fogo investor presentation _june 2015

8/20/2019 Fogo Investor Presentation _June 2015

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Investor PresentationJune 2015


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Forward-Looking Statements

Some of the statements contained in this presentation constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar

expressions concerning matters that are not historical facts, such as statements regarding the Company’s future financial con dition or results of operations, its prospects and strategies for future growth, the development and introduction of

new products, and the implementation of its marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,”

“predicts,” “potential,” “seeks,” “intends,” “targets” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this presentation reflect the Company’s current views about future events and are subject to risks, uncertainties, ass umptions and changes in circumstances that may cause events or its actualactivities or results to differ significantly from those expressed in any forward-looking statement. Although the Company believes that its assumptions are reasonable, it cannot guarantee future events, results, actions, levels of activity,

performance or achievements. You are accordingly cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-

looking statements, including, but not limited to, those factors described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its prospectus. These factors include without limitation:

changes in general economic or market conditions, both in the United States and Brazil; increased competition in the Company’s industry; risk associated with its Brazilian operations and any other future international operations; its ability to

manage operations at its current size or manage growth effectively; its ability to successfully expand in the United States and other new markets; its ability to locate suitable locations to open new restaurants and to attract guests to its

restaurants; the fact that it will rely on its operating subsidiaries to provide it with distributions to fund its operating activities, which could be limited by law, regulation or otherwise; its ability to continually innovate and provide its consumers

with innovative dining experiences; its ability to maintain recent levels of comparable revenue or average revenue per square foot; the ability of its suppliers to deliver beef in a timely or cost-effective manner; its lack of long-term supplier

contracts, its concentration of suppliers and distributors and potential increases in the price of beef; its ability to raise money and maintain sufficient levels of cash flow; conflicts of interest with the THL Funds; the fact that upon listing of its

common stock, the Company will be considered a “controlled company” and exempt from certain corporate governance rules primar ily relating to board independence, and its intention to use some or all of these exemptions; its ability to

effectively market and maintain a positive brand image; changes in government regulation; the Co mpany’s ability to attract an d maintain the services of its senior management and key employees; the availability and effective operation of

management information systems and other technology; changes in consumer preferences or changes in demand for upscale dining experiences; the Company’s ability to accurately anticipate and respond to seasonal or quarterly fluctuations

in its operating results; its ability to maintain effective internal controls or the identification of additional material weaknesses; the Company’s expectations regarding the time during which it will be an emerging growth company under the

JOBS Act; changes in accounting standards; and other risks described in the “Risk Factors” section of the prospectus.

Although the Company believes that the assumptions inherent in the forward-looking statements contained in this presentation are reasonable, undue reliance should not be placed on these statements, which only apply as of the date hereof.Except as required by applicable securities law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of

unanticipated events.

Non-GAAP Financial Measures

This presentation contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most

directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or s tatements of cash flow of the company. The Company has provided a reconciliation of Adjusted EBITDA, a non-

GAAP financial measure, to net income in the Appendix to this presentation. Adjusted EBITDA is presented because management believes that such financial measure, when viewed with the Company’s results of o perations in accordance with

GAAP and the reconciliation of Adjusted EBITDA to net income (loss), provides additional information to investors about certain material non-cash items and about unusual items that the Company does not expect to continue at the same level

in the future. Adjusted EBITDA is used by investors as a supplemental measure to evaluate the overall operating performance o f companies in the Company’s industry, you should not consider it in isolation, or as a substitute for analysis of

results as reported under GAAP. Our calculation of Adjusted EBITDA may not be comparable to that reported by other companies. For additional information about our non-GAAP financial measures, see our filings with the Securities and

Exchange Commission.

Availability of Prospectus

The Company has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents

the Company has filed with the SEC for more complete information about the Company and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov . Alternatively, the Company, anyunderwriter, or any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting: (1) Jefferies LLC, by calling toll-free (877) 547-6340 or by email to [email protected], or (2) J. P.

Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by calling toll-free at 1-866-803-9204.

The registration statement relating to the Company’s securities has not yet become effective and the securities may not be so ld nor may offers to buy be accepted prior to the time the registration statement becomes effective. This

presentation shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of thes e securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification

under the securities laws of any such jurisdiction.

JOBS Act

The Company is an “emerging growth company” within the meaning of the Jumpstart Our Business Startups Act. As a result, the Company will be subject to reduced public company reporting requirements. No securities will be offered or sold

and no offers to buy will be accepted prior to the time the Company’s registration statement becomes effective.

1

Forward-Looking Statements


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2

Larry Johnson

Chief Executive Officer

Years at Fogo: 8 yrs

Experience: 35+ yrs

Associated with Fogo: 19 yrs

Barry McGowan

President


Experience: 30+ yrs

Tony Laday

Chief Financial Officer

Years at Fogo: 1 yr

Experience: 20+ yrs

Selma Oliveira

Chief Operating Officer


Experience: 25+ yrs

Michael Prentiss

Chief Accounting Officer


Experience: 15+ yrs

Gerry McGrath

General Counsel

Years at Fogo: < 1 yr

Experience: 30+ yrs

Associated with Fogo: 10 yrs

Andrew Feldmann

Senior Vice President of

Marketing and Sales


Experience: 15+ yrs

Jandir Dalberto

President, Brazil


Experience: 28+ yrs

Average of Over 25 Years of Industry Experience

Senior Leadership with Extensive Industry Experience

Note: Shading indicates members of management in attendance.


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Brazilian Born Churrascaria with Authenticity at Our Core

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• Founded in Porto Alegre, Brazil in 1979

– 37 restaurants including one JV in MexicoCity

• Fire-roasted Brazilian cuisine

• Utilize churrasco, a traditional Southern

Brazilian cooking method

• Differentiated dining experience

– Approachable fine-dining

• Highly-trained gaucho chefs

– Drives ~2/3 the labor costs of full-servicepeers

Our Concept


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4

Our Gaucho Chefs Are a Key Point of Differentiation

• Trained in the cooking technique of

churrasco

• 12-15 gauchos per restaurant

• Butcher, prepare, cook and serve

•

Provide a tailored and interactivedining experience

– Guests control variety, quantityand pace

• Import talent to ensure brand

consistency and authenticity

• Drives financial benefits for our

model

Skilled Artisans


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A High-Energy, Differentiated Dining Experience

Continuous

Service

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Customization

Control

High-Quality

Authentic Interactive


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Award Winning Concept

Best Steakhouse in São PauloBest Steakhouse

Americas Best Restaurants

Best Churrascaria

Silver Spoon Award

Five Skewers

Nation’s Restaurant News

Best Service

Fogo de Chão is the recipient of numerous awards and accolades from critics and

reviewers in Brazil and the United States

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Multiple “Best Of” Awards


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9

Delivering Leading Financial Results

Average Unit Volume

Labor Costs(2)

Restaurant Contribution Margin

Advantage

$8.0M $3.6M higher

20.8% 1,150bps lower

32.5% 1,230bps higher

Cash-on-Cash Returns 57.7% 2,520bps higher

Net Income Margin 9.9%

(3)

520bps higher

Note: Represents FY 2014.

(1) Includes BBRG, BJRI, BLMN, CAKE, CHUY, DFRG, DRI, RUTH and TXRH.

(2) Excludes DFRG and RUTH labor costs as they are not reported separately.(3) Pro forma for the IPO and concurrent refinancing of the existing Senior Credit Facilities.

Full-

Service

(1)

Average

$4.4M

32.3%

20.2%

32.5%

4.7%


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52

A Brand Poised for Global Growth

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Significant U.S. Opportunity with 100+ Additional Units IdentifiedFocus on Top 50 DMAs

26 Restaurants

in the U.S.

