Biglari Holdings Inc. · NYSE:BH
Biglari — Steak & Shake — Shareholder Meeting (February 2004)
40 slides from Biglari's shareholder meeting presentation, Feb 12, 2004
Slide 1: 2004 Annual Shareholders Meeting
2004 Annual Shareholders Meeting February 11, 2004
Slide 2: Building on the strong foundation of Steak n Shake
We are building on the strong foundation of Steak n Shake, by reinforcing the Virtuous Cycle and offering our restaurants to an ever expanding circle of raving fans EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES. Pe state ounteabins f= THE STEAK N SHAKE VIRTUOUS CYCLE GROW
Slide 3: The Virtuous Cycle begins with capable leaders
The Virtuous Cycle begins with capable leaders who are able to energize our associates - and our challenge is to develop each leader to their full potential EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES. 1 THE STEAK N SHAKE 4 1 VIRTUOUS CYCLE 1 s rae serrer care E Z s 7 R
Slide 4: Manager turnover has decreased to 26.3% in Q1
Manager turnover has decreased to 26.3% in Q1 Trailing 13 Period Manager Turnover Rates 41% a L | i a @ fer] or) i a FY D4
Slide 5: Field management staffing level remained above 100% in Q1
The field management staffing level remained above 100% in Q1 Manager Staffing Level 103.0% 102.0% 101.0% 100.0% aK 99.0% JE 98.0% oT 97.0% 96.0% 95.0% 94.0% d at a2 as a4 at 04
Slide 6: Key objectives and initiatives to recruit, train and motivate leaders
Key objectives and initiatives are in place to recruit, train and motivate effective leaders
Slide 7: Our next challenge is to take better care of our associates
Our next challenge is to take better care of our associates, because we will only succeed when we help our associates realize their full potential as they serve each other and our guests EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES. 7 ENABLE OUR LEADERS THE STEAK N SHAKE
Slide 8: Crew turnover is still a large opportunity
We have made some progress but crew turnover is still a large opportunity. It will continue to be a major focus in 2004 Crew Turnover 202% to2% 188% . ri 177% Quarter % Crew Turnover
Slide 9: Company-wide EYW scores have increased in Q1
Company-wide EYW scores have once again increased in Q1 Company-Wide EYW Scores
Slide 10: Nearly 84% of stores have Earn Your Wings scores above 90%
Nearly 84% of stores have Earn Your Wings scores in excess of 90% Stores with >90%EYW Scores foc} DEYW Scores
Slide 11: Key objectives and initiatives to retain associates
Key objectives and initiatives are in place to retain associates, match them with the right challenge, train and motivate them $1.02 EFS for FYD4|
Slide 12: Together our challenge is to better serve our guests
Together our challenge is to better serve our guests so that they are delighted and want to return, fueling a bright future EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES. 7 ENADLE OUR LEADERS 4 THE STEAK N SHAKE 1 VIRTUOUS CYCLE ‘ouests ——_S A STRONG FOUNDATION AND HERITA
Slide 13: Same store sales trends have improved substantially
After a difficult period ending in Q1 of ‘03, and in spite of negative industry trends, same store sales trends have improved substantially and are driving profits Quarterly Same Store Sales
Slide 14: Table service improved directionally
Table service, a key driver of guest satisfaction, improved directionally Mystery Shop Scores Table Service 76.4 71.6 67.4 [] April June October December
Slide 15: Service performance gains were maintained in December
Service performance gains were maintained in December Mystery Shop Scores Overall Performance 86.0 86.0 83.5 81.2 L April June October December
Slide 16: Total Shake Sales increased 32% over prior year
Total Shake Sales increased 32% over prior year in the 1st Quarter Total Shake Sales (000) 9 10 11 12 13 1 Period
Slide 17: Credit cards continue to contribute to sales growth
Credit cards continue to contribute to sales growth through both incremental guest visits and higher average check Credit Card Usage - Percent of Sales 20% + Percent af Saks 45,07, 10% 5% 0% Period 5 6 7 8 9 10 11 12 13 * Highest credit percentage of any DMA - Dallas - 36%
Slide 18: Same store sales growth during non-coupon weeks
During non-coupon weeks same store sales have grown and each time have increased at a greater rate Conpamble Sales 12 [Ciange verses Prior Year 8 6 1077-1228 420-607 TBS 921-118
Slide 19: Hot Fudge Milk Shake and Double Steakburger promotions
Add Hot Fudge to any Milk Shake and the Double Cheese Double Steakburger 70th Anniversary Dinner launched December 28, 2003. Hot Fudge in a Cold Milk Shake. Looking back, it was 0 obvious.
