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Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

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Page 1: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

August 1, 2012

YRI Guidance on Pizza Hut Dough Commissary

Page 2: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

YRI Commissary Classification System

Page 3: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

• Need Accurate Data:– Average Annual Store Sales.– Pies per order ratio– SSSG and Transaction Growth are

averages for all stores– # Stores is the final number after 10 years

• PHD vs PBP mix• Size mix – important to determine dough

weight.• Store Count Forecast

– Based on a 10 year build– Start with Existing number of Stores– Contract Par Baked Pan

Avg Store Sales ($M) 900$ Same Store Sales Growth 2.0%Transactions per store p/week 1,400 Pie to order ratio 1.78 Pies per store per week 2,485 Check Average 12.36$ Transactions Growth 1.0%# of Stores to be served 75

Par Bake PAN % 15%PB PAN Pies per store p/week 373 % of Orders - Large 20.0%% of Orders - Medium 60.0%% of Orders - Small 20.0%

PHD/Mia % 85%PHD Mia Per Store p/week 2,112 % of Orders - Large 45.0%% of Orders - Medium 10.0%% of Orders - Small 45.0%

Store Count ForecastCurrent Store Count 70Year 1 71Year 2 71Year 3 72

Year 4 72Year 5 73Year 6 73Year 7 74Year 8 74Year 9 75Year 10 75System Sales per Store ($M) 900$ Months new stores are open 8

Sales, Transactions, Dough Type

Financial Model - Market Inputs

Page 4: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

• Commissary CAPeX:– Design & Construction; Architectures – Building Equipment; i.e. HVAC, Proofing

Room, & Refrigeration.– Dough Making Equipment; Mixer,

Divider / Rounder, Sheeter, Oven, MD, etc.

– Taxes; Duties will vary by country• Rent; Assumes facility is leased for 10 yr.

Duration. The rate per m2 will be one of the site location criteria.

• Store CAPeX avoidance for new builds only.• New Store rent and depreciation also

predicated on smaller footprint which was assumed to be up to 20%.

Commissary CAPEXDesign & Construction 135,600$ Building Equipment 141,250$ Dough Making Equipment 338,800$ Other Misc Items 36,450$ Taxes 135,520$ Total CAPEX 787,620$ Tax / DutyRate 40.0%Useful Life (Avg Years) 10

Commissary Rent/Utilities ExpenseMonthly Rent 10,000$ Rent Inflation 1.5%Square Meters 600 Rent Expense (Year) 120,000$ Price per Sq Meter 16.67$ Utilitiy Expense per Month 10,000$ Total Utilities Expense (Year) 120,000$

Store CAPEX to be Eliminated w/CommissaryMixer 7,175$ Sheeter 3,050$ Proofer 3,205$ Retarder 2,030$ Other 500$ Total CAPEX 22,344$

Store Rent/Deprec to be Eliminated w/CommissaryNew Store Rent/Deprec -10.0%Note: Savings that each store will realize by not having space for dough equipment in stores.

Financial Model - CAPeX

Page 5: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Commissary CAPEX (788)$

Frige Truck (100)$ Depreciation (add back) 79$ 79$ 79$ 79$ 79$ 79$ 79$ 79$ 79$ 79$

Savings 511$ 554$ 613$ 659$ 722$ 772$ 839$ 894$ 965$ 1,024$ Total (888)$ 590$ 633$ 692$ 738$ 801$ 851$ 918$ 973$ 1,044$ 1,103$

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Commissary CAPEX (788)$

Frige Truck (100)$ Capex savings on new stores 0 22$ -$ 22$ -$ 22$ -$ 22$ -$ 22$

Depreciation (add back) 79$ 79$ 79$ 79$ 79$ 79$ 79$ 79$ 79$ 79$ Savings 1,519$ 1,601$ 1,686$ 1,774$ 1,865$ 1,958$ 2,054$ 2,154$ 2,256$ 2,363$

Total (888)$ 1,598$ 1,702$ 1,765$ 1,875$ 1,943$ 2,059$ 2,133$ 2,256$ 2,335$ 2,464$

Total System - 7 Year IRR 186% 0.39$ Total System - 10 Year IRR 186% 0.47$

0.47$ Commissary - 7 Year IRR 72%

Commissary - 10 Year IRR 74% 16,085$

System NPV ($M) 7,557$ 15%Commissary NPV ($M) 2,591$

Discount Rate

Total System Cash Flow (Commissary + Store Level)

Avg Dough Ball Cost - Commissary Avg Dough Ball Cost - Store BOHAvg Dough Ball Cost - Store BOH with Commissary

Franchisee Avg Savings per store

Financial Summary

Commissary Cash Flow

Financial Model – CF Summary

Page 6: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 – 20 StoresCapacity Calculator – Space Requirements

Enter Estimated Transactions & Product Mix

20 Stores 900 Transactions/wk/store 1.5 Pies Per Transaction 5 days Operating per Week 20% Family Pan 80% Medium Traditional

2,830 Trays Required189 Dollies Required90 Dolly Positions in Cooler

Engineered SolutionC2 – 1 ShiftApprox. 4,950 Sq. Ft.

