Page 106 - New Employee Onboarding

Date: February 2 , 2016
nd
To: Pancake Supply Chain Co-op Audit & Finance Committee
Mark Justice, Chairman
Darren Rebelez
Bob Sharp

From: Dustin Pittman

Subject: Final 2015 Cost Management Performance – Pancake Co-op

The Pancake Co-op Board approved a change to the 2015 Cost Management measurement to utilize
a modified Producer Price Index as the benchmark to compare against the IHOP’s Market Basket
performance. This approach replaced the Cost Impact Reporting methodology used in previous
years’ reviews to provide a perspective on the Co-op’s procurement performance in comparison to
industry. The enclosed work papers are meant to provide the Co-op’s Audit & Finance Committee
transparency into the methodology, calculation, and supporting detail in order to substantiate
published performance results. Enclosed please find the final 2015 audited Cost Management results
for the Pancake Co-op, including:

 Cost Management methodology explanation
 2015 Cost Management target calculation
 2015 Market Basket performance compared to the Modified Producer Price Index
 2015 Market Basket category performance detail
 Actual store delivered costs 2014 vs. 2015 (backup detail to the Pancake Market Basket)
 PPI sub-index performance detail for 2014 and 2015 (backup detail to the MPPI Index)

All inputs to the Cost Management calculation were audited against the approved methodology. The
audited performance by category was calculated based on static purchase volumes for year-over-
year comparability.

The Pancake Market Basket outperformed the MPPI by 3.88% in calendar year 2015, with an
unfavorable increase of 0.02% compared to an increase in the MPPI of 3.90%. These results
surpassed the 2015 target of 3.70%. See the accompanied work-papers in section III of the package
for further details.

We look forward to reviewing this information with you on the February 4 conference call.
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Enclosures

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