LBO Analysis: Del Frisco's Restaurant Group

Acquisition of Del Frisco’s Restaurant Group
David Fisher
Agenda
01 Industry Analysis
Industry Definition, Industry History, Industry Trends, Analyst
Reports, P orter’s Five Forces Analysis, Competition, Risk Factors
(short-term, long-term), Industry Outlook
02 Company Analysis
Company B ackground, Organizational S tructure, Management
Team, Mergers & A cquisitions, Corporate B usiness Model,
Historical Financial Analysis (Balance S heet, Income S tatement,
Cash Flow S tatement), A nalyst Reports
03 LBO Analysis
Strength o f L BO, Growth Model S trategy, Capital S tructure, Control
Premium, P rojections Assumptions, P rojections, Comparables,
LBO Model, A djusted P resent Value (APV) Model, L iquidation
Modell, Return Analysis (ROI, MOI)
04 Potential Investment Bid

Price A nalysis (Floor, Max, Target), E xit Opportunities, E xit Multiple
Analysis
Industry Analysis
Del Frisco’s Restaurant Group
Fine Dining History
Fine Dining Boom

Restaurant Division Modern e mphasis to
Chain Restaurants sustainability, a wareness
Economic b oom results
Modern Restaurants Olive Garden, in h igher income for between h ealth a nd nutrition.
Applebee’s a nd 9 9 o ther families, specialty stores Customers b egin to p ay
Shift in families h eaded
chain restaurants stored and fine d ining b egins to premium for fresher
by two working p arents, were created in a five support h igher income ingredients, n on-GMO, e tc.
shifting consumer year span. Consumer
patterns to increase in levels
loyalty b egins to d evelop
the n umber o f p eople
eating o ut
1991 1996 2005 2015 2019
Mealey, Lorri. “A History of the Rise of the Modern Day Restaurant.” The
Balance Small Business, The Balance, 13 Dec. 2018
Restaurant Industry Segmentation
Chain Mom & Pop
Fine Dining
Restaurants Shops
Industry Definition: Fine Dining

Caters to a n u pscale clientele a nd p rovides the h ighest
quality o f food with a formal a tmosphere, sit d own
restaurant, a nd fancier menu than a typical restaurant
Fine Dining Revenue Growth:

10 Y R CAGR: 7 .8%
20 Y R CAGR: 11.7%
10 Y R P remium S teakhouse CAGR: 4 .1%
Restaurant Industry S tore Growth (1995-2015)

Fine Dining CAGR: 8 .2%
Chain Restaurant CAGR: 3.99%
Mom & P op S hops CAGR: -5.34% 1995 2005 2015
$148.91B $416.2B $745.61B
“Restaurant Industry: Total Sales U.S. 1970-2017 | Statistic.” Statista,

Hyland, Rachel. "Premium Steak Restaurants in the US." IBISWorld, 2019. Accessed February 02, 2019.
Industry Composition
Geographic Focus (2018)
Industry Composition by Types o f Fine
Revenue Dining Restaurants Independent – 13% Region Weight of Stores
9.70% Northeast 35.8%

Non-Chain or franchised,
typically 1-5 stores, regional Southeast 8.6%
9.50%
and small brand recognition
Midwest 4.2%
6.70% Southwest 39.3%
West 12.1%
6.60% Chain – 42%
62.20%
5.30%
Types of Fine Dining (2016)
Directly owned and operated
by owners, typically 1-5 stores Fine Dining Type Weight
with large brand recognition
Classic Steakhouse 24.1%
Darden Resturants Inc.
Ruth's Hospitality Group Inc.
Brazilian Steakhouse 18.9%
We Create Quality Professional

Texas d e B razil Churrascaria S teakhouse
Franchised – 45% Steak and Seafood 19.5%
PPT Presentation
Flemming's
P rime S teakhouse a nd Wine B ar
Stores licensed by parent
French Cuisine 12.4%
Morton's The S teak House company, typically larger in Spanish Cuisine 7.7%
Other Fine Dining store count with recognizable
brand Italian Cuisine 8.3%
Other 9.1%
Supply Chain
Buy Goods a nd S ervices
Organization sources a variety o f vendors b ased o n
1 Plan for P urchases
Organization d ecides what p roducts should they
2
geographical location a nd p roduct type. S ince fine offer to customers, h ow much a re they selling, what
dining contains the h ighest q uality p roducts, g oods price would they p ay, a nd where it is coming from.
are rather d ifficult to find a nd h ave limited q uantities Key Factors: P rice, Time
Key Factors: Relationship, B rand
Waste
Restaurants e fficiency is b uilt o n creating minimal 3 Delivery & Consumption
Suppliers d eliver g oods to restaurant. Food
4
spoilage a nd waste in p roducts. Unfortunately, e ach undergoes a series o f p rocesses d epending o n the
year 6 3 million tons o f food is wasted in US, product a nd store, a nd is e ventually sold a nd
11.4MM d edicated to restaurants, b ut o nly .8MM consumed b y customer
tons b y fine d ining.
Purchase Analysis
Organization reviews the p revious p urchase o f 5 Recycling & Donations
Oftentimes, restaurants turn surplus that is turning
6
goods a nd services, d etermining if g oods were fairly or will turn in the n ear future a nd a n on-selling item
priced, freshness o f g oods, customer satisfaction o f and d onate to food shelters a nd soup kitchens.
product, e tc. Other times, vegetables a nd u sed o il a re recycled
and a re u sed a s fuel
Jennings, Lisa. “What Restaurants Can Do to Reduce Food Waste.” Restaurant Hospitality, 8 Feb. 2018,
Porter’s Five Forces Analysis
Barriers to E ntry: Low Buyer P ower: High Substitutes: High
01 Brand value o f incumbent firms increasing,

growing saturation h as made it more
difficult for startups to maintain p rofitability.
High cost o f capital – complex supply chain
03 Demand is d etermined b y d isposable
income a nd value o f e xperience
provided b y firms, industry h ighly
vulnerable to e conomic d ownturns, low
05 Premium food is a luxury p roduct a nd h igh
susceptible to substitution for casual, fast-
food, a nd h ome d ining e xperiences a t a
much cheaper p ricepoint
construction customer loyalty p resence
Conclusion: Medium-High
Competition: Medium Supplier P ower: High
02 04
Market h as tremendous p ush a nd p ull
Rivalry likely to increase a s the n umber o f Suppliers h ave more p ower o ver
factors that d irectly e ffect the p erformance
new e nterprises is p rojected to g row b y a n smaller chains, p remium restaurants
of the industry. Difficulty managing supply
annualized rate of 3.3%. Concentration low, face challenges a s n ecessity o f chain a nd substitutions makes industry
top 4 p layers p osses u nder 3 5% market rare/quality ingredients is d ifficult a nd
difficult.
share controlled b y few
Industry Trends
Organizational Structure
Key Trends Standard Cost-Structure
Owner Increasing Organizational Costs
Due to the complexity a nd formal n ature o f
fine d ining, job specialization h as increased
Investors labor costs b y in p ast five years b y 1 9.7% Food Costs
Labor Costs
Commercial L easing Difficulties
Building o wners h ave further created Overhead Costs
General
Manager harsher criteria for tenants, making store Upkeep
expansion d ifficult a s 7 9% o f stores a re
Executive
leased (Five Year Growth: 3 .1%)
Maitre D
Chef Ethnic Inspired Cuisine
Increasing sophistication a nd knowledge o f
Head restaurant-goers, chefs must e xpand with
Pasty Chef Captain
Bartender more g lobal flavors increasing costs (2.1% Public Restaurant EV/EBITDA
CAGR) Multiples (2013-2018)
Pastry
Waiter Bartender Vegetable-Centric Cuisine
Cooks
Increase in vegan a nd vegetarian d iets 8.7
Cocktail
(2.3% CAGR), focus o n e xotic p lant-based 9.63
Assistant
Line Cooks Busperson Waiter dishes o r vegetable-centric menu
Chef
9.68
Environmental S ustainability
Bar Back Initiative a nd focus o n e nergy a nd water 9.93
conservation a s well a s food waste
reduction 10.24
“Restaurant Valuation Multiples: Global Trends and Forecasts.” Aaron Allen & Associates, Global Restaurant Consultants, 18 Feb. 2019
Industry Trends
Change in Consumers Key Trends
Change in Clientele
Increasing Pricing on Fine
Category 1990’s 2010’s
Emergence o f youth super wealth a s well as Dining
Men 61% 47% changes in d isposable income d isbursement 8
yields a younger clientele, p rimary b etween
Women 39% 53%
18-34. Trend a lso indicates that o lder 6
generations will n o longer h ave the income
Price
Under 18 1.2% 3.1%
to g o a s frequently to fine d ining, resulting in 4
Age 18-34 15.3% 33.9% change o f p reference to more casual d ining
2
Age 3 5-44 28.7% 31.2% Increasing Operational Difficulty 0
Age 4 5-54 23.5% 9.3% Two o f the most p rominent factors in
determining the success o f a fine d ining
Age 5 5-64 19.0% 6.7% restaurant is the cost o f its steaks a nd
average food p rice, b oth o f which h ave Steak Median P rice (Per L b.)
Age 6 5+ 12.3% 4.4% almost d oubled in a n e ight year span Average Food Item
Technology Cultural Customers

Increasing n ecessity o f a ll-in- Seeking to improve e mployee Moving towards more
one restaurant management conditions to reduce p ersonal socially/envirornmentally
platforms turnover conscious p ractices
Everett, Holly. "2019 Restaurant Industry Trends: Shaping the Future of Food." Restaurant Insider. February 15, 2019. Accessed May 01, 2019
Fine Dining Risks
EVERCHANGING CUSTOMER EXPECTATIONS,
COMPLEXITY OF SUPPLY CHAIN AND PRICE
SENSITIVY RESULT IN HIGH FAILURE
R = .8827
Restaurants a re considered to o riginate in three stages: E arly S tage (0-3),
Growth S tage (4-10), Maturity S tage (10+). E arly stage restaurants fail d ue
to p oor management, supply chain issues, a nd failure to a djust to p rice
sensitivity. Growth S tage o rganizations tend to succeed d ue to b rand
recognition a nd a n e stablished customer b asis, b ut a lso fail d ue to issues in
expansion e fforts including supply chain a nd increasing o verhead. Maturity
stage fails d ue to minimal changes d uring e conomic trends a nd a n on-
upkeep o f industry trends
Failed Fine Dining (MM)

6
DJIA P rice Fine Dining S ales Revenue ($MM) 5
4
3
PROSPERITY OF FINE DINING DEPENDENT 2
ON DISPOSABLE INCOME AND GDP GROWTH 1
DJIA a nd Fining Dining Revenue h ave a n e xtremely strong correlation. A s 0
the financial markets p rosper, more d isposable income is readily a vailable 2012 2013 2014 2015 2016 2017 2018
towards luxury items. When e conomic d ownturns o ccur, the immediate
Early-Stage Growth-Stage Maturity S tage
adjustment in e xpenditures is the removal o f luxury g oods.
Industry Outlook
The Decline of Capital Spending Historical Projections
• Capital Spending will continue to fall as 2018 h ad the most fine
dining mergers (87), more than the p revious five years combined 40
Players ( MM)
(73). With larger orders, economies of scale for expensive
35
products allows capital spending to b e further stabilized
30
25
2015201620172018201920202021202220232024
The Rapid Growth in F oot Traffic Industry P layers

