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Message

MIKE LEIKAM

PRESIDENT & CEO
CENTRALIZED SUPPLY CHAIN SERVICES

As our Pancake Co-op Chairman, Peter DeGast, points out in his Message to
Membership, your numbers are a source of strength to CSCS. By every Member in both
the Pancake and Apple Co-ops agreeing to align and work together, it positions CSCS to take $2 billion of combined
purchasing leverage to the marketplace…..and that leverage is a key source of strength that allowed us to deliver strong
results in 2016.

Softer commodity markets and strategic sourcing strategies by Mark Smith and the Procurement team lowered the
IHOP market basket by 3.2% versus 2015 and was better than the corresponding producers’ price index. Participation
in our optional service programs grew by 13% with total spend under management in this category now exceeding
$170,000,000. As we continue to assess improved equipment alternatives, one of our offerings included the
ConserveWell, a dipper well alternative manufactured by Server products that will eliminate the use of half a million
gallons of water per restaurant per year. If adopted across the system, it saves billions of gallons of water and millions of
dollars annually.

Paul Allegri’s Logistics team delivered sustained freight management results and focused on several key distributors
whose service levels were not to acceptable standards. Don Ikemoto and the Brand Program Management team
delivered strong results with effective campaign management and improved collaboration with IHOP, and we continued
to make progress against our technology road map under the direction of Dustin Pittman, our Chief Financial Officer. In
addition, under his direction, we earned our eighth consecutive clean audit from our independent audit firm and operated
the company within the Board approved budget.

We manage CSCS guided by our core company values – Results Driven, Member Focused, Accountability, Integrity,
Continuous Improvement and Community. In September 2016, we again celebrated our Member Focused values by
conducting Member Maniac Week, a week where we attempt to contact every Member of the Pancake and Apple Co-
ops to find out how we can continue to improve and add even greater value to your businesses. Our 2016 Member
satisfaction scores matched those of 2015, earning an average rating of 4.63 out of 5.0. We continue to receive a
tremendous amount of feedback through this process that will help us continue to improve.

Emulating the commitment demonstrated by all our Members to support their local communities has been important to
us since the formation of CSCS. Through various fundraising activities, the CSCS team raised more than $21,000 for
the Spofford Home in Kansas City. Spofford is a leading provider of prevention and therapeutic treatment services for
children in the area suffering the effects of physical and sexual abuse, neglect, and mental disorders.

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