Outputs estimate of space required

Page 7: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 – 60 StoresCapacity Calculator – Space Requirements

Enter Estimated Transactions & Product Mix

60 Stores 900 Transactions/wk/store 1.5 Pies Per Transaction 5 days Operating per Week 20% Family Pan 80% Medium Traditional

8,500 Trays Required566 Dollies Required270 Dolly Positions in Cooler

Engineered SolutionC2 – 2 ShiftsApprox. 6,900 Sq. Ft.

Outputs estimate of space required

Page 8: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 – 100 StoresCapacity Calculator – Space Requirements

Enter Estimated Transactions & Product Mix

100 Stores 900 Transactions/wk/store 1.5 Pies Per Transaction 5 days Operating per Week 20% Family Pan 80% Medium Traditional

14,150 Trays Required950 Dollies Required450 Dolly Positions in Cooler

Engineered SolutionC2 – 3 ShiftsApprox. 8,200 Sq. Ft.

Outputs estimate of space required

Page 9: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Future Expansion: 20 Stores - 1 Shift

Estimated 7,820 sq ft of Total Space

435 sq ft Cooler Usage

Tray/Pan Washing

Proofing & Retarding

Par-Baking

Processing

Packaging

175 sq ft Ingredient

Storage Usage

Page 10: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Future Expansion: 60 Stores – 2 Shifts

Estimated 7,820 sq ft of Total Space

1,100 sq ft Cooler Usage

Tray/Pan Washing

Proofing & Retarding

Par-Baking

Processing

Packaging

336 sq ft Ingredient

Storage Usage

Page 11: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Future Expansion: 100 Stores – 3 Shifts

Estimated 7,820 sq. ft of

total space

1,700 sq. ft Cooler Capacity

Tray/Pan Washing

Proofing & Retarding

Par-Baking

Processing

Packaging

500 sq ft Ingredient

Storage Usage

Page 12: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

AppendixAppendix

Page 13: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

2007

2008

2009

2010

2011

2012

50 100

150

200

250

300

350

400

450

# of Commissaries

# of PHD’s

21 STORES SUPPORTED

71 STORES SUPPORTED

1 COMMISSARY

3 COMMISSARIES

163 STORES SUPPORTED6 COMMISSARIES

195 STORES SUPPORTED15 COMMISSARIES

338 STORES SUPPORTED*27 COMMISSARIES

500 STORES SUPPORTED32 COMMISSARIES (21 -C1, 11-C2&C4) **

* Data as of October 2011** Includes 2012 forecast

Pizza Hut Commissaries and PHD Stores

Page 14: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

DallasDallas• Define & Develop :

– QA/Sanitation Policies (CCA)– Training Materials (Business Model)– Facility/Ops processes & systems– Commissary Contract

• Approve:– Critical equipment specs– Layout & Workflows

• Review Committee process for exceptions to recommended layout and business model.

• Central Repository for all necessary information (Website)

• Define & Develop :– QA/Sanitation Policies (CCA)– Training Materials (Business Model)– Facility/Ops processes & systems– Commissary Contract

• Approve:– Critical equipment specs– Layout & Workflows

• Review Committee process for exceptions to recommended layout and business model.

• Central Repository for all necessary information (Website)

BMU/FBUBMU/FBU• Field all initial Franchise

commissary requests• Resource to:

– Define 10 year Growth Potential– Cascade & review Financial

Model– Approve Site Selection– Approve Construction of facility

conforming with latest manual– Start-up Support– Make each facility ready for CCA

& STAR audit– Understanding Contractual

Agreements

• Field all initial Franchise commissary requests

• Resource to:– Define 10 year Growth Potential– Cascade & review Financial

Model– Approve Site Selection– Approve Construction of facility

conforming with latest manual– Start-up Support– Make each facility ready for CCA

& STAR audit– Understanding Contractual

Agreements

Commissary Roles and Responsibilities of Dallas vs Field

Page 15: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

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Commissary 3-Step Process

Page 16: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

Estimated %Cost / (Savings)

Current Store Level P&L % of Sales w/ CommissaryDough 4.4% 2.0%Dough - Wastage 0.1% -0.1%Cheese 6.0%Vegtables 5.5%Meat 7.2%Packaged Materials 5.0%Other 3.5%Total Cost of Sales 31.7% 1.9%

Cost of Sales Inflation % 2% 0.54$

Management 4.0%Crew - Dough Labor 2.0% -2.0%Crew - Training 3.0% -0.5%Non-Dough Labor/Benefits 9.8%Total COL 18.8% -2.5%Cost of Labor Inflation% 2%

Franchise Fees 6.0%Advertising/Marketing 7.0%Rent/Depreciation Expense 8.0%Electricity 4.2% -0.5%Call Center 3.1%Cleaning/Hygiene 1.1%Surveillance 0.2%Communications 0.2%Propane Gas 0.1%Operating Supplies 1.0%Water 0.9% -0.5%Credit Card Fees 0.5%Maintenance Expenses 0.5%Disposal 0.5%Repair Expense 0.2%Garbage Collection 0.2%Taxes/Government Fees 0.1%Insurance 0.1%Other 0.8%Total Utilities/Other 34.7% -1.0%

Unit Contribution Margin 14.8% 16.4%

Store Level P&L / Savings

Financial Model – Store Level P&L

Page 17: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

• Dough Ingredient Expense based on 100kg batch:– Flour; will vary by

market– Instant Dry Yeast

available locally.– Oil per spec.– Lesaffre improver

• Assumes 3 sizes for both PBP and PHD.