40
Industry Revenue
• Economists predict financial markets short and long-term success.
Greater disposable income will allow fine dining to flourish 30
• Fine dining's exponential spending increase (3x since 2015) o n
(BB)
social media will further spread branding a wareness and g enerate 20
strong returns (2015 yielded a 9.2% conversion rate)
10
0
2015201620172018201920202021202220232024
Overall Financial Projections (Five-Year)
• Revenue Growth Rate – 2.6% Revenue for the fine d ining industry h as reaching its climax, b ut
• Industry is saturated, entering ‘long-term slow-growth phase’ o f will still grow a s the e conomy h as still shown signs o f p romise.
maturity Additionally, a nalysts h ave p redicted this to b e the consolidation
• EBITDA Growth – 1.7% era within this industry, a s ~20% o f firms will e ither close o r b e
• Advancements in Management Information Systems will allow subject to M&A b y 2 024
computerization and a utomation to advance margins slightly
Company Analysis
History of Del Frisco’s
Expansion to New
IPO & Minor Expansion
Announces o ffer p rice
Markets
Purchase o f B arteca
on IPO o f $ 13 raising
Minor Expansion Efforts Restaurant Group,
$75.4MM. Opens one of
Launches three n ew stores in owner o f B arcelona Win
he largest steakhouses
new Texas regions. Revamping Bar a nd B artaco for
in Chicago. Change in
of o riginal restaurant o n B elt $325MM. Gained 3 1
Chief Operating Officer.
Line Road locations in 1 0 states
‘81 ‘90 ‘94 ’02 ‘17 ‘18
Foundation Introduction of Awards of Prosperity

Developed with focus Winery to Supply Named 1 00 B est
on u nforgettable Chain Steakhouses in America
experiences, g enuine 2016 b y Open Table.
Group a cquires well
hospitality, coupled with Leads to a ddition o f 6
renowned S ommeliers
the h ighest q uality food new stores a nd 2 1%
and a ward-winning to h elp g row the wine
increased foot traffic
menu a nd d ining
beverage p rograms.
experience
First location in Irving,
Texas. McNeal, Joseph. “'Dee' Lincoln Leaving Del Frisco's Double Eagle Steak House.” Dallas News, 19 Apr. 2010
Executive Leadership
Relatively New Management
President, Chief Norman
Executive Officer, Abdallah
(2016) With a ll e xecutive members joining b etween 2 016 a nd 2 018, management
Director
could face p otential challenges. A lthough management d oes h ave
experience in restaurant g rowth (Median E xperience: 1 4.2 years), o nly two
Executive Level Neil William Mia executives came from a fine d ining b ackground (Neil Thomson, Norman
Thomson Martens Meachem
(CFO, CDO, CMO) (2017) (2017) (2018) Abdallah). One o f g reatest challenges was the sale o f S ullivan’s in
September 2 018, a p opular steakhouse. S cott S mith, who was responsible
for the majority o f the e xpansion e fforts for Del Frisco’s Restaurant Group
Vice President, Thomas Brandon
Dritsas Coleman left when the a cquisition took p lace.
Brand President (2018) (2017)
Board of Directors Board of Directors Inexperience

Similar to e xecutive leadership, the b oard o f d irectors h as p otential issues,
Independent Chairman Ian Carter as a lmost a ll h ave b een instated within the p ast five years. The b oard h as
of t he Board (2015) provided minimal p ushback o n the o rganization, a nd to d ate, h as supported
the e xecutive team o n e very strategic a nd e xpansion e ffort d ecision since its
David Barr
Pauline Richard William Joseph inception. However, b oard o f d irector members seem to u ndergo change
Independent Directors (2012)
Brown Davis Lamar Reece
every ~6 years, majority d ue to p oor management changes a nd p oor a bility
(2017) (2012) (2013) (2019)
to challenge e xecutive management team.
Financials, Nasdaq. “DFRG Organizational Structure.” NASDAQ.com

Company Structure
Del Frisco’s
Parent Company Restaurant
Group, Inc.
(DRFG)
Original Restaurants, Del Frisco’s Del Frisco's

Double Eagle
Barteca
Restaurant
Acquisions Grille
Steakhouse Group
Acquired Restaurants Barcelona Wine

Bar
Bartaco
Diversity of Brands

Del Frisco's Double E agle Barcelona Wine B ar Bartaco Del Frisco’s Grille
Steakhouse
• Premier steakhouse concept in the • Spanish tapas b ar o ffering simple • Health food concept with cuisine • Appeals to a wide range o f
United S tates, d efined b y h igh and e legant small p lates with coming from a b road range p laces customers seeking fine d ining with
quality steak menu a nd e xtensive seasonal specialties from S pain in Mediterranean, A sia a nd a less formal a tmosphere - top
wine list complemented b y a and Mediterranean Beyond with a rustic b each shack selling signature menu items a nd
“Swarming S ervice” • Wine p rogram o ffers wines from design a b road selection o f the same
• 16 restaurants in e leven states Spain to S outh A merica, including • 18 locations in ten states quality wines
and District o f Columbia over 4 0 wines b y the g lass • Typical restaurant size: ~4500 sq. • 24 L ocations in e leven states a nd
• Size range 11,000 – 24,000 sq. ft., • 15 locations in seven states a nd feet District o f Columbia
seat ~350 p eople District o f Columbia • Average Check: $ 23 • Average Check: $ 51
• Average Check: $123 • Typical restaurant size: ~4500 sq.
ft.
• Average Check: $34
Business Model
Infographic Style
Site a nd S election Restaurant Operations a nd
Overview Geographic Diversity
Development Management
Management Choices Sight Selection Operational Structure

• Partners with third parties to • Possesses strict operational
• Utilize proprietary recipes and standard in all aspects of business
source cities against clear
quality food presentation to 𝑥 𝑥
𝑥 criteria pertaining to specific • High level of quality control
deliver a premium dining 𝑥 𝑥
𝑥 𝑥 brand • Use third parties to appraise
experience 𝑥 𝑥
• Conducts comprehensive distributors/suppliers based o n
𝑥 𝑥
• Geographically choose 𝑥
customer demographic studies food safety standards and risk-
locations with a high net 𝑥 • Analyzes business dynamics based p reventive controls
worth, low poverty rate 𝑥 and u nit economics of area • Two Main Beef S uppliers, less than
(>10%), and a large under-consideration ten o verall for foods/drinks/supplies
• Board and senior management (30+ year relationship)
population (<50,000 people)
visits and gives final
• Acquisition of Barteca appraisal/approval of location Restaurant Structure
designed to diversity Geographic Expansion Efforts
customer base Mathematical Criteria • Fine dining industry median
• Currently, only e leven states h ave number of employees 18, DFRG
• Seasonal changes in their been e ntered
• Medium Income Minimum of median 28
menu to allow slight margin • At o ne p oint, they were in fourteen $75K, ideally 100K median • Focus on job specialization (Ex.
increases states, b ut three failed d ue to h igher sommelier) to charge premium
that e xpected costs • Minimum Food Traffic of 6K
• Minimal ownership of stores, • Potential further expansion within people, 3 0K vehicles • Regional directors to oversee
focus on leasing in longer- Texas a nd California Regions, minor • Daytime Population Minimum of restaurants, must have 5 + years of
expansion p otential in Florida 67K, Ideally 100K+ experience in running DFRG
term capacity (10+ years) restaurants prior to holding p osition
Relations, Investor. “10-K.” Investor Relations, Del Frisco's Restaurant Group, Inc.
SWOT Analysis
Strength Weakness
• Strong Distribution Network • Organization structure too large a nd inefficient,

• Strong B rand P ortfolio unnecessary CAPEX
• Success Track Record o f integrating complimentary • Limited success o utside core b usiness
firms through mergers a nd a cquisitions • High a ttrition rate – Employee training a nd
• Strong Returns o n Capital E xpenditures development costs 2 7% h igher than fine d ining
• Product Innovation through menu changes to competitors
charge p remium p ricing • Financial P lanning Issues - Current Ratio (1.5 vs.
2.8 Industry A verage)
SWOT
Threat
Opportunity
• Economic d ownturn could instantly h urt the o verall
• Economic u ptick a nd increase in consumer spending, performance
financial markets p rojected to g row a nd create further • Consolidation o f local d istributors a nd meat supply
wealth in midwest and southeast organizations creates d ifficulty in n egotiating with
• New h ealth conscious consumers a nd a wareness o f suppliers
nutrition a lign with Del Frisco’s p latform • Highly seasonal p roducts, introduction o f e xpanded
• Decreasing cost o f transportation (-3.28% CAGR since product line could h ave p oor customer satisfaction
2015) can lead to b etter COGS a nd h igher margins
Historical Financial Performance
INCOME STATEMENT 2014 2015 2016 2017 2018
Sales & Cost of Goods Sold
Sales 220,893 252,629 273,884 293,827 378,216
• Growth in sales due to expansion of locations
Cost of Goods Sold 163,807 188,926 205,337 225,137 295,875
• Surprisingly grew even through a major segment of the b usiness was sold
Gross Profit 57,086 63,703 68,547 68,690 82,341
SG&A 30,655 36,380 33,485 63,013 83,230 EBITDA
EBITDA 36,376 40,148 49,965 23,272 -889 • Drastic changes in EBITDA due to losing most profitable segment. However,
management projections due to drastic expansion in customer base will
supposedly allow this negative to be an a nomaly
Liquidity Ratios
Ratio 2018 2017 2016 2015
• Current Ratio is drastically improving, meaning that assets are improving faster
Current Ratio 1.54 1.41 1.10 1.28 than liabilities
• More efficient operations, smaller accounts payable a nd other major liabilities
Quick Ratio 2.50 2.44 1.69 2.38 • Considered slightly low, a 'strong' Current ratio is usually considered to be
two
Cash Ratio 10.00 11.11 3.45 9.09
Profitability Ratios
Gross Margin 22% 23% 25% 24%
• Gross margin, operating margin remaining relatively constant as expansion
efforts take place
Operating Margin 6% 4% 7% 7%
• Profitability margin drastic growth (5x growth), as inefficient business
Profit Margin 20% 4% 6% 5% segments were sold/underwent organizational and o perational changes
BALANCE SHEET 2015 2016 2017 2018
Cash and Cash Equivalents $5,176 $14,622 $4,553 $8,535
Assets Short-Term Investments $0 $0 $0 $0
Net Receivables $7,739 $7,624 $5,108 $9,636
• Drastic growth in inventory due to the Inventory $17,308 $16,400 $15,539 $22,461
increase in restaurant concentration Other Current Assets $6,774 $8,034 $11,803 $17,327
Total Current Assets $36,997 $46,680 $37,003 $57,959
• Other Current Assets growth accompanied by
the purchase of locations rather than the Fixed Assets $183,191 $195,992 $210,384 $287,803
leasing of locations Goodwill $75,365 $75,365 $43,928 $156,131
Intangible Assets $36,865 $37,409 $20,284 $206,573
Liabilities Other Assets $282 $282 $543 $4,010
Deferred Asset Charges $13,955 $15,054 $16,327 $13,556
• 2018 was the first time period where the Total Assets $346,655 $370,782 $328,469 $726,032
company took on short-term debt, drastic
Accounts Payable $24,572 $22,681 $24,357 $58,000
increase in long term debt Short-Term Debt $0 $0 $0 $4,814
• Large increase in accounts payable due to the Other Current Liabilities $22,815 $28,395 $27,474 $26,843
large purchase orders in order to achieve Total Current Liabilities $47,387 $51,076 $51,831 $89,657
economies of scale pricing
Long-Term Debt $4,500 $0 $24,477 $332,564
Other Liabilities $2,100 $2,242 $10,582 $1,828
Stockholder's Equity Deferred Liability Charges $64,969 $71,098 $52,492 $88,401
Total Liabilities $118,956 $124,416 $139,382 $512,450
• Surprisingly for a restaurant organization, it
hedges itself through the economic downturns Common Stocks $24 $24 $24 $37
by investing in treasury stock, which has been Capital Surplus $137,601 $143,325 $147,503 $248,618
producing negative returns Retained Earnings $103,074 $120,840 $109,383 $33,379
Treasury Stock -$13,000 -$17,823 -$67,823 -$67,823
• Capital Surplus has been extremely strong Other Equity $0 $0 $0 -$629
between 2017 and 2018 Total Equity $227,699 $246,366 $189,087 $213,582
Key Findings
STATEMENT OF CASH FLOW 2015 2016 2017 2018
• Net Income has had tremendous Net Income $15,998 $17,766 -$11,457 -$76,303
fluctuations due the changes in Depreciation $16,118 $17,727 $22,347 $24,552
Net Income Adjustments $9,670 $5,268 $26,334 $44,472
subsidiaries through acquisition Accounts Receivable $5,760 $2,692 $8,065 $10,845
• Depreciation has significantly increased Changes in Inventories
Other Operating Activities
-$716
-$3,161
$908
$810
-$1,629
$61
-$4,605
-$1,963
due to the amount of stores and Liabilities $2,199 $4,644 -$5,656 $14,204
operating equipment Net Cash Flow-Operating $45,868 $49,815 $38,024 $11,168
• Large sale block of shares in 2018, Capital Expenditures -$46,150 -$36,698 -$39,426 -$85,838
brings up potential questions as to how Other Investing Activities -$380 $2,530 $15,497 -$296,647
much faith management has in the Net Cash Flows-Investing -$46,530 -$34,168 -$23,929 -$382,485
organization Sale and Purchase of Stock -$2,182 -$1,616 -$48,458 $97,263

