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The Pantry, Inc.
Morgan Keegan 2008 Equity Conference
         September 5, 2008
Safe Harbor Statement


      Some of the statements in this presentation constitute “forward-looking
 statements” within the meaning of the Private Securities Litigation Reform Act
   of 1995. All statements other than those of historical facts included herein,
    including those related to the company’s financial outlook, goals, business
 strategy, projected plans and objectives of management for future operations
       and liquidity, are forward-looking statements. These forward-looking
 statements are based on the company’s plans and expectations and involve a
      number of risks and uncertainties that could cause actual results to vary
 materially from the results and events anticipated or implied by such forward-
   looking statements. Please refer to the company’s Annual Report on Form
      10-K and its other filings with the SEC for a discussion of significant risk
        factors applicable to the company. In addition, the forward-looking
       statements included in this presentation are based on the company’s
  estimates and plans as of the date of this presentation. While the company
    may elect to update these forward-looking statements at some point in the
               future, it specifically disclaims any obligation to do so.



                                        1
Our Business
 Leading independently operated
  convenience store chain in the
  Southeast and 3rd largest in the U.S.

 1,660 stores located across 11
  states
     Primarily branded Kangaroo Express

 Last twelve months as of June 26,
  2008 sales of $8.5 billion and LTM
  EBITDA of $218 million

 Stores offer a broad selection of
  merchandise, motor fuel and food
  service offerings designed to meet
  convenience needs of consumers




                                          2
Key Investment Highlights

 Leading market positions in attractive Southeastern markets

 Significant scale advantages vs. primary competitors

 Benefiting from consumer trends toward convenience formats

 Leveraging infrastructure to drive profitability and future growth

 Attractive sector growth and consolidation potential



 Strong Cash Flow Generation to Reinvest in Our Business, De-lever and Drive Earnings Growth
                                                          De-




                                             3
Attractive Industry Fundamentals

                                                                                                                U.S. C-Store Sales and Growth (1)
                                                                                                                     C-
 Large and rapidly growing sector
                                                                                                                                                                                   c te d
                                                                                                                                                                               roje 5.9%
                                                                                       ($ in Billions)

 Defensive growth characteristics                                                                                                                                           P                    $727
                                                                                                                                                                                 R=
                                                                                                                                                                            C AG
                                                                                       $700
                                                                                                                                                                                           $577
                                                                                                                                         .6%
                                                                                        600
                                                                                                                                  R = 11                                            $524
                                                                                                                           l CAG R = 7.0%
 Increasing consumer demand for                                                                                                                                             $475
                                                                                                                       rica
                                                                                        500                                                                                                $169
                                                                                                                 Histo          CAG
                                                                                                           Total Historical
                                                                                                                                                                                    $160
                                                                                                                                                                     $395
                                                                                                                                                                             $145
                                                                                        400
                                                                                                                   e
                                                                                                                 r                           $337
  smaller-box, fill-in convenience                                                                        In-Sto                        $290
                                                                                                                              $269 $283                              $132
                                                                                        300
                                                                                                                               $234                           $116
                                                                                                                        $186                         $109
  shopping                                                                                                      $174                          $112
                                                                                                         $166                          $104                                                $409
                                                                                        200     $154                            $100                                                $364
                                                                                                                                                                             $330
                                                                                                                        $86
                                                                                                                $81                                                  $263
                                                                                                          $77
                                                                                                 $75                                                        $221
                                                                                         100                                                         $181
                                                                                                                                              $171
                                                                                                                                       $165
                                                                                                                               $134
                                                                                                                        $100
                                                                                                          $89   $93
                                                                                                 $79

         Relative to hypermarkets, large
                                                                                           0
                                                                                                 1995    1996   1997    1998   1999    2000   2001 2002     2003     2004    2005 2006     2007 2011E


          supermarkets, etc.                                                                                                            Gasoline        In St ore



                                                                                             5-Year In-Store Sales CAGR vs. Other Sectors (1)(2)
                                                                                                    In-
 Increasing amount of food
  consumed away-from-home and                                                                            7.4%
  on-the-run                                                                                                             6.0%             6.0%              6.0%



 Highly fragmented market with                                                                                                                                              2.9%

  ample consolidation opportunities

                                                                                                                                                                                            (1.3%)
                                                                                                       Co venience     Drug Sto res    Restaurants     To tal Retail         Gro cery       Disco unt
_____________________
                                                                                                         Sto res                                                              Sto res      Department
(1) Source: NACS 2007 NACS State of the Industry Report and Retail Forward, Inc.
                                                                                                                                                                                             Sto res
(2) Source: Retail Forward, Inc. CAGR for 5-year period from 2001-2006.