• Store CAPeX avoidance for new builds only.

• Smaller batches will have proportionate ingredient amounts associated.

Commissary Dough ExpenseTotal Pan Production cost per kg kg/batch cost per batchFlour 1.10$ 100.0 110.00$ IDY Yeast 6.35$ 1.0 6.35$ Water -$ 52.0 -$

Oil 2.72$ 1.5 4.08$ Lesaffre NY Improver 3.16$ 4.0 12.65$

Batch weight (kg) 158.5Cost per batch 133.08$

$ per kg 0.840$ Weight Cost

Large (14") 0.625 0.525$ Medium (10") 0.325 0.273$

Small (6") 0.140 0.118$ Average 0.29$

Total PHD Production cost per kg kg/batch cost per batch

Flour 1.10$ 100.0 110.00$ Yeast 6.35$ 0.3 1.71$ Water -$ 52.0 -$ Oil 2.72$ 3.0 8.16$ Lesaffre NY Improver 3.16$ 5.0 15.82$

Batch weight (kg) 160.27Cost per batch 135.69$

$ per kg 0.847$ Weight Cost

Large (14") 0.490 0.415$ Medium (10") 0.245 0.207$

Small (6") 0.140 0.119$ Average 0.26$

Financial Model – Commissary Ingredient Costs

Page 18: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

• This sheet shows one of three 8hr shifts:– Can also be two 10hr

shifts with 4hrs Cleaning & PM.

– Assumes 9 team members. One of whom will be Shift Lead

– Hourly wage will vary. Supervisor 1.5X team member

• General Manager/QA Manager & Admin as full time employees.

• This team member modeling based on 15% PBP. Please refer to Labor Table.

Hourly Wage 6.00$

Third Shift (Up to 75) # of Employees Salary Labor ExpenseMixing 1 17,472$ 17,472$ Cutting & Sheeting 2 17,472$ 42,806$ Proofing - 17,472$ -$ Retarding - 17,472$ -$ Baking 0 17,472$ 5,242$ Packing & Chilling 2 17,472$ 34,944$ Utilities 1 17,472$ 17,472$ Reliever - 17,472$ -$

Supervisor 1 26,208$ 26,208$

Maintenance 1 17,472$ 17,472$ Total 9 161,616$

General Manager 1 50,000 50,000$ QA Manager 1 25,000 25,000$ Training/Uniforms/Benefits 20% 111,970$ Other 1 10,000 10,000$ Total 17 196,970$

First Shift 161,616$ Second Shift 161,616$ Thrid Shift 161,616$ Other Labor 196,970$ Labor Expense 681,818$

Financial Model – Commissary Wages

Page 19: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

• Fridge Truck:– $100,000 CAPeX– $10,000/yr Depreciation.– Labor expense of $10,000/yr could

vary greatly.– R&M costs assumed to be

outsourced but could be internalized with Maintenance Manager

– Insurance $7,500 is just for internal investment.

• Gas Expense assumes daily delivery 6 days per week at average of 500 miles per day driven.

• Outsource Logistics of additional 50% contingency assumed for modelling.

Fridge Truck ExpenseFridge Truck 100,000$ Useful Life (Years) 10 Depreciation Expense (per yr) 10,000 Gas ExpensePrice per Gallon 4.00$ Miles to be driven per day 500 Miles per gallon 10 Gas Expense 62,400$ Total Logistics ExpenseFridge Truck (Depreciation) 10,000$ Gas 62,400$ Outsource % 50.0%Logistics Inflation 5.0%Labor Expense - Driver(s) 10,000$ Labor Expense - Helper(s) -$ Repair/Maintenance 10,000$ Insurance 7,500$ Total Distribution Expense 136,100$

Distribution Inputs

Financial Model – Market Inputs

Page 20: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

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FINANCIAL MODEL CF DRIVERS Baseline Product Mix Proximity to City Store Build RateTotal CAPEX $899,000 $1,099,000 $1,052,000 $1,099,000Comments 15% PBP 85% PBP Close to MetroMonthy Rent $5,000 $5,000 $12,000 $5,000Rent Inflation 2% 2% 2% 2%Lease Space (Sq M) 1000 1000 1000 1000Utilities per Month $10,000 $14,000 $15,000 $8,333

Labor Rates per Hour $6 $6 $8 $6General Manager $55,000 $55,000 $55,000 $55,000QA Manager $30,000 $30,000 $30,000 $30,000

Gasoline Prices per Mile $7 $7 $8 $7Average Miles Driven 400 400 200 400Total Truck Cost $200,000 $200,000 $100,000 $200,000

