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QSR Inc Bryan Cowan Andrew Spano Time Period Food Entrep. Patrons Partners Total Pre-Class 3 7 8 18 Day 1 4 6 0 10 Day 2 10 2 0 12 Day 3 4 6 1 11 Day 4 2 3 5 10 Total 23 24 14 61 A Fast Casual Restaurant Accelerator focused on finding the next big concept in QSR restaurants – the fastest growing segment in the industry at roughly 11% per year Sarah Drew

QSR Columbia 2015

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Page 1: QSR Columbia 2015

QSR Inc

Bryan Cowan Andrew Spano

Time PeriodFood

Entrep.Patrons Partners Total

Pre-Class 3 7 8 18

Day 1 4 6 0 10

Day 2 10 2 0 12

Day 3 4 6 1 11

Day 4 2 3 5 10

Total 23 24 14 61

A Fast Casual Restaurant Accelerator focused on finding the next big concept in QSR restaurants – the fastest

growing segment in the industry at roughly 11% per year

Sarah Drew

Page 2: QSR Columbia 2015

What is QSR Inc.?

QSR Inc

Page 3: QSR Columbia 2015

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments

• Restaurant equipment supplier

• Restaurant Consultants

• “Celebrity” Chefs and Notable Restauranteurs

• Food suppliers

• Restaurant investors

• Food vendor markets (e.g. Smorgasburg)

• Lawyers

• Restaurant designers

• Food bloggers

• PR firm

• Investors

• Function as full service fast casual restaurant

• Provide restaurant space for new fast casual concepts

• Platform to incubate and accelerate fast casual concepts

• Provide training and resources to restaurant entrepreneurs

Value to Customer:• Developing, testing and

refining QSR restaurant concepts in a low risk financial environment

• Equipping physical restaurant space

• Transaction level data

• Connecting the concept teams with an experienced support system network

Value to Consumer: • Cutting edge restaurant

concepts and high quality dining experiences

• Providing a platform for key feedback, allowing patrons to feel a part of the development process

• Offering ancillary special event services

Value to Investor:• Vetting and testing

concept teams that have a higher likelihood of success

Concept Teams

• Dedicated personal assistance

• Communities of other concept teams

• Co-creation of new fast casual restaurant

Restaurant Patrons

• Communities allowing for reviews of restaurant concepts

• Ability to co-create on next new restaurant concept

Multi-Sided Platform

Concept Teams

• Recent culinary school graduates who do not have business experience

• Food truck or market vendors who want to transition into brick and mortar

• Individuals with a restaurant idea but no formal experience

Restaurant Patrons

• Mass market in urban area

• Work lunch crowd

• People ordering in for dinner or picking up dinner on their way home

Key Resources

Channels

Physical:

• White box restaurant space

• POS system

Human:

• Skilled restaurant operators and employees

Financial:

• Equipment lease line

Intellectual:

• Brand

• Recruitment outreach

• Brand awareness campaigns via food blogs, newspapers and magazines

Cost Structure Revenue Streams

• Rent (equipment and restaurant space) and food costs

• Salaries, advising fees, PR/marketing fees

• POS system fees

• Change-over costs

• Renting fee charged to concept teams for restaurant space

• Revenue share model of restaurant food sales to restaurant patrons

• Equity ownership of concept teams

Business Model Canvas – Day 1

Page 4: QSR Columbia 2015

Concept Teams

• Recent culinary school graduates who do not have business experience

• Food truck or market vendors who want to transition into brick and mortar

• Individuals with a restaurant idea but no formal experience

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments

• Restaurant equipment supplier

• Restaurant Consultants

• “Celebrity” Chefs and Notable Restauranteurs

• Food suppliers

• Restaurant investors

• Food vendor markets (e.g. Smorgasburg)

