BFG 2019 Annual Meeting Speeches

Chairman's Address, 12th Annual Meeting of Burger Fuel Group Ltd, Thursday 26th September
2019 at 10.00 am

On behalf of the board, I would like to again welcome you all to the 12
th
annual BurgerFuel
Group AGM and thank you all for your support as shareholders.

For those of you who haven’t visited here before, we would also like to welcome you to
BurgerFuel HQ. This building is the heart of the deeply unique BurgerFuel brand and it is our
pleasure to be able to host you here today, with some HQ staff on this level, who will
continue to work away in the background.

I would now like to review the main events of the past financial year for the BurgerFuel Group
of companies.

In FY19 the Group Operating Revenue decreased by (15%) to $21.0M, this decline is mainly
due to the sale of the company owned store in the US, to Chris Mason the founding director,
as well as some internal changes to our supply chain. We did however, in line with what we
advised you last year, achieve a net profit after tax for the period of $1,236,341 which is a
$1.7M increase on the previous year.

BurgerFuel Total (unaudited) System Sales were down (2.9)% to $102M for the 12-month
period.

The total number of BurgerFuel restaurants operating globally as at 31 March 2019 was 78.

Last year we discussed the transformation the Group would make from being a globally
focused single brand company, to a locally focused multi-brand business, aside from
supporting our Middle East interests. I am pleased to advise that the transition has been very
successful and continues to occur on several different levels.

On 1 July with the extinguishing of the NZAX, we migrated to the main board of NZX. At the
same time, we changed our name from BFW (Burger Fuel Worldwide) to BFG (Burger Fuel
Group). This name change better reflects the business we are now transforming into; that
being a company that is currently operating and developing 3 brands. Our Chief Executive
and Chief Operating Officer will talk to you more about the operational aspects of those
brands, later in their address.

A further corporate change that occurred during the past year was the completion of the
Franchise Brands share buyback of 10% of the company owned by FB and the cancelling of
those shares. We advised you last year and indeed voted on acquiring FB’s 10% stake and I
am pleased to advise that this transaction was successfully completed in April this year, in a
staged buyback, utilising the company’s cash reserves. Shareholders will see from our
balance sheet that cash wise we are well on the way to fully recovering from that stock
acquisition. This purchase has resulted in the total share registry being reduced from 59.6M to
53.7M shares and accordingly each shareholders percentage ownership of the company
has risen in accordance with that share buyback and cancellation.

FY19 saw the re-focus of the company structure to better serve the new chapter of
becoming a multi-brand NZ focused company. Whilst we continue to support our Middle East
Master Franchisees in both the UAE and Saudi Arabia, the key growth focus for us as a
company is in the development of both Shake Out and Winner Winner within NZ, as well as
further BurgerFuel system development, wherever possible.

Last year we talked about the new brand which we had developed in-house. This was Shake
Out and in November 2018 we opened our first store (a company owned store) in Smales
Farm on the North Shore. I am pleased to advise that that store has traded generally in
accordance with our expectations and we see growth potential for Shake Out in many NZ
locations in the future.

The Winner Winner brand has also had an extensive systemisation overhaul and as a result is
now ready for scaling. The second and third franchised WW stores are due to open at the
end of this year. Again, our CEO and COO will talk more about the development of these
brands shortly.

We will, of course, also continue to support and work alongside our established BurgerFuel
partners in the Middle East in both Dubai and Saudi Arabia. Dubai has been a difficult market
in recent years but nonetheless we remain present there. Saudi has also been difficult but is
now poised to see some growth, especially with the westernistion of that country by its new
ruler.

Strategic Options Review Update

As previously advised by way of public announcement at the end of 2018 and again on 15
February 2019, the board has engaged KPMG’s corporate finance team to undertake a
strategic options review of the company. This entailed running a formal process seeking
expressions of interest regarding a sale, merger, joint venture, international partnership,
domestic partnership or alternative proposals. This process has delivered discussions with
various parties on some of those options, including an outright sale which if eventuated and
was recommended by the directors, would be subject to shareholder approval.

We can confirm that although the board has reviewed several non-binding offers for possible
mergers as well as outright purchase, the process is still ongoing and we are limited in our
ability to provide further context or description of any offers or parties involved, given the
confidentiality agreements in place and also given that these discussions and offers are
occurring on a non-binding basis. They may come to nothing.

