Page 4 - 2019 Apple Supply Chain Co-op, Inc. Annual Report_No Financials

David Paradise

Board Chairman, Apple Supply Chain Co-op

In my letter last year, I talked about the need to adapt as change accelerates. In the world of supply chain, adapting
to change is not a solitary exercise. You must adapt for your customers, with your suppliers, and sometimes against
prevailing wisdom. Effectuating that type of change is complex and takes many people willingly working together. It
takes courage, leadership, and most of all, relationships.

Centralized Supply Chain Services, or CSCS, exists to negotiate the lowest sustainable prices, ensure continuity of
supply, and support Applebee’s in product development. Led by Mike Leikam, they work tirelessly on our behalf
to produce results in new and creative ways. The CSCS team’s relationships across our industry are a significant
contributor to driving a “competitive advantage for every Member every day.” While many ideas and initiatives start
with CSCS, they don’t end there. They are successfully executed through coordination with other companies, made
up of people that value their relationship with the CSCS and Applebee’s family.

Perhaps nowhere are relationships on brighter display than the Restaurant Profitability initiative. Extracting almost
$60MM of value in 2019 required an incredible amount of cross-functional work built on individual relationships and
trust among Applebee’s, CSCS, franchisees, the supplier community, and our distributors. Beginning with “category
strategy” summits, continuing through appropriate levels of testing, and finishing with the product transition process,
each cost savings project has dozens of people involved with hundreds of activities. There are bound to be difficulties
and roadblocks, many of which can only be overcome through relationships.

Strengthening our partnerships in the distribution space is critical as our distributors continue to face mounting
challenges to capacity, labor, legislation, and other input costs. CSCS is executing a comprehensive strategy to make
Applebee’s a customer of choice, getting us well positioned for an uncertain future. Mike and his management team
have conducted top-to-top meetings with all our distribution partners, assessing current relationships and cultivating
the important ones. Being strategically aligned with the right partners is the best strategy to avoid future distribution
dilemmas.

There are endless opportunities for investment, and as business owners we constantly weigh where to spend our
time and resources. We are fortunate to have a team at CSCS that recognizes an investment in people will often
times pay dividends beyond measure. Thank you to the other Apple Co-op Board Members for devoting their time
and talents to CSCS, and thank you to all Members for investing in system excellence through the supply chain. •

Extracting almost $60MM of value in Results through
2019 required an incredible amount of cross-functional work built
on individual relationships and trust among Applebee's, CSCS, Relationships
4 4 franchisees, the supplier community, and our distributors.