Noble Roman's, Inc. · OTC:NROM
Noble Roman's — Shareholder Meeting (June 2012)
60 slides from Noble Roman's's shareholder meeting presentation, Jun 27, 2012
Slide 1: Business Review – Annual Shareholder's Meeting
Business Review Annual Shareholder’s Meeting June 27, 2012 NOBLE ROMAN’S, INC. Contains 60 Slides 1
Slide 2: Business Model Overview
Two Foodservice Brands Non-Traditional Foodservice Focus BUSINESS MODEL OVERVIEW 2
Slide 3: Foodservice Brands
FOODSERVICE BRANDS Noble Roman’s Pizza Primary nameplate Pizza focused Menu diversity as needed Tuscano’s Italian Style Subs Secondary nameplate Sub focused Usually a supporting role 3
Slide 4: Non-Traditional Foodservice
NON-TRADITIONAL FOODSERVICE Providing Delicious Food Where People Want to Enjoy It Putting the End Consumer in Control of the Eating Occasion Very Often Inside Another Type of Business Whose Focus is Not Foodservice ◘ Not a Traditional Destination Restaurant Experience 4
Slide 5: Non-Traditional Venues
NON-TRADITIONAL VENUES A Venue is Similar to a Retail Channel of Distribution Venues Represent Different Target Markets for Selling Franchise & Licensing Agreements Individual Venues Differ in Relative Opportunity Over Time Macroeconomic variables which impact the overall economy Microecon
Slide 6: Examples of Non-Traditional Venues
EXAMPLES OF NON-TRADITIONAL VENUES Convenience Stores & Travel Plazas Grocery Delis Bowling & Entertainment Centers Parks & Attractions Military Bases Hospitals Universities 6
Slide 7: Current Macroeconomic Conditions
Strategy Considerations CURRENT MACROECONOMIC CONDITIONS 7
Slide 8: Macroeconomic Considerations
MACROECONOMIC CONSIDERATIONS Recessionary Aftermath & Slow Recovery Limited Access to Traditional Financing Bank Lending Equipment Leasing Small Business Finance Cautionary Climate By business decision makers By individual consumers 8
Slide 9: Global Economics
GLOBAL ECONOMICS U.S. GDP Growth 1st Qtr 2012 Revised Down to 1.9% Growth Federal Reserve Estimates Overall 2012 Growth at 1.9% to 2.4% European Union Growth 1st Qtr 2012 Stated to be (.1%) Contraction Overall 2012 Estimated to be (.3%) Contraction Global Uncertainties Greece, Spain,
Slide 10: Food Stamp Growth
FOOD STAMP GROWTH Approximately 1 in 7 Americans or 14% of the Population Receives Food Stamp Assistance 10
Slide 11: Commodities
COMMODITIES Agriculture & Energy Related Commodities were Almost Universally High in 2011 So far in 2012 Some Agricultural commodities have decreased Cheese prices have reduced to near long-term average But corn is down and wheat is up Petroleum has spiked then retreated 11
Slide 12: Cheese Prices (Block Cheddar/lb)
CHEESE PRICES (BLOCK CHEDDAR/LB) $1.850 $1.800 $1.750 $1.700 $1.650 $1.600 $1.550 $1.500 $1.450 $1.400 $1.350 2011 Average 2012 Average 5 Year Average Current Spot 12
Slide 13: Wheat Prices (Spot Price/Bushel)
WHEAT PRICES (SPOT PRICE/BUSHEL) $6.600 $6.400 $6.200 $6.000 $5.800 $5.600 $5.400 $5.200 June 2011 Spot Wheat 5 Year Average 13
Slide 14: Crude Oil Prices (Spot Price per Barrel)
CRUDE OIL PRICES (SPOT PRICE PER BARREL) $130.00 $125.00 $120.00 $115.00 $110.00 $105.00 West Texas $100.00 Brent Sea $95.00 $90.00 $85.00 $80.00 June 2011 Oct 2011 Mar 2012 Current Dec 2008: West Texas $40, Brent Sea $42 14