A key issue that continues to surface is the rationale for BFG remaining a listed company.
Whilst over time we are hopeful that our new brands will provide new earnings streams for
the Group, we believe it will take considerable time for them to contribute meaningful
earnings to support suitable scale and attract liquidity in BFG shares; trading liquidity being
fundamental to a company being suited to a listed environment. It seems likely, for the
reasons already set out by KPMG in earlier announcements that BFG is a candidate for
privatisation, but the question remains on what basis this could occur.

The board intends to continue running the process until a clear conclusion is reached which
could be that there is no outcome and the company remains listed. In any event, I can

confirm that we have nothing material to advise the market of, at this time, but we will of
course keep you fully informed with any material developments in regard to the options
review process.

In summary, the board remains positive about the opportunities available to us in New
Zealand and in particular, the development of our new brands and we look forward to
updating the market with any announcements around either potential strategic review
outcomes or company developments for new store openings as well as any other milestones.

We advised you last year that the company expected to move towards profitable growth in
FY19 and I am pleased to report that was well achieved. At this stage, we expect the group
to remain in profit in this current FY20 year, however, taking into account development costs
of the new brands as well as the costs associated with the strategic options review (most of
which are non-deductible), we consider profit would likely be less than last year.

The board will consider paying a dividend in the future, however no decisions will be made
until the strategic review process has been completed and the future capital requirements of
the business are determined.

I will return to address you all later in the meeting, but for now, I would now like to hand you
over to Josef Roberts our Chief Executive.
Chief Executive’s Address, 12th

Annual Meeting of Burger Fuel Group Ltd, 10.00am, Thursday
26
th
September 2019.

Good morning everyone and welcome to our 12th AGM. Time continues to fly by and it
certainly doesn’t feel like a year has passed since I was last here addressing you.

FY19 marked another fast and furious year for the BurgerFuel Group. I spoke last year about
our new and very real reality stemming from the major loss of our global partner – Franchise
Brands and the impact that that loss has had on our prospects as an international company.

I advised then that given the loss of our partners, the key redirection of the Group from an
internationally focused, single brand company to a New Zealand focused multi-brand
business must also become our priority.

I am pleased to advise that we are well under way with that transformation in several
different areas within the business. My colleague – our COO Tyrone Foley, will elaborate on
the operational aspects of those developments, following my address.

It has become clear that BFG no longer attracts investors based on its international “growth
stock” potential and that in reality our share price and accordingly our enterprise value is
now viewed by the market, more on an earnings and multiple basis.

Frankly, I think it’s important for all current and potential investors to understand that this
current valuation methodology appears to be our new reality. Although of course our
objectives are always to improve and grow value and on this note our FY19 profit was our
best so far as a listed company, clearly, we are no longer viewed as an international growth
stock.

Last year we told you that we would move the company into profit, and we did that and
again this year we expect to deliver a profit. Peter noted that with the extraordinary costs of
the options review as well as the new brands’ development, that figure may however, be
less than last year. From an earnings perspective, the key redirection of the Group from an
internationally focused, single brand company to a New Zealand focused multi-brand
business will take time, but I am pleased to advise that we are well under way with that
transformation, in several different areas.

For us to gain momentum on the share price, we need to increase revenue and lower costs.
The question becomes how? Firstly, there is further growth within the BurgerFuel system in NZ
and we are working to identify new sites and franchisees. The second area is the
development of our new brands; Shake Out, where we now have two stores operating and
Winner Winner – our chicken shop concept that is ready for development, with two new
outlets scheduled to open later this year.


That said – shareholders need to recognise that the NZ economy is at best flat, there is little
confidence and the higher labour and overhead costs of operating restaurants make
attracting new and quality franchisees to this sector, quite difficult. Equally, we have no
desire to sell franchises to just any operator. We have always taken a long-term view when it
comes to selecting franchisees and this policy will continue. We need to be confident that
new operators have both the financial and operational wherewithal, to manage a start-up
and grow that business carefully over the years ahead. Again, this all takes time to achieve.
We are certainly not operating in a booming economy so we cannot predict how rapidly we
can fill the pipeline for new stores, but at this stage I am pleased to report that there are
some commitments and further prospects for new business.

Our international business which now consists of franchised restaurants in Saudi Arabia where
we have 9 stores operating, UAE (in Dubai and Abu Dhabi) where we also have 9 stores
operating, Iraq where we still have one store and the USA where we have one store
operating under license by BurgerFuel founder Chris Mason.

In regards to the USA - I have no updates at this point, other than to say that the single store
run by Chris Mason under license, continues to operate in Indianapolis.

