Page 12 - 2019 Apple Supply Chain Co-op, Inc. Annual Report_No Financials

Logistics

DISTRIBUTION MANAGEMENT

As distributors continue to evaluate their partners and “right-size” their businesses, considerable emphasis was placed on renewing and
extending distributor contracts in 2019 to protect Members and ensure continuity of supply for Applebee’s restaurants. Some agreements
have been extended out as far as 2025 with Operator options for extension.

Distributor acquisitions were prominent during 2019, including transactions among and between some Applebee’s distribution centers.
Performance Food Group (PFG) purchased Reinhart Foodservice in the Midwest. US Foodservice acquired the 5 FSA/SSA distribution
centers servicing 218 Applebee’s restaurants who will join the 116 Applebee’s currently serviced by US Foods in Florida.

As outlined in last year’s annual report, CSCS Logistics conducted an overall distribution assessment and engaged an industry-respected
consulting firm to assist in development of a short and long-term roadmap to address distributor challenges and meet the needs of our
Members. Activities will include making operational changes already in test, working with the Brand on SKU management and improving
relationships through expanded communications as shown below.

Though distributors have been successful in slowing driver and warehouse turnover, distributor service challenges continue. On-time
delivery performance to Applebee’s restaurants continued to decline in 2019.

Applebee’s Distributor Annual Service Performance

100%
99%
98% Fill Rate
97% On Time Delivery
96%
95%
94%
93%
92%
91%
90%
2014 2015 2016 2017 2018 2019

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