• Capital Expenditures drastically Net Borrowings
Other Financing Activities
$4,500
$0
-$4,500
-$85
$24,477
-$183
$299,676
-$180
increased due to the growing number of Net Cash Flows-Financing $2,318 -$6,201 -$24,164 $375,299
stores
Net Cash Flow $1,656 $9,446 -$10,028 $4,016
• Net Cash F low looks to grow in the
future with drastic growth
Analyst Reports
Price Analysis vs. Predictions (May 1st Value)
ANALYST REPORT 60.00
You can Resize without DFRG
RANKINGS
losing quality 50.00 Zacks
RANK SITE
You can Change Fill 40.00 Reuters
Color & Morningstar
#1
Line Color Zacks 30.00
NASDAQ
20.00
#2 Reuters Yahoo Finance
10.00
#3 Morningstar Seeking A lpha
- Market Watch
#4 NASDAQ 2013 2014 2015 2016 2017 2018 2019 2020
#5 Yahoo Finance
DRFG vs. Analyst Eight of ten firms see
#6 Seeking Alpha Median DFRG as Recent Acquisition of
FREE
#7 Market Watch 30.00
undervalued
between 1.07x -
Barteca hurt short-
term public returns
2.78x
PPT
#8 The Street
20.00
10.00
TEMPLATES
#9 Wall Street Journal
-
Geographical
expansion and Brand potential
award recognition diluted by drastically
#10
www.allppt.com FinViz consistent with stock different subsidiaries
DFRG Analyst Report Median growth
LBO Analysis
Private Equity Firm
Sun Capital Partners Inc.
2018 Highlights
$600MM
• Focused on identifying • Bar Louie 4 Acquisitions Capital
History
Previous Relevant Transactions

companies’ untapped • Award willing upscale
potential and leveraging restaurant and bar Invested
its deep operational and • Fazoli’s
financial resources to
• Premium Italian
transform results restaurant focused on
• Since 1995, Sun Capital traditional and 1.8B Realized
has invested in more than
360 companies world
innovative Italian food 11 Exits Gross
offerings
wide, investing over
• Restaurants Unlimited
Proceeds
$50BB
• Award-winning
• Strong Flexibility & restaurants including a
Efficiency
• Acquisitions consistently
Steakhouse, Seafood
Grill, and Upbeat
$1.5B
close in 30 days or less European-inspired Financings
• Recognized for seller cuisine
friendly contract terms Completed
Sc-Gsadmin, Albert. “About Us | Sun Capital Partners.” Sun Capital Partners, Inc. | Private Equity Firm, Sun Capital Partners Inc.
2019 Projection Year
(Acquisition Year)
Management Projections vs.

Sun Capital Projections
600000
• Sun Capital Partners • Management Price
Stock Performance
Store Growth
500000
400000
Assumptions Projections
• Calculated revenue • Low: +5.2%
300000 per store for 2018 • Median: +24%
200000
• Used ratio to • High: +35.2%
determine 2019 • Price not indicative
100000 revenue based on of the strong brand
number of name, hurt by recent
0 projected stores
2015 2016 2017 2018 2019 2020 acquisition multiple
added pricing
Management S ales P rojections
Sun Capital P artners S ales P rojections
Hillway, Brian. “DFRG.” CNNMoney, Cable News Network

Growth Strategy
Growth of DFRG LBO Growth Return Methodologies
•Economies of s cale t hrough better pricing on
Geographical Cost
Expansion of
Current
Other
Expansion
Increase goods, expansion of s tores, lean management
organizational s tructure of s tores
Expansion Reduction
Portfolio Methodologies EBITDA •Introduce take-out, be available on GrubHub,
OpenTable, more s ocial media f ocus
•Franchising options, receive f ranchise f ees
Diversifying
Create 'Hub' within Simplification of restaurant portfolio Ability to expand
California and West organizational with other food multiple by •Simplification of organizational s tructure
coast, be first
steakhouse group
to dominate the
structure, combine
and empower
employees for more
genres, but also
containing similar
product items
introduction of new
products (bottling
sauces, franchising
Decrease •Shrinkage of menu t o reduce labor c osts
(currently 41% v s. 35% industry avg.)
region responsibility (meats, vegetables,
etc.)
model for stores)
Costs •Structuring more f avorable leases for longer t erm,
less growth per y ear
Greater
Turn off hours of
Growth in
concentration of
Better management Creating synergies business into •Can purchase other organizations t o become a
restaurants in of inventory and with the current
areas with poor hosting events, restaurant c onglomerate with diverse f ood genres
control food costs portfolio of Sun cooking classes,
Exit
pricing (Florida, (Currently 5.6% of Capital Partners •Must achieve drastic growth in s tore c ount and
Northeast) to restaurant training
counterbalance
food is wasted) investments sessions, wine geographic c oncentration
tastings, etc.
Multiple
supplier power •Introduction of c onsumer products t o s ell (Ex.
steak s auce)
Private Equity Firm
Typical LBO Transaction Structure
Percent of Cost of
Offering Leading Parameters Likely Sources
Transaction Capital
• Commercial Banks
• 5-7 Year Payback
• Credit companies
Senior Debt 50-60% 7-10% • 2-3x EBITDA
• Insurance Companies
• 2x Interest Coverage
• Public Market
Mezzanine • 7-10 Year Payback
20-30% 10-20% • Insurance Companies
Financing • 1-2x EBITDA
• LBO/Mezzanine Funds
• Management
• LBO Funds
Equity 20-30% 25-40% • 4-6 Year Exit Strategy
• Subordinated debt holders
• Investment Banks
Ivashina, Victoria, et al. “Note on LBO Capital Structure.” Note on LBO Capital Structure - Module Note - Harvard Business School
Sun Capital Partners Stucture
Senior Debt Mezzanine Financing Equity
• Typical Investors • Typical Investors • Typical Investors

• Arrow Financial Corporation • Greyrock Capital Group • Management (7-12% of Equity)
• Bank of America • Banyan Investment Partners • LBO Fund
• BB&T • Prism Capital • CIBC (Financing if Needed)
• BBVA Compass • NewSpring Capital • Percent of Transaction
• AIG • Percent of Transaction • 15-40%
• Nationwide • 10-37.5% • Cost of Capital
• Assurant • Cost of Capital • Median 31.2%
• Fairfax Financial • Median 14.83% • Strategy
• Percent of Transaction • Parameters • Median 7.2 Year Holding Period
• 40-45% • 1.5X+ EBITDA • Return Focus: 2.3X – 3.5X
• Median Transaction: 726MM
• Cost of Capital
• Median 9.7%
• Parameters
• 6-10 Year Payback
• 1.5 – 2X EBITDA
• 2.2X+ Interest Coverage
Sun Capital Partners Transactions
Percent of Cost of
Firm Multiple Offering Parameters Partners
Transaction Capital
Senior Debt 45% 8.3% 2.5X+ EBITDA BBVA Compass
14.28X Mezzanine
Bar Louie 35.3% 12.16% 1.5X+ EBITDA New Spring Capital
EBITDA Financing
15 Year Projected Sun Capital Partners,
Equity 29.7% 35%
Hold Management, CIBC
7.51X 8 Year Projected Sun Capital Partners,
Fazioli’s Equity 100% 31%
EBITDA Hold Management
Restaurants 9.30X 10 Year Projected Sun Capital Partners,

Equity 100% 36%
Unlimited EBITDA Hold Management
Exit Strategy Options
Fine Dining Exit Strategies
Initial Public 100.00%
Private Sale Offering Liquidation
90.00%
80.00%
70.00%
Commonly exited Not commonly exited Rare occurrence to exit
through this platform through this platform through this platform
(79% of transactions) (18%) (3%) 60.00%
50.00%
Last resort for exit 40.00%

95% of transactions exit strategy, as many of the
at the same multiple they Typically exit at 1.6X portfolio investments
were originally EBITDA have minimal divestible 30.00%
purchased for high value liquidity and
value
20.00%
10.00%
Many of their IPO's were
Mission is to grow well branded products Company Return:
EBITDA not grow with high success (Ex. ~4.61% 0.00%
expansion multiple
Boston Market) 2013 2014 2015 2016 2017 2018 2019
Private S ale Initial P ublic Offering
Liquidation Chapter 9
LBO Candidate Valuation
Steady and P redictable Cash Flow Divestible Assets
• Cash flow inconsistent within past five years due to acquisition of Barteca and sale of • Majority of assets comprise of land, cooking equipment, wine, and the high-quality food.
Sullivan’s Steakhouse Besides real estate and machinery, most assets have low transactional movement and narrow
• Prior to these acquisitions, cash flow was consistently positive for 24+ years scope of assets
Clean Balance Sheet with Little Debt Strong Management Team

• Balance sheet has recently accrued of short-term debt and a drastic increase in long term debt • Organizational structure has many layers of expertise, but all major executive leadership
(10x+) members have been added in 2016 or later
• However, due to the nature of an LBO, in the case where we are acquiring and restructuring • Board of directors also relatively new
the entire organization, this issue has little importance • 83% of non-executive leadership members (regional directors, store managers), have been
•Value of organization does not change regardless of the amount of debt with the firm for 10+ years
Strong, Defensible market position Viable Exit Strategy
• Ranked #43 in overall fine dining revenue • Current poor stock performance makes IPO future strategy potentially difficult as users have
• 35+ year heritage, customer retention strong (92% vs. 74% industry average) not seem returns;; stock price hit a peak of $28, but is currently trading at ~$6 a share
• Diversity of restaurant holdings minimizes risk through preference changes • Acquisitions of restaurants are particularly common, either between restaurant groups or
private equity firms make it a viable option
• Financial markets predict an increase in economic surplus, therefore the industry will continue
to grow Synergy Opportunities
Limited Working Capital Requirements • Due to the familiarity of Sun Capital Partners in the restaurant industry, potential synergies
with their current portfolio companies of Bar Louie, Fazioli's and Restaurants Unlimited is
• Restaurants industry, particularly fine dining has extremely high capital requirements due to possible based on their common product purchases
premium supply chain products
• Increased locations within same regions will allow economies of scale to occur
• Expansion of locations in recent era has yielded high capital expenditures
Minimal Future Capital Requirements Potential for Expense Reduction
• Del Frisco's Restaurant Group's focus is to expand on locations as their primary growth tool, • “Hub Growth” within regions will allow economies of scale to support better prices
therefore future capital requirements will rise • Alternative suppliers through Sun Capital Partners relationships could provide benefits
• Location choice focused on creating hubs and sectors within states to allow supply chain • Reduction of restaurant organizational structure (Ex. removal of assistant managers, combine
expansion and economies of scale focus to aid in cheaper pricing roles of waiter and bus person, etc.)
LBO Candidate Valuation
LBO Candidate Weight Score (1 Worst, 10 Best) Weighted Score
Steady and Predictable Cash
22.5% 5 1.125
Flow
Clean Balance Sheet with Little
0.00% 4 -
Debt
Strong, Defensible market
15% 7 1.05
position
Limited Working Capital
3.75% 4 0.15
Requirements
Minimal Future Capital
8.75% 4 0.35
Requirements
Divestible Assets 5% 4 0.2
Strong Management Team 10% 4 0.4
Viable Exit Strategy 15% 7 1.05
Synergy Opportunities 10% 8 0.80
Potential for Expense
10% 8 0.80
Reduction
(5.925/10)
Total
[40.75% Discount Rate]
Multiple Analysis
Valuation Date: 5/2/19
DFRG STOCK Buyer Seller