• Lawyers

• Restaurant designers

• Food bloggers

• PR firm

• Restaurant and Hospitality Associations

• Function as full service fast casual restaurant

• Provide restaurant space for new fast casual concepts

• Hold taste tests and investor events

• Platform to incubate and accelerate fast casual concepts

• Provide training and resources to restaurant entrepreneurs

• Host consumer forum for real-time feedback and interaction

Value to Concept Team:• Developing, testing and

refining QSR restaurant concepts in a low risk financial environment

• Equipping physical restaurant space

• Transaction level data

• Connecting the concept teams with an experienced support system network

• Special PR and investor events (e.g., tastings)

• Get: Restaurant association

• Get/Keep: Co-creation of new restaurants

• Keep: Dedicated assistance

• Grow: Communities of alumni other concept teams

Key Resources

Channels

Physical:

• White box restaurant space

• POS system

Human:

• Skilled restaurant operators and employees

Financial:

• Equipment lease line

Intellectual:

• Brand

• Recruitment outreach

Cost Structure Revenue Streams

• Rent (equipment and restaurant space) and food costs

• Salaries, advising fees, PR/marketing fees

• POS system fees

• Change-over costs

• Renting fee charged to concept teams for restaurant space

• Equity ownership of concept teams

Business Model Canvas – Day 2

Restaurant Patrons

• Mass market in urban area

• Work lunch crowd

• People ordering in for dinner or picking up dinner on their way home

Restaurant Investors

• Angel, Venture, and Growth Stage funders

• Get: Ability to co-create new restaurant concepts

• Get/Keep: Loyalty programs

• Keep: Communities allowing for reviews of restaurant concepts

• Keep: Quality product

• Grow: Online forums /PR

• Revenue share model of restaurant food sales to restaurant patrons

• Brand awareness campaigns via food blogs, newspapers and magazines

Value to Consumer: • Cutting edge restaurant

concepts and high quality dining experiences

• Providing a platform for key feedback, allowing patrons to feel a part of the development process

• Offering ancillary special event services

Value to Investor:• Vetting and testing concept

teams that have a higher likelihood of success

• Get/Keep/Grow: Network / Success / Success

Page 5: QSR Columbia 2015

Concept Teams

• Recent culinary/hospitalityschool graduates who do not have business experience

• Food truck or market vendors who want to transition into brick and mortar

• Individuals with a restaurant idea but no formal experience

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments

• Restaurant equipment supplier

• Restaurant Consultants

• “Celebrity” Chefs and Notable Restauranteurs

• Food suppliers

• Food vendor markets (e.g. Smorgasburg)

• Flea markets

• Hospitality schools

• Culinary schools

• Lawyers

• Restaurant designers

• Food bloggers

• PR firm

• Restaurant and Hospitality Associations

• Function as full limitedservice fast casualrestaurant

• Provide restaurant space for new fast casual concepts

• Hold taste tests and investor events

• Platform to incubate and accelerate FC concepts

• Provide training and resources to restaurant entrepreneurs

• Host consumer forum for real-time feedback and interaction

Value to Concept Team:• Developing, testing and

refining QSR restaurant concepts in a low risk financial environment

• Equipping physical restaurant space

• Transaction level data

• Connecting the concept teams with an experienced support system network

• Special PR and investor events (e.g., tastings)

• Get: Restaurant association

• Get/Keep: Co-creation of new restaurants

• Keep: Dedicated assistance

• Grow: Communities of alumni other concept teams

Key Resources

Channels

Physical:

• White box restaurant space

• POS system

Human:

• Skilled restaurant operators and employees

Financial:

• Equipment lease line

Intellectual:

• Brand (or track record?)

• Recruitment outreach

Cost Structure Revenue Streams

• Rent (equipment and restaurant space) and food costs

• Salaries, advising fees, PR/marketing fees

• POS system fees

• Change-over costs

• Renting fee charged to concept teams for restaurant space

• Equity ownership of concept teams

• Partner recommendation fee

Business Model Canvas – Day 3

Restaurant Patrons

• Mass market in urban area

• Work lunch crowd

• People ordering in for dinner or picking up dinner on their way home

Restaurant Investors

• Angel, Venture, and Growth Stage funders

• Get: Ability to co-create new restaurant concepts

• Get/Keep: Loyalty programs

• Keep: Communities allowing for reviews of restaurant concepts

• Keep: Quality product

• Grow: Online forums /PR

• Revenue share model of restaurant food sales to restaurant patrons

• Brand awareness campaigns via food blogs, newspapers and magazines

Value to Consumer: • Cutting edge restaurant

concepts and high quality dining experiences

• Providing a platform for key feedback, allowing patrons to feel a part of the development process