In terms of the Middle East – I have just returned from a short visit to Dubai. Dubai itself is in a
recession. In my view the city has been overstocked with restaurants (now some 15,000 of
them) and extremely unreasonable and unsustainable occupancy costs. Labour has also
escalated over recent years. The combined effect of these fundamental factors has caused
the closure of many retail outlets with both local and international retail brands (especially
food) closing and exiting Dubai altogether.

We still have a future in the UAE but I expect a few more store closures to occur in the next 12
months. The good news in this market is the growing food delivery “dark kitchen” category
which is considerably more advanced in Dubai than in NZ. A dark kitchen is effectively a
non-retail kitchen that can be located anywhere (with cheap rents being the primary
objective) and no dining room fit out needed, because it is not designed to attract retail
customers. These are popping up everywhere in Dubai with major food aggregators
investing in this new world model.

The delivery business in Dubai is expected to replace much of the lost sales revenue from
store closures because in the end what we are seeing with the onslaught of food delivery is
simply the cannibalisation of bricks and mortar restaurants. It’s a simple concept; if people
are ordering from our menu through an aggregator, but having their food delivered through
these various aggregators, then they are no longer going to our store, which is of course
saddled with a fixed overhead structure. That bricks and mortar model becomes increasingly
unsustainable as more and more sales move to delivery from these dark kitchens with much
lower overheads.
This is a new global reality and has the ability to impact any retail food concept be it through
margin erosion and/or loss of sales.

This global phenomenon has had a major impact on the UK for example. There we can see
just how quickly the category can be attacked. Since June 2018, more than 1,400 fast casual
restaurants (including Jamie Oliver’s food empire) as well as major gourmet burger chains
like Byron Burger and GBK have either fully collapsed or are rapidly in decline. These results
can be largely attributed to both tighter consumer spending, growing and unsustainable
occupancy costs as well as the advent of non-profitable delivery aggregators such as Uber
Eats.

The UAE is hard work at present, but we are well established there as a brand. In my view we
will survive there, but in the end – as we have always said about the Middle East in general,
treat it with caution and we will just have to see how things pan out.

Saudi Arabia is a lot more positive as an economy with the new ruler liberating many of the
previous cultural restrictions that were in place. These changes help to generally westernise
the culture, which is good for BurgerFuel.

However, Saudi also has its challenges in occupancy costs and higher labour costs, but in
general I feel optimistic about future growth in the Kingdom.

Overall, I feel we have a strong business base to grow from in New Zealand, but it will take
time. I don’t expect rapid growth, only incremental growth that can rise or fall off the general
health of our economy, an economy that is no doubt becoming increasingly challenging.

The second question becomes how to reduce overheads, within reason, but still allowing us
to have enough capacity and resource to grow our new brands? In the end we are a public
company and that comes with considerable fixed costs for an enterprise of our size. Not only
external costs, but time - we spend much of our time navigating public company
requirements.

The KPMG process has unearthed possible buyers for the company as well as possible merger
options, but I note that any non-binding proposal comes with the proviso of BFG being
privatised. The NZX itself is shrinking by number of listed companies and new listings (with the
exception of one in recent times) are virtually non-existent.
Furthermore, the broking firms do not provide coverage for small cap stocks like BFG and
there is no sign of this situation changing in the foreseeable future. In summary, the listed
environment in NZ at present seems bleak for small, thinly traded stocks like ours and today
there are new ways of raising capital for smaller enterprises and as a result we are seeing less
companies willing to IPO in NZ.

As shareholders are aware, we had not intended to be on the main board, we are there by
default given the unexpected end of the NZAX. The board of directors will certainly be
exploring all options for privatisation and this may be a subject that we come back to
shareholders on in the future. I raise it, because in my mind it is a fundamental issue that now
needs to be tabled as a serious option. I do however stress that at this point we do of course
remain a listed company and as Peter has stated, we have no further update to provide
today in terms of the KPMG strategic review.

Finally, I would like to thank you and all of our shareholders for their continued involvement
and support. I would also like to thank our many stakeholders such as our great team here at
BurgerFuel head office, all our in-store staff, our franchisees both in NZ and overseas, as well
as the many suppliers who each day ensure that fresh produce makes it on time to the
BurgerFuel system. We are thankful to all of these people.

Of course, finally I wish to thank our loyal customers and in doing that pose a simple question
to all our shareholders: When was the last time you visited a BurgerFuel? Well there’s never
been a better time! We have some quite amazing special burgers regularly being rolled out
and we invite you to go try one! We’d love to see you in store!