TV/
EBITDA
Note Include (Y/N)
30
Catterton OSI Restaurant Transaction 11/06/2006
9.81x Y
20 Partners Corp Partners LLC M&A: Standard, Outdated Transaction
10 JAB Holding Co Panera Bread Transaction: 07/19/19

18.10x N
Sarl Co M&A: Poor, Different Segment
0
5/5/14 5/5/15 5/5/16 5/5/17 5/5/18
Whole Foods Amazon.com Transaction: 08/29/17
10.88x N
Enterprise Value 2019 TEV/EBITDA Market Inc Inc M&A: Poor, Differences in Scale/Segment
(Market Cap + EBITDA Multiple
Debt – Cash)
Transaction: 04/13/00
Koninklijke Ahold
329,065.32 32,937 9.99 US Foods Inc. 12.40x M&A: Poor, Outdated Transaction, Differences in N
Delhaize NV
Scale/Segment
Transaction: 05/28/99
The Kroger Co Fred Meyer Inc. 13.49x M&A: Poor, Outdated Transaction, Differences in N
Scale/Segment
Albertson’s LLC Safeway Inc. 5.00x Transaction: 01/30/15

N
M&A: Poor, Differences in Scale/Segment
Median Transaction EBITDA Multiple 9.81X
Financials, Nasdaq. “DFRG Stock Performance.” NASDAQ.com

Acquisition of DFRG
Multiples Value Capital Percent Of Cost of
Transaction Partners
Structure Item Transaction Capital
Bar Louie’s Transaction 14.28X
Bar Louie’s 45% 8.3% BBVA
Fazioli’s Transaction 7.51X Sun Capital Sun Capital
Typical 42.5% 9.7% Management, Sun
Restaurants Unlimited 9.3X Senior Debt Transaction Capital Partners
Commercial Banks,
Typical LBO
2018 PE Buyout Multiple 11.6X 55% 8.75% Credit Companies,
Transaction
Insurance Company
Precedent Transaction Senior Debt Average 47.5% 8.92% BBVA
9.81X
Multiple
Capital Percent Of Cost of
Transaction Partners
Average Acquisition Structure Item Transaction Capital
9.81X
Multiple Bar Louie’s 35.3% 12.16% New Spring Capital
Sun Capital Sun Capital
LBO Candidate Valuation Mezzanine Typical 23.75% 14.83% Management, Sun
-40.75% Financing Transaction Capital Partners
(Premium/Discount)
Typical LBO Public Market,
25% 15%
Adj. Acquisition EBITDA Transaction Mezzanine Funds
5.81X
Multiple Mezzanine Financing Average 28.02% 14% New Spring Capital
Acquisition of DFRG
Multiples Value
Bar Louie’s Transaction 14.28X Cost

Capital
Percent Of of
Structure Transaction Partners
Transaction Capita
Fazioli’s Transaction 7.51X Item
l
Restaurants Unlimited 9.3X Sun Capital Partners,

Bar Louie’s 29.7% 35%
Management,
2018 PE Buyout Multiple 11.6X Sun Capital Partners,

Fazioli’s 100% 31%
Management,
Precedent Transaction Restaurants Sun Capital Partners,
9.81X 100% 36%
Multiple Equity Unlimited Management,
Sun Capital
Sun Capital Partners,
Average Acquisition Typical 27.5% 31.2%
9.81X Management,
Multiple Transaction
Typical LBO Sun Capital Partners,
25% 32.5%
LBO Candidate Valuation Transaction Management,
-40.75%
(Premium/Discount) Sun Capital Partners,
Equity Average 56.44% 33.14
Management
Adj. Acquisition EBITDA
5.81X
Multiple
Acquisition of DRFG
Line Item Value LBO
LBO Structure Adjusted Weighted
Structure Fine Capital Cost of Investment
EBITDA Item Dining Structure Capital
91,693 Average
(000’s)
Senior Debt 47.5% 36.00% 8.92% $193MM

Acquisition
5.81X
Multiple Mezzanine
28.02% 21.23% 14% $114M
Financing
Acquisition
532.74M Sun Capital
Price
56.44% 33.27% 33.14% $178MM
Partners
Rounded
Management 9.5% $50MM
Acquisition 535M
Price Total 131.96% 100% 535MM
LBO Model Assumptions
•Purchase multiple is determined by t he median precedent t ransactions f rom Sun Capital
Acquisition Price Partners and t he industry multiple itself, t hen being discounted by t he ' quality' or s trength f or
an LBO Candidate
•Assumed t o f ollow prior Sun Capital Partners t ransaction s tructure and rates from previous
Capital Structure acquisitions and f unds
•Management also provides a good portion of investment t o align incentives
•As opposed t o a s tandard private equity f irm holding period of f ive y ears, Sun Capital Partners
Holding Period has a median holding of 7.92 y ears, t hus, 8 y ears was used in t he f inancial model
•Firm would be exiting v ia private s ale, as t his is not only t he most popular exit s trategy, and
Exit since t he c ompany has already I PO'd before, private s ale is best option
Financial Statement •Financials f or 2019 were projected as a ratio of 2018's restaurants t o t he new number of s tores
by t he end of 2019
Assumptions •Same methodology of f inancial ratio applied t o all y ears - more s tores, more revenue, greater
ability t o c ontrol COGS, etc.
•Capital Expenditures grew with accordance t o t he number of s tores

Debt Repayment •Net Working Capital (% of s ales method) t aken by management assumptions in 10-K
Scenario’s
Most Likely Best Case Worst Case APV
• Management projections • Management projections • Management projections • Net present v alue of a
will be met, as will be outperformed, will be a complete miss, projected finances,
management projections and geographical making geographical growth in EBITDA,
historically have been expansion will go expansion efforts returns, etc.
extremely accurate to greater than expected extremely difficult • Dependent on each
the overall firm • A potential acquisition • No potential acquisitions scenario and success of
performance could aid the overall will occur business model growth
• Synergies will be progress of the firm to • Due to the difficulty of strategy, thus a s cenario
created between DFRG continue s ynergy expansion, financial was created for most
and the other portfolio benefits and create a benefits (synergies) will likely, best c ase and
companies in Sun larger brand not occur, making worst c ase
Capital • Firm will introduce new EBITDA have a minimal
• Firm will leave at the products s uch as s elling growth
same multiple sauces, c reate a large • Firm will be lucky to
franchising platform, etc. leave at the s ame
• Firm will have a slight multiple it was acquired
uptick in multiple for
Most Likely
Business Unit Assumptions
Assumptions Value Reasoning
• Out of the 1 3 stores e xpanded in 2 019, 9 o f them a re b eing p urchased a nd n ot leased. Management p rojects
Depreciation Growth 12.5%
these to b e b etween 1 0-20% d epending o n the location
• Stores grew from 7 3 to 8 6, showing a n 1 8% g rowth. With a n inspired management team a nd the o perational
Store Growth 18% expertise o f S un P ower Capital, we b elieve the g rowth in stores trend will o ccur throughout the transaction
• With the e xpansion o f stores, Capital Expenditures h as a d irect g rowth relation. However, with e very n ew store,
Capital Expenditure S ynergy
75% especially in DFRG’s case where they a re creating ‘Hubs,’ o r regions with many stores to h elp reduce costs, a
Adj.
synergy will a llow these costs to b e stabilized
• With a lean management strategy, the current stores will a lready see a d ramatic d ecrease in costs, reducing
SG&A Expenditure S ynergy number o f e mployees p er store from a median o f 2 8 to 1 9. This is a ccompanied b y the consolidation o f b usboys
80%
Adj. and waiters, b artenders with sommeliers, removal o f a ssistant manager
• Biggest issue o f DFRG is the h igh COGS with relation to its high q uality p roducts a nd low q uantity p urchases. With
the common p roducts b etween DFRG a nd the o ther investments b y S un Capital, the q uantity will b e much h igher,
COGS E xpenditure Synergy
90% allow the p rice p oint to fall significantly
Adj. • Additionally, a b etter inventory system a nd control food cost management style will minimize waste
• This E BITDA growth is b ased o n the e xpansion o f stores a nd the large synergies created. This n umber is a lso
EBITDA Growth 5% supported b y the a nalyst reports, which suggests that if g rowth was constant, E BITDA g rows b etween 2 .5-10%
Most Likely
Business Units
Historical Projected
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Del Frisco
Number of Stores 14 16 21 26 31 37 44 52 62 74 88
Growth 14% 31% 24% 19% 19% 19% 18% 19% 19% 19%
Sales $176,713 $182,957 $240,131 $297,305 $354,479 $423,088 $503,132 $594,610 $708,958 $846,176 $1,006,264
Growth 4% 31% 24% 19% 19% 19% 18% 19% 19% 19%
Cost of Goods Sold $52,944 $54,559 $64,448 $71,813 $77,061 $82,779 $88,595 $94,233 $101,120 $108,622 $116,255
% of Revenues 30% 30% 27% 24% 22% 20% 18% 16% 14% 13% 12%
Gross Profit $123,769 $128,398 $175,683 $225,492 $277,418 $340,309 $414,536 $500,377 $607,839 $737,554 $890,008
Margin 70% 70% 73% 76% 78% 80% 82% 84% 86% 87% 88%
SG&A $76,860 $86,557 $113,606 $112,524 $107,331 $102,483 $97,498 $92,180 $87,925 $83,954 $79,870
% of Revenues 43% 47% 47% 38% 30% 24% 19% 16% 12% 10% 8%
EBITDA $46,909 $41,841 $54,916 $71,391 $89,376 $112,009 $139,859 $173,553 $217,275 $272,295 $340,000
Margin 27% 23% 23% 24% 25% 26% 28% 29% 31% 32% 34%
Depreciation $10,503 $13,786 $15,509 $17,448 $19,628 $22,082 $24,842 $27,948 $31,441 $35,371
% of Revenue 0% 6% 6% 5% 5% 5% 4% 4% 4% 4% 4%
Most Likely
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Del Grill
Number of Stores 21 24 28 32 38 45 54 64 76 90 107
Growth 14% 17% 14% 19% 18% 20% 19% 19% 18% 19%
Sales $117,114 $120,989 $141,154 $161,319 $191,566 $226,854 $272,225 $322,637 $383,132 $453,709 $539,409
Growth 3% 17% 14% 19% 18% 20% 19% 19% 18% 19%
% of Revenues 26% 27% 25% 22% 20% 18% 16% 15% 13% 12% 11%
Gross Profit $86,441 $87,918 $106,429 $125,602 $153,394 $186,171 $228,287 $275,770 $333,042 $400,324 $482,287
Margin 74% 73% 75% 78% 80% 82% 84% 85% 87% 88% 89%
SG&A $70,978 $73,167 $85,362 $78,045 $74,143 $70,240 $67,431 $63,934 $60,738 $57,541 $54,728
% of Revenues 61% 60% 60% 48% 39% 31% 25% 20% 16% 13% 10%
EBITDA $15,463 $14,751 $17,210 $20,651 $25,750 $32,018 $40,342 $50,204 $62,598 $77,836 $97,165
Margin 13% 12% 12% 13% 13% 14% 15% 16% 16% 17% 18%
Depreciation $8,307 $9,691 $10,903 $12,266 $13,799 $15,524 $17,464 $19,647 $22,103 $24,866
% of Revenue 7% 7% 7% 6% 6% 6% 5% 5% 5% 5%
Most Likely
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Barcelona
Number of Stores 15 18 21 25 30 36 43 51 61 72
Growth 20% 17% 19% 20% 20% 19% 19% 20% 18%
Sales $34,084 $40,901 $47,718 $56,807 $68,168 $81,802 $97,707 $115,886 $138,608 $163,603
Growth 20% 17% 19% 20% 20% 19% 19% 20% 18%
Cost of Goods Sold $9,123 $9,853 $10,345 $11,084 $11,971 $12,929 $13,899 $14,836 $15,970 $16,965
% of Revenues 27% 24% 22% 20% 18% 16% 14% 13% 12% 10%
Gross Profit $24,961 $31,048 $37,372 $45,722 $56,197 $68,873 $83,809 $101,050 $122,638 $146,638
Margin 73% 76% 78% 80% 82% 84% 86% 87% 88% 90%
SG&A $17,336 $20,803 $19,416 $18,492 $17,752 $17,042 $16,285 $15,451 $14,785 $13,961
% of Revenues 51% 51% 41% 33% 26% 21% 17% 13% 11% 9%
EBITDA $7,625 $9,150 $11,209 $14,011 $17,654 $22,244 $27,897 $34,742 $43,632 $54,075
Margin 22% 22% 23% 25% 26% 27% 29% 30% 31% 33%
Depreciation $3,227 $3,872 $4,356 $4,901 $5,513 $6,203 $6,978 $7,850 $8,831 $9,935
% of Revenue 9% 9% 9% 9% 8% 8% 7% 7% 6% 6%
Most Likely
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Bartaco
Number of Stores 18 19 20 24 29 35 42 50 59 70
Growth 6% 5% 20% 21% 21% 20% 19% 18% 19%
Sales $40,186 $42,419 $44,651 $53,581 $64,744 $78,139 $93,767 $111,628 $131,721 $156,279
Growth 6% 5% 20% 21% 21% 20% 19% 18% 19%
% of Revenues 23% 21% 19% 17% 15% 14% 12% 11% 10% 9%
Gross Profit $30,954 $33,648 $36,342 $44,608 $54,985 $67,539 $82,319 $99,362 $118,695 $142,370
Margin 77% 79% 81% 83% 85% 86% 88% 89% 90% 91%
SG&A $21,085 $22,256 $18,742 $17,993 $17,393 $16,793 $16,121 $15,354 $14,494 $13,757
% of Revenues 52% 52% 42% 34% 27% 21% 17% 14% 11% 9%
EBITDA $9,869 $10,417 $11,514 $14,507 $18,406 $23,325 $29,390 $36,737 $45,517 $56,704
Margin 25% 25% 26% 27% 28% 30% 31% 33% 35% 36%
Depreciation $3,706 $3,912 $4,401 $4,951 $5,570 $6,266 $7,049 $7,931 $8,922 $10,037
% of Revenue 9% 9% 10% 9% 9% 8% 8% 7% 7% 6%
Most Likely
LBO Model
Historical Projections
INCOME STATEMENT 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Sales $220,893 $252,629 $273,884 $293,827 $378,216 $464,604 $550,993 $656,433 $782,855 $935,298 $1,108,722 $1,319,604 $1,570,214 $1,865,555
Growth 14.4% 8.4% 7.3% 28.7% 22.8% 18.6% 19.1% 19.3% 19.5% 18.5% 19.0% 19.0% 18.8%
Cost of Goods Sold $66,824 $72,260 $76,319 $83,617 $105,985 $117,796 $126,184 $135,291 $145,192 $156,063 $166,447 $178,311 $191,004 $204,251
% of revenues 30.3% 28.6% 27.9% 28.5% 28.0% 25.4% 22.9% 20.6% 18.5% 16.7% 15.0% 13.5% 12.2% 10.9%
Gross Profit $154,069 $180,369 $197,565 $210,210 $272,231 $346,809 $424,808 $521,142 $637,663 $779,235 $942,275 $1,141,293 $1,379,210 $1,661,303
Margin 69.7% 71.4% 72.1% 71.5% 72.0% 74.6% 77.1% 79.4% 81.5% 83.3% 85.0% 86.5% 87.8% 89.1%
SG&A $137,583 $165,871 $177,406 $222,128 $294,833 $242,027 $228,727 $217,958 $207,869 $198,764 $188,520 $179,468 $170,774 $162,316
% of Revenues 62.3% 65.7% 64.8% 75.6% 78.0% 52.1% 41.5% 33.2% 26.6% 21.3% 17.0% 13.6% 10.9% 8.7%
EBITDA 45,120 47,291 51,918 62,372 74,086 91,693 114,765 143,644 180,087 225,771 281,044 351,352 439,279 547,944
Margin 20.4% 18.7% 19.0% 21.2% 19.6% 19.7% 20.8% 21.9% 23.0% 24.1% 25.3% 26.6% 28.0% 29.4%
Depreciation 9,945 12,825 14,903 17,595 21,713 26,672 30,007 33,757 37,977 42,724 48,065 54,073 60,832 68,436
Management fee 6,688 6,688 6,688 6,688 6,688 6,688 6,688 6,688
Interest Expense
Senior Subordinated 17,216 12,382 11,113 10,413 10,227 9,304 7,067 3,072
Jr. Sub 15,960 15,960 15,960 15,960 15,960 15,960 15,960 15,960
Total Interest Expense 33,176 28,342 27,073 26,373 26,187 25,264 23,027 19,032
Pre-tax income 44,896 74,858 108,349 149,986 200,105 265,328 348,733 453,788
Taxes 45.0% 20,203 33,686 48,757 67,494 90,047 119,398 156,930 204,205
Net Income 24,693 41,172 59,592 82,492 110,058 145,930 191,803 249,583
Capital Expenditures 47,481 46,150 36,698 39,426 85,838 75,843 87,308 104,064 124,348 149,041 177,261 210,773 250,459 297,199
CASH FLOW STATEMENT