Value to Investor:• Vetting and testing concept

teams that have a higher likelihood of success

• Get/Keep/Grow: Network / Success / Success

Page 6: QSR Columbia 2015

Concept Teams

• Recent culinary/hospitality school graduates who do not have business experience

• Fine dining line cooks

• Food truck or market vendors who want to transition into brick and mortar

• Individuals with a restaurant idea but no formal experience

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments

• Restaurant equipment supplier

• Restaurant consultants

• “Celebrity” chefs and notable restauranteurs

• Food suppliers

• Food vendor markets (e.g. Smorgasburg)

• Flea markets

• Hospitality schools

• Culinary schools

• Fine dining restaurants

• Lawyers

• Restaurant designers

• Food bloggers

• PR firms

• Restaurant and hospitality associations

• Platform to incubate and accelerate FC concepts

• Provide white box restaurant space andfunction as limited service restaurant for new FC concepts

• Provide training and resources to entrepreneurs

• Host consumer forum for real-time feedback and interaction

• Hold taste tests and investor events

Value to Concept Team:• Developing, testing and

refining QSR restaurant concepts in a low risk financial environment

• Equipping physical restaurant space

• Transaction level data

• Connecting the concept teams with an experienced support network

• Special PR and investor events (e.g., tastings)

• Get: Restaurant association

• Get/Keep: Co-creation of new restaurants

• Keep: Dedicated assistance

• Grow: Communities of alumni concept teams

Key Resources

Channels

Physical:

• White box restaurant space

• POS system

Human:

• Skilled restaurant operators and employees

• Access to restaurateur network

Financial:

• Equipment lease line

Intellectual:

• Brand / track record

• Recruitment outreach

Cost Structure Revenue Streams

• Rent (equipment and restaurant space) and food costs

• Salaries, advising fees, PR/marketing fees

• POS system fees

• Change-over costs

• Renting/upfront/monthly fee charged to concept teams for restaurant space

• Equity ownership of concept teams

• Partner recommendation fee

Business Model Canvas – Day 4

Restaurant Patrons

• Mass marketDestinationdiners in urban area

• Work lunch crowd

• People ordering in for dinner or picking up dinner on their way home

Restaurant Investors

• Angel, venture, and growth stage funders

• Get: Ability to co-create new restaurant concepts

• Get/Keep: Loyalty programs

• Keep: Communities allowing for reviews of restaurant concepts

• Keep: Quality product

• Grow: Online forums /PR

• Revenue share model of restaurant food sales to restaurant patrons

• Brand awareness campaigns via food blogs, newspapers and magazines

Value to Consumer: • Cutting edge restaurant

concepts and high quality dining experiences

• Providing a platform for key feedback, allowing patrons to feel a part of the development process

Value to Investor:• Vetting and testing concept

teams that have a higher likelihood of success

• Get/Keep/Grow: Network / Success / Success

Page 7: QSR Columbia 2015

Concept Teams

• Recent culinary/hospitality school graduates who do not have business experience

• Fine dining line cooks

• Food truck or market vendors who want to transition into brick and mortar

• Individuals with a restaurant idea but no formal experience

Key Partners Key Activities Value Proposition Customer Relationship Customer Segments

• Restaurant equipment supplier

• Restaurant consultants

• “Celebrity” chefs and notable restauranteurs

• Food suppliers

• Food vendor markets (e.g. Smorgasburg)

• Flea markets

• Hospitality schools

• Culinary schools

• Fine dining restaurants

• Lawyers

• Restaurant designers

• Food bloggers

• PR firms

• Restaurant and hospitality associations

• Local Governments

• Platform to incubate andaccelerate FC concepts

• White box restaurant space and function as limited service restaurant for new FC concepts