                                                                                   4
Leading Convenience Store Retailer Concentrated in
the Southeastern United States

1,660 Stores Located in Eleven Southeastern States as of June 26, 2008

                                                                                       Indiana
                                                                                        Indiana
                                                                                                                                                Arlington
                                                                                                                                                Arlington
                                                                                     Indianapolis
                                                                                      Indianapolis
                                                                                                         Covington
                                                                                                         Covington
                                                                                                                                                  Hampton
                                                                                                                                                  Hampton
                                                                                                                                  Richmond
                                                                                                                                  Richmond
                                                                                                  Frankfort                                             Norfolk
                                                                                                                                                        Norfolk
                                                                                                  Frankfort
                                                                                                                                   Virginia
                                                                                                                                   Virginia              Chesapeake
                                                                                                                                                         Chesapeake
                                                                                                  Kentucky
                                                                                                  Kentucky

                                                                                                  PA0021GM_1.WOR
                                                                                              Bowling Green
                                                                                              Bowling Green    Durham
                                                                                                                Durham
                                                                             Paducah
                                                                             Paducah                                                                     Raleigh
                                                                                                                                                         Raleigh
                                                                                                                            North Carolina
                                                                                                                            North Carolina
                                                                                             Nashville
                                                                                             Nashville
                                                                          Tennessee
                                                                          Tennessee
                                                                                                                          Columbia
                                                                                                                          Columbia                Wilmington
                                                                                                                                                  Wilmington
                                                                                                                               South
                                                                                                                               South
             NY0010DP_1.WOR                                                                                                  Carolina
                                                                                                                              Carolina
                                                                                                     Atlanta
                                                                                                     Atlanta
                                                                    Mississippi
                                                                    Mississippi

                                                                                                                Georgia
                                                                                                                Georgia
                                                                          Clinton
                                                                          Clinton       Montgomery
                                                                                        Montgomery
                                                              Vicksburg
                                                              Vicksburg
                                                                               Meridian
                                                                               Meridian
                                                                                      Alabama
                                                                                       Alabama
                                                                Jackson
                                                                Jackson
                                                                                                                                  Jacksonville
                                                                                                                                  Jacksonville
                                                        Louisiana
                                                        Louisiana                                    Tallahassee
                                                                                                     Tallahassee
                                                                                                                                         Daytona Beach
                                                                                                                                         Daytona Beach
                                                                                  Gulfport
                                                                                  Gulfport
                                                               Baton Rouge
                                                               Baton Rouge
                                                                                                                                            Orlando
                                                                                                                                            Orlando

                                                                                                         St. Petersburg
                                                                                                         St. Petersburg          Tampa
                                                                                                                                 Tampa
      Pantry Store Locations
                                                                                                                                    Florida
                                                                                                                                    Florida    Boca Raton
                                                                                                                                               Boca Raton
                                                                                                                                               Miami
                                                                                                                                               Miami


_____________________
Note: Map as of fiscal year ended September 27, 2007.


                                                        5
Key Markets Possess Highly Attractive Growth
Characteristics

             Core Markets Projected to Experience Rapid Growth Throughout Next Several Years;
                                                                          Next
               High Degree of Fragmentation Provides Continued Consolidation Opportunities
                                                                             Opportunities

