PowerPoint Presentation

By: Kevin Farshchi, Drew Szilagyi, Tom Van SpankerenPresented May 5, 2015Popeyes Louisiana Kitchen, Inc.(PLKI - Nasdaq)AgendaIntroductionBusiness OverviewIndustry OverviewMacroeconomic ReviewRecent Financial PerformanceFinancial AnalysisValuationRecommendation

ScreeningConsidered sectorsWhat is our client not exposed to?Our team is bullish on consumer discretionaryCame up with restaurant industryIdentified favorable trendsDeclining oil prices and consumer confidenceQuick Service RestaurantsInvesting by walking aroundFundamentalsHigh RoE with low leverage, growing same store sales (High Growth and Profitability)Low PEG ratio, P/SGaining Market Share and brand valueDetailed 10-KPopeyes Louisiana KitchenSecond largest quick-service chicken conceptMenu features spicy chicken, chicken tenders, fried shrimp, seafood and a variety of regional sidesFounded in New Orleans, LA in 1972Develops, operates and franchises quick-service restaurants Two business segmentsFranchise Operations and Company Operated restaurants2,379 Popeyes restaurants

2014 10-K Pages 1-3

Popeyes Four Pillars2014 10-K page 1Popeyes PresenceHigh presence in the Southern United States where fried chicken is favored60% of international franchised stores are in South Korea, Turkey and Canada2014 10-K Page 1

Growth StoryCompany has been growing top line, bottom line and market shareHas outpaced Chicken Quick Service Restaurant Same Store Sales for 27 consecutive quarters19 quarters of same store sales growthGlobal Same Store Sales: 6.2%Market Share: 23.2% vs. 20.8%

Popeyes Investor Conference 2015 Page 16, 2014 Annual Report Page 1

Franchise ModelFranchise royalties and fees have three basic components:1)percentage of sales royalty payments 2)franchise fees for opening new restaurants 3)development fees for new restaurants in a given market.

Franchise customers pay large fees to operate a Popeyes and subsequent royalties$35,000 domestic franchise fee$12,500 development fee per restaurant 9% claim on gross sales5% revenue to Popeyes on gross sales4% advertising fund

Strong relationship with franchisees In 2013, approximately 90% of new restaurants were opened by existing franchisees

2014 10-K Page 19Revamping of StoresOn plan to have 80% of stores re-imaged by year end 2015Improve the customer experienceDesire for customers to hang out

2014 10-K Page 8, 18

CustomersLouisiana style meals focusing on flavored Chicken and SeafoodLimited Time Offers$5 Bonafide Big Box!, Beer Can Chicken, Spice BoxSignature sidesOffers the customer a variety of sidesRed Beans & Rice, Cole Slaw, Cajun Fries, Cajun RiceAt Popeyes we never compromise quality for value- Chief Marketing Officer Hector Muoz

2015 Investors Conference Page 7-8

This company truly knows their customers always looking for new ways to enhance products and prices. Popeyes Performance2014 YoY PerformanceEPS Growth: 15% Operating Profits: 22.4%$300,000 per locationFCF growth of ~13%587% return since end of 2009

Domestic Franchisee Restaurant Operating Profit before rent2014 Investors ConferenceTechnical Analysis

Support at $55? Reversal of 20 below 50Investors are taking profitsSupply ChainSuppliers are required to purchase all supplies from approved suppliersPrimary supply is chicken Main suppliers include Sysco and Pilgrims Pride

BloombergSuppliers

FranchisesPopeyes CorporateChicken FarmersThe Consumer

Industry AnalysisQuick service restaurants are becoming more popularConsumers are preferring the experience rather than fast foodU.S. Broiler Chicken demand will grow at 5.8% in 2015High beef prices has been a tailwind for ChickenPounds of chicken per year per person is at all time highs

Pounds per Person Per Year ConsumedEarth Policy Institute, National Chicken Council Chicken Bird Flu EpidemicAn Iowa based chicken breeding broiler breeding farm tested birds positive for the H5N2 bird flu17 total outbreaks of the fluPrompted the Governor to declare a state of emergency on May 1, 2015U.S. Centers for Disease Control and Prevention states there is no food safety risk for consumers yet Iowa is on track to exterminate 5 million hensCould be a great buying opportunity amidst with uniformed investorsBan imposed by importing nations has led to extra domestic supplies of chicken leg-quarters- Tyson CEO: Donnie SmithSimilar to Ebola affecting the airline industry

http://www.usatoday.com/story/money/business/2015/04/30/bird-flu-strikes-another-million-iowachickens/26657913/http://www.bloomberg.com/news/articles/2015-05-04/tyson-says-bird-flu-s-primary-effect-is-lost-export-sales

Industry TrendsQuick service restaurants are becoming more popularConsumers are preferring the experience rather than fast foodU.S. Broiler Chicken demand will grow at 5.8% in 2015High beef prices has been a tailwind for Chicken

Pounds per Person Per Year ConsumedEarth Policy Institute, National Chicken Council Porters Five ForcesMacro-Economic OverviewSt. Louis Federal Reserve, University of Michigan, National Restaurant Association 2015 outlook,

Pounds of chicken per year per person is at all time highsMore eating out - food expenditures outside the home are making up a larger portion of overall household expenditures

Macro-Economic Overview

Source: IBISworld, Source: Calculated by the Economic Research Service from various data sets from the U.S. Census Bureau and the Bureau of Labor Statistics.

19Management Long Term GuidanceCEO: Cheryl BachelderServed since November 2007Management if focused on transparency of company performance, shareholder friendlySame-store sales growth approximately 2%-4%Next year growth rate of 3.5% to 4.5%Diluted EPS Growth rate of 11%-14%Net Unit Growth rate of 5% to 7%Buy back $40-$50 million shares in 2015International expansionContinue to gain market share

2014 10-K Page 18

Financial Ratios

Debt2014 10-K Pages 24,25

Debt Projection

Financial Projections

Revenue Projections

Discount Rate

DCF Model

***Step Function WACC due to anticipated changes in capital structure

Comparable AnalysisQSRChicken and non-ChickenFranchise Business Model FocusEliminates many big players such as MCD, CMG, SBUX5% gross sales franchise fee2-4% gross sales directed to brand management/advertising funds Regionally focused in the US while also making international expansion a primary objectiveExtremely competitive in terms of price, quantity, location and input costs

Comparable Analysis

In Conclusion,2014 10-K Pages 6-9

RecommendationDCF suggests a price target of $32.14

Comps suggest a price at roughly $50

Technical Analysis suggests a price support at $55

Further analysis of what the market is thinking led us to realize that the differences in valuation that we were experiencing was because of the differences in Discount Rate. We have applied a higher rate than have analysts covering the issue, as we see risks to adding leverage.RecommendationAdd to Watch List