• Large kitchen space for all teams

• Provide training and resources to entrepreneurs

• Host consumer forum for feedback and interaction

• Hold taste tests and investor events

Value to Concept Team:• Developing, testing and

refining QSR restaurant concepts in a low risk financial environment

• Equipping physical restaurant space

• Transaction level data

• Connecting the concept teams with an experienced support network

• Special PR and investor events (e.g., tastings)

• Kitchen and office space for teams

• Fast Casual “Playbook”

• Get: Restaurant association

• Get/Keep: Co-creation of new restaurants

• Keep: Dedicated assistance

• Grow: Communities of alumni concept teams

Key Resources

Channels

Physical:

• White box restaurant space

• POS system

Human:

• Skilled employees

• Food Advisors

Financial:

• Equipment lease line

• Seed funding

Intellectual:

• Brand / track record

• Recruitment outreach

• Direct Sales

• Earned/Paid media

Cost Structure Revenue Streams

• Rent (equipment and restaurant space) and food costs

• Salaries, advising fees, PR/marketing fees

• POS system fees

• Change-over / Re-design costs

• Renting/upfront/monthly fee charged to concept teams for restaurant space

• Equity ownership of concept teams

• Partner recommendation fee

Business Model Canvas – Day 5

Restaurant Patrons

• Destination diners in urban area

• Work lunch crowd

• People ordering in for dinner or picking up dinner on their way home

Restaurant Investors

• Restaurant angel, venture, and growth stage investors

• Economic and Community Development

• Get: Ability to co-create new restaurant concepts

• Get/Keep: Loyalty programs

• Keep: Communities allowing for reviews of restaurant concepts

• Keep: Quality product

• Grow: Online forums /PR

• Revenue share model of restaurant food sales to restaurant patrons

• Brand awareness campaigns via food blogs, newspapers and magazines

Value to Consumer: • Cutting edge restaurant

concepts and high quality dining experiences

• Platform for feedback -part of the dev. process

Value to Investor:• Vetting and testing concept

teams that have a higher likelihood of success

• Get/Keep/Grow: Network / Success / Success

Page 8: QSR Columbia 2015

Key Learnings

Opening a restaurant is a “lonely” experience

CustomersOffer back office / kitchen space for

pipeline teams to work

What? How did we find out? Implications

1

Established food vendors/trucks will generate their own

publicity and they are easy to identify

PR Firms, Food Bloggers, Customers

Focus customer acquisition / “get” strategy on market

vendors and food trucks

2

The single greatest value we can provide is retail and kitchen space

Customers

Increase the size of the kitchen such that

multiple teams can utilize at once

3

Select incubators in NYC are granted space or

fundsCustomers, Advisors

Reach out to potential investment / economic

development funds

4

Page 9: QSR Columbia 2015

Value Proposition

Value to Customer

Value to Consumer

Value to Investor

Problem Solution Features

• Finding and securing attractive restaurant space

• Need space to prove concept for investors

• Partnering with credible and useful vendor and investors

• Challenge of managing costs

• Discovering new and innovative food options

• Extremely high failure rate of restaurants

• Desire to enter attractive investment space

• Leap of faith investment decisions with little to no available data

• A white box restaurant space available to test launch and refine product / menu

• Community of advisors, experts, and entrepreneurs

• Access to investors

• A fast casual restaurant which changes concept every few months

• A location that is known to customers as having high quality, new, and innovative concepts

• Increased deal-flow in an attractive industry

• Partnership providing first-look access to vetted restaurant concepts

• Actual data demonstrating proof of concept

• Retail selling space and commercial grade kitchen

• Advisors and business model assistance

• Vendor and investor relationships

• Training from experienced restaurant operators

• Loyalty rewards program, which incentivizes customer interaction and feedback on food and concept

• Meet-up’s and events focusing on up-and-coming restaurant entrepreneurs

• Restaurant venture fund

Page 10: QSR Columbia 2015

Customer Segments

Food Truck Owners Market Vendors Culinary/Hospitality Grads Aspiring Food Entrepreneurs