Slide 20: Bringing guests to our restaurants and serving them better
place to bring guests to our restaurants, and serve them better by knowing their needs, delighting them with food and service, and addressing their concerns
Slide 21: Serving each stakeholder well to enhance margins
By serving each stakeholder well and managing our assets wisely we can also enhance our margins EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES. 7 ENABLE OUR LEADERS F—=[ THE STEAK N SHAKE Pastel (=f Tae aren cane Fo) erin onsunnerocatts f= | as va a a GROW SALES, PROFITS A
Slide 22: Food Cost exceeded PY by 0.6% due to commodity prices
Food Cost exceeded PY by 0.6% due to increases in commodity prices Food Cost as a Percentage of Sales Q1 FY '03 Q1 FY '04
Slide 23: Restaurant labor as a percentage of sales decreased
Restaurant labor as a percentage of Sales decreased 0.6% vs. PY driven by efficiencies resulting from Same Store Sales increases ee, Restaurant Labor as a Percentage of Sales Q1 FY'03 Q1 FY'04
Slide 24: Key objectives to optimize labor and variable costs
Key objectives and initiatives are in place to optimize labor and other variable costs, improve EVA on capital invested, and improve G&A efficiency
Slide 25: Improving core operations to reach more people
As we improve our core operations we are capable of reaching more people with our own stores and franchises EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES, A ANADLE OUR LEADERS rh THE STEAK N SHAKE 1 VIRTUOUS CYCLE or our associates =| s s a ry GROW SALES, PROFITS AND SHAR
Slide 26: Continued growth in the number of stores
We have continued to grow the number of stores in our system Company-Owned mFranchised 404 413
Slide 27: Expected new unit openings during FY '04
The Company expects to open 15 - 18 new units during FY ‘04. Four have opened so far, with an additional four slated for Q2 with encouraging early results. LL Qi Location DMA Status Brownsburg, IN Indianapolis Opened 10/6/03 Pleasant Hills, PA Pittsburgh Opened 11/3/03 Plano, TX Dallas Opened 11/10/
Slide 28: Five new franchise candidates approved in the last year
We have approved five new Franchise candidates in the last year which are pursuing potential locations. Additionally, existing franchisees continue to expand a @ One candidate has been selected to develop each of the following new DMA's: Tulsa, OK Oklahoma City, OK Ft. Smith (Springdale/Rogers), AR
Slide 29: Key objectives to open new units and add franchisees
Key objectives and initiatives are in place to open new units, upgrade existing units, and add new franchisees Franchi
Slide 30: Taking care of fundamentals to reward shareholders
By taking care of the fundamentals we are able to reward our shareholders and continue the Virtuous Cycle EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES. ENABLE OUR LEADERS 1 THE STEAK N SHAKE VIRTUOUS CYCLE a s Or our cursts t Ye wake serrer care or our E Sms —_! A STRONG
Slide 31: Business model has been the source of major value creation
The result of this outstanding business model has been the source of major value creation = Steak n Shake has steadily grown sales and earnings Systenewide Sales — Steak n Shake (in millions) Adjusted Net Earnings (Non-GAAP in milliors) ons worn SSA son i | I wis wa wis ‘ena / | I I 1900 2000 2001 0
Slide 32: Adjusted net earnings is a non-GAAP measure
Adjusted net earnings is a non-GAAP measure that excludes the provision for restaurant closings. = Net earnings in accordance with GAAP is adjusted for the $5.2 million ($3.4 million after tax or $.13 per diluted share) provision for restaurant closings recorded in the fourth quarter of fiscal year
Slide 33: Provision for nine restaurant closures
In the reporting of Fiscal 2003 results, we announced the decision to record provision for nine restaurant closures of $5.2M ($3.4M net of taxes - or $.13 per Diluted Share). LL During 2003 we completed a review of all restaurants, identified problem stores and identified actions to maximize value f
Slide 34: Earnings improved consistently over the last years
Earnings improved consistently over the last 3 years with growing momentum LL Diluted Earnings Per Share (adjusted) $0.30 $0.25 i ial $0.20, | i $0.15 heat i— a DE Fiscal 2001) = Fiscal 2002 $0.10 | | 4] iaiFiscal 2003 $0.05 all imi ml $0.00 ‘ ‘st Qtr) 2nd Otr| 3rd Qtr 4th Ctr}
Slide 35: Q1 Sales were up 12%
Q1 Sales were up 12% $101,285 Q1 FY '03 Sales in 000s $113,516 Q1 FY'04
Slide 36: Q1 Net Earnings exceeded prior year by 34.9%
Q1 Net Earnings exceeded prior year by $1.2 million, or 34.9% Net Earnings in 000s $4,590 Q1 FY '03 Q1 FY '04
Slide 37: Q1 '04 EPS was up 30%
Q1 ‘04 EPS was up $.04 cents, or 30% Earnings Per Share $0.17 Q1 FY '03 Q1 FY '04
Slide 38: Earnings per share expected in the range of $.98 to $1.02
Earnings per share have shown steady progress and are expected to be in the range of $.98 to $1.02 Earnings Per Share (adjusted)
Slide 39: Shareholders have benefited from the early progress
Shareholders have benefited from the early progress ‘On January 21, 2004, the stack closed at its all tine high of $21.70 sla) 50 - $18.13 $9.97 $11.63 i | Q1'03 Q1'04 Q2'04 thru 2/10/04 3
Slide 40: Building on the strong foundation of Steak n Shake
We are building on the strong foundation of Steak n Shake, by reinforcing the Virtuous Cycle and offering our restaurants to an ever expanding circle of raving fans EXPANDING THE REACH OF STEAK N SHAKE WITH MORE RESTAURANTS AND FRANCHISES. 7 ENADLE OUR LEADERS 1 THE STEAK N SHAKE : VIRTUOUS CYCLE y