                             Population Growth CAGRs (2005-2015) (1)                                          Market Fragmentation (1)
           25.0%
                                                                                                         Florida                                 North Carolina
                     21.1%                                                                           (7,356 stores)                              (5,447 stores)
                                                                                                                                                           Pantry
           20.0                                                                                              Pantry                     >50 Store
                                                                                                                                        Operators
                                                                                        >50 Store
                                                                                                             6%                                     14% 7%
                                                                                                                         1 Store
                                                                                        Operators                                                                     1 Store
                                                                                                                        Operators                                    Operators
                                                                                                       31%
                                   15.0%                                                                                            2-50 Store
                                                                                                                                                 21%
                                                                                                                                    Operators
           15.0
                                                                                                                54%                                        58%
                                                                                                       9%
                                                                                        2-50 Store
                                                                                        Operators
                                                 9.5%                        9.1%
                                                               9.0%
           10.0

                                                                                                     South Carolina                                Tennessee
                                                                                                     (2,872 stores)                              (3,697 stores)
            5.0
                                                                                                               Pantry                                     Pantry
                                                                                           >50 Store                                    >50 Store
                                                                                           Operators                                    Operators
                                                                                                       17% 10%                                            3%           1 Store
                                                                                                                         1 Store                    17%               Operators
            0.0                                                                                                         Operators
                     Florida       North         South Tennessee             U.S.                    21%
                                                                                                                                    2-50 Store 20%
                                  Carolina      Carolina                                2-50 Store             52%                                             60%
                                                                                                                                    Operators
                                                                                        Operators
  (2)   Pantry Stores: 455           388           282          104          1,660


_____________________
(1) Source: U.S. Census Bureau and 2007 NACS State of the Industry Report.
(2) Note: Pantry’s store counts as of quarter ended June 26, 2008.


                                                                                    6
Strong Track Record of Top Line Growth…

            Merchandise Revenue                                            Retail Gas Gallons Sold                                                       Total Revenue


($ in mm)                                                          (Gallons in mm)                                                    ($ in mm)

                                                                                                                                      $9,000
                                                                   2,500
$2,000                                                                                                                                                                            .9 %            $8,502
                                                                                                                                                                                25
                                                                                                               .0 %                                                           =
                                            1.8%                                                           = 15                                                         ’07
                                       =1                                                            ’07                      2,129                                 –
                                 ’07                                                             –                                     8,000                    ’03
                                                                                             ’03
                            3–                            $1,640
                        R ’0                                                             R                            2,033
                                                                                     CAG                                                                   GR
                    CAG                       $1,576                                                                                                     CA                              $6,911
                                                                   2,000
                                                                                                                                       7,000
                                                                                                       1,758
 1,500                              $1,386                                                                                                                                     $5,962
                           $1,229                                                                                                      6,000
                                                                                           1,497
                  $1,170
                                                                   1,500           1,372
                                                                                                                                       5,000                     $4,429
         $1,010
                                                                           1,161
 1,000
                                                                                                                                                        $3,493
                                                                                                                                       4,000
                                                                   1,000
                                                                                                                                               $2,750
                                                                                                                                       3,000

  500
                                                                                                                                       2,000
                                                                    500

                                                                                                                                       1,000

                                                                                                                                          0
                                                                      0
    0
                                                                                                                                               2003 2004 2005 2006 2007                            LTM
                                                                           2003 2004 2005                  2006 2007          LTM
         2003 2004         2005 2006               2007    LTM

                            Fiscal Year                                                      Fiscal Year                                                          Fiscal Year
    _____________________
    Note: Fiscal year ends in September. Last twelve months as of June 26, 2008.


                                                                                             7
…And Substantial EBITDA Generation

                               Gross Profit                                                                   Reported EBITDA

 ($ in mm)                                                                               ($ in mm)
                                                                               ’03-’07
   $900                                                                                   $300
                                                                               CAGR                                       $279
                                                                $826
                                                      $811
                                            $779
     800
                                                                                            250
                                                                               11.6%
                                  $663                                                                                                   $218
                                                                $220
     700                                              $225                                                                        $214
                                                                                                                   $214
                                            $281
                        $591
     600                                                                                    200
                                                                                                            $173
             $511                 $214
                        $165
     500
                                                                                                     $136
                                                                                            150
              $145
     400

                                                                $606           12.5%
     300                                                                                    100
                                                      $586
                                           $518
                       $425       $449
     200     $366
                                                                                             50
     100


        0                                                                                     0
             2003       2004      2005      2006      2007       LTM                                 2003   2004   2005    2006   2007   LTM
                                   Fiscal Year                                                                      Fiscal Year

                           Merchandise     Gasoline
_____________________
Note: Fiscal year ends in September. Last twelve months as of June 26, 2008.