Background• Operating one or several

food truck(s) in NYC• Already Established brand• No experience

owning/operating a brick and mortar restaurant

• Started with a food truck to mitigate risk

• Focus on savory dishesMotivations• Expansion of business• Diversification into brick

and mortarPain Points• Cost of retail market• Regulation issues

associated w/ trucks• Risk associated with

opening a restaurant• Scale and inventory

management

Background• Participating in one or more

NYC food markets (e.g. Smorgasburg, Chelsea Market)

• Already Established brand• No experience

owning/operating a brick and mortar restaurant

• Focus on savory dishesMotivations• Expansion of business• Pursuit of permanent

locationPain Points• Cost of retail market• Risk associated with

opening a restaurant• Instability and lack of

resources at markets• Lack of organized

mentorship

Background• Recently graduated from

culinary school• Interest in fast casual

market• Non-pastry chefs• Interest in the business side

of the culinary industryMotivations• Owning a quick service

restaurant• Business aspect of culinary

industryPain Points• Inexperience with

owning/operating brick and mortar restaurant

• No brand value• Lack of connections with

potential partners (e.g. food suppliers)

Background• Business professionals who

want to quit their jobs and start fast casual restaurants

• Spent several years in the workforce

• Strong business/finance experience

Motivations• Pursing their passions• Opportunistic investments• Entrepreneurial drivePain Points• Zero culinary experience• No brand value• Lack of connections with

potential partners (e.g. food suppliers)

• Inexperience with owning/operating brick and mortar restaurant

Page 11: QSR Columbia 2015

Paid and Earned: Key Influencers (e.g., Bloggers)

Service Fee

Direct Sales: Market Vendors

and Trucks

Indirect

Recruit from

schools

Company run social

media

Investors

Profit Share Food Sales

COGS / SGA

Direct Sales

Equity Flows

Dollar Flows

Next Stage Flows

Cust. Acquisition Flows

KEY

Channels

Direct

Word of Mouth &

Referral

QSR Inc

Channels and Revenue Model – Day 1

Page 12: QSR Columbia 2015

Paid and Earned: Key Influencers (e.g., Bloggers)

Service Fee

Direct Sales: Market Vendors

and Trucks

Indirect

Recruit from

schools

Company run social

media

Investors

Profit Share

Grants/Seed $/Free Space

COGS / SGA

Interm

ediatio

n Fee

Direct Sales

Equity Flows

Dollar Flows

Next Stage Flows

Cust. Acquisition Flows

KEY

Channels

Direct

Word of Mouth &

Referral

QSR Inc

Channels and Revenue Model – Day 5

EDF / Gov’t $

Food Sales

Page 13: QSR Columbia 2015

Revenue Model

Potential Revenue Stream

Cashflows Amount

Service Fee In $5,000-$20,000

Revenue Share In 1% - 5%

Equity In 5% - 15%

Restaurant Costs Out Variable

Incubator Overhead Out Variable

Service Fee Revenue Share Equity

• Charge up front monthly service fee to be part of incubator

• Taka a portion of revenue off the top to help cover incubator overhead

• Restaurant revenue will cover costs of running restaurant

• Concept teams will take any remaining profit

• We will taka a percentage of all concepts equity to share in the upside potential of the business

• We also believe, and are still testing the possibility of taking an intermediary fee from investors for providing investment opportunities (1% - 5% of deal value)

• Economic and Community Development Funds (To be tested)

• GI Education Dollars (To be tested)

Other Potential Revenue Streams

Page 14: QSR Columbia 2015

Competitive Landscape

Culinary Incubators

Fine Dining Rotational

TV / Competitions

Restaurant Groups

Communal /Commissary Kitchens

Food Markets / Trucks

Restaurant Consultants

Page 15: QSR Columbia 2015

Critical Next Steps

1

2

3

4

5

Next 2 weeks: Test MVP

Confirm our Hypothesis or Iterate/Pivot

Next 2 weeks: Formalize Get Strategy

Develop both physical and web demand creation models

Next 6 mos: Est. Partner/Vendor Relationships

Sell concept via growth/scale opportunities

Next 2-3 mos: Finalize Cost and Revenue Structure

Deep dive into fixed (rent) vs. variable (switching, food) costs; Build revenue/fee/equity guidelines