Thank you all and I will now hand you over to Tyrone Foley our Chief Operating Officer for his
update on the more operational aspects of the business.
Chief Operating Officer’s Address, 12th

Annual Meeting of Burger Fuel Group Ltd, 10.00am,
Thursday 26
th
September 2019.
Thanks Josef. I’d also like to welcome our shareholders to BurgerFuel HQ today and thank
you all for your ongoing support.
Given my role as COO operational updates from year to year can seem similar, especially
with one brand. To an extent, this year, that is also the case, with the notable exceptions of
reshaping our business into a group, adding some new innovative food offerings, and
launching our new brand Shake Out.
Last year we completed the systemisation and documentation of our two new brands,
Winner Winner & Shake Out. It isn’t the most exciting of topics, but it is an essential
fundamental of franchising; readying brands for scale. We also concluded the changes to
our supply chain and created all the legal documentation needed to franchise the new
brands. With that work complete, we embarked on quite a bit of internal change and I’m
pleased to report that our office has been reshaped to operate as a Group in order to
ensure each brand has the staff and focus that it needs.
One pleasing outcome of this systemisation is that we won another award, and this time it
was a global award from World Manager for “Best Delivery of Training”, and our competitive
pool was over 400 other companies across 62 countries. It is a very satisfying tribute to the
way we work because this sort of content, and indeed all of our marketing content, is
produced in-house, by talented people here at our offices.
In New Zealand, BurgerFuel has maintained a solid sales result which has been achieved in a
flat economy, with increased competition, and also ongoing disruption from Uber Eats and

similar services. Here in New Zealand we intend to open more BurgerFuel locations and for
the existing business we are embarking on a “back to basics” operational strategy and a
refreshed marketing strategy.
Being a listed company and trading in the Middle East has had an influence on just how
cheeky, irreverent and humourous our marketing can be, and we want to increase our
creativity and push boundaries a little more in future years – simply to ensure that we keep
standing out in what is a very crowded social media world. We have strengthened our
brand in many areas, but we are now working to reclaim some of those areas that are part
of our genesis. Recently we have been offering alternative meats, fresh tarakihi, hemp,
charcoal buns, kombucha, broccoli bites, kimchi, sauerkraut, and some comforting
favourites like Mac’n’Cheese aka Smack & Cheese. As we say, its “Fast Food, but Real
Food.” People want fast food with minimal processing and no weird additives. We give them
that and we offer some interesting quirky alternatives that they are unlikely to find at their
local takeaway or indeed at any of the large global chains. That’s the essence of Burgerfuel
– unique, fresh and natural food served in an environment as charged as our food.
How often can you satisfy the Meat Eaters, Vegans and Flexitarians all at once? Well we
have, and not just once, but twice! The Beyond Beleaf used the Beyond Meat burger patty
and we had to work hard to secure the stock as US and global demand has been soaking
up all available supply. Like the Beyond Beleaf, our Chook Free burger also featured vegan
provolone (un)cheese and our very own BurgerFuel vegan aioli.
We also thought we would have a go at creating our own highly nutritious and craveable
vegan offering. Our Electric Puha burger headlined the use of hemp as its nutritional
credentials are very impressive and we had hemp in the sourdough bun, the aioli and the
Hemp & Broccoli bites. Our team also spent time with the team at Kaitahi learning about the
nutritional benefits and applications of Puha and we will continue to look at other
applications for indigenous ingredients in the future.
We have always led the way in our industry when it comes to environmental, nutritional,
social and ethical initiatives and we have many projects underway that will help us propel all
of these BurgerFuel initiatives, even further into the future.
In FY19 we have been deploying a newly fitted out portable kitchen in a shipping container.
In true BurgerFuel style, it has been popping up at music festivals and also at some South
Island towns that haven’t had much BurgerFuel love so far.
I’ll now comment on what has been going in BurgerFuel in the Middle East, and then on to
our new brands here in New Zealand.
In the Middle East, total revenue is down for FY19, but the region continues to be a good
contributor for us, and we are seeing progress in Saudi Arabia. The UAE remains challenging
and this has demanded a lot of extra support from our office and we hope to see the fruits of
those efforts in 2020 during the World Expo in Dubai.
It was mentioned earlier that the retail occupancy costs have been high and these continue
to be an issue but there are signs that the major landlords are seeing the impact of this and
are becoming more negotiable. We hope to see this fundamental metric reduce from here.