                                                                                     8
Strong Growth in Merchandise Sales Per Store

                                  Improved Store Portfolio and Stronger Consumer Offering
                                 Have Driven Increased Average Merchandise Sales per Store

                                                             Average Merchandise Sales per Store
         ($ in Thousands)

                                                                                                   .0 %
                                                                                           6
                                                                                     -’07:
                                                                              R ’0 3                       $999
                                                                          CAG                                       $996
           $1,000
                                                                                                    $954
               950
                                                                             $898
               900
                                                     $857
               850

                              $792
               800

               750

               700
                              2003                    2004                   2005                   2006   2007     LTM
                                                                                     Fiscal Year

      Stores                 1,258                  1,361                   1,400                  1,493   1,644   1,660



_____________________
Note: Fiscal year ends in September. Last twelve months for the quarter ending June 26, 2008.


                                                                                     9
Consistently Strong Merchandise Margins

                             Superior Merchandise Offering Leads to Above Average Margins


                                                                                                                Merchandise Gross Margin
 Proprietary branded offerings                                                                 40.0%
                                                                                                                                37.4%   37.2%   37.0%
                                                                                                                        36.6%
                                                                                                                36.3%
                                                                                                        36.2%

 Private label products in high velocity                                                       35.0

  categories                                                                                                                                            Industry
                                                                                                                                                        Avg.(1):
                                                                                                                                                        30.6%
                                                                                                30.0

 Selective expansion of nationally branded
  quick service restaurants (QSRs)
                                                                                                25.0



 Leveraging scale with merchandise
  vendors                                                                                       20.0
                                                                                                        2003    2004    2005     2006   2007    LTM
                                                                                                                          Fiscal Year

                                                                                   Merch. Comps          2.1%    3.4%   5.3%     4.9%   2.3%     N/A

_____________________
Note: Fiscal year ends in September. Last twelve months for the quarter ending June 26, 2008.
(1) Industry average for 2007 based on the 2008 NACS State of the Industry Report.


                                                                                     10
Proprietary Merchandise and Food Service Concepts
Drive Revenue and Margins

             Celeste                     Candy Lane




        Bean Street Coffee        Grilling Depot & Chill Zone




                             11
QSR Food Service Offering Differentiates Our
Stores and Drives Traffic and Margins

             We Currently Operate 236 Nationally Branded and
                 Proprietary Quick Service Restaurants




                                  12
Gasoline Strategy Maximizes Fuel Gross Profit Dollars

                            We Balance Average Gallons Sold Per Store and Gasoline Margins
                                        to Maximize Overall Gross Profit Dollars

                                                                                                                      Retail Gasoline Gross Profit $
                        Average Gallons Sold per Store

(Gallons in Thousands)                                                                          ($ in mm)
                                                                                                                                                      1 1 .6 %
                                                             %
                                                      8 .3
                                               ’0 7 =                                                                                          07 =
                                                                                                                                          –’
                                           –
 1,400                              R ’ 03                                                     $300                                R ’0 3                  $281
                              CAG                                                                                            CAG
                                                                              1,309
                                                                     1,306
 1,300
                                                                                                 250
                                                             1,242
                                                                                                                                                                  $225    $220
                                                                                                                                      $214
 1,200
                                                                                                 200
                                         1,118
                                                                                                                        $165
 1,100
                                                                                                            $145
                          1,026                                                                  150
 1,000
               941
                                                                                                 100
   900

                                                                                                  50
   800


   700                                                                                              0
              2003         2004           2005      2006             2007      LTM                         2003         2004          2005      2006              2007    LTM
                                            Fiscal Year                                                                                 Fiscal Year
                                                                                                     (1)
   Comps      0.7%          2.0%         4.7%        3.1%         1.0%         N/A              CPG        12.5¢        12.0¢        14.3¢        15.9¢        10.9¢      10.7¢
_____________________
Note: Fiscal year ends in September. Last twelve months for the quarter ending June 26, 2008.
(1) Net of credit card fees and repairs and maintenance. Last twelve months excludes per gallon loss on hedging operations in Q2 and Q3 of 1.6¢ and 0.3¢, respectively.


