer buying habits- customer loyalty is challenging Driver shortages Category management execution New channel competition Obsolete Risk/Price Risk 1

Who is Dot Foods? Founded in 1960 Family owned Redistribution $6.2 billion in sales 5,000 employees

Nationwide Distribution

What is re-distribution? Link between manufacturers and distributors Adds service and reduces costs on Less-Than-Truckload shipments Makes the supply chain more efficient without adding touch points

Supply Chains Without Dot

Supply Chains With Dot

Re-Distribution Concept Without Redistribution P.O. P.O. P.O. P.O. P.O. P.O. Manufacturer Owned or Public Warehouses LTL Pool Dist. 7 Distributor Operator Manual TL 7 Payments With Redistribution Manufacturer P.O. EDI Dot Foods 1 Distributor Operator Dot Foods 1 Payment

Supply Chain Math- A Retail Grocery Example Product originates in New Zealand. Broadleaf arranges ocean freight to California. This hypothetical item (boneless leg) costs $6.00/lb USD. Product arrives to Broadleaf -after Mark Mitchell s (outrageous) markup, which includes his ocean freight, import costs, currency conversion, business expenses and profit, his published FOB LA Dock is $7.00/lb. Dot Foods picks up from Broadleaf in LA at this price.

Supply Chain Math - Retail Dot adds: $.35/lb- freight expense to ship to a Retail Grocery Wholesaler anywhere in the USA, via Dot truck. Wholesaler pays Dot $7.35/lb. Retail Grocery Wholesaler adds 20% or $1.47lb and sells to Retail Grocery Store for $8.82/lb. Grocery Store Meat Manager adds 50% gross margin or $8.82/lb to put it in his case. Consumer pays $17.64/lb PLUS tax (6%).final tab: $18.70/lb!

Supply Chain Math - Foodservice Dot sells to Foodservice Distributor at $7.35/lb. Foodservice distributor adds a 20% delivery charge to take it to the restaurant. Price is $8.82/lb. The restaurant divides into 3 equal portions. $8.82/3 = $2.94 food cost per portion. Food cost represents 1/3 of the price, so the cost of the meal is $2.94 x 3 = $8.82 per plate (plus tax)

Where do we go from here? Protein demand is growing in the US Strong Desire for authentic, unique food experiences Large, affluent US market willing/able to pay the price The Supply Chain has been built and is efficient Imported products have a unique story

Thank You!