7 Yr IRR 49% 41% 43% 32%10 Yr IRR 55% 48% 50% 43%NPV $3,874,000 $3,505,000 $3,560,000 $2,672,000

Key Cash Flow Drivers

Page 21: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

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Fresh Commissary: Equipment

Equipment / Infrastructure

C1(Up to 5 Stores)

Emp Per

Shift

C2 - Manual(6 to 100 Stores)

Emp Per

Shift

C2 - Automatic(75 to 100 Stores)

Emp Per

Shift

C3(Over 100 Stores)

Emp Per

ShiftBatching – Weigh Raw Ingredients

• 10kg (Opt1) or 80kg (Opt2) Batches• Manual weighing

1

• 90kg Batches• Manual weighing

1

• 100kg Batches• Super Sack or Silo

1

• 250kg Batches• Bulk ingredients (Silo)

2Water – Meter & Temp • Manual • Automated Meter • Automated Meter • Automated Meter

Mixing • (1) 60Qt or (1) 200kg Mixer • (1) 200kg Mixer • (1) 200kg Horizontal Mixer

• (2) 400kg Horizontal Mixers

Divider/Rounder • Manual or (1) Divider/Rounder

1

• (1) Divider/Rounder • (1) Divider/Rounder • (2) Divider/Rounders

2

Scale – Dough Ball Weight • Manual •Checkweigher • Checkweigher • (2) Checkweighers

Metal Detection • N/A • Dough Ball or Tray

1 or 2

• Dough Ball or Tray • Dough ball or Tray

Tray Packing • Manual • Manual • Automated • Automated

Oiling (Dough Balls) •Manual (Spray Cans) • Manual (Spray Cans) • Automatic Spray Bar • Automatic Spray Bar

Cold Proofing (48hrs) • Expanded Store Cooler • Standalone Cooler • Standalone Cooler 1 • Standalone Cooler 3

Additional Par-Bake Requirements:Oil Pan • Manual

1 or2

• Manual

3

• Automated Spray Bar

1

• Automated Spray Bar

1

Sheeting • (1) or (2) Sheeters • (2) Sheeters • Automated Conveyor • (2) Sheeters

Place in Pan • Manual • Manual • Automated • Automated

Proofing • 1 hour on racks • 1 hour

3 or 4

• Continuous Conveyor • Continuous Conveyor

Retarding • 1 hour on racks • Up to 2 hours • N/A • N/A

Oven • Existing Store Oven, Off Hours• Operators load/unload• 20 to 60 minutes per batch

• (3) Ovens • Operators load/unload• 60 minutes per batch

• Continuous Conveyor • Continuous Conveyor

Cooling • Open air cooling • Open air cooling1

• Spiral Chilled Cooling • Spiral Chilled Cooling1

Packing (2 Per Bag) • Manual Packaging • Manual Packaging • Automated Packaging • Automated Packaging

Pan/Tray Washing • End of Shift 0 • Continuous 2 • Continuous • Continuous 3

Total Employees: 3-4 Total Employees: 11-13 Total Employees: 3 Total Employees: 12

Page 22: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

Assumptions: C1 C2 - Manual C2 - Automatic C3Kilograms Per Hour of Capability 48 to 330 kg/hr 430 kg/hr 475 kg/hr 2,400 kg/hr

Number of Dough Balls Per Hour 112 to 1,350 Dough Balls/hr

1,000 to 1,750 Dough Balls/hr

1,120 to 1,940 Dough Balls/hr

5,650 to 9,800 Dough Balls/hr

Number of Batches Per Day 3 to 22 Batches/Day 3 to 46 Batches/Day 32 to 42 Batches/Day Up to 80 Batches/Day

Number of Supported Stores Up to 5 6 to 100 75 to 100 Up to 285

Transactions Per Store Per Week 900 900 900 900

Ratio of Pies Per Store Transaction 1.5 1.5 1.5 1.5

Operating Hours 5 to 8 hrs per day, 6 days/wk

Up to 24 hrs per day, 6 days/wk

16 hrs per day, 6 days/wk

10 hrs per day, 6 days/wk

Product Mix Pan – 20% Traditional – 80%

Pan – 20% Traditional – 80%

Pan – 20% Traditional – 80%

Pan – 15% Traditional – 85%

Sizes Pan – 12” Family Traditional – 10” Medium

Pan – 12” Family Traditional – 10” Medium

Pan – 12” Family Traditional – 10” Medium

Pan – 12” Family Traditional – 10” Medium

Number of Full-Time Employees 3 or 4 11 to 39 6 12

Level of Automation Low Moderate High High

Shelf Life of Dough Ball at 2 to 4ºC 4 to 5 Days 4 to 5 Days 4 to 5 Days 4 to 5 Days

Estimated Square Footage 515 Sq. Ft. to 830 Sq. Ft.(Incremental to Typical 745

Sq. Ft. Store)4,875 Sq. Ft. to 7,820 Sq. Ft. 16,500 Sq. Ft. 56,700 Sq. Ft.

