Capriotti's Franchise Guide

Franchise Guide

Table
of Contents

1. The Industries
2. Who is Capriotti’s?
3. Brand Growth
4. The Capriotti’s Brand
5. What Makes Capriotti’s So Scrumptiously Different?
6. Our Franchise Partners
7. Support for Our Franchise Partners
8. Restaurant Formats
9. Qualifications for Prospective Franchise Partners
10. Process and Next Steps
11. FAQs
12. Contact

Capriotti’s is a 41-year-old heritage brand in the
fast-casual restaurant sector with a following of
raving fans lovingly known as CAPAddicts.

Many are driven to open their own location after
falling in love with the food.

Fast-Casual
Industry

Capriotti’s occupies space in the $47 billion fast-casual restaurant sector.
Sandwich concepts make up 18 percent of that. Fast-casual is a subset of limited-

service restaurants, which include quick-serve restaurants (QSR).

The fast-casual sector leads all other restaurant sectors – full-service and QSR –
in growth.

Fast-casual is anticipated to make up 22 percent of the limited-service market by

2021.

Sandwich concepts account for $31 billion in limited-service sales and $8.5
billion in fast-casual sales.





Franchise
Industry

The franchise industry in 2017 grew faster than the overall economy
for a seventh consecutive year. The industry shows no signs of slowing

down.

The franchise industry is expected to have grown by $36 billion in 2017.

Franchising is a powerful economic engine providing more than 120 different
industries a way to sell products or services to consumers through independently

owned and operated franchises.

Who is
Capriotti’s?

An award-winning fast-casual sandwich restaurant, Capriotti’s is a fast-growing chain
where franchise partners earn exceptional returns by selling the best tasting, highest-

quality food in a comfortable and inviting atmosphere. Capriotti’s has more than 100
locations in 18 states, with $58 million in system-wide sales, as of 2017.

More than 70 percent of the system is made up of multi-unit franchisees, proving

that partners are reinvesting in the brand. The top quartile of Capriotti’s owners

average nearly $1.1 million* in sales annually, which is higher than other

sandwich competitors.

*$1,115,570 is the average unit volume of the top 25%(8/42%) of all 77 franchised Capriotti’s shops in operation for the entire calendar
year ending December 31, 2015. The median unit volume of all restaurants in the top 25% of shops (19) is $1,063,423. A new franchisee’s
results may differ from the represented performance. There is no assurance that you will do as well, and you must accept that risk. For
information about the financial performance during 2015 of all franchised and affiliate-owned restaurants that operated for the full year
see Item 19 of the CSSI Franchise Disclosure Document dated June 10, 2016.
**For a complete break down of the total investment, see item 7 of the CSSI Franchise Disclosure Document dated June 10, 2016. The
total investment ranges from $325K - $525.5K. Franchise investment varies.





Our
leadership

Our leadership
team has fostered
the momentum to
open 500 franchise
locations by 2025.

Ashley Morris
& Jason Smylie

Ashley Morris and Jason Smylie became CEO and President, respectively, after buying
the company in 2008. They tripled the number of locations to 106 stores today. The
friends and business partners had been Capriotti’s multi-unit operators in Las Vegas
since 2005.



David
Barr

Barr, who serves as Vice Chair of the International Franchise Association’s Board of
Directors, brings a wealth of experience as multi-unit franchisee for Yum! Brands,
operating 23 KFC and Taco Bell restaurants. Barr is also an investor in TITLE Boxing Club
and is managing director and partner for Franworth, a franchise growth equity firm. He
also serves on the board of several franchise companies, including BrightStar Care, The
Spice & Tea Exchange and The Bistro Group.

Shelly
Sun

Sun is Chair of the IFA and CEO, CFE and co-founder of BrightStar Franchising LLC. Sun
is an investor in other franchise companies, including TITLE Boxing Club. In 2009, she
was named Entrepreneur of the Year by the IFA. Sun is the author of the book, Grow
Smart, Risk Less – A Low-Capital Path to Multiplying Your Business through Franchising, in
which she shares her experience and knowledge of franchising success.

David
Bloom

David Bloom serves as Chief Development Officer, overseeing all aspects of franchise
development, operations and training. Bloom’s background includes senior
leadership positions in a variety of high-growth franchise brands. His early career in
the franchise industry began as a multi-unit franchisee and included such milestones
as serving as Senior Vice President of Brand Expansion for Quiznos, growing it from a
small regional brand to opening over 5,000 locations in 28 countries. In subsequent
senior roles, he was responsible for the rapid growth of numerous enterprises,
including Clockwork Home Services, which has system-wide revenues in excess of
$2.5 billion; Bridge International Academies based in Nairobi, Kenya, which has
schools throughout Africa and India; and Famous Brands International, which has
approximately 900 franchised locations in over 30 countries.

