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FRANCHISE REPORT

www.casualpintfranchise.com

Table of Contents The Casual Pint Craft Beer Market Where Beer Lovers MeetTM .....................................................................................1

The Craft Beer Industry ................................................................................................2 Brewing Up Beer Sales ............................................................................................2

The Casual Pint Story Groceries, Growlers and Growth ............................................................................5

Target Market Who are the Casual Pint Customers? ....................................................................7

The Investment What are my Startup Costs? ...................................................................................8

Breaking Ground What makes a good location for a Casual Pint franchise? .................................10 Preferred Co-Tenants and Market Generator .....................................................10 Targeted Demographics .......................................................................................11

The Casual Pint Look Do I have any options for store layout? ...............................................................12

Build It... And They Will Drink Who makes a good Casual Pint franchise owner? ..............................................13

The Next Step... Joining the Casual Pint family ..............................................................................14

This Is How We Do Craft Beer Casual Pint’s franchise philosophy .......................................................................14

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1www.casualpintfranchise.com

The Casual Pint Craft Beer Market

Where Beer Lovers MeetTM

The Casual Pint story began in the fall of 2011 when the first location opened in the Bearden area, just West of Downtown Knoxville. After much success the owners decided to open a second location in Downtown Knoxville the summer of 2012. Realizing the high demand for craft beers, the owners Jon and Nathan Robinette, father and son, decided that the Casual Pint would be perfect for franchising. Having successfully opened two stores and having the processes in place, why not franchise? In the first nine months of offering Casual Pint franchises, over ten locations have been sold -- and that number is growing rapidly!

The Casual Pint refers to itself as a craft beer market as opposed to a bar. The focus is the sale of craft beer for takeout in either bottle or growler form. A bar is simply offered for the enjoyment of customers to taste different selections and to help them choose what they prefer to take home.

The Casual Pint offers a wide variety of beers, over 400 with 22 ever-changing taps, and growler fills. Each store also includes ample bar and room seating for guests to enjoy the large selection of import and domestic beers. The Casual Pint is not your typical “sticky floor bar.” Jon and Nathan make it very clear that the Casual Pint is a craft beer market first and foremost.

The Casual Pint’s mission is to, “Share the craft beer experience in neighborhoods, one pint, one growler, and one person at a time.”

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The Craft Beer IndustryBrewing Up Beer Sales

Beer has been a mainstay beverage in the United States since before the Revolutionary War. Our Founding Fathers, including George Washington and James Madison, were purported to be brewers of beer on their country estates. Beer is a beverage of choice and it has been a staple in the American way of life.

The U.S. beer market has seen some significant changes in recent years. The market has been marked by consolidations, overall revenue decline, and the emergence of new specialty craft beers. Consolidation, best exemplified by the InBev purchase of Anheuser-Busch, continues to push at the forefront of the market as the large brewers look for greater economies of scale to stave off declining revenues.

With all the changes, beer still remains one of the best selling beverages in the United States. In 2013, sales of beer in the United States amounted to approximately $100 billion dollars. Domestic beer sales far outweigh sales of other beverages as shown in the table below:

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Beer outsells most of the refreshments we see every day including, soft drinks, bottled water, coffee, liquor, and wine. When these beverages are looked at in total, beer comprises the lion’s share at 41%. Surprisingly, beer easily commands a larger share than soft drinks and it is nine times larger than bottled water.

The industry is a big business that is currently dominated by the Budweiser’s and Miller’s, but consumer sentiments and tastes are changing and the trend is reflected in the growth of the craft beer industry. Many consumers are seeking beers that are different than those offered by the mainstream brands. The craft beer industry has emerged as a definite alternative; an industry that offers bolder, more diverse and notably upscale beers.

Craft beer is a bright spot within the U.S. Beer Market. In 2013, craft beers accounted for approximately $14.3 billion or 14% of the domestic beer market of $100 billion. Since 2004, the craft beer sector has doubled in size to a 6% share of the U.S. Beer Market in 2012. As of June of 2013, there were 2,538 breweries in the U.S. Of those, 98% or 2,483, are considered craft breweries. There are now more breweries operating in the U.S. than at any point in the 140 years.

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From 2005 to 2011, the number of craft breweries in the U.S. increased by an astonishing 50%. The projected growth of craft breweries from 2012 to 2016 is equally impressive at approximately 40%. The continued growth of craft beer is undeniable.

Here are some more impressive statistics about the craft beer industry.

• Craft brewers currently provide an estimated 108,440 jobs in the U.S., including serving staff in brew pubs.