Estimated Equipment InvestmentIncludes Racks, Pans, Trays, etc.Building Construction & Install Additional

$140M $375M to $710M $3MM to $4MM $5MM to $6MM

Fresh Commissary: Assumptions

Page 23: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

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Fresh Commissary: Capital Estimates

Equipment / InfrastructureC1

(Up to 5 Stores)

C2 - Manual(6 to 100 Stores)

C2 – Auto(75 to 100 Stores)

C3 - Auto(Over 100 Stores)

Batching – Weigh Raw Ingredients $3,500 $5,500 $75,000 to $1,020,000 $1,237,000

Water – Metering & Temp. Control $4,000 $8,000 $8,000 $16,000

Mixing $25,000 $25,000 $180,000 $360,000

Divider/Rounder $30,000 $30,000 $130,000 $260,000

Scale – Dough Ball Weight Verification $500 $30,000 $60,000 $100,000

Metal Detection --- $30,000 $60,000 $100,000

Tray Packing (Includes Trays/Dollies) $10,125 $44,200 to $224,325 $356,000 $610,000

Oiling (Dough Balls) $1,000 $2,500 $15,000 $15,000

Cold Proofing (48hr Refrigeration) $18,000 $26,000 to $67,000 $67,000 $290,000

Additional Par-Bake Requirements:

Oil Pan $500 $2,500 $20,000 $25,000

Sheeting $12,000 $12,000 $85,000 $200,000

Place in Pan (Includes Pans/Lids) $6,000 $25,000 to $48,600 $250,000 $555,000

Proofing (Includes Racks) $14,550 $20,000 $250,000 $350,000

Retarding (Includes Racks) $2,050 $23,500 --- ---

Oven Store Oven $39,375 $350,000 $450,000

Cooling (Includes Racks/Trays) $6,275 $14,200 $400,000 $500,000

Packing (2 Per Bag, Includes Trays/Dollies) $6,500 $17,225 to $87,500 $300,000 $537,000

Pan/Tray Washing Store Washer $20,000 to $40,000 $120,000 $170,000

TOTAL (Building & Install Additional) $140M $375M to $710M $3MM to $4MM $5MM to $6MM

Page 24: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

Fresh Commissary: Capability Comparison

C1(Up to 5 Stores)

C2 - Manual(6 to 100 Stores)

C2 – Auto(75 to 100 Stores)

C3 - Auto(Over 100 Stores)

Bulk Ingredients

Water Metering/Temperature Control

Divider/Rounder

Metal Detection

Manual Tray packing

Automatic Tray Packing

Manual Dough Ball Oiling

Automatic Dough Ball Oiling

Manual Sheeting

Automatic Sheeting

Manually Place in Pan

Automatically Place in Pan

Rack Proofing

Conveyor Proofing

Conventional Restaurant Oven

Conveyor Oven

Chilled Cooling

Up to 330 kg/hr

Up to 430 kg/hr

Up to 475 kg/hr

Up to 2400 kg/hr

Page 25: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

Traditional

Par-Baked Pan

Add Ingredients

Warm Bowl

Mix

Divide & Round

Load Hopper Verify Weight

Place in Tray and Spray with Oil

Sheeting

Let Dough Rest minimum of 3 minutes

Place in Pan and Spray edges with Oil

Proof & Retard

Add Perforated Pan

Bake 3 minutes

Place on Cooling Tray

Temper 30min

Package in Bags

Store & Ship

Process Flow - Typical

Page 26: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

• Water Metering – Automate temperature controlled water delivery to remove manual measurement with flow meter, load cells, etc.

• Sheeting Throughput – Increase capacity of sheeters to reduce manpower, floor space, and bottlenecking.

• Pan Oiling – Automate pan oiling with wiper or spray arm to remove manual pumping and pan rotation for coverage.

• Pan Denesting/Stacking – Automate processes of staging pan, adding lid, stacking and racking pans for Proofing.

• Proofing and Retarding – Spiral accumulation and singulation to/through Retarding. Consistent timing for continuous Proofing/Retarding process.

• Right Size Oven - Maximize throughput to match continuous dough ball/pan speed. Eliminate Retarding time by oven outrunning

production and going directly from Proofing to Oven.

Real Opportunities for Innovation

vs.

Page 27: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C1 – Option 1(See Appendix)

C1 – Option 2(See Appendix)

C2 – Manual(See Appendix)

C3 – Automatic(See Appendix)

Process Flow

C2 – Automatic(See Appendix)

Page 28: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

Manual Dividing/Rounding• Batch must be Divided/Rounded within 20 minutes• 6 pcs/min per employee• One employee• 90 to 150 kg/hr

3-10min Rest

Proof 1hr

Retard 1 to 2hrs

Note: Equipment specification for example only.