Jane
McPherson

Jane McPherson is Capriotti’s Senior Vice President of Marketing responsible for
marketing and technology. She brings more than 20 years of marketing experience
and deep knowledge of the franchise restaurant category. At Quiznos, McPherson
was the Senior Director of Marketing, where she was responsible for driving 900
percent growth for the brand. Leading the revitalization of the TCBY and Mrs. Fields
brands, she also served as Vice President of Marketing at Famous Brands International.
With additional experience in a venture funded early-stage technology company and
a top U.S. marketing agency, McPherson blends start-up style creativity with
big-brand corporate discipline to marketing and technology at Capriotti’s.



Brand
Growth

With locations open in 18 states and growing quickly, Capriotti’s is well on its way
to reaching the 500 restaurant mark by 2025. Having expanded the Capriotti’s

presence in our home market of Las Vegas, we also recently expanded in key markets
such as Chicago, Indianapolis, Nashville, Salt Lake City and Minneapolis. We signed

more than 50 franchise agreements in 2017.

But, Capriotti’s still has prime territories available for development, including locations
in the Mid-Atlantic, Midwest, Middle South and Mountain West regions. In addition to
domestic expansion, we have our sights set on international growth. Franchise
partners outside the United States should have a high-level of restaurant or retail
development and operational expertise in country. Additionally, the right franchise
partners are individuals who align with our brand’s mission and values, and are as
passionate as we are about the extraordinary food at Capriotti’s.

The Capriotti’s
Brand

Capriotti’s began in 1976 by brother and sister duo Lois and Alan Margolet in
Wilmington, Delaware, based on the idea of creating a unique sandwich shop for “real
turkey lovers.”They named their shop after their grandfather, Philip Capriotti, who
loved to cook. The company took off, spreading across the country simply based on
word of mouth.

Capriotti’s became famous for its nightly tradition of slow-roasting whole, all-natural
turkeys in-house and hand-shredding them each morning to feature in a variety of
fan-favorite subs. This includes The Bobbie, the shop’s acclaimed best-seller, made with
homemade turkey, cranberry sauce, stuffing and mayo on a soft roll. The Bobbie was
voted “The Greatest Sandwich in America” by AOL users in 2009.

While attending the University of Nevada in Las Vegas, best friends Ashley Morris and
Jason Smylie became so enthralled by Capriotti’s that they broke their apartment lease
to move closer to a restaurant. In 2005, the duo opened their own franchise location
and quickly became multi-unit operators, opening their second location that same
year and the third location in 2007. In 2008, they bought the entire company. Ashley
and Jason nearly tripled the size of Capriotti’s, which now has 106 locations open
across the country.

Although the brand has experienced tremendous growth, Capriotti’s still insists its
mission – To share our passion, one sandwich at a time – and values exist at every
location that carries its name.



Capriotti’s
core values

Capriotti’s core values, which flow from the leadership at the corporate level to each
member of every restaurant’s staff, include:

Passion – Be the Best
Family – Care About People
Integrity – Walk the Talk
Profitability – Everyone Wins
Genuineness – 100 Percent Real

What Makes Capriotti’s So
Scrumptiously Different?

We are obsessed with food and exceeding expectations. For example, The Bobbie,

Capriotti’s signature sub, was voted “The Greatest Sandwich in America”

by thousands of readers across the country and reported by AOL.com. Additional

accolades for our food include being ranked by No. 1 QSR Brand for Highest

Quality and Taste by Sandelman & Associates in a 2014 study.



Why? Because we prepare our food the hard way:

• Slow-Roasted Homemade Turkey
• Meatballs Made from Scratch
• Homemade Tuna Made Fresh Daily
• Premium Grilled Steak & Chicken
• Slow-Cooked Hand-Pulled Roast Beef
• Fresh Coleslaw Made Daily





Our Franchise
Partners

Besides being committed to the quality of our food, we are also committed to our
family of franchise partners. In 2014, Forbes ranked Capriotti’s Sandwich Shop as one
of The 10 Best Food Franchises for Your Buck.

We are happy you’re interested in joining the Capriotti’s family. Check out what some
of our partners have to say about their experience with Capriotti’s:

Kim Schneese
Wilmington, Delaware

On being part of the growing Capriotti’s brand:

Kim has been with Capriotti’s since the company’s start, growing up in the restaurants
as her mother was best friends with the company’s founder, Lois Margolet. After
working in the original Union Street Capriotti’s, her mother bought the Silverside
location in 1997, the fourth Capriotti’s ever opened. Kim worked with her mother in
the restaurant until taking ownership in 2015.

“I’ve had the unique opportunity to experience first-hand where the company began,” said
Kim. “This perspective has allowed me to stay true to our founding quality standards while
also playing an important role in the evolution of the brand. It’s exciting to see the growth
we have experienced and the innovation paving the way for Capriotti’s future.”