10 Restaurants

in Brazil

Joint venture restaurant (Mexico City)

Company-owned restaurant

2

2


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9

Investment Highlights

• Differentiated, Award Winning

Concept with Broad Appeal

• Unique Model Drives Long-TermOperating Advantages

• Industry-Leading Restaurant-Level

Financials

•

Proven Portability with SignificantWhitespace


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Our Menu

• Streamlined prix-fixe menu

– Up to 20 cuts of meat

Our Kitchen

• Simple, space efficient cooking technique

Our Service Model

• Self-service Market Table

• Dual role gaucho chefs

• Continuous table-side service

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Unique Operating Model Drives Long-Term Advantages


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20.8%

32.3%

15.0%

25.0%

35.0%

29.9%29.4%

15.0%

25.0%

35.0%

Labor as % of RevenueFood & Beverage Costs as % of Revenue

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Driving Significant Labor Efficiency and Allowing Us To…

Source: Company filings and Wall Street research.

Note: Represents FY 2014 results.(1) Includes BBRG, BJRI, BLMN, CAKE, CHUY, DFRG, DRI, RUTH and TXRH.

(2) Includes BBRG, BJRI, BLMN, CAKE, CHUY, DRI and TXRH. Excludes DFRG and RUTH as they do not report labor costs separately.

Full-Service Average (2)Full-Service Average (1)

• Dual role of gauchos – both chef and server

• Simple cooking technique and food offering

• Self-service Market Table

1,150 bps

• Food costs in-line with peers

• Flexible food sourcing model


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$59

$110

$90

$76$72 $71

$62

$0

$20

$40

$60

$80

$100

$120

Median: $74

Average Check


Note: Represents FY 2014.

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Deliver a Compelling Value Proposition

• Average check of fine-dining peers is approximately 25% more


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16%

26%

33%

23%

2%

0%

5%

10%

15%

20%

25%

30%

35%

33%

45%

16%

7%

0%

10%

20%

30%

40%

50%

Less than $75k $75k - $150k $150k - $250k $250k+

A Dining Experience With Broad Guest Appeal

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Purpose of Visit

Household Income

Source: Company commissioned email survey and credit card data.

Notes: Represents U.S. data. Gender mix represents average of commissioned email survey data and credit card data.

Businessmeal

Familymeal

OtherFriendsSignificantOther/

Date

• Guests come to Fogo for awide array of occasions

• Demonstrated appeal to

both men and women

– Over 40% of our guests are

female

• A majority of our guests visit

two or more times per year


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Industry-Leading Financial Metrics

A U V

F o o d a n d L a b o r

C o s t s ( 2 )

R e s t a u r a n t

C o n t r i b u t i o n %

$8.0

(1)

$12.1$5.7$4.3 $10.5$7.1$4.4$3.1 $5.7$5.2$4.9$4.4 $4.7$3.4 $4.2$3.3$3.1$2.9

32.5%20.3%20.2%18.6%18.0%17.9%16.1% 20.5%

50.7%

Note: $ in millions. Represents FY 2014.

(1) Excludes NY Location.

(2) Excludes DFRG and RUTH as they do not report labor costs separately.

(3) Excludes BLMN and DRI as they do not report financial results by concept.

(4) Pro forma for the IPO and concurrent refinancing of the existing Senior Credit Facilities.

60.5% 57.5%61.9%64.5% 61.7% 60.1%62.2%

20.6%

C - o - C R e t u r n ( 3 )

(1)

50.4%33.0%26.7% 30.7% 32.0% 35.1% 44.2%24.4% 36.6%27.0% 57.7%

24.2%

N e t I n c o m e %

2.9% 4.7% 4.8% 5.5%2.1% 9.9%(4)5.5%5.1%4.6%3.2%

16


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15

Our Growth Strategies

• Expand Our Restaurant Base

•

Increase Our ComparableRestaurant Sales

• Improve Margins by Leveraging

Our Infrastructure and

Investments in Human Capital

to Support Growth


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Our Global Growth Plan

U.S. Development

• Primary market for new restaurant growth

• Potential for 100+ new restaurants

– Mix of large and mid-size markets across urban and suburban locations

• Focus on the top 50 DMAs

– Over 25 markets we believe are multi-unit markets

• Plan to open 3-4 U.S. restaurants in 2015 including San Juan (opened in Q1)

