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MESSAGE

MIKE LEIKAM

PRESIDENT & CEO PANCAKE SUPPLY CHAIN CO-OP

The theme of our fiscal year 2017 annual report, “Your Bottom Line is our Top
Focus” is really borne from our vision of creating an Unmatched Competitive Advantage for EVERY Member EVERY
Day. Everything we do is focused on maximizing the value we deliver to you through the supply chain to improve your
bottom line.

One such step we undertook in 2017, together with IHOP, was launching the Restaurant Profitability Improvement
project. Together we engaged a third-party consultant, PricewaterhouseCoopers, to help us identify additional
opportunities to improve margins while maintaining the customer and brand experience, optimize how we and the
Brand work together to maximize value, and to continue to enhance our and the Brand’s internal capabilities. This
effort will result in millions of dollars of additional value based on the results of similar engagements at other brands
and co-ops.

Commodity market trends and strategic sourcing strategies by Mark Smith and the Procurement team lowered the
IHOP market basket by 0.51% versus 2016 and while the corresponding Producers’ Price Index increased. This is
the third year in a row of market basket deflation for IHOP. Participation in our optional service programs continued
to grow as more Members realize their value. Paul Allegri’s logistics team delivered sustained freight management
results and focused on several key distributors whose service levels were not to acceptable standards. Chris
McNutt and the Brand Program Management team delivered strong results with effective campaign management
and improved collaboration with Applebee’s, 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 ninth
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 2017, we again celebrated our Member
Focused value by conducting Member Maniac Week, a week where we attempt to contact every Member
of the Apple and Pancake Co-ops to find out how we can continue to improve and add even greater
value to your businesses. Our 2017 Member satisfaction scores improved to 4.77 out of 5.0 versus Welcome
our 2016 score of 4.63. We continue to receive a tremendous amount of feedback through this Member!
process that will help us continue to improve.

We again would not have been able to achieve the results we did in 2017 without the support and
leadership of the CSCS and Apple Boards. It is an honor and a privilege to work with such a dedicated
group of people. I also want to thank the CSCS management team – Mark Smith, Dustin Pittman, Paul Allegri,
Chris McNutt, and Mary Hempfling. They are true professionals in every sense of the word. Finally, I want to
thank every CSCS team member. They are the true “Member Maniacs”, a tireless group of professionals dedicated to
fulfilling our vision of Creating an Unmatched Competitive Advantage for Every Member Every Day.

Thank you for your collaboration, feedback and support in 2017. I hope you find this annual report informative and
useful. We will continue to work hard to deliver against our commitments to you because this company exists for only
one reason – to serve you, our Member owners.

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