Slide 15: Volatility Is the Greater Issue
VOLATILITY IS THE GREATER ISSUE Convenience store operators are more concerned with large price swings than the actual price itself Imagine the mood of an operator if they filled 50,000 gallons of underground tanks with $3.80 gas and then prices suddenly drop to $3.50 . . . 15
Slide 16: Market Conclusions
MARKET CONCLUSIONS Decision Makers Still Exercising Great Caution World-wide Economy Still Fragile Commodities Still High and Somewhat Volatile Better Established Companies Have Access to Some Cash for Revenue Growth Opportunities ◘ Consumers Are Still Seeking Good, Fresh Products with Price-V
Slide 17: Business Strategy Execution
Increasing Revenues Controlling Costs BUSINESS STRATEGY EXECUTION 17
Slide 18: Benefit of Weak Economy
BENEFIT OF WEAK ECONOMY Low Interest Rate Environment Banks Vying for Strong Business Models with Safe Cash Flows 18
Slide 19: NRI Debt Refinancing
NRI DEBT REFINANCING Debt has been reduced to $4.9m Entered into a credit agreement with BMO Harris Bank N.A. on May 15, 2012 48 month term LIBOR + 4%, Which Currently Totals 4.25% Eliminated balloon payment due Wells Fargo Bank in October, 2012 Lowered NRI’s overall effective interest r
Slide 20: Venue Focus Remains Same as 2011
VENUE FOCUS REMAINS SAME AS 2011 Revenue Building Focusing on: Foodservice franchising in convenience stores Especially medium sized chains with professional organizations and better access to capital Take-N-Bake licensing in grocery delis With an emphasis on growth through partnerships wi
Slide 21: Non-Traditional Unit Agreements
NON-TRADITIONAL UNIT AGREEMENTS Company Name Signed Prior Signed in 2012 Total in Chain Gateway Triangle Corp 2 2 30 Costcutter Nottley Dam 0 1 1 Bill Dover 0 1 10 Unified Grocers 0 1 1 The Pantry 0 1 1,650 Huck’s 0 10 112 Fort Belvoir 1 1 2 E.J. Goal Mind 0 1 1 Bimor Station 0 1 10 Magnolia Foods 1
Slide 22: Grocery Take-N-Bake Locations
GROCERY TAKE-N-BAKE LOCATIONS Total Development as of June 20, 2012 Number of Signed Licensing Agreements 1,106 Number of Locations that Have Opened 915 22
Slide 23: Grocery Take-N-Bake Revenue
GROCERY TAKE-N-BAKE REVENUE $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2009 Act. 2010 Act. 2011 Act. 2012 Proj. 2013 Proj. 23
Slide 24: Controlling Costs
CONTROLLING COSTS Growth Requires Minimal Increases in Field Staffing Only Keeping Tight Control On Overhead Spending in one area necessitates cuts in another Increases in Trade Show & Travel Expenses: Part of the revenue generating strategy in target venues Diversity and number of new u
Slide 25: Trade Show Productivity
TRADE SHOW PRODUCTIVITY Last Grocery Distributor Food Show 10 Signed Agreements While On Site Prospects Representing An Additional 51 Locations Last Grocery Industry Trade Show Leads for 30 Chains Representing 3,134 Units Leads for 6 New Grocery Distributors 25
Slide 26: Grocery Take-N-Bake Venue
Target Market Economic Flow GROCERY TAKE-N-BAKE VENUE 26
Slide 27: Noble Roman's Licensing Efforts
NOBLE ROMAN’S LICENSING EFFORTS Develop Distribution Agreements with Grocery Distributors Sign Licensing Agreements with Grocery Distributor Customers Service Grocery Distributors Through Noble Roman’s Foodservice Distributors Inventory Consolidators 27
