Schlotzsky’s® (Nasdaq:BUNZ) started in 1971 with a single South Austin deli and an unusual made-up name. High tech was
an oven, a phone and a cash register—all standalone, of course.

However, today, Schlotzsky’s and IBM, the world’s largest information technology company, announced
a comprehensive technology agreement which provides the foundation for the approximately 700
Schlotzsky’s quick service restaurants worldwide to be linked together and equipped with advanced
IBM e-business technology.

Schlotzsky’s® Deli restaurants will serve customers with specialized, retail-hardened IBM point-of-sale
systems and Aloha software solutions, and will communicate with customers, each other and
headquarters through the Internet. In addition, some Schlotzsky’s restaurants will soon be able to
allow customers to place and pay for orders with their personal digital assistants (PDAs).

“This agreement with IBM and Aloha is part of Schlotzsky’s plan to be one of the first restaurant chains
to build an advanced e-business infrastructure,” said Robin Hanna, Schlotzsky’s chief information
officer, who also spent more than 20 years in the personal computer industry. “Our market is very
competitive, and our franchisees need quick, timely information and communications to give them a
competitive edge.

“In addition, our customers want the convenience of the advanced technology they already use every
day. We’re also headquartered in Austin, Texas, one of the world’s best-known cities for high
technology. So it’s important that we become the leading, technology-driven upscale food service
chain—from the latest servers and point-of-sale systems, to the Internet, wireless and pervasive
computing technologies.”

“Retailers of all types, including food service and hospitality, are quickly realizing that advanced,
e-business technology can transform their business, improve operations, enhance customer service
and contribute directly to the bottom line,” said Tom Peterson, general manager, IBM Retail Store

Referring to Schlotzsky’s slogan, “Funny Name. Serious Sandwich.®” he said, “In addition to building
serious sandwiches, they also are building a serious e-business infrastructure and leading what we
believe will be a strong trend in this area. Consumers are quite comfortable with the Internet, PCs and cell phones, and they are
demanding the ability to have choice, convenience and control over their shopping experience, whether it be for an upscale Schlotzsky’s®
sandwich or consumer electronics.”

In addition to providing Schlotzsky’s with its award-winning web-based ASP, Aloha’s Internet Services worked with Schlotzsky’s IT team to
interface Aloha with the sandwich chain’s back office software, creating a unique system called SANITY (Schlotzsky’s Aloha
Network Information Technology).

“We are thrilled to be partnered with such dynamic industry leaders as Schlotzsky’s and IBM,” said Martin Siebert, Aloha’s vice president of
sales and marketing. “The ease-of-use and swift delivery of business-critical information that Aloha offers makes us a great fit for their

Schlotzsky’s, which has more than 700 Schlotzsky’s® Delis worldwide, is launching technology initiatives that include:

•Installing new, touch-screen IBM SurePOS 500 point-of-sale systems and new IBM SureMark printers in each restaurant. Food
service, with heat, crumbs, smoke and spills, is one of the harshest computing environments, and the SurePOS 500 is uniquely
designed for food service, using a “cooling pipe” and sealed, spill resistant covers, to protect sensitive internal electronics.

• Schlotzsky’s will use Aloha QuickService software for its POS application.

• Installing new IBM eServer xSeries systems in each restaurant, linking them with the POS systems and employee/franchisee
communications network

• Upgrading the Internet-based communications network that links the stores, employees and headquarters. Schlotzsky’s is
developing “FranWeb” to connect all 440 Schlotzsky’s franchisees worldwide with on-line operations manuals, newsletters, daily
communications and timely information on suppliers.

• Expanding Schlotzsky’s Web presence ( and interactive, e-marketing programs, such as e-coupons.

• Opening its first two wireless stores (scheduled to open in the Fall in the Austin area), in which consumers will be able to
download all Schlotzsky’s store locations, directions and menus to their Personal Digital Assistant (PDA) devices, and then use
those palm devices to place orders. Eventually, customers will be able to place and pay for orders with their PDAs and future

• Internet-enabled cell phones.

 Transforming its company-owned Schlotzsky’s® Deli locations into “cyber-delis” with free Internet access, where children can get
online to play games and surf the Web, while business people will be able to log on for e-mail and access to stock market news
along with national newspapers. “It’s amazing how instantaneously customers respond to this concept,” said Ms. Hanna.
“It begins with morning commuters, and moves through the afternoon with ‘free agents,’ and into the evening with couples with
children, all logging on for news, e-mail, games, you name it.”

Using IBM Global Services to maintain, support and manage all hardware and software systems, as well as the wireless initiative.
Schlotzsky’s corporate restaurant managers and franchisees will now have one convenient number to call to handle all of their
technology support needs.

News, Sandwiches, Schlotzsky's