• Growth of the craft brewing industry in 2012 was 15% by volume and 17% by dollars compared to the growth in 2011 of 13% by volume and 15% by dollars.

• Craft brewers sold an estimated 13,233,917 barrels of beer in 2012, up from 11,467,337 in 2011.

• The craft brewing sales share in 2012 was 6.5% by volume and 10.2% by dollars.• Craft brewer retail dollar value in 2012 was an estimated $10.2 billion, up from $8.7

billion in 2011.• Although overall U.S beer sales for the first six months of 2013 fell 2% from the same

period last year, craft beer sales increased 13% from 6.4 million barrels to 7.3 million barrels.

• Total retail dollar value in 2013, $7,600,000,000.

(Sources: Brewers Association & MouthBySouthWest)

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The Casual Pint Story

Groceries, Growlers and Growth

The Casual Pint is the product of a father and son team where the story begins with Jon Robinette in 1976. That was the year Jon took up the grocery business landing a job with Harris Teeter Neighborhood Food and Pharmacy in Mountain City, TN. He began with the basics, but soon moved up the career chain from co-manager to store manager to area supervisor to area specialist.

Jon’s experience with Harris Teeter taught him what separates the country’s best grocers from their mediocre competitors – things like a wide selection of fresh, high-quality produce, meats, and other perishables. A world-class store is always clean, well-lit, and easy to maneuver through the aisles. It is well staffed with helpful and friendly professionals who ensure that questions are answered and checkouts are quick. And it has a generous selection of prepared products to make a shopper’s life just a little bit easier.

In other words, when you go into the country’s best grocery stores, you find high-quality products without having to search, you get out quickly, and you’re happy with the experience. Jon made sure to apply these lessons in 1997 when he became manager of Harris Teeter’s Quality Assurance Department. As Jon moved forward he was recruited by Giant then Food City in managerial positions.

During this time, Jon’s son, Nathan, also decided to get into the grocery business starting with Harris Teeter as an assistant store manager and co-manager in 2004. He later worked for Earth Fare and eventually took up with KeHE distributors. There he

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sold products to Food City, such as specialty and gourmet cheese, organic groceries, other specialty groceries and frozen dairy items.

Nathan was doing pretty well for himself, but it wasn’t enough. Nathan is an entrepreneur at heart; he needed to be his own boss. Along the way he had developed a passion for craft beers; those extraordinary artisanal concoctions created by small breweries around the region and the country.

Craft brewers have the same obsession for uncompromising quality that Nathan and Jon developed in the grocery business. They believe beer should be crafted by impassioned brewmasters, not by accountants and marketers. For his part, Nathan dreamed of providing a gathering place that honors their vision and rewards their effort. Enter The Casual Pint, the place ‘Where Beer Lovers Meet’.

With Nathan providing the dream, Jon providing the capital, and both providing the business expertise, they opened their first location in Knoxville’s Bearden neighborhood. That was 2011. The next year the father and son team opened a second location, this one on Union Avenue in downtown Knoxville.

Today, the dream of opening your own Casual Pint Craft Beer Market is available to you. Jon and Nathan decided in late 2012 the best way to expand the Casual Pint was through franchising. Working closely with 1st Choice Franchise Concepts, Jon and Nathan developed a business model that is easy to follow and process focused. The first Casual Pint franchise opened in April of 2014 and there has been a steady growth since.

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Target Market

Who are the Casual Pint Customers?

The unique position of the Casual Pint is the client base. The typical Casual Pint customer is primarily upscale from the age group of 30 to 60 years old. Craft beers, once thought as a trendy and unique option for the thirty-something males, are now attractive to females. Craft beer drinkers are characterized as ‘happy-go-lucky’ individuals who are open-minded, seek out interesting and varied experiences, and are intellectually curious. (Sited by an interesting study published in Advertising Age, November 2, 2009; “What Your Taste in Beer Says About You.”) Craft beer drinkers are typically both males and females with adventurous palettes who enjoy tasting new and exciting beer flavors.

The Casual Pint is different by design; we wanted a clean and homey environment. The name Casual Pint Craft Beer Market says it all. ‘Casual,’ conveys the informal,

relaxed and clean environment. ‘Pint,’ the sentiment of an old English pub; a welcoming place where friends meet and beer is served in pint glasses. Finally ‘Beer Market,’ a retail spot to purchase beer by the bottle, growler or keg to take home. The Casual Pint offers a distinct alternative to the typical bar; a craft beer store with a bar in it. The Casual Pint is the place where craft beer is celebrated with fellow beer-lovers.

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The Investment

What are my Startup Costs?