Next 6-12 mos: Customer Validation

Find first accelerator class

Page 16: QSR Columbia 2015

MVP

Page 17: QSR Columbia 2015

MVP – Home Page

Page 18: QSR Columbia 2015

MVP – Our Program

Page 19: QSR Columbia 2015

Appendix

Page 20: QSR Columbia 2015

Key Customer Interview Insights – Day 1

Key Insights

• Having retail space to test proof of concept is probably biggest aspect of value proposition

– Construction / design issues were main frustration

– Issue of securing angel funding – they wanted proof of concept

• Not much deviation between successful QSR models

– Strict operations and inventory management is key (need to maintain margins)

• Starting a restaurant was all about networking

• Would be helpful to have many resources of opening new restaurant in same place

• Model provides low risk way to break into the space – historically many would choose a truck for lower risk

• Concept Teams need to have enough time in the accelerator to be able to see a trend

– Determine whether customers like the food with enough time to tweak the menu

• Potential customers revenue streams:

– Food trucks who already have a brand may be more willing to pay upfront than give up equity

– New entrepreneurs without a brand are more cash strapped and will want to give up equity

• Location with good foot traffic and mix of demographics is important

• Food trucks are becoming less attractive because of parking / permit issues

• Consumers would be willing to provide feedback with loyalty programs or incentives

Next Steps

• Speak to market vendors and culinary students to determine if problem exists

• Gain further insight into concept team revenue stream (revenue share vs. equity vs. fee)

Page 21: QSR Columbia 2015

Key Customer Interview Insights – Day 2

Key Insights

• Get out and talk to various markets (i.e., in addition to Smorgasburg, Madison Square Eats, Union Square Eats, better bets may be flea markets in BK, QNY, etc.)

– ~50% of flea mkt operators are not profitable b/c they don’t know how to manage/operate (need consistency, sourcing volume and scaling advice, velocity/expediting skills)

– All operators need more/better prep kitchen space

• Get out and talk to hospitality schools

• Confirmation: while culinary students will seek work at fine dining shops, there is interest for FC

• Rent: Tenants/prospects not willing to push much beyond market average (~10% of sales)

• Mkt/flea/truck operators do it for one reason: asset-lite! (*Note on food trucks – output issues, low/limited resources, and sig. work to operate; thus most QSRs using for catering/events only)

• Issues with central commissary setup and scaling

• Hardest thing in NYC – space/rent

• Rev/equity model:

– Small fee off gross sales (top line); balance of making money and growing

– Offer/recommend different platforms (suppliers, purveyors, dry goods, etc.) => receive fee

– The more owners, the less willing to part with equity (dilution!)

Next Steps

• Speak to chefs, culinary/hospitality students to determine what needs they have

• Speak to PR firms / food bloggers for sourcing concept teams

• Speak to partners (advisers, equipment suppliers, purveyors) to gauge interest and on what terms / cost structure

• Dig deeper into concept team revenue stream (revenue share vs. equity vs. fee)

Page 22: QSR Columbia 2015

Key Customer Interview Insights – Day 3

Key Insights

• Fixed kitchen equipment: grill, fryer, 6-stove burner, calibrated oven, rice cooker, smallwares (FOH/BOH), walk-in preferred, reach-ins, heat & holds, steam tables

– If used equipment, then must have warranty

– Short-term equipment rentals more expensive

– Inevitably concessions on eqp’t will need to be made for most concepts

– Entrepreneurs purchase own eqp’t?