Brazil Development

• Continue to opportunistically open restaurants in Brazil

• Maintains authentic and distinctive heritage and supports global growth

• Opened one restaurant in 2015 (Rio De Janeiro)

Other International

Development

•

Targeting growth in large “Capital Cities” • Grow utilizing a combination of asset-light joint ventures and company-

owned development

• First JV restaurant opened in Mexico City in May 2015

At Least 10% Annual Company-owned Restaurant Growth plus Accelerating JV Development


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Demonstrated Track Record of Successful New Restaurant Growth

3

4

3

5 - 6

27

31

34

39 - 40

0

15

30

45

2012 2013 2014 2015E

2014 Openings

• San Jose, CA (Q1)

• Portland, OR (Q2)

• Los Angeles, CA (Q4)

2013 Openings

• San Diego, CA (Q3)

• Rosemont, IL (Q3)

• Jardins, BR (Q4)

• New York, NY (Q4)

2012 Openings

• Orlando, FL (Q1)

•

Center Norte, BR (Q4)

• Boston, MA (Q4)

Annual Restaurant Growth

% Unit Growth 13% 15% 10% 15% - 18%

(Including 1 JV)

2015 Openings YTD

• San Juan, PR (Q1)

• Rio De Janeiro, BR (Q2)

• Mexico City, MX (JV – Q2)

Restaurant OpeningsRestaurants – Beginning of Year

2016 sites leased; working on 2017 pipeline

Under Construction

• Houston, TX (Woodlands)

• 2nd Houston Location

• San Francisco, CA

• Chicago, IL (Naperville)

• 3rd Chicago Location

• Las Vegas, NV (Summerlin)

• 2nd Las Vegas Location


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Highly Attractive New Unit Economic Model

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Average Unit Volume $7.0

Restaurant Contribution Margin 27.0%

Net investment Cost(2) $4.5

Cash-on-Cash Return 40.0%+

Payback Period ~2.5 years

Year 3 Target

Note: $ in millions.

(1) Calculated as of FYE 2014 and includes only restaurants open for at least three years.

(2) Includes cash impact of tenant allowance and excludes pre-opening costs.

New restaurants opened since 2007 have generated

cash-on-cash returns of greater than 50%(1)

Recent Openings Outperforming Target


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137

112 110

8769 69 68

59

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Highly Attractive Concept For Real Estate Developers

Annual Traffic Per Restaurant(1)

Median: 69K(in 000s)


(1) Calculated by dividing AUV by average check.

(2) Excludes New York location.

Smaller Format Drives Flexible Real Estate Model

(2)

Free-Standing In-Line Lifestyle Mall

San Jose, CA San Juan, PRWashington, D.C.Addison, TX


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• Development process is led by our CEO

• Internal real estate team has over 93 years of combined experience

• Sites are identified and prioritized by internal real estate team

– Tour and evaluate potential sites for construction criteria, visibility,and accessibility to primary customers

– Utilize a national real estate broker to assist with search

• Deploy third party site selection tools to validate internally generated

analysis

• Development committee recommends new locations to our board of

directors for approval

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Disciplined Approach to Site Selection


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21

Increase Comparable Restaurant Sales

• Comparable restaurant sales initiatives are designed to drive trial and frequency while increasing average check

Grow Group DiningIncrease Customer EngagementSeafood EntréeShrimp Cocktail Appetizer

Menu Strategy and Innovation

Small Plates

Bar Design

Beverage Innovation

Enhanced Bar Experience – Bar Fogo


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Financials

Financials

22


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(1) Figures shown on a constant currency basis of R$2.84 per USD, which represents the derived exchange rate for the first quarter of Fiscal 2015.

