FWM Fairway Market 2014 Summer Conference VFINAL

8/17/2019 FWM Fairway Market 2014 Summer Conference VFINAL

1/15

Summer Conference 2014

0


2/15

Forward Looking Statements/ Safe Harbor

Except for historical information contained herein, the statements in this release are forward-looking and made

pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-lookingstatements involve known and unknown risks and uncertainties and other factors that may cause Fairway'sactual results in current or future periods to differ materially from forecasted results. Food retail is a large andhighly competitive industry, and Fairway’s business involves many risks and uncertainties, including, but notlimited to: our ability to open new stores on a timely basis or at all; our ability to achieve sustained sales and profitable operating margins at new stores; the availability of financing to pursue our new store openings onsatisfactory terms or at all; our ability to compete effectively with other retailers; our ability to maintain pricecompetitiveness; our ability to achieve the anticipated benefits of our centralized production facility; the

geographic concentration of our stores; our ability to maintain or improve our operating margins; our history ofnet losses; ordering errors or product supply disruptions in the delivery of perishable products; restrictions onour use of the Fairway name other than on the East Coast and in California and certain parts of Michigan andOhio; our ability to retain and attract senior management, key employees and qualified store-level employees;rising costs of providing employee benefits, including increased healthcare costs and pension contributions dueto unfunded pension liabilities; our ability to satisfy our ongoing capital needs and unanticipated cashrequirements; and other risk factors detailed in our filings with the Securities and Exchange Commission(“SEC”), and available at the SEC's website at www.sec.gov . You are urged to consider these factors carefully in

evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this presentation and the company undertakes noobligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Actual results could differ materially from anticipated results. More detailed information about these and other factors is set forth on Fairway’s AnnualReport on Form 10-K for the fiscal year ended March 30, 2014 and in subsequent filings with the Securities and Exchange Commission.

1

http://www.sec.gov/http://www.sec.gov/


3/15

Bill Sanford Interim Chief Executive Officer

Ed Arditte Co-President and Chief Financial Officer

Speakers

2


4/15


5/15

Unique Offering and Value Proposition

Perishable Mix~65% ~65% ~65% ~20% ~45% ~50% ~35%

ShoppingSelection

Broad70,000 SKUs

Narrow21,000 SKUs

Narrow9,500 SKUs

Narrow18,000 SKUs

Narrow3,500 SKUs

Narrow16,500 SKUs

Moderate50,000 SKUs

DemographicBroad Narrow Narrow Narrow Broad Broad Broad

CompetitivePricing Quality

Experiential

Customer Draw Destination

& LocalDestination

& LocalLocal Local

Destination& Local

Local Local

Private Label Distinct andgrowing

Distinct andgrowing

Distinct andgrowing

Small andgrowing

LargeDistinct and

growingGeneric

Conventional

Source: Fairway management estimates

10%90%

~$600 billion food retail market still dominated by conventional grocers

Channel shift towards fresh, natural and organic segment

4


6/15

Expanded prepared foods offering

− Address the focus on convenience and value

− International inspired dishes to cater to the diversityof a younger demographic

−Leverage benefits of centralized production facility

− Integrate Fairway branded products into dishes

Private Label

− Expand into new categories while increasingpenetration in existing categories

− Emphasis on quality

Sales & Merchandising

5


7/15

Private Label Product Introductions

6


8/15

Re-engineered new store design to improve workflow and drive labor efficiencies

Integrated new signage system to enhance in-store communications

− Focus on highlighting unique merchandising strategy and value proposition

Began working with Google Express to launch online shopping service

− Over 12,000 Fairway SKUs available

−

Same day delivery throughout Manhattan

Operational Initiatives

7


9/15

RI

V

MD

DE

ON

VT

NH

CT

NY

P

WV

NJ

M

Baltimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

altimore

Washington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

ashington

Philadelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

hiladelphia

New York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

ew York

Boston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

oston

Hartford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

artford

Providence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

rovidence

~90+ storeopportunity

Fairway current location

Greater NYC Metropolitan Area#1 food retail market

~$30 billion of annual sales

Northeast region represents ~90+ stores in a

~$70 billion food retail market

~50 storeopportunity

Highly Attractive Unit Growth Opportunity

8


10/15

Real Estate Pipeline

Lake Grove, New York (est. summer calendar 2014)

TriBeCa, New York (est. early calendar 2015)

Fiscal 2015

TBD

Hudson Yards, New York (est. late calendar 2015 or early calendar 2016)

Fiscal 2016

Fiscal 2017

Potential to accelerate store growth in fiscal 2017

9


11/15

6.3%

6.1%

5.3%

5.0%

FY 2011 FY 2012 FY 2013 FY 2014

Leveraging Infrastructure to Drive Profit Growth

1. Central services expenses represents G&A expenses less depreciation and amortization pertaining to G&A, management fees and expenses, fees and expenses related to the IPO, financing transaction expenses and other

non-operating expenses.2. Our Red Hook, Brooklyn location was temporarily closed beginning October 29, 2012 due to damage sustained in Hurricane Sandy and re-opened March 1,2013. As a result, net sales for the fiscal year ended March31,2013 reflect a pro forma adjustment of $25.0 million based on the Red Hook location’s results during the same 18 week period in the prior fiscal year.

Central Services Annual Expenditure (as % of net sales)1

2

10


12/15

FairwayBrandedProducts

VendorInitiatives

Increased buying power

Greater scale increasing opportunities for key suppliers

~8-9% of net sales with the potential to double penetration

CentralProductionFacility

Labor Optimization

Capital Efficiencies

Scalability

Consistency of product quality and taste

Gross Margin Initiatives

11


13/15

12

1. Produce cross-dock operations (est. Summer)

Refrigerated cross-dock to preserve cold-chain and improve product freshness andshelf life

2. Select bakery functions & central kitchenoperations (est. Summer/ Fall)

Automated production lines & state of the artequipment

Temperature controlled facility

3. Remaining store kitchen operations (est. Fall)

Production Center Update

Right : Refrigerated cooling tower .Below: Loading bays for inbound andoutbound shipping.

Anticipated Transition Schedule

Unit growth to yield labor arbitrage benefits.Improved product quality & consistency. 12


14/15

Appendix

13


15/15

FY 2011 FY 2012 FY 2013 FY 2014

General & administrative $40.0 $44.3 $60.2 $84.1

Depreciation and amortization (4.3) (5.7) (4.5) (4.3)

IPO related expenses – – (3.0) (18.1)

Management fees (1.6) (2.6) (3.5) (0.9)

Financing transaction expenses (1.3) – (6.2) (0.3)

Professional services (0.9) (1.6) (1.1) (2.3)

Severance (0.5) (1.1) (1.0) (3.5)

Non-operating expenses (0.9) (1.5) (1.2) (0.7)

Equity compensation charge – (0.4) (0.1) (11.0)

Pre-opening advertising costs – – (3.2) (2.7)

Foundation funding – – – (1.5)

Central Services1

$30.7 $31.4 $36.4 $38.8

($ in millions)

Non-GAAP Reconciliation

1. Central Services is a non-GAAP financial measure within the meaning of applicable SEC rules and regulations. The Company believes that Central Services is a useful performance measure and is used to facilitate anevaluation of infrastructure investments without distortions that may result from general and administrative expenses that do not directly relate to the operations of the business. The Company defines Central Servicesas general and administrative expenses less: depreciation and amortization related to general and administrative activities, management fees, financing transaction expenses, pre-opening advertising costs, equitycompensation, foundation funding and non-operating items. 14

Documents

FWM Fairway Market 2014 Summer Conference VFINAL