• Chefs attraction to concept: low risk (lower reward) and stable. Chefs need knowledge, training, and relationships

• Provide playbook on QSRs and provide vendor relationships (2 camps of rels.: basic and specific)

• Time frame: 3-6 mos. Confirmed

• Partner with restaurant svcs aggregator? (The Collective)

• Rev/equity model confirmed:

– Mo. fee / upfront fee + rev. share + skin

– Catering / delivery revs?

• Address: funding needs of concept teams (Kickstarter, soft opening events, etc.)

• End customers (street patrons): destination customers, not mass market or tourists

Next Steps

• Speak to chefs, culinary/hospitality students to determine what needs they have

• Speak to PR firms / food bloggers for sourcing concept teams

• Speak to partners (advisers, equipment suppliers, purveyors, capital providers) to gauge interest and on what terms / cost structure

• Dig deeper into concept team revenue stream (revenue share vs. upfront fee vs. equity)

Page 23: QSR Columbia 2015

Market Opportunity Hypothesis (“Share of Stomach”)

Top Down Approach(1) Unit Economics(2)

Total Available Market:$456B

ServedAvailable Market:$35B

Target Market:

$2.6B

(1) The target market for the top down approach is calculated as follows: $455.9 billion in U.S. FY14 sales projections for commercial eating places (Source: National Restaurant Association (“NRA”)), $35 billion in U.S. FY14 fast casual restaurant sales (Source: Technomic); $2.5 billion is ~7% of the Projected FY14 New York restaurant sales ($34.2 billion; Source: NRA, grossed FY13 up by 2%, approx. total industry growth).

(2) Assumes average ticket price is $10 ($1 higher than Technomic’s fast casual average to account for NYC premium). 15% Margin based on discount to market comparable (Chipotle 20%; Panera 17%). 6x multiple assumes multiple locations and is discounted from larger comps (Chipotle: 28x; Panera: 12x)

Avg. Daily Customers 250

Avg. Check Size $10

Total Daily Sales $2,500

Total Annual Sales $900,000

% Margin 15.0%

EBITDA 135,000

Multiple 6.0x

Store Valuation 810,000

% Equity 10.0%

QSR Inc Value per Location $81,000

Page 24: QSR Columbia 2015

Hypothesis Testing – Value Proposition and Customer Segments

Hypothesis Experiment Pass / Fail

Customer Segments

Food trucks / market vendors / recent culinary grads do not have extensive restaurant operating experience

Speak with potential customers from these segments to determine their experience and understanding of what is required to open a restaurant

Pass: Most self-admit a lack of understanding Fail: Most interviewees have managed brick and mortar restaurants

People in urban areas enjoy the convenience of fast casual during the work day and as pick up for dinner

Interview patrons about their dinning habitsPass: Patrons indicate dinning at fast casuals 3+ times a weekFail: Majority do not visit fc rest.

Value Proposition

The main reason people are hesitant or unable to open brick and mortar restaurant locations is because of the risk involved and financial undertaking

Interview individuals who would potentially open restaurants (food trucks, culinary school grads, market vendors) and discuss their hesitations

Fail: No interviewees demonstrate interest in opening restaurants at all Fail: Majority of interviewees express other reasons unrelated to risk/cost

Interview existing fast casual restaurant founders / food truck owners and discuss the process they went through from inception to launch

Pass: Interviewees express lack of resources and difficulty finding investors without proof of conceptFail: Felt current market possesses resources necessary

Restaurant customers are eager to participate in the feedback and development of concept teams

Speak to customers eating at fast casual restaurants and ask if they would be interested in providing feedback on their experience (w/ or w/out incentives)

Pass: Strong interest from some (~10%) potential customersFail: Restaurant goers do not have an interest in providing feedback, even with incentives

Page 25: QSR Columbia 2015

Value Proposition – Findings

Hypothesis

Here’s what we thought…

We could provide value…to the concept teams…• Developing, testing, and refining QSR concepts in a low risk

financial environment• Equipping a physical restaurant space• Data• Experienced support system and network…to the consumer…• New & exciting concepts• Co-creation (feedback platform)…to the investor…• Proof of concept