Net Income 24,693 41,172 59,592 82,492 110,058 145,930 191,803 249,583
Plus: Depreciation and Amortization 30,007 33,757 37,977 42,724 48,065 54,073 60,832 68,436
Plus: (incr) decr in Wkg. Cap. 86,797 43,366 34,620 25,915 29,482 35,850 42,604 50,208
Less: Capital Expenditures -87,308 -104,064 -124,348 -149,041 -177,261 -210,773 -250,459 -297,199
Less:
Cash Flow Available for Debt Reduction 54,189 14,231 7,842 2,091 10,343 25,079 44,780 71,028
Most Likely
LBO Model
Net Working Capital -31,698 55,099 98,465 133,085 159,001 188,483 224,333 266,936 317,144
% of sales -6.8% 10.0% 15.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
Debt:
Senior Subordinated 193,000 138,811 124,581 116,739 114,647 104,304 79,225 34,445 0
Jr. Sub 114,000 114,000 114,000 114,000 114,000 114,000 114,000 114,000 77,417
Total Debt 307,000 251,901 238,581 230,739 228,647 218,304 193,225 148,445 77,417
Interest Rates:
Senior Subordinated 8.92% 8.92% 8.92% 8.92% 8.92% 8.92% 8.92% 8.92%
Jr. Sub 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%
SELECTED CREDIT STATISTICS

EBITDA / Senior Interest 6.7 11.6 16.2 21.7 27.5 37.8 - -
EBITDA / Total Interest 3.5 5.1 6.7 8.6 10.7 13.9 19.1 -
EBITDA-CapEx / Senior Interest 1.6 3.2 5.0 7.4 10.1 15.1 - -
EBITDA-CapEx / Total Interest 0.8 1.4 2.1 2.9 4.0 5.6 8.2 -
Senior Debt / EBITDA 1.2 0.9 0.6 0.5 0.4 0.2 0.1 0.0
Total Debt / EBITDA 2.2 1.7 1.3 1.0 0.8 0.5 0.3 0.1
RETURNS ANALYSIS Exit Multiple

Investor Ownership % of $Ownership OptionsOwnership EBITDA 547,944 547,944 547,944
Total Ent.
5.81 6 7
Sponsor 178,000 78.1% 78.1% 74.2% Value
Mezz/Sub Debt Lender 0.0% 0.0% Less: Net Debt 77,417 77,417 77,417
Management 50,000 21.9% 21.9% 5.0% 25.8% Equity Value 3,106,135 3,210,245 3,758,188
Total Equity 228,000 100.0% 100.0% 5.0% 100.0%
Most Likely
LBO Model
At 5.81 x Mult. Of
Equity Returns 2020 2021 2022 2023 2024 2025 2026 2027 IRR Investment
Sponsor -178,000 0 0 0 0 0 0 2,303,717 44.2% 12.9 X
Management -50,000 0 0 0 0 0 0 802,418 48.7% 16.0 X
At 6.00 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 2,380,932 44.8% 13.4 X
Management -50,000 0 0 0 0 0 0 829,313 49.4% 16.6 X
At 7.00 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 2,787,323 48.1% 15.7 X
Management -50,000 0 0 0 0 0 0 970,865 52.8% 19.4 X
Most Likely
APV Model
APV Method
Debt
Assumptions: Sr
Terminal Perpetuity Growth: 4.0%Assumed perpetual growth Jr
Cost of Capital: Total
Pre-tax cost of debt 10.8%Weighted Average from Jr and Sr Debt
After-tax cost of debt 6.5%Assume 40% fed & state tax
Unlevered cost of equity 13.2%Risk free rate + assumed 8% market premium for equity
Levered cost of equity 25.0%Assumed minimum LBO hurdle
Assumed LT Debt/Total Capitalization 50.0%
Target Wtd Avg Cost of Capital 15.7%
Projected Years Ending December 31,

Free Cash Flow 2020 2021 2022 2023 2024 2025 2026 2027
EBITDA 114,765 143,644 180,087 225,771 281,044 351,352 439,279 547,944
Less: Depr & Amort -30,007 -33,757 -37,977 -42,724 -48,065 -54,073 -60,832 -68,436
EBIT 84,759 109,887 142,110 183,047 232,979 297,279 378,447 479,508
Taxes (40%) -33,903 -43,955 -56,844 -73,219 -93,192 -118,912 -151,379 -191,803
After Tax EBIT 50,855 65,932 85,266 109,828 139,788 178,368 227,068 287,705
Plus: Depr & Amort 30,007 33,757 37,977 42,724 48,065 54,073 60,832 68,436
Less: Capex -87,308 -104,064 -124,348 -149,041 -177,261 -210,773 -250,459 -297,199
Plus/Minus Ch in NWC 86,797 43,366 34,620 25,915 29,482 35,850 42,604 50,208
Free Cash Flow (Unlevered, After Tax) 80,351 38,991 33,515 29,427 40,073 57,517 80,045 109,149
NPV of FCF @ Unlevered Cost of Equity $265,415
Terminal Value 0 0 0 0 0 0 0 1,233,859

Implied Multiple of EBITDA 2.3
NPV of TV @ Unlevered Cost of Equity $457,609
Value of Tax Shield