Slide 28: How Grocery Distributors Are Supplied
HOW GROCERY DISTRIBUTORS ARE SUPPLIED 28
Slide 29: Advantages of Grocery Distributors
ADVANTAGES OF GROCERY DISTRIBUTORS Gives Our Program Instant Credibility with Their Customers/Members Allows Noble Roman’s Access to Their Customer/Member Database for Marketing Permits Noble Roman’s to Present at Distributor Food Shows Provides Additional Support Through Inside Sales Staff
Slide 30: Grocery Distributors
GROCERY DISTRIBUTORS Signed, Not Currently Active Current Prospect Yet Stocked 30
Slide 31: Revenue Stream from Grocery TNB
REVENUE STREAM FROM GROCERY TNB Each Pizza Sold Represents Approximately $1.16 per Pizza in Revenue to NRI However, Revenue Does Not Flow Directly From the Sale of Individual Pizzas Income flows from sales of our consolidators to grocery distributors Consolidators pay NRI once per month 31
Slide 32: Take-N-Bake Revenue Flow
TA K E-N-BAKE REVENUE FLOW Noble Roman’s, 32
Slide 33: Unique Grocery Take-N-Bake Factors
UNIQUE GROCERY TAKE-N-BAKE FACTORS Still a new market with relative inexperience Difficult to engage the end retailer with helpful data collection Retailers do narrow/expand, drop/add the program over time Retailers adjust space seasonally and around major holidays Once well established wi
Slide 34: Examples of Units
Non-Traditional Convenience Store Grocery Take-N-Bake EXAMPLES OF UNITS 34
Slide 35: Huck's Location – Evansville, IN
HUCK’S LOCATION - EVANSVILLE, IN 35
Slide 36: Huck's – Evansville, IN
Huck’s – Evansville, IN 36
Slide 37: Grocery TNB – Heber City, UT
GROCERY TNB - HEBER CITY, UT 37
Slide 38: Heber City, UT
Heber City, UT 38
Slide 39: Grocery TNB – Houston, TX
GROCERY TNB - HOUSTON, TX Strategic Use of the Merchandising Package Is Helpful for Program ID 39
Slide 40: Tamaroa, IL
TAMAROA, IL Cross-Marketing in the Frozen Pizza Aisle 40
Slide 41: What's Cooking in R&D
1 Example: Stand-Alone Take-n-Bake WHAT’S COOKING IN R&D 41
Slide 42: Extrapolation Requests from TNB
EXTRAPOLATION REQUESTS FROM TNB Some Grocery Operators Have Been Requesting the Flexibility to Top to Order Using all the traditional pizzeria ingredients Some Grocery Operators Have Been Requesting the Flexibility to Locate Independently of the Grocery We are Always Looking for Ways to Incr
Slide 43: Extended Take-N-Bake Development
EXTENDED TAKE-N-BAKE DEVELOPMENT We Have Already Gone Through the Time & Effort to Develop Take-N-Bake Make Charts and Operational Systems for “Live Topping” The Natural Thought . . . How Else Can This Work be Leveraged to Further Increase Revenues? 43
Slide 44: Stand-Alone Take-N-Bake Operations
STAND-ALONE TAKE-N-BAKE OPERATIONS There is Currently Only 1 National Company Competing in this Space: Papa Murphy’s® There are a Few Smaller, Regional Players There are Very Few Local, Mom & Pop Players 44
Slide 45: Papa Murphy's Facts
PAPA MURPHY’S FACTS ® 2011 System-Wide Sales Said to be $702 mil 2011 Sales Were Reportedly Up 10%, with Same Store Sales Up 5% Had 1,300 Units in Operation at the End of 2011 Reported an Average Per-Unit Volume in 2009 of $560,171 Sources: Papa Murphy’s International, LLC Franchise Disclosu
Slide 46: Food Stamp Eligibility