This will help our licensee achieve better margins, but they are facing other headwinds in the
form of increased competition, an ever-increasing number of restaurants and disruption not
just from aggregator and delivery services but also from “virtual, cloud, ghost or dark”
kitchens. As Josef alluded to, these are kitchens that are invisible to the public that partner
with a delivery service, such as Uber Eats as their window to the marketplace. These dark
kitchens have been around for a while now, but the latest twist is that you don’t have to
build your own dark kitchen, you can now contract out to existing dark kitchens and this is
creating even more clutter in the marketplace. We are now trialling 5 dark kitchens in the
UAE, but it is too early to determine the success of this hyper convenience option.
Our licensed business in Saudi Arabia is continuing to improve and this can be largely
attributed to a continued increase in BurgerFuel marketing activity, as well as the changes in
social attitudes and the local economy, which means we are likely to benefit as Saudi moves
closer to western values. Already the local population is seeking its entertainment at home
rather than in Dubai. Our Saudi licensee has refurbished most of their stores and whilst it isn’t
quite like the end of the Berlin wall, we have videos of our staff enjoying the demolition of the
dining room walls that used to segregate diners. As is often the case in the Middle East,
progress is followed by turbulence. The recent drone strikes in Saudi were at a facility that is
about 45 minutes away from two cities on the East coast that have many BurgerFuel stores.
Thankfully no BurgerFuel staff were harmed by the drone strike. Our Saudi licensee has a very
stable management team that has refreshed the business and they are ready for more
growth.
In Iraq, trading conditions have deteriorated, but we continue to support our licensee in any
way we can that doesn’t involve visiting the country. We remain uncertain about the future
of BurgerFuel in Iraq.
To summarise, while revenue is down for the MENA region, we remain positive about parts of
the region, and we will continue to support the business and strengthen the brand in a
commercially sensible way. As always, we do caution the market every year that our outlook
in any of these countries can change quickly due to the ongoing potential for volatility in the
Middle East.
On a more positive note, back here in New Zealand we have two new brands that I’d now
like to talk about.
Winner Winner has been in our stable of brands for well over a year now. The Hamilton East
team was a little hesitant to embrace all our new systemisation but having done so they now
realise that it has enhanced their ability to consistently provide a friendly, local and casual
restaurant that is providing high quality, craveable and authentic meals.
As well as systemising the procedures at Winner Winner, the IT platforms have also been
upgraded and online ordering was launched. Winner Winner online ordering is now a well
performing sales channel and as seen in BurgerFuel, it is a channel that is continuing to grow.
More recently we have launched a new catering menu and given how popular it has been
we will digitise this channel soon.
Overall, the store is performing extremely well, and we are now ready to open some more
locations, which will occur soon.

Shake Out is our home-grown concept that satisfies all of our cravings for an uncomplicated,
fast and great tasting experience. The small menu makes it quick and easy for the customer
to decide what to order and it also makes it easy to use our kiosks. Payment is by card only
and by not taking cash we have managed to lower our risk of losses, improve food hygiene,
eliminate the need to do banking, reduced the amount of administration and reduced the
need for front-of-house labour costs.
Operating a burger business is actually more difficult than most people realise and with the
approach we have taken at Shake Out, we have made the business about as simple as it
can be, whilst still providing a premium product. We get many compliments on the organic
shakes, the super soft burger bun, the juicy beef and our signature sauces. Shake Out is a far
simpler offer for both customers and franchisees. We have two Shake Out stores, both on
Auckland’s North Shore, and we are now taking franchise applications for the rest of the
North Island. The opening of new stores will be announced soon.
Here is a quick video clip, that showcases each of the brands and a lot of the refreshed
marketing and training that I have talked about today.
It is worth noting that most of what you see in that video, was, once again, created in-house.
Menus, logos, procedures, layout, self-service kiosks, mobile website. Everything! It is a great
testament to our ability to systemise a business.
Overall, it has been a year of significant consolidation, optimisation and preparation.
Running three brands is a lot more complicated than running one, but we are profitable and
ready for the challenges that lie ahead. Thanks for your time.
I’ll now hand you back to Peter to conclude the Board's address before we move on to the
formal resolutions of the meeting
Chairman of the Board to close address to shareholders.

On behalf of the Board, I wish to thank all employees, franchisees, and other business
partners for their efforts. I would also like to thank my Board colleagues for their support and
the work that they have performed during the year.

Finally, the Directors would like to thank all shareholders for their ongoing support. We look
forward to continuing our work to support management and direct the business for the year
ahead so that the Company can continue to grow.
I look forward to sharing our developments with you as we transition into a multi-brand
Group.