Interest Expense 33,176 28,342 27,073 26,373 26,187 25,264 23,027 19,032
Tax shield 13,270 11,337 10,829 10,549 10,475 10,106 9,211 7,613
NPV @ Pre-tax cost of d ebt $55,738
Total APV $778,762 NPV of FCF + NPV of TV + NPV of Tax Shield
Best Case
• Out of the 1 3 stores e xpanded in 2 019, 9 o f them a re b eing p urchased a nd n ot leased. Management p rojects these to
Depreciation Growth 15%
be b etween 1 0-20% d epending o n the location, more stores will continue to b e b ought to h elp d iversify a ssets
• Stores grew from 7 3 to 8 6, showing a n 1 8% g rowth. With a n inspired management team a nd the o perational e xpertise
Store Growth 20% of S un P ower Capital, we b elieve the g rowth in stores trend will o ccur throughout the transaction, a nd in this case
actually e xceed management e xpectations a s the g eographical e xpansion b ecomes a h it in California
• With the e xpansion o f stores, Capital Expenditures h as a d irect g rowth relation. However, with e very n ew store,
Capital Expenditure S ynergy especially in DFRG’s case where they a re creating ‘Hubs,’ o r regions with many stores to h elp reduce costs, a synergy
70%
Adj. will allow these costs to b e stabilized. The large store g rowth will a llow o verhead to b e spread, a nd managers to take
hold o f multiple stores, making costs e ven further d ecline
• With a lean management strategy, the current stores will a lready see a d ramatic d ecrease in costs, reducing n umber o f
SG&A Expenditure S ynergy employees p er store from a median o f 2 8 to 1 9. This is a ccompanied b y the consolidation o f b usboys a nd waiters,
75%
Adj. bartenders with sommeliers, removal o f a ssistant manager. A dditionally, the lean management with managers h olding
titles for multiple restaurants a llows costs to d ecline
• Biggest issue o f DFRG is the h igh COGS with relation to its high q uality p roducts a nd low q uantity p urchases. With the
COGS E xpenditure Synergy common p roducts b etween DFRG a nd the o ther investments b y S un Capital, the q uantity will b e much h igher, a llow the
85%
Adj. price p oint to fall significantly. In this case, d ue to the e xpansion o f stores, the q uantity to p urchase will b e e xtremely
high a llow p rice b reaks to o ccur
• This E BITDA growth is b ased o n the e xpansion o f stores a nd the large synergies created
• Turn o ff-peak h ours into p rofitability including renting the space for p rivate e vents, cooking classes, wine tastings
EBITDA Growth 12.5% • Firm will begin to d iversify b y selling some o f its o wn p roducts (steak sauces, e tc.), a lso u se social media more a nd d o
take o ut to increase margins
• Firm could p otentially a cquire o ther p layers to create synergies, b ut d iversify food p ortfolio to increase multiple
Best Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Del Frisco
Number of Stores 14 16 21 26 32 39 47 57 69 83 100
Growth 14% 31% 24% 23% 22% 21% 21% 21% 20% 20%
Sales $176,713 $182,957 $240,131 $297,305 $365,914 $445,958 $537,436 $651,784 $789,002 $949,089 $1,143,481
Growth 4% 31% 24% 23% 22% 21% 21% 21% 20% 20%
% of Revenues 30% 30% 25% 22% 18% 16% 13% 11% 10% 8% 7%
Gross Profit $123,769 $128,398 $179,264 $233,249 $298,902 $376,537 $466,325 $578,479 $713,575 $871,968 $1,064,501
Margin 70% 70% 75% 78% 82% 84% 87% 89% 90% 92% 93%
SG&A $76,860 $86,557 $113,606 $105,491 $97,377 $89,008 $80,450 $73,175 $66,435 $59,936 $54,159
% of Revenues 43% 47% 47% 35% 27% 20% 15% 11% 8% 6% 5%
EBITDA $46,909 $41,841 $54,916 $76,491 $105,910 $145,213 $196,875 $268,608 $365,802 $495,026 $670,969
Margin 27% 23% 23% 26% 29% 33% 37% 41% 46% 52% 59%
Depreciation $10,503 $13,786 $15,854 $18,232 $20,966 $24,111 $27,728 $31,887 $36,670 $42,171
% of Revenue 0% 6% 6% 5% 5% 5% 4% 4% 4% 4% 4%
Best Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Del Grill
Number of Stores 21 24 28 32 39 47 57 69 83 100 120
Growth 14% 17% 14% 22% 21% 21% 21% 20% 20% 20%
Sales $117,114 $120,989 $141,154 $161,319 $196,607 $236,937 $287,349 $347,843 $418,420 $504,121 $604,945
Growth 3% 17% 14% 22% 21% 21% 21% 20% 20% 20%
% of Revenues 26% 27% 23% 20% 17% 14% 12% 10% 9% 7% 6%
Gross Profit $86,441 $87,918 $108,358 $129,460 $163,604 $203,130 $252,499 $311,984 $381,756 $466,573 $566,646
Margin 74% 73% 77% 80% 83% 86% 88% 90% 91% 93% 94%
SG&A $70,978 $73,167 $85,362 $73,167 $66,879 $60,449 $54,982 $49,918 $45,035 $40,694 $36,625
% of Revenues 61% 60% 60% 45% 34% 26% 19% 14% 11% 8% 6%
EBITDA $15,463 $14,751 $17,210 $22,127 $30,338 $41,131 $56,117 $76,423 $103,420 $140,177 $189,239
Margin 13% 12% 12% 14% 15% 17% 20% 22% 25% 28% 31%
Depreciation $8,307 $9,691 $11,145 $12,817 $14,739 $16,950 $19,493 $22,417 $25,779 $29,646
% of Revenue 7% 7% 7% 7% 6% 6% 6% 5% 5% 5%
Best Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Barcelona
Number of Stores 15 18 21 26 32 39 47 57 69 83
Growth 20% 17% 24% 23% 22% 21% 21% 21% 20%
Sales $34,084 $40,901 $47,718 $59,079 $72,713 $88,618 $106,797 $129,519 $156,786 $188,598
Growth 20% 17% 24% 23% 22% 21% 21% 21% 20%
% of Revenues 27% 23% 19% 16% 14% 12% 10% 9% 7% 6%
Gross Profit $24,961 $31,595 $38,490 $49,368 $62,553 $78,094 $96,016 $118,406 $145,351 $176,906
Margin 73% 77% 81% 84% 86% 88% 90% 91% 93% 94%
SG&A $17,336 $20,803 $18,203 $16,903 $15,602 $14,262 $12,890 $11,725 $10,645 $9,603
% of Revenues 51% 51% 38% 29% 21% 16% 12% 9% 7% 5%
EBITDA $7,625 $9,150 $12,009 $16,727 $23,161 $31,756 $43,054 $58,741 $79,995 $108,255
Margin 22% 22% 25% 28% 32% 36% 40% 45% 51% 57%
Depreciation $3,227 $3,872 $4,453 $5,121 $5,889 $6,773 $7,789 $8,957 $10,300 $11,845
% of Revenue 9% 9% 9% 9% 8% 8% 7% 7% 7% 6%
Best Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Bartaco
Number of Stores 18 19 20 24 29 35 42 51 62 75
Growth 6% 5% 20% 21% 21% 20% 21% 22% 21%
Sales $40,186 $42,419 $44,651 $53,581 $64,744 $78,139 $93,767 $113,860 $138,418 $167,442
Growth 6% 5% 20% 21% 21% 20% 21% 22% 21%
% of Revenues 23% 20% 17% 14% 12% 10% 9% 7% 6% 5%
Gross Profit $30,954 $34,135 $37,240 $46,022 $56,980 $70,174 $85,643 $105,475 $129,753 $158,532
Margin 77% 80% 83% 86% 88% 90% 91% 93% 94% 95%
SG&A $21,085 $22,256 $17,571 $15,814 $14,331 $12,972 $11,675 $10,633 $9,694 $8,795
% of Revenues 52% 52% 39% 30% 22% 17% 12% 9% 7% 5%
EBITDA $9,869 $10,417 $12,336 $16,654 $22,639 $30,738 $41,497 $56,687 $77,528 $105,507
Margin 25% 25% 28% 31% 35% 39% 44% 50% 56% 63%
Depreciation $3,706 $3,912 $4,499 $5,173 $5,949 $6,842 $7,868 $9,048 $10,406 $11,967
% of Revenue 9% 9% 10% 10% 9% 9% 8% 8% 8% 7%
Best Case
LBO Model
Sales $220,893 $252,629 $273,884 $293,827 $378,216 $464,604 $550,993 $675,181 $820,351 $991,543 $1,200,192 $1,450,802 $1,748,415 $2,104,466
Growth 14.4% 8.4% 7.3% 28.7% 22.8% 18.6% 22.5% 21.5% 20.9% 21.0% 20.9% 20.5% 20.4%
% of revenues 30.3% 28.6% 27.9% 28.5% 28.0% 23.9% 20.4% 17.4% 14.8% 12.6% 10.7% 9.1% 7.7% 6.6%
Gross Profit $154,069 $180,369 $197,565 $210,210 $272,231 $353,353 $438,439 $557,895 $699,200 $867,092 $1,072,122 $1,319,211 $1,613,645 $1,966,585
Margin 69.7% 71.4% 72.1% 71.5% 72.0% 76.1% 79.6% 82.6% 85.2% 87.4% 89.3% 90.9% 92.3% 93.4%
SG&A $137,583 $165,871 $177,406 $222,128 $294,833 $242,027 $214,432 $196,972 $179,390 $162,666 $147,659 $133,827 $120,970 $109,183
% of Revenues 62.3% 65.7% 64.8% 75.6% 78.0% 52.1% 38.9% 29.2% 21.9% 16.4% 12.3% 9.2% 6.9% 5.2%
EBITDA 45,120 47,291 51,918 62,372 74,086 91,693 122,963 169,629 232,143 315,486 429,581 584,650 792,727 1,073,970
Margin 20.4% 18.7% 19.0% 21.2% 19.6% 19.7% 22.3% 25.1% 28.3% 31.8% 35.8% 40.3% 45.3% 51.0%
Depreciation 9,945 12,825 14,903 17,595 21,713 26,672 30,673 35,274 40,565 46,650 53,648 61,695 70,949 81,592
Management fee 6,688 6,688 6,688 6,688 6,688 6,688 6,688 6,688
Interest Expense
Senior Subordinated 17,216 11,434 8,133 4,013 0 0 0 0
Jr. Sub 15,960 15,960 15,960 15,960 13,517 0 0 0
Total Interest Expense 33,176 27,394 24,093 19,973 13,517 0 0 0
Pre-tax income 52,426 100,273 160,797 242,175 355,729 516,267 715,090 985,691
Taxes 45.0% 23,592 45,123 72,359 108,979 160,078 232,320 321,791 443,561
Net Income 28,834 55,150 88,439 133,196 195,651 283,947 393,300 542,130
Best Case
LBO Model
CASH FLOW STATEMENT
Net Income 28,834 55,150 88,439 133,196 195,651 283,947 393,300 542,130
Less:
Cash Flow Available for Debt Reduction 64,818 37,007 46,190 62,437 107,802 174,239 256,388 373,117
% of sales -6.8% 10.0% 15.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
Debt:
Senior Subordinated 193,000 128,182 91,175 44,985 0 0 0 0 0
Jr. Sub 114,000 114,000 114,000 114,000 96,548 0 0 0 0
Total Debt 307,000 251,901 205,175 158,985 96,548 0 0 0 0
Interest Rates:
Jr. Sub 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%

EBITDA / Senior Interest 7.1 14.8 28.5 78.6 - - - -
EBITDA / Total Interest 3.7 6.2 9.6 15.8 31.8 - - -
EBITDA-CapEx / Senior Interest 2.4 6.1 13.7 42.1 - - - -
EBITDA-CapEx / Total Interest 1.3 2.6 4.6 8.5 18.7 - - -
Senior Debt / EBITDA 1.0 0.5 0.2 0.0 0.0 0.0 0.0 0.0
Total Debt / EBITDA 2.0 1.2 0.7 0.3 0.0 0.0 0.0 0.0

Investor Ownership % of $Ownership OptionsOwnership EBITDA 1,073,970 1,073,970 1,073,970
Total Ent.
5.81 6 7
Sponsor 178,000 78.1% 78.1% 74.2% Value
Mezz/Sub Debt Lender 0.0% 0.0% Less: Net Debt 0 0 0
Management 50,000 21.9% 21.9% 5.0% 25.8% Equity Value 6,239,766 6,443,820 7,517,790
Total Equity 228,000 100.0% 100.0% 5.0% 100.0%
Best Case
LBO Model
At 5.81 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 4,627,826 59.3% 26.0 X
Management -50,000 0 0 0 0 0 0 1,611,940 64.2% 32.2 X
At 6.00 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 4,779,167 60.0% 26.8 X
Management -50,000 0 0 0 0 0 0 1,664,654 65.0% 33.3 X
At 7.00 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 5,575,694 63.6% 31.3 X
Management -50,000 0 0 0 0 0 0 1,942,096 68.7% 38.8 X
Best Case
APV Model
APV Method
Debt
Assumptions: Sr

Free Cash Flow 2020 2021 2022 2023 2024 2025 2026 2027
EBITDA 122,963 169,629 232,143 315,486 429,581 584,650 792,727 1,073,970
Less: Depr & Amort -30,673 -35,274 -40,565 -46,650 -53,648 -61,695 -70,949 -81,592
EBIT 92,289 134,354 191,578 268,836 375,933 522,955 721,778 992,378
Taxes (40%) -36,916 -53,742 -76,631 -107,534 -150,373 -209,182 -288,711 -396,951
After Tax EBIT 55,374 80,613 114,947 161,301 225,560 313,773 433,067 595,427
Plus: Depr & Amort 30,673 35,274 40,565 46,650 53,648 61,695 70,949 81,592
Less: Capex -81,487 -99,596 -120,996 -146,513 -176,967 -214,007 -258,455 -311,133
Free Cash Flow (Unlevered, After Tax) 91,357 62,469 72,698 90,542 137,711 204,065 296,155 426,414
NPV of FCF @ Unlevered Cost of Equity $688,260
Terminal Value 0 0 0 0 0 0 0 4,820,332