FOOD STAMP ELIGIBILITY Papa Murphy’s Locations are Able to Accept EBT (Food Stamp) Payments in Most Locations Estimates Say that Individual Papa Murphy’s Locations Bring at Least 10% to as Much as 25% of Their Sales in EBT* Represents a Growing Sales Opportunity Not Available for Prepared, Tra
Slide 47: Prototype Concept
PROTOTYPE CONCEPT freshP’ZA Logo 47
Slide 48: Prototype Exterior Elevation
PROTOTYPE EXTERIOR ELEVATION Building Facia 48
Slide 49: Prototype Menu Offering
PROTOTYPE MENU OFFERING Menu Baord 49
Slide 50: Prototype Interior Elevation
PROTOTYPE INTERIOR ELEVATION Layout 50
Slide 51: Prototype Interior Layout
PROTOTYPE INTERIOR LAYOUT 51
Slide 52: Estimated Prototype Initial Investment
ESTIMATED PROTOTYPE INITIAL INVESTMENT Franchise Fee $15,000 Equipment & Restaurant Wares $38,500 - $42,500 Service Counters $4,000 - $5,000 Estimated Costs Signage & Décor $8,000 - $10,000 Construction & Build-Out $47,500 - $67,500 (Less: Landlord Improvement Allowance) ($0 - $30,000) Estimated Ini
Slide 53: Estimated Prototype Economics
ESTIMATED PROTOTYPE ECONOMICS Mid-Range Weekly Gross Sales $8,000 - $10,000 Annualized Gross Sales $416,000 - $520,000 Cost of Goods Sold & Discounts 38% of Gross Sales Gross Margin 62% of Gross Sales Operating Expenses 42% of Gross Sales Estimated Operating Income (before Owner Salary) 20% of Gross
Slide 54: Prototype Stages Only
PROTOTYPE STAGES ONLY Development of the idea has taken place over the last 12 months or so An existing Noble Roman’s Non-Traditional Franchisee who was an early adopter of TNB is committed to opening the first prototype First prototype location will be located in the Plainfield, IN market N
Slide 55: Advantages of Prototype Concept
ADVANTAGES OF PROTOTYPE CONCEPT Non-Traditional Take-N-Bake Space has Far Fewer Competitors than Traditional QSR Piggy-Backs on Existing Product, Procedures and Distribution Very Simple & Focused Operation Appears to have Attractive Start-Up and Operating Economics Utilizes a Franchise Agr
Slide 56: Current Status of Prototype
CURRENT STATUS OF PROTOTYPE Not Occupying Sales Efforts Being Managed Purely as an R&D, Operational & Franchise Services Project May Quickly Expand Prototype Testing to Additional Interested Parties Will Monitor Results Before Making a Commitment to General Expansion 56
Slide 57: On-Going Product R&D
ON-GOING PRODUCT R&D Always Have a Pipeline of Projects Using Retail Cheesy Stix in Non-Traditional Locations New Chicken Dippers – Boneless Chicken to Offset Cost Issue with Chicken Wings Spicy Meatballs & Sauce – Utilizes Existing Ingredients in an Appealing Way Experimenting with Flatbr
Slide 58: Concluding Remarks
Non-Traditional & Grocery Take-n-Bake Prospect Pipelines Expanding Grocery Take-n-Bake Experience Continuing to Mature General Macroeconomics are Still Concerning Stand-Alone Take-n-Bake Looks Promising as Potential Revenue Enhancer CONCLUDING REMARKS 58
Slide 59: Noble Roman's, Inc. – End of Presentation
End of Presentation NOBLE ROMAN’S, INC. The statements contained in this presentation concerning the company's future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Refor
Slide 60: Investor Relations
INVESTOR RELATIONS Paul Mobley, Chairman & CEO 1 Virginia Ave., Suite 300 Indianapolis, IN 46256 317-634-3377 ● [email protected] NOBLE ROMAN’S, INC. 60