James Gimbel
Davenport, Iowa

On owning a Capriotti’s with confidence:

In 2007 on a trip to Las Vegas, James stopped by Capriotti’s and instantly fell in love
with the sandwiches. James was hooked, and ate at Capriotti’s every time he was
in Vegas. In 2010, he decided he would become a Capriotti’s franchisee so he could
have the restaurant where he lived in Iowa. Seven years later, he owns four successful
Capriotti’s locations in his home state.

“From the moment I tried Capriotti’s, I knew I found something special,” said James. “For
me, it was more than just a sandwich I loved – it was an opportunity for me to run a
successful business and feel confident about the quality products I’m selling.”



Bill Byrd
Atlanta, Georgia

On Capriotti’s thorough design process:

As the President and Co-Owner of PTMD Restaurants, and a franchisee of dozens
of KFC and Taco Bells, Bill Byrd is no stranger to the franchising and restaurant
industries. He decided to invest in a Capriotti’s because he was drawn to the brand’s
supportive family atmosphere. He and his son Jason opened their first Capriotti’s
in 2016.

“The design process went very well,” Bill said. “We got a lot of support from Capriotti’s
laying it out, helping coordinate and manage the contractor. They came out twice to make
sure it was being built to spec. The support we got was phenomenal. Having built many
brands before, I feel we got more support from Capriotti’s than we did anywhere else.”



Andy Poch & Craig Garofalo
Chicago, Illinois

On Capriotti’s staying current with the times:

After attending culinary school at Kendall College, the two best friends managed a
variety of well-known high-end restaurants around the country and abroad. Since Andy
had never tried the restaurant before, Craig took him on a road trip over the Wisconsin
border to try Capriotti’s at three locations. Andy was instantly drawn in by Capriotti’s
commitment to quality, unique flavors and fresh ingredients. The duo opened their first
Capriotti’s in 2016 and second restaurant in January 2018.

“Capriotti’s has taken the care to grow the brand and bring it into modern times. We get to
see the continuing evolution, which keeps us relevant and current in the fast-casual sector.
Capriotti’s also stays true to its roots. We will never bend on who we are, making everything
fresh on a daily basis, sourcing the best ingredients every day and being genuine.”





Support for Our
Franchise Partners

Capriotti’s treats franchise partners like family, and therefore provides support to get
them up and running successfully. Like a family, that support is always available.

Site Selection and Construction – Our domestic franchise partners are

provided with state-of-the-art site selection tools and best-in-class support from
design to the buildout of your Capriotti’s.

Grand Opening – Our team of experts will work to support you through a

program focused around public relations, advertising, in-shop experience, and local
shop marketing.



CAPMastery Program – This is an online and field program that provides

significant support to franchise partners for marketing, retail sales, operations and
growth strategies throughout every stage of their ownership.

Technology– Capriotti’s works with a number of the largest technology firms in our

industry to develop systems that will aid our franchise partners in delivering our award-
winning food to our guests quickly and help them run their businesses efficiently:

Our improved POS system integrates inventory management, recipes,
and sales data with store schedules and labor costs. Aided by the system,
Capriotti’s corporate team performs regular reviews of franchise partners’
operations at no cost to the shop owner.

Capriotti’s automation system integrates third-party delivery and
catering options, which are providing excellent results in building
revenues for our franchise partners.



Marketing – Ongoing customer acquisition marketing programs are available

to franchise partners. Our branded loyalty app and social following gives us a direct
connection to our most loyal customers and enables us to drive incremental visits and
reward our most loyal customers.

Restaurant
Formats

Capriotti’s is a versatile concept that can operate in many
different city and suburban locations:

• Most Capriotti’s are end-caps, inline or freestanding
• The brand is open to nontraditional locations, such as airports, casinos and malls

(There’s a Capriotti’s currently in a courthouse, casino and truck stop)

• The average size of a Capriotti’s is 1,800 square feet
• Open kitchen design and attractive finishes convey the fact that our food is fresh,

made in-house, and made to order

• Seating averages 40



Capriotti’s does not use a set design for kitchens, although the brand strives to limit
it and other back-of-the-house operations to 1,000 square feet to maximize space for
guest seating. The same kitchen equipment is used system-wide. Our shops feature a
mixture of modern design elements that provide a warm, inviting feeling.

Format for restaurants in international markets will be similar, but will take into
account cultural preferences.





Qualifications for Prospective
Franchise Partners

Our partners should fit into the “family” environment of the company and align with
Capriotti’s other core values such as passion, profitability and genuineness. The ideal
Capriotti’s franchise partner will have high levels of business acumen and a proven
track record of growing a business.

Restaurant experience is preferred, but not required. Prospects should also have an
understanding of the customer experience as this is a vital part of the Capriotti’s dining
experience. Our owners should love Capriotti’s food and be dedicated to being a great
brand ambassador.