The NPD Group, Inc. | Proprietary and Confidential Copyright 2014. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential.

The NPD Group, Inc. | Proprietary and Confidential

Copyright 2014. The NPD Group, Inc. All Rights Reserved. This presentation is Proprietary and Confidential and may not be disclosed in any manner, in whole or in part, to any third party without the express written consent of NPD.

Parties with Kids: Motivating More Visits

April 2014

The NPD Group, Inc. | Proprietary and ConfidentialThe NPD Group, Inc. | Proprietary and Confidential 2

About This ReportThe restaurant industry’s ability to attract parties with kids (those including children under age 13) has been declining since 2008. The losses have been significant: parties with kids made slightly over one billion fewer visits to U.S. restaurants over the past six years. No restaurant segment was left unscathed; seventy percent of all traffic declines stemming from full service restaurants. Visits dropped across all meal periods, with supper hit especially hard – well over half of all visit losses occurred at the dinner occasion.

Households with kids face daily decisions about what and where to feed the family. In order to bring back parties with kids to the restaurant table, operators and manufacturers need to understand what consumers seek for these visits.

Insights from this report will answer these questions and many others ….

Why have visits by households with kids declined?What do visits look like for families dining out with kids?What preferences drive the decision to dine out with children?What types of menu items will have the biggest impact on attracting parties with kids? Is entertainment important, and what will entice more families through the door?

The NPD Group, Inc. | Proprietary and Confidential 3

In-depth custom online survey uncovering barriers to restaurant visitation, changes in visitation, current restaurant visit situation, decision-making process, attitudes toward restaurant fit with kids’ needs, reasons for visiting, menu preferences, restaurant features that attract families including kid-specific aspects, and general attitudes about kids eating out

Study conducted February 2014

Other Information Sources: CREST

Sample Ending sample of 4,352 families with kids

aged 2-12 36% have kids 2-5 years of age

(n=1,586) 45% have kids 6-10 years of age

(n=1,944) 19% have kids 11-12 years of age

(n=822) Most respondents have visited a quick serve

or full serve restaurant in the past 3 months 85% have visited (n=3,673) but 28%

are visiting less than they did a year ago (n=1,042)

15% have not visited (n=679)

Information Collected

Parties with Kids: Motivating More Visits

The NPD Group, Inc. | Proprietary and ConfidentialThe NPD Group, Inc. | Proprietary and Confidential

2008 2009 2010 2011 2012 2013 2014

15,545,860

14,545,030

Source: CREST®, years ending February

Family Parties with Kids 12 years and under Visit Trend

4

Total Restaurant Visits (000s)

There are one billion fewer restaurant occasions in 2014 versus 2008 among parties with kids (12 years and under)

The steepest declines occurred at the start of the recession and have been

slow to recover

The NPD Group, Inc. | Proprietary and Confidential

2008 20132% 2%11% 10%

12% 10%3% 5%

72% 73%

-700 Millionfamily visits since 2008

=70%

of total family party declines

Segment Visit Distribution

Source: CREST®, year ending February*

Traffic Share by Segment Among Family Parties with Kids <12 Present

Family occasions have changed over the years. The majority of the pullback stems from the Full Service group, accounting for seventy percent of all declines from 2008 to 2013 . Many visits shift from Full Service to Traditional QSR and Fast Casual

Traditional QSR

Fast CasualMidscaleCasual DiningFine Dining

5

The NPD Group, Inc. | Proprietary and Confidential 6

Don’t like menu options for kids

Don't have/offer enough healthy items

Not a kid-friendly place

Not a good value

Too busy

Special occasions only

Bad economy

Prefer home cooking

Too expensive

Watching what I spend

17%

16%

9%

12%

19%

12%

15%

34%

26%

28%

8%

12%

14%

15%

15%

19%

31%

34%

49%

54%

Visiting Less

Visiting Less

Watching Wallet

Non VisitingPersonal

Preference

Not Visiting

Q.3 Why haven’t you visited a fast food, fast casual, family dining-style or casual dining restaurant with your child in the past 3 months? (Multiple response)Q.18 You mentioned that you eat out less often than you used to with your child – why is that? (Multiple response)

Reasons Some Families are Visiting Less or Not at AllOperators have a better chance of increasing visits by focusing on appropriate value cues targeted towards those who are still visiting, but less often

Average Party Check*Family w/Kids 12 & Under: $21.30Adult Only:

$10.43

*Source: CREST®, year ending February 2014

The NPD Group, Inc. | Proprietary and Confidential 7

Reasons Why Some Families are Visiting Less by Age of Child

Prefer Home Cooking

Not a Kid Friendly Place

Households with Kids 2-5

Bad Economy

Not a Good Value

Households with Kids 6-12

Attributes with Significant Differences Between Child’s Ages

Those with older kids are worried more about the expense while those with younger kids desire a kid-friendly establishment

Q.18 You mentioned that you eat out less often than you used to with your child – why is that? (Multiple response)2-5 n=381 6-12 n=661