Page 292 - Onboarding May 2017

Administration

The Administration team is responsible for support functions at the Co-op, including cost management

reporting, communications, membership services, accounting, finance, auditing, information
technology, compliance, and human resources. The team also manages third-party vendors who
provide additional services in these areas.

This year was the Administration department’s first experience with tracking overall performance
against a Modified Producer Price Index (“MPPI”), which replaced the legacy Net Positive Financial Impact
methodology, or “NPFI”. The Apple market basket is comprised of a group of key products from different
categories that represent approximately 70% of the total spend in an Applebee’s restaurant, while the
MPPI is made of PPI sub-indices that resemble those same products with the same mix. Comparing the
relative change in both indexes creates a more comprehensive view of the impact of contract savings,
increases, cost avoidances, and underlying commodity market movements. Combined with performance
measurements for inventory management and the cost savings pipeline, CSCS achieved over 65% of its
overall company goals for 2015.

The Co-op relies on system-wide supplier, distributor, and restaurant data to achieve our vision of end-to-end
supply chain visibility. Co-op activities such as contract negotiations, inventory management, and pricing
compliance all depend on timely and accurate information. Strides were made this year to increase the level
of supplier inventory visibility to complement distributor inventories. All inventory data is fed into a scorecard
to help guide the BPM teams on their inventory decisions. Perhaps the most impactful system initiative in
2015 was the rollout of a new contract authoring and management tool. Not only does the software increase
our efficiency in negotiating contracts, it improves the level of visibility and contractual compliance.

The Administration team developed and implemented a new Member financing program to assist with the
steak program rollout. The program consolidates borrowing needs to negotiate a competitive bank offering
that is in turn made available to Members for the purchase of equipment and smallwares. Twelve Members
participated in the program with a total loan over $4M, which will be paid back over two years through a
special distributor sourcing fee.

Co-op membership and active participation are foundational to building the volume and credibility required
to unlock savings that only large-scale systems can realize. At the end of 2015, 100% of the Applebee’s
restaurants in the U.S. were Members in the Apple Supply Chain Co-op. The Apple Supply Chain Co-op Board
of Directors and the Board committees met throughout the year to provide oversight and guidance on the
Co-op’s activities to ensure proper alignment with Member interests. Membership was kept informed through
weekly Co-op newsletters and special news blasts.

Also this year, we administered several distributor programs to ensure balanced pricing was realized across
all Members, received clean audit opinions for the seventh year in a row, tackled hundreds of information
technology requests, conducted our third annual employee engagement survey, conducted our fourth
annual Member Maniac week, worked with distributors to collect on overcharges, and the list goes on.
In addition to the team’s daily responsibilities, we are looking forward to 2016 and the opportunities to
continuously improve our processes and programs resulting in increased value for our Members.

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