$49 $50

$63

$30

$40

$50

$60

$70

2012 2013 2014

$202$219

$262

$100

$150

$200

$250

$300

2012 2013 2014

27

31 34

10

20

30

40

2012 2013 2014

$61

$69

$85

$50

$60

$70

$80

$90

2012 2013 2014

Proven Track Record of Growth

SSS: (1.3%) 1.3% 5.0%

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Restaurant Growth Revenue

Restaurant Contribution Adjusted EBITDA

Margin %: 30.4% 31.3% 32.5% Margin %: 24.3% 23.0% 24.1%


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• Substantially completed investment in

corporate and restaurant key functions to

support future growth

• Invested approximately $5.5M in incremental

annualized fixed personnel costs since the

beginning of 2012

–18 corporate positions, 16 local salesmanagers and five assistant managers

Investing to Support Our Growth

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Functional Areas Supplemented By Investment

Incremental Personnel Costs

6.4%

8.3% 8.2%

0.0%

4.0%

8.0%

12.0%

2012 2013 2014

G&A % of Sales

(1)

Note: $ in millions

(1) Excludes $5.5 million in equity compensation related to the 2012 acquisition.

•Executive Team

• New Store Development

• Marketing

•Finance/Accounting

• Operations

$0.4

$5.5

$1.5

$2.3

$1.3

$0.0

$2.0

$4.0

$6.0

2012 2013 2014 Full Year

Impact of

2014

Investment

Annualized


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(1) Figures shown on a constant currency basis of R$2.84 per USD, which represents the derived exchange rate for the first quarter of Fiscal 2015.

$13$15

$5

$10

$15

$20

Q1'14 Q1'15

$61

$65

$50

$55

$60

$65

$70

$75

Q1'14 Q1'15

32

35

20

30

40

Q1'14 Q1'15

$18

$21

$15

$20

$25

Q1`14 Q1'15

Momentum Continues in Q1’15

25

Restaurant Growth Revenue

Restaurant Contribution Adjusted EBITDA (0.1%) 0.6%SSS

29.5% 31.6% 20.6% 23.0%Margin: Margin:


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469.3

493.7

560.1

350.0

450.0

550.0

650.0

2012 2013 2014

USDA Beef Index(1)

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Flexible Platform and Disciplined Food Cost Management

(1) Data sources: USDA Economic Research Service calculations based on Bureau of Labor Statistics and USDA Agricultural Marketing Service Data; represents all fresh beef retail value,

cents/lb.

COGS % of Sales

31.6%

30.6%

29.9%

29.0%

29.5%

30.0%

30.5%

31.0%

31.5%

32.0%

32.5%

33.0%

2012 2013 2014

Despite increasing beef costs, COGS margin has decreased as a percent of sales driven by

innovative, margin accretive product launches, mix shift and waste reduction initiatives


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(1) Reflects $20 IPO price and full exercise of the over-allotment option.

As of March 29, 2015

Actual

As

Adjusted(1)

Cash & Cash Equivalents $17.3 $17.3

Total Debt $247.9 $164.9

Net Debt $230.6 $147.6

Net Debt / LTM 3/29/15 Adjusted EBITDA 3.5x 2.3x

LTM 3/29/15 Adjusted EBITDA $65.4 $65.4

Capitalization


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Long-Term Financial Goals

28

10%+ Company-owned Restaurant Unit Growth plus Joint Venture Development

Low Single Digit Annual Consolidated Comparable Restaurant Sales Growth

G&A and Operating Leverage

13-15%+ Annual EBITDA Growth

18-20% Annual EPS Growth

Note: These targets are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond control

of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary and these variations may

be material. For discussion of some of the important factors that could cause these variations, please consult the “Risk Fact ors” section of the preliminary prospectus. Nothing in thispresentation should be regarded as a representation by any person that these goals will be achieved and the Company undertakes no duty to update its goals.

fogo investor presentation _june 2015

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