Implied Multiple of EBITDA 4.5
NPV of TV @ Unlevered Cost of Equity $1,787,745
Value of Tax Shield

Interest Expense 33,176 27,394 24,093 19,973 13,517 0 0 0
Tax shield 13,270 10,958 9,637 7,989 5,407 0 0 0
Total APV $2,512,525 NPV of FCF + NPV of TV + NPV of Tax Shield
Worst Case
• Due to the minimal expansion, d epreciation g rowth o nly minutely increases
Depreciation Growth 5%
• Stores a lso continued to b e rented versus b eing p urchased d ue to the limited cash
• Growth o f stores minimal, as the costs to e xpand b ecome h igher than e xpected
Store Growth 5%
• Stores o nly marginally increase in their locations, creating a ‘hub’ o nly in Texas
• Capital e xpenditures become a ratio o f the increase in the a mount o f the stores. Unfortunately, d ue to the minimal
Capital Expenditure S ynergy
95% store e xpansion, the capital e xpenditure g ains a re minimal
Adj.
• Lean Management structure d oes n ot seem to work, inefficiencies o ccur
• The e mployee’s d o n ot seem to take o n the idea o f d oing multiple job roles, a nd thus, the firm must g o b ack to the
SG&A Expenditure S ynergy
100% highly specialized o rganizational structure
Adj.
• New management team d oes not seem to h ave the e xpertize to h ave the firm g row
• Since there is o nly minute e xpansion into Texas, there is a slight e conomies o f scale increase o n p urchasing goods
COGS E xpenditure Synergy • Firm does create synergies with the S un Capital P artners p ortfolio companies, a nd a s a result, the COGS
95%
Adj. becomes the same a s h istorical d ata
Worst Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Del Frisco
Number of Stores 14 16 21 26 28 30 32 34 36 38 40
Growth 14% 31% 24% 8% 7% 7% 6% 6% 6% 5%
Sales $176,713 $182,957 $240,131 $297,305 $320,175 $343,044 $365,914 $388,784 $411,653 $434,523 $457,393
Growth 4% 31% 24% 8% 7% 7% 6% 6% 6% 5%
% of Revenues 30% 30% 28% 27% 26% 24% 23% 22% 21% 20% 19%
Gross Profit $123,769 $128,398 $172,103 $217,291 $238,314 $259,722 $281,481 $303,559 $325,927 $348,558 $371,428
Margin 70% 70% 72% 73% 74% 76% 77% 78% 79% 80% 81%
SG&A $76,860 $86,557 $113,606 $140,655 $151,475 $162,294 $173,114 $183,934 $194,753 $205,573 $216,393
% of Revenues 43% 47% 47% 47% 47% 47% 47% 47% 47% 47% 47%
EBITDA $46,909 $41,841 $54,916 $67,992 $73,222 $78,452 $83,682 $88,912 $94,142 $99,372 $104,603
Margin 27% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23%
Depreciation $10,503 $13,786 $14,475 $15,199 $15,959 $16,757 $17,594 $18,474 $19,398 $20,368
% of Revenue 0% 6% 6% 5% 5% 5% 5% 5% 4% 4% 4%
Worst Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Del Grill
Number of Stores 21 24 28 32 34 36 38 40 42 45 48
Growth 14% 17% 14% 6% 6% 6% 5% 5% 7% 7%
Sales $117,114 $120,989 $141,154 $161,319 $171,401 $181,484 $191,566 $201,648 $211,731 $226,854 $241,978
Growth 3% 17% 14% 6% 6% 6% 5% 5% 7% 7%
% of Revenues 26% 27% 26% 25% 23% 22% 21% 20% 19% 18% 17%
Gross Profit $86,441 $87,918 $104,500 $121,523 $131,233 $141,079 $151,049 $161,131 $171,315 $185,717 $200,292
Margin 74% 73% 74% 75% 77% 78% 79% 80% 81% 82% 83%
SG&A $70,978 $73,167 $85,362 $97,556 $103,653 $109,751 $115,848 $121,945 $128,042 $137,188 $146,334
% of Revenues 61% 60% 60% 60% 60% 60% 60% 60% 60% 60% 60%
EBITDA $15,463 $14,751 $17,210 $19,668 $20,897 $22,127 $23,356 $24,585 $25,814 $27,658 $29,502
Margin 13% 12% 12% 12% 12% 12% 12% 12% 12% 12% 12%
Depreciation $8,307 $9,691 $10,176 $10,685 $11,219 $11,780 $12,369 $12,987 $13,637 $14,319
% of Revenue 7% 7% 6% 6% 6% 6% 6% 6% 6% 6%
Worst Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Barcelona
Number of Stores 15 18 21 23 25 27 29 31 33 35
Growth 20% 17% 10% 9% 8% 7% 7% 6% 6%
Sales $34,084 $40,901 $47,718 $52,262 $56,807 $61,351 $65,896 $70,440 $74,985 $79,529
Growth 20% 17% 10% 9% 8% 7% 7% 6% 6%
% of Revenues 27% 25% 24% 23% 22% 21% 20% 19% 18% 17%
Gross Profit $24,961 $30,501 $36,191 $40,269 $44,422 $48,645 $52,930 $57,274 $61,670 $66,113
Margin 73% 75% 76% 77% 78% 79% 80% 81% 82% 83%
SG&A $17,336 $20,803 $24,270 $26,582 $28,893 $31,205 $33,516 $35,828 $38,139 $40,451
% of Revenues 51% 51% 51% 51% 51% 51% 51% 51% 51% 51%
EBITDA $7,625 $9,150 $10,675 $11,692 $12,708 $13,725 $14,742 $15,758 $16,775 $17,792
Margin 22% 22% 22% 22% 22% 22% 22% 22% 22% 22%
Depreciation $3,227 $3,872 $4,066 $4,269 $4,483 $4,707 $4,942 $5,189 $5,449 $5,721
% of Revenue 9% 9% 9% 8% 8% 8% 7% 7% 7% 7%
Worst Case
Business Units
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Bartaco
Number of Stores 18 19 20 21 23 25 27 29 31 33
Growth 6% 5% 5% 10% 9% 8% 7% 7% 6%
Sales $40,186 $42,419 $44,651 $46,884 $51,349 $55,814 $60,279 $64,744 $69,209 $73,674
Growth 6% 5% 5% 10% 9% 8% 7% 7% 6%
% of Revenues 23% 22% 21% 20% 19% 18% 17% 16% 15% 14%
Gross Profit $30,954 $33,161 $35,393 $37,649 $41,741 $45,892 $50,099 $54,357 $58,661 $63,007
Margin 77% 78% 79% 80% 81% 82% 83% 84% 85% 86%
SG&A $21,085 $22,256 $23,428 $24,599 $26,942 $29,285 $31,628 $33,970 $36,313 $38,656
% of Revenues 52% 52% 52% 52% 52% 52% 52% 52% 52% 52%
EBITDA $9,869 $10,417 $10,966 $11,514 $12,610 $13,707 $14,804 $15,900 $16,997 $18,093
Margin 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
Depreciation $3,706 $3,912 $4,107 $4,313 $4,528 $4,755 $4,993 $5,242 $5,504 $5,780
% of Revenue 9% 9% 9% 9% 9% 9% 8% 8% 8% 8%
Worst Case
LBO Model
Sales $220,893 $252,629 $273,884 $293,827 $378,216 $464,604 $550,993 $590,722 $632,683 $674,645 $716,607 $758,568 $805,571 $852,574
Growth 14.4% 8.4% 7.3% 28.7% 22.8% 18.6% 7.2% 7.1% 6.6% 6.2% 5.9% 6.2% 5.8%
% of revenues 30.3% 28.6% 27.9% 28.5% 28.0% 26.8% 25.5% 24.3% 23.0% 21.9% 20.8% 19.7% 18.7% 17.8%
Gross Profit $154,069 $180,369 $197,565 $210,210 $272,231 $340,264 $410,398 $447,464 $486,963 $527,066 $567,720 $608,873 $654,606 $700,840
Margin 69.7% 71.4% 72.1% 71.5% 72.0% 73.2% 74.5% 75.7% 77.0% 78.1% 79.2% 80.3% 81.3% 82.2%
SG&A $137,583 $165,871 $177,406 $222,128 $294,833 $242,027 $285,909 $306,309 $327,880 $349,451 $371,022 $392,594 $417,213 $441,833
% of Revenues 62.3% 65.7% 64.8% 75.6% 78.0% 52.1% 51.9% 51.9% 51.8% 51.8% 51.8% 51.8% 51.8% 51.8%
EBITDA 45,120 47,291 51,918 62,372 74,086 91,693 109,300 117,325 125,897 134,470 143,042 151,615 160,802 169,989
Margin 20.4% 18.7% 19.0% 21.2% 19.6% 19.7% 19.8% 19.9% 19.9% 19.9% 20.0% 20.0% 20.0% 19.9%
Depreciation 9,945 12,825 14,903 17,595 21,713 26,672 28,006 29,406 30,877 32,421 34,042 35,744 37,531 39,407
Management fee 6,688 6,688 6,688 6,688 6,688 6,688 6,688 6,688
Interest Expense
Senior Subordinated 17,216 14,807 14,807 14,807 14,807 14,807 14,807 14,807
Jr. Sub 15,960 15,960 15,960 15,960 15,960 15,960 15,960 15,960
Total Interest Expense 33,176 30,767 30,767 30,767 30,767 30,767 30,767 30,767
Pre-tax income 41,431 50,463 57,566 64,594 71,546 78,417 85,817 93,127
Taxes 45.0% 18,644 22,709 25,905 29,068 32,196 35,287 38,617 41,907
Net Income 22,787 27,755 31,661 35,527 39,350 43,129 47,199 51,220
Worst Case
LBO Model
CASH FLOW STATEMENT
Net Income 22,787 27,755 31,661 35,527 39,350 43,129 47,199 51,220
Less:
Cash Flow Available for Debt Reduction 27,000 -27,739 -45,860 -61,202 -64,694 -68,149 -71,489 -75,645
% of sales -6.8% 10.0% 15.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
Debt:
Senior Subordinated 193,000 166,000 166,000 166,000 166,000 166,000 166,000 166,000 166,000
Jr. Sub 114,000 114,000 114,000 114,000 114,000 114,000 114,000 114,000 114,000
Total Debt 307,000 251,901 280,000 280,000 280,000 280,000 280,000 280,000 280,000
Interest Rates:
Jr. Sub 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0% 14.0%

EBITDA / Senior Interest 6.3 7.9 8.5 9.1 9.7 10.2 10.9 -
EBITDA / Total Interest 3.3 3.8 4.1 4.4 4.6 4.9 5.2 5.5
EBITDA-CapEx / Senior Interest (0.1) (0.1) (0.1) (0.1) (0.1) (0.2) (0.2) -
EBITDA-CapEx / Total Interest (0.0) (0.0) (0.0) (0.1) (0.1) (0.1) (0.1) (0.1)
Senior Debt / EBITDA 1.5 1.4 1.3 1.2 1.2 1.1 - -
Total Debt / EBITDA 2.3 2.4 2.2 2.1 2.0 1.8 1.7 -

Investor Ownership % of $Ownership OptionsOwnership EBITDA 169,989 169,989 169,989
Total Ent.
5.81 6 7
Sponsor 178,000 78.1% 78.1% 74.2% Value
Mezz/Sub Debt Lender 0.0% 0.0% Less: Net Debt 280,000 280,000 280,000
Management 50,000 21.9% 21.9% 5.0% 25.8% Equity Value 707,638 739,936 909,926
Total Equity 228,000 100.0% 100.0% 5.0% 100.0%
Worst Case
LBO Model
At 5.81 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 524,832 16.7% 2.9 X
Management -50,000 0 0 0 0 0 0 182,807 20.3% 3.7 X
At 6.00 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 548,786 17.5% 3.1 X
Management -50,000 0 0 0 0 0 0 191,150 21.1% 3.8 X
At 7.00 x Mult. Of
Sponsor -178,000 0 0 0 0 0 0 674,862 21.0% 3.8 X
Management -50,000 0 0 0 0 0 0 235,064 24.7% 4.7 X
Worst Case
APV Model
APV Method
Debt
Assumptions: Sr