New Casual Pint owners typically need a minimum liquidity of $100,000 and a minimum net worth of $400,000. The total startup investment can range from $250,000 to $326,000 depending on your site location and lease.

A breakdown of our estimated initial investment, or startup costs, as outlined in the Item 7 of our latest Franchise Disclosure Document is included on the next page for your review.

Keep in mind the chart includes the average amount of franchisee investment from low to high. During your appointment with our franchise development team, we will walk through this Item 7 with you line by line.

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Item 7: Estimated Initial Investment*

*May 1, 2014

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Breaking Ground

What makes a good location for a Casual Pint franchise?

The Casual Pint is the type of concept that can work in many markets, and we work with all our franchise owners to make sure they have the best possible scenario to do well. Our first two stores were in vastly different locations. The first store was our Bearden store which is located in a suburban shopping area. Our second store is situated in downtown Knoxville. Both stores have a different clientele and have been successful. Of our current franchise locations all our stores are located in strip malls in small towns or suburbs.

Our real estate development experts have developed a list of ideal criteria for a Casual Pint Craft Beer Market:

Beer License: The site must be able to accommodate both the on-premise and off-premise consumption of beer.

Square Footage: 1,900 – 2,300 SF with 2,100 SF being the prototype sizeLease Term: Ten (10) year primary term lease, with at least two (2) 5-year optionsSeating: 60-70+ seats, including approximately 200 SF of outdoor seatingType of Sites: Free-standing or End-cap location, In-Line sites in dense marketsSignage: Maximum allowable building signage and space on dedicated

pylon or monument signTraffic Patterns: Easy access for late afternoon and evening customers. Access to

businesses is important. 25,000+ CPD on major traffic thoroughfare Casual Pint will be facing.

Parking Spaces: 20+ parking spaces for Casual Pint customer use and 2 designated parking spaces for quick pick up service

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Preferred Co-Tenants and Market Generators

Starbucks Panera Bread Five Guys Burgers & Fries

Chipotle Moe’s SW Grill Jason’s Deli

Target Barnes & Noble Whole Foods/Upscale Grocery

Movie Theaters Regional Malls Universities/Schools

Major Office Complexes Hospitals Lifestyle, Mixed-Use & Power Centers

Targeted Demographics

Population: 50,000 within 3 mile radius

Daytime Population: 25,000 within 3 mile radius

Average HH Income: $50,000 within 3 mile radius

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The Casual Pint Look

Do I have any options for store layout?

Here are Casual Pint store layout options developed by our team of architects.

102

Market

103

Bar105

Cooler

104

Storage

109

Office

107

Men's

108

Women's

101

Seating

106

Brewmaster's Club

111

Storage

112

Corridor

110

Utility Closet

100

Patio

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Build It... And They Will Drink

Who makes a good Casual Pint franchise owner?

Owning your own business is not as easy as it sounds. We believe that our Casual Pint owners must be passionate about owning their own business. If you have the passion then you will have the perseverance needed to pick yourself up on bad days. If your beer shipment did not make it as planned, then you can’t just close your doors for the day. You have to call your local brewery or distributor and make a contingency plan. If an employee calls in sick, then you might have to become the best beer tender for the evening. You’ve got to lead by example and maintain a positive attitude.

We are looking for owners who are driven and are willing to follow the proven Casual Pint business model. Why would you buy a franchise if you just want to turn around and run things differently? The strength of a franchise system lies with its proven model. Management experience is important, but work ethic is more so. If you are willing to work hard and follow our model, we can all be successful.

Here are some other traits that we are looking for when selecting Casual Pint franchise owners.

• Customer focus • Great communication skills• Trustworthy • Self-assured• Organized • Highly Motivated• Optimistic • Extroverted• Multi-tasker

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The Next Step...

Joining the Casual Pint family

By now you may know that the Casual Pint Craft Beer Market is poised to become the largest craft beer franchise in the U.S. Hopefully, you have also learned that we are serious about sticking to our business model because that is what has made us successful.

The next step is two-fold. Tell us more about yourself and we will tell you more about us. First, fill out an application so we can learn more about you. One of our franchise developers will reach out to you to set up an introductory telephone conversation where we will explore the possibility of a match.

This Is How We Do Craft Beer

Casual Pint’s franchise philosophy

You can rest assure that we will always be completely honest with you. We have a detailed investigation process, which will help you determine whether or not a Casual Pint franchise is the right fit for you.

In return, we expect you to be completely honest with us. We look forward to a healthy, open and honest dialogue.

Jon & Nathan Robinette

IF YOUBUILD ITTHEY WILLDRINK



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