Tempering30min

Store1 Day

4 Day Store

Shelf Life

Cold Proof 48hrs

5 Day Store

Shelf LifeTraditional:

C1 – Option 1Sized for 5 Stores8 hours of production

C1 Equipment Optimization

20min Max

(1) Hobart HL662 Mixer

• 10kg Batches Pan Family Pies 37Traditional 10” 64• 48 kg/hr

Par-Baked Pan:

(1) Doyon DFP18 Sheeter• 3-10 min Rest• Batch processed within 10 minutes• 8pcs/min per machine• 200 kg/hr

(1) Middleby Marshall PS555 Oven

• 2.5 to 3 minute bake time• Batch processed within 20 minutes• Pies per/hr per Oven:

Family 131• 55 kg/hr

Page 29: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

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C1 – Option 2Sized for 5 Stores5 hours of production

(1) AM S302 Divider/Rounder

• Batch must be Divided/Rounded within 20 minutes• 30pcs/min per machine capacity• 440 to 765 kg/hr

(2) Doyon DFP18 Sheeters• 3-10 min Rest• Batch processed within 30 minutes• 8pcs/min per machine• 408 kg/hr

Proof 1hr

Retard 1 to 2hrs

(1) Middleby Marshall PS555 Oven

• 2.5 to 3 minute bake time• Batch processed within 60 minutes• Pies per/hr per Oven:

Family 131• 55 kg/hr

Note: Equipment specification for example only.

Tempering30min

Store1 Day

4 Day Store

Shelf Life

5 Day Store

Shelf Life

Par-Baked Pan:

C1 Equipment Optimization

Traditional:20min Max

Cold Proof 48hrs

3-10min Rest

(1) Thunderbird ASP-200 Mixer

• 80kg Batches Pan Family 188Traditional 10” 517• 380 kg/hr

Page 30: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Sized for Up to 100 StoresUp to 24-hour Production

(1) Automated Scale• Check weight of every dough ball• 30pcs/min per machine• 440 to 765 kg/hr

(1) Thunderbird ASP-200 Mixer

• 90kg Batches Pan Family 335Traditional 10” 582• 142 to 427 kg/hr

(1) AM S300 Divider/Rounder

• Batch must be Divided/Rounded within 20 minutes• 30pcs/min per machine capacity• 440 to 765 kg/hr

(2) Doyon DFP18 Sheeters• 3-10 min Rest• Batch processed within 30 minutes• 8pcs/min per machine• 408 kg/hr

(3) Middleby Marshall PS555 Ovens

• 2.5 to 3 minute bake time• Batch processed within 20 minutes• Pies per/hr per Oven:

Family 131• 167 kg/hr

20min MaxCold Proof

48hrs

Par-Baked Pan:

Proof 1hr

Retard 1 to 2hrs

Tempering30min

Store1 Day

4 Day Store

Shelf Life

Note: Equipment specification for example only.

C2 Equipment Optimization - Manual

Traditional:5 Day Store

Shelf Life

3-10min Rest

Page 31: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Sized for Up to 100 StoresUp to 24-hour Production

(1) Automated Scale • Check weight of every dough ball• 33pcs/min per machine minimum• 440 to 765 kg/hr

(1) Horizontal Mixer

• 100kg Batches Pan Family 372Traditional 10” 647• 475 kg/hr

(1) Divider/Rounder• Batch must be Divided/Rounded within 20 minutes• 33pcs/min per machine minimum• 485 to 841 kg/hr

(2) Sheeters• 3min Rest (conveyor)• Continuous processing• 17pcs/min per machine minimum• 867 kg/hr

Continuous Proofer & Conveyor Oven

• 2.5 to 3 minute bake time• Batch processed within 20 minutes• Pies per/hr: Family 1,116• 475 kg/hr

20min MaxCold Proof

48hrs

Par-Baked Pan:

Proof 1hr

Tempering30min

Store1 Day

4 Day Store

Shelf Life

Note: Equipment specification for example only.

C2 Equipment Optimization - Automatic

Traditional:5 Day Store

Shelf Life

3min Rest

Metal Detection

Metal Detection

Page 32: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C3 Sized for 100+ Stores24-hour Production

(2) Horizontal Mixers• 250 kg Batches Pan Family 932Traditional 10” 1617• 2,400 kg/hr

(2) Divider/Rounders• Batch must be Divided/Rounded within 20 minutes• 100 pcs/min per machine capacity• 2,940 to 5,100 kg/hr

(2) Automated Scales • Check weight of every dough ball• 100 pcs/min per machine• 2,940 to 5,100 kg/hr

(2) Sheeters• 3min Rest (conveyor)• Continuous processing• 100pcs/min per machine minimum• 5,100 kg/hr

20min MaxCold Proof

24hrs

Par-Baked Pan:

Proof 1hr

Tempering30min

Store1 Day

4 Day Store

Shelf Life

Note: Equipment specification for example only.

C3 Equipment Optimization

Traditional:5 Day Store

Shelf Life

3min Rest

Metal Detection

Metal Detection

Continuous Proofer & Conveyor Oven

• 2.5 to 3 minute bake time• Batch processed within 20 minutes• Pies per/hr: Family 5,592• 2,400 kg/hr

Page 33: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C1 – Option 1(See Appendix)

C1 – Option 2(See Appendix)

C2 – 20 Stores(See Appendix)

C2 – 60 Stores(See Appendix)

C3 – Automatic(See Appendix)

Conceptual Commissary Layouts

C2 – 100 Stores(See Appendix)

C2 – Automatic(See Appendix)

Page 34: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C1 Layout – Option 1

C1 – Option 1(1) Hobart 60Qt Mixer Manual Dividing/Rounding(1) Sheeter(1) Oven (Store Oven, Off Hours)(4) Estimated Employees