Experiments

Here’s what we did…

Interviewed restauranteurs, market vendors, restaurant managers, food truck operators, ‘end’ customers, lawyers, and culinary students to understand their problems and needs

Results

So here’s what we found…

So far, each customer segment largely agrees with our value proposition. We have had no major pivots, but we have made iterations as evidenced by changes to our business model canvas

Iterate (and continued experimentation)

So here’s what we are going to do next…

• Continue to speak to chefs, culinary/hospitality students to determine what needs they have

• Speak to PR firms / food bloggers for sourcing concept teams• Speak to partners (advisers, equipment suppliers, purveyors)

to gauge terms / cost structure• Dig deeper into concept team revenue streams (revenue

share vs. equity vs. fee)

Page 26: QSR Columbia 2015

Hypothesis Testing – Channels, “Get” Strategy and Revenue Streams

Hypothesis Experiment Pass / Fail

Channels

A large portion of fast casual restaurant patrons go to the restaurants because of brand value and they have heard about the food through social media, blog, etc.

Ask restaurant patrons what are some of the reasons that they would try a new fast casual restaurant

Fail: Brand and reputation of restaurants (through blogs / social media / newspapers) is not a common reason

Established food markets (e.g. Chelsea Market, Gotham West) recruit from outdoor food flea markets (e.g. Smorgasburg, Broadway Eats) for new vendors

Speak to vendors at indoor food market to determine how they were selected

Pass: A portion of vendors (>15%) previously operated in one of the outdoor markets Fail: Virtually no vendors operated in one of the outdoor markets

Vendors at established food markets approach these markets themselves to gain after having heard of the opportunity through written media and food blogs

Interview vendors at indoor food market about how they first heard about the opportunity

Pass: A portion of vendors (>15%) reached out to the marketsFail: The majority of vendors were recruited by the markets and did not make the point of contact

“Get” Strategy

Vendors at established food markets gain entry via recruitment outreach by the markets and applications/expressions of interest from the vendors

Interview vendors at indoor food markets about their path to opening their shop

Pass: There is a mix of responses between vendor outreach and market recruitmentFail: Only one method dominates

Revenue Streams

Concept teams will be willing to give up equity to participate in the accelerator

Test appetite for product at various different equity structures with potential customers

Pass: Teams are willing to part with equity for the offeringFail: Some teams believe at least 5% equity is too high

Concept teams will be willing to pay a service/rent fee or percent of food sales along with an equity component

Interview potential customers testing various different payment schemes consisting of Equity, Revenue Share, and Service Fee

Pass: Teams are amendable to some combination of these leversFail: Model is too difficult for potential customers to understandFail: Value to customer is below profitability threshold

Page 27: QSR Columbia 2015

Channels, Get Strategy & Revenue Model – Findings

Hypothesis

Here’s what we thought…

PROSPECTIVE CONCEPT TEAMS• Channels/Get Strategy: Targeted recruitment outreach, PR,

special events, WOM, Social Media• Revenue Model: Rev share + upfront fees + equity stakeSTREET PATRONS (END CUSTOMER)• Channels/Get Strategy: PR, special events, WOM, Social

Media• Revenue Model: Arm’s length transactionsINVESTORS• Channels/Get Strategy: Relationship driven (network-

oriented)• Revenue Model: Growth/appreciation!

Experiments

Here’s what we did…

Interviewed restauranteurs, market vendors, food truck operators, culinary students, chefs, ‘end’ customers and investors to understand their needs and financial flexibility

Results

So here’s what we found…

So far, each customer segment largely agrees with our acquisition strategies and revenue model. We have had no major pivots, but we have made iterations as evidenced by changes to our business model canvas. *Note: the revenue model needs to be flushed out further

Iterate (and continued experimentation)

So here’s what we are going to do next…

• Speak to chefs, culinary/hospitality students to determine what needs they have

• Speak to PR firms / food bloggers for sourcing concept teams• Speak to partners (advisers, equipment suppliers, purveyors,

capital providers) to gauge interest and on what terms / cost structure

• Dig deeper into concept team revenue stream (revenue share vs. upfront fee vs. equity)