Free Cash Flow 2020 2021 2022 2023 2024 2025 2026 2027
EBITDA 109,300 117,325 125,897 134,470 143,042 151,615 160,802 169,989
Less: Depr & Amort -28,006 -29,406 -30,877 -32,421 -34,042 -35,744 -37,531 -39,407
EBIT 81,294 87,918 95,020 102,049 109,001 115,871 123,271 130,582
Taxes (40%) -32,518 -35,167 -38,008 -40,820 -43,600 -46,348 -49,309 -52,233
After Tax EBIT 48,776 52,751 57,012 61,229 65,400 69,523 73,963 78,349
Plus: Depr & Amort 28,006 29,406 30,877 32,421 34,042 35,744 37,531 39,407
Less: Capex -110,590 -118,409 -127,346 -136,283 -145,219 -154,156 -164,209 -174,263
Free Cash Flow (Unlevered, After Tax) 52,990 -2,743 -20,509 -35,499 -38,644 -41,756 -44,725 -48,516
NPV of FCF @ Unlevered Cost of Equity $(68,492)
Terminal Value 0 0 0 0 0 0 0 -548,440

Implied Multiple of EBITDA -3.2
NPV of TV @ Unlevered Cost of Equity $(203,403)
Value of Tax Shield

Interest Expense 33,176 30,767 30,767 30,767 30,767 30,767 30,767 30,767
Tax shield 13,270 12,307 12,307 12,307 12,307 12,307 12,307 12,307
Total APV $(207,253) NPV of FCF + NPV of TV + NPV of Tax Shield
Liquidation Model
Assumptions Most Best Worst
Year Median
• Firm would e xit in 2 027 Likely Case Case
• Due to financial h ardship, there would b e minimal d isposable income for
people to spend o n fine d ining 2016 195,992 195,992 195,992 195,992
• DRFG would sell the firms a ssets, o r the b uildings a nd P P&E to receive
the returns it is seeking 2017 153,316 153,316 153,316 153,316
• Firm would cease to e xist a fter a ll assets a re sold
• All o f these locations retain value a nd that they a re p urchased versus 2018 287,803 287,803 287,803 287,803
being leased
2019 427,150 427,150 427,150 427,150
Best Case Most Likely Case Worst Case 2020 519,710 516,218 451,581 516,218
• Firm would • The firm has • The firm will 2021 701,091 619,721 467,192 619,721
blossom till done well in have a difficult
2027, but due to growth, but time to exist, 2022 886,410 756,810 498,105 756,810
the financial financial and selling its
times the firm hardship has assets is most 2023 903,917 919,274 515,219 903,917
would need to made the firm sure way of
be sold difficult to getting capital 2024 955,129 1,204,719 567,192 955,129
• IRR: 777% operate and be bac from the
• MOI: 8.77X sustainable investment 2025 997,612 1,597,102 613,435 997,612
• IRR: 520% • IRR: 264%
• MOI: 6.2X • MOI: 3.64X 2026 1,100,014 1,680,180 687,748 1,100,014
2027 1,215,195 1,719,571 713,419 1,215,195

Liquidation Model Issues
Liquidating a firm of this size
Purchasing all locations will Assets may not be as
and magnitude does not
stricken cash, hurt cash valuable as market value,
provide a positive image on
flows and minimize the there is a discount when the Private Equity firm and
overall equity growth of the liquidating so returns will
will make it difficult to secure
firm probably take a hit
deals in the future
Senior and Mezzanine debt Liquidation is very

would be able to get their uncommon in the fine dining
capital back but not as sector, and therefore the
quickly as when they like it expertise is minimal and may
to, and the risk of liquidation run into operational
could stop investments efficiency issues
Potential Investment Bid
Price Analysis
IRR Firm (Management) MOI Firm (Management)
5.81X 6X 7X 5.81X 6X 7X
Case Case
Multiple Multiple Multiple Multiple Multiple Multiple
Most Most
44.2% 44.8% 48.1% 12.9X 13.4X 15.7X
Likely Likely
(48.7%) (49.4%) (52.8%) (16.0X) (16.6X) (19.4X)
Case Case
Best 59.3% 60.0% 63.6%
Case (64.2%) (65.0%) (68.7%) Best 26.0X 26.8X 31.3X
Case (32.2X) (33.3X) (38.8X)
Worst 16.7% 17.5% 21.0%
Case (20.3%) (21.1%) (24.7%) Worst 2.9X 3.1X 3.8X
Case (3.7X) (3.8X) (4.7X)
40.07% 40.77% 44.23% 13.93X 14.43X 16.93X
Average Average
(44.4%) (45.22%) (48.73%) (17.3X) (17.9X) (20.97X)
Exit Multiple Analysis
Due to the strength of Based on hitting Firm had expansion, but
Most Likely
Best Case
Worst Case
the organization hitting management projections has had minimal ability
major milestones and having expansion to grow in terms of
including location geographically with EBITDA due to their
growth, expanded some reduction of costs, inability to reach price
product line and trading at the same quotas and achieve
decreasing costs multiple is most likely long-term synergy status
through synergies, the Potential Exit Multiple Potential Exit Multiple
multiple could be
• Minimum of purchase multiple • Firm will trade at the same
assumed and expanded (5.81X), with a small change purchase multiple (5.81X), as
Potential Exit Multiple that the multiple increases to the firm grew in revenue, but
6X, as the holding period for relatively had the same
• Minimum of purchase multiple the firm could change market EBITDA after an 8 year
(5.81X), likely to increase perceptions and buyout rates holding period
~5%-15% to between 6X and
7X EBITDA
Pricing
Things to Consider
Price Floor Target Price • Control Premium has not been taken into
account, which has ranged from 13.5% to
• Purchase at current • Purchasing at 35% between 2015 and 2018 (Duff &
Phelps)
stock price standard rates - see
• Analysis does not include other
($220.04MM) analysis ($535MM) acquisitions, which c ould result in drastic
changes in FCF and EBITDA
• Analysis also does not include the
potential franchising option, which
Auction Price Max Price solely increases FCF while not
increasing any costs
• Trade at the US PE • Paying 2019 EBITDA • Large risk associated with DFRG is the
relation it has to the performance of the
buyout multiple of at the 11.6X multiple financial markets. If disposable income
11.6X (335.25MM) ($682.31MM) decreases, the firm c ould take a drastic
hit
• Vice v ersa, if financial markets boom,
then the c ompany c an further prosper
Projected Pricing Versus Returns
LBO APV Liquidation
Most Best Worst Most Best Worst Most Best Worst
Likely Case Case Likely Case Case Likely Case Case
Price
220.04 220.04 335.25 220.04 220.04 335.25 220.04 220.04 335.25
Floor
Max
682.31 682.31 682.31 682.31 682.31 682.31 682.31 682.31 682.31
Price
Target
535 535 535 535 535 535 535 535 535
Price
Auction
335.25 220.04 682.31 335.25 220.04 682.31 335.25 220.04 682.31
Price
IRR 40.07% 63.6% 16.7% 41.51% 87.2% (4.96%) 520% 777% 264%
MOI 13.93X 31.3X 2.9X 15.16X 23.79X -1.17X 6.2X 8.77X 3.64
Conclusion
Industry
• Considered in maturity stage b ut g rowing
• Highly competitive
• Based o n financial market trends
• Young management team - enough e xperience q uestions
Company • Portfolio of b usiness n arrow b ut with tremendous p otential

• Geographical e xpansion a nd reduction o f cost make it p otentially a ttractive
candidate
• Returns look strong, a lthough h olding p eriod is longer than u sual
LBO Analysis • Financial markets risk factor n ot a voidable a nd therefore make p otentially d ifficult
investment
• Sun Capital P artners strategic d ecisions a nd synergies make d eal worth while
Conclusion
• LBO is g ood a t the right p rice
• Operational e xcellence must o ccur in o rder for strong returns
• Unavoidable risks via financial markets makes investment slightly risk

LBO Analysis: Del Frisco&#39;s Restaurant Group

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LBO Analysis: Del Frisco&#39;s Restaurant Group

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Acquisition of Del Frisco’s Restaurant Group

04 Potential Investment Bid

Fine Dining Boom

1991 1996 2005 2015 2019

Industry Definition: Fine Dining

Fine Dining Revenue Growth:

Restaurant Industry S tore Growth (1995-­2015)

$148.91B $416.2B $745.61B

“Restaurant Industry: Total Sales U.S. 1970-2017 | Statistic.” Statista,

9.70% Northeast 35.8%

We Create Quality Professional

Barriers to E ntry: Low Buyer P ower: High Substitutes: High

01 Brand value o f incumbent firms increasing,

Technology Cultural Customers

Failed Fine Dining (MM)

The Rapid Growth in F oot Traffic Industry P layers

‘81 ‘90 ‘94 ’02 ‘17 ‘18

Foundation Introduction of Awards of Prosperity

Board of Directors Board of Directors Inexperience

Financials, Nasdaq. “DFRG Organizational Structure.” NASDAQ.com

Original Restaurants, Del Frisco’s Del Frisco's

Acquired Restaurants Barcelona Wine

Diversity of Brands

Management Choices Sight Selection Operational Structure

• Strong Distribution Network • Organization structure too large a nd inefficient,

organization Sale and Purchase of Stock -­$2,182 -­$1,616 -­$48,458 $97,263

Previous Relevant Transactions

Management Projections vs.

• Sun Capital Partners • Management Price

Hillway, Brian. “DFRG.” CNNMoney, Cable News Network

•Economies of s cale t hrough better pricing on

• Typical Investors • Typical Investors • Typical Investors

Senior Debt 45% 8.3% 2.5X+ EBITDA BBVA Compass

Restaurants 9.30X 10 Year Projected Sun Capital Partners,

Last resort for exit 40.00%

Clean Balance Sheet with Little Debt Strong Management Team

DFRG STOCK Buyer Seller

10 JAB Holding Co Panera Bread Transaction: 07/19/19

Albertson’s LLC Safeway Inc. 5.00x Transaction: 01/30/15

Median Transaction EBITDA Multiple 9.81X

Financials, Nasdaq. “DFRG Stock Performance.” NASDAQ.com

Bar Louie’s Transaction 14.28X Cost

Restaurants Unlimited 9.3X Sun Capital Partners,

2018 PE Buyout Multiple 11.6X Sun Capital Partners,

Senior Debt 47.5% 36.00% 8.92% $193MM

•Capital Expenditures grew with accordance t o t he number of s tores

CASH FLOW STATEMENT

SELECTED CREDIT STATISTICS

RETURNS ANALYSIS Exit Multiple

Projected Years Ending December 31,

NPV of FCF @ Unlevered Cost of Equity $265,415

Terminal Value 0 0 0 0 0 0 0 1,233,859

Value of Tax Shield

SELECTED CREDIT STATISTICS

RETURNS ANALYSIS Exit Multiple

Projected Years Ending December 31,

NPV of FCF @ Unlevered Cost of Equity $688,260

Terminal Value 0 0 0 0 0 0 0 4,820,332

Value of Tax Shield

SELECTED CREDIT STATISTICS

RETURNS ANALYSIS Exit Multiple

Projected Years Ending December 31,

NPV of FCF @ Unlevered Cost of Equity $(68,492)

Terminal Value 0 0 0 0 0 0 0 -­548,440

LBO Analysis: Del Frisco's Restaurant Group

LBO Analysis: Del Frisco's Restaurant Group

Restaurant Industry S tore Growth (1995-2015)

organization Sale and Purchase of Stock -$2,182 -$1,616 -$48,458 $97,263

Terminal Value 0 0 0 0 0 0 0 -548,440

• Young management team - enough e xperience q uestions