Additional 515 sq. ft. built out from typical store

Utilize Store Oven during

Off Hours

Additional 116 sq. ft. of

Cooler Space

Page 35: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C1 Layout – Option 2

C1 – Option 2(1) Thunderbird 200kg Mixer(1) AM Divider/Rounder(2) Sheeters(1) Oven (Store Oven, Off Hours)(3) Estimated Employees

Additional 830 sq. ft built out from typical store

Utilize Store Oven during

Off Hours

Additional 142 sq. ft of

Cooler Space (Storage & Retarding)

Page 36: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Layout

C2 – 20 Stores(1) Thunderbird 200kg Mixer(1) AM Divider/Rounder(2) Sheeters(3) Ovens(11) Estimated Employees

Estimated 4,875 sq. ft. of Total Space

435 sq. ft. Cooler Capacity

Proofing & Retarding

Packaging

Tray/Pan Washing

Par-Baking

Processing

Page 37: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Layout

C2 – 60 Stores(1) Thunderbird 200kg Mixer(1) AM Divider/Rounder(2) Sheeters(3) Ovens(26) Estimated Employees

Estimated 6,665 sq. ft of

total space

1,100 sq. ft Cooler Capacity

Tray/Pan Washing

Proofing & Retarding

Packaging

Par-Baking

Processing

Page 38: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Layout

C2 – 100 Stores(1) Thunderbird 200kg Mixer(1) AM Divider/Rounder(2) Sheeters(3) Ovens(39) Estimated Employees

Estimated 7,820 sq. ft of

total space

1,700 sq. ft Cooler Capacity

Tray/Pan Washing

Proofing & Retarding

Par-Baking

Processing

Packaging

Page 39: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Automatic Layout

C2 – 100 Stores(1) 200kg Horizontal Mixer(1) Divider/Rounder(2) Sheeters(1) Continuous Proofer/Oven(6) Estimated Employees

Estimated 16,500 sq. ft of

total space

1,700 sq. ft Cooler Capacity

Tray/Pan Washing

Packaging & Metal Detection

Bulk Ingredients

Processing

Proofing

Tray Packing & Metal Detection

Par-Baking

Page 40: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C3 Layout

C3 – 100+ Stores(2) Horizontal Mixers(2) Divider/Rounders(2) Sheeters(1) Continuous Proofer/Oven(12) Estimated Employees

5,615 sq. ft Cooler Capacity

Estimated 56,700 sq. ft of

total space

Tray/Pan Washing

Par-Baking

Packaging

Processing

Proofing

Bulk Ingredients

Sheeting

Cooling

Page 41: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C1 - 5 Stores - 22 Batches/Day60Qt MIXER (7) 10kg Family Pan Batches (15) 10kg Traditional 10" Batches

BatchingDivide/RoundRest (3-10min)Sheeting

Proofing

Retarding

OvenCooling

Packaging

C1 - 5 Stores - 3 Batches/Day200kg MIXER (1) 70kg Family Pan batch (2) 80kg Traditional 10" Batches

BatchingDivide/RoundRest (3-10min)SheetingProofingRetardingOvenCoolingPackaging

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs

C1 – Option 1(1) Hobart 60Qt Mixer Manual Dividing/Rounding(1) Sheeter(1) Oven (Store Oven, Off Hours)

C1 – Option 2(1) Thunderbird 200kg Mixer(1) AM Divider/Rounder(2) Sheeters(1) Oven (Store Oven, Off Hours)

C1 Production Time Study

Traditional

Par-Bake

Traditional

Par-Bake

1 ShiftUp to 5 Stores22 Batches/Day4 Employees

1 ShiftUp to 5 Stores3 Batches/Day3 Employees

Page 42: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 - 20 Stores - 10 Batches/Day200kg MIXER, MINIMUM OVENS (3) (3) 90kg Family Pan batches (7) 90kg Traditional 10" Batches

BatchingDivide/RoundRest (3-10min)SheetingProofingRetarding

OvenCooling

Packaging

C2 - 60 Stores - 28 Batches/Day200kg MIXER, MINIMUM OVENS (3) (9) 90kg Family Pan batches (19) 90kg Traditional 10" Batches

BatchingDivide/RoundRest (3-10min)SheetingProofingRetarding

OvenCooling

Packaging

C2 - 100 Stores - 46 Batches/Day200kg MIXER, MINIMUM OVENS (3) (14) 90kg Family Pan batches (32) 90kg Traditional 10" Batches

BatchingDivide/RoundRest (3-10min)SheetingProofingRetarding

OvenCooling

Packaging

C2 – Option 1(1) Thunderbird 200kg Mixer(1) AM Divider/Rounder(1) Automated Scale(2) Sheeters(3) Ovens

C2 Manual Production Time Study

TraditionalPar-Bake

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs 11hrs 12hrs 13hrs 14hrs 15hrs 16hrs 17hrs 18hrs 19hrs 20hrs 21hrs 22hrs 23hrs 24hrs

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs 11hrs 12hrs 13hrs 14hrs 15hrs

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs

1 ShiftUp to 20 Stores10 Batches/Day11 Employees

2 ShiftsUp to 60 Stores28 Batches/Day26 Employees

3 ShiftsUp to 100 Stores46 Batches/Day39 Employees

Page 43: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 - 100 Stores - 42 Batches/DayOVENS TO MATCH BATCH SIZE (13) 100kg Family Pan Batches (29) 100kgTraditional 10" Batches

BatchingDivide/RoundRest (3-10min)Sheeting

Proofing

Retarding

OvenCooling

Packaging

C2 – Optimization(1) Thunderbird 200kg Mixer(1) Divider/Rounder(1) Automated Scales(2) Sheeters(9) Ovens

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs 11hrs 12hrs 13hrs 14hrs

C2 Manual Production Labor Optimization

Traditional

Par-Bake

15hrs

Optimize Oven Size

2 ShiftsUp to 100 Stores42 Batches/Day30 Employees

Page 44: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C2 Auto - 100 Stores - 42 Batches/DayOVEN/COOLING TO MATCH BATCH SIZE (13) 100kg Family Pan Batches (29) 100kg Traditional 10" Batches

BatchingDivide/RoundRest (3-10min)SheetingProofing

OvenCoolingPackaging

C2 – Automatic(1) 200kg Horizontal Mixer(1) Divider/Rounder(2) Automated Scales(2) Sheeters(1) Continuous Proofer/Oven(1) Spiral Cooler(1) Automated Bagger/Tray Packer(1) Automated Dough Ball Tray Packer

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs 11hrs 12hrs 13hrs 14hrs

C2 Automatic Production Time Study

Traditional

Par-Bake

15hrs

2 ShiftsUp to 100 Stores42 Batches/Day6 Employees

16hrs

Page 45: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

C3 - 285 Stores - 47 Batches/Day400kg MIXERS - TWO BATCHES AT A TIME (14) 250kg Family Pan batches (33) 250kg Traditional 10" Batches

BatchingDivide/RoundRest (3-10min)SheetingProofing

OvenCoolingPackaging

1hr 2hrs 3hrs 4hrs 5hrs 6hrs 7hrs 8hrs 9hrs 10hrs 11hrs 12hrs

C3 Production Time Study

Traditional

Par-Bake

1 Shift285 Stores47 Batches/Day12 Employees

C3 – 100+ Stores(2) Horizontal 400kg Mixers(2) Divider/Rounders(2) Automated Scales/Metal Detectors(2) Sheeters(1) Continuous Proofer/Oven(1) Spiral Cooler(1) Automated Bagger/Tray Packer(1) Automated Dough Ball Tray Packer

Page 46: Y.R.I. Confidential August 1, 2012 YRI Guidance on Pizza Hut Dough Commissary

Y.R.I. Confidential

Commissary Cost Comparison

Item Unit Cost C1 - Opt 1 C1 - Opt 2 C2 - 20 Stores C2 - 60 Stores C2 - 100 Stores C2 - Auto C3 - AutoBatch Water Meter $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $8,000Ingredient Scales $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $4,000Mixer $25,000 $16,750 $25,000 $25,000 $25,000 $25,000 $180,000 $360,000Divider/Rounder $30,000 --- $30,000 $30,000 $30,000 $30,000 $130,000 $260,000Automated Scale $30,000 --- --- $30,000 $30,000 $30,000 $60,000 $60,000Metal Detector $30,000 --- --- $30,000 $30,000 $30,000 $60,000 $60,000Sheeters $6,000 $6,000 $12,000 $12,000 $12,000 $12,000 $85,000 $125,000Conveyors Varies --- --- --- --- --- $390,000 $780,000Proofers Varies $25,000 $13,500 $13,500 $13,500 $13,500 $250,000 $350,000Retarders Varies $40,000 Use Cooler $18,000 $18,000 $18,000 --- ---Ovens $15,000 Store Store $37,500 $37,500 $37,500 $350,000 $450,000Spiral Chiller Varies --- --- --- --- --- $300,000 $500,000Packaging Varies --- --- --- --- --- $300,000 $300,000Cooler Varies $15,000 $16,000 $26,000 $52,000 $66,000 $66,000 $200,000Equipment Total $108,750 $102,500 $228,000 $254,000 $268,000 $2,177,000 $3,457,000

Work Tables $750 $2,500 $2,500 $5,500 $5,500 $5,500 $5,500 $5,500Tray Washer/Dryer $20,000 Store Store $20,000 $20,000 $40,000 $120,000 $170,000Sinks $5,000 $1,000 $1,000 $5,000 $5,000 $5,000 $5,000 $15,000Hose Stations $1,500 --- --- $4,500 $4,500 $4,500 $4,500 $7,500Trays/Dollies/Racks Varies $20,000 $25,000 $83,000 $205,000 $335,000 $335,000 $740,860Pans/Lids $25 $6,500 $6,500 $25,000 $48,000 $48,000 $48,000 $155,000Bulk Ingredients Varies --- --- --- --- --- $1,000,000 $1,205,000Ancillary Total $30,000 $35,000 $143,000 $288,000 $438,000 $1,518,000 $2,298,860

Equipment & Ancillary Total $138,750 $137,500 $371,000 $542,000 $706,000 $3,695,000 $5,755,860