                                                                                      13
Recent Inflation and Volatility in Oil and Gas Prices
                                                                                                                                                                                  $146.65
                                    $150.00                                                                                                                                                         $5.00
                                                                                                              %  3 Months              Since
                                                                                                              Prior to Peak             Peak
                                                                                                                                                                        $124.47
                                      125.00                                                 Oil                    +33%                (25%)                                             $109.71
                                                                                             Gas                    +23%                (12%)




                                                                                                                                                                                                            Avg. Retail Price per Gasoline Gallon
                                                                                                                                                                                                     4.00
Avg. Crude Oil Price per Barrel




                                                                                                                                                                $97.59
                                      100.00
                                                                                                                                                       $90.61
                                                                                                                                              $75.13
                                                                                                     $70.89 $60.74
                                                                             $60.13
                                                                                               $70.95
                                       75.00                                                                                                                                                         3.00
                                                                                                                                    $65.44
                                                                    $63.34            $63.82
                                                                                                                           $58.74
                                                          $53.58
                                                 $50.03
                                       50.00

                                                                                                                                                                                                     2.00

                                       25.00




                                         0.00                                                                                                                                                        1.00
                                                   Q2       Q3        Q4       Q1       Q2         Q3      Q4       Q1       Q2        Q3       Q4       Q1       Q2        Q3    7/11/08Current
                                                                                                                                                                                  (Peak)

                                                         FY2005                           FY2006                                                                         FY2008
                                                                                                                                FY2007

                                                                               Avg. Crude Oil Price per Barrel                      Avg. Retail Price per Gasoline Gallon


                                  Note: Fiscal year ends in September. Graph updated through September 2, 2008.
                                  Source: FactSet. Data represent average futures contract price per barrel of light sweet crude and national average retail price per gasoline gallon.


                                                                                                                           14
Gasoline CPG Can Be Volatile on a Quarterly Basis…

                  Recent Margins Impacted by Higher Credit Card Fees and Fuel Maintenance Expenses,
                                                                               Maintenance
                            As Well As Losses on Fuel Hedging Activities in Q2 and Q3 2008

                                Our Quarterly Retail Gasoline CPG (Net of Credit Card Fees and Repairs and Maintenance)

22.5¢                                                    21.2¢

                                              19.4¢
20.0

                                                                                            17.3¢
17.5

            14.6¢
15.0                                                                            14.0¢
                                                                                                                            12.8¢
                                  12.3¢
12.5                                                                                                             11.4¢
                                                                     11.1¢                                                                                    11.0¢
                                                                                                                                            10.6¢   10.6¢
                                                                                                                                    10.5¢
                        9.9¢                                                                                                                                   0.3¢
10.0                                                                                                                                                1.6¢       10.7¢
                                                                                                        8.6¢

                                                                                                                                                     9.0¢
 7.5


 5.0
             Q1          Q2         Q3         Q4          Q1         Q2          Q3         Q4          Q1       Q2         Q3      Q4      Q1      Q2            Q3

                                                                                                                                                             (1)
                              FY2005                                       FY2006                                       FY2007                      FY2008

                                                                                                     Hedging Loss (1)
                                                                                 Net CPG
       _____________________
       Note: Fiscal year ends September.
       (1) Q2 and Q3 include per gallon loss on hedging operations of 1.6¢ and 0.3¢, respectively.


                                                                                             15
…But Annual CPG Tends to Remain Relatively Stable

                                     Annual Net CPG Margins Typically Range from 10¢ – 13¢
                                                                                 10¢ 13¢


20.0¢




17.0
                                                                                                                         15.9¢


                                                                                                                 14.3¢
                           13.4¢
14.0                                                     13.2¢
                                                                                                 12.5¢
                                                                        12.5¢
            12.8¢                         12.3¢
                                                                                                         12.0¢
                                                                                                                                 10.9¢
                                                                                      10.4¢
11.0




 8.0




 5.0
            1997           1998           1999           2000           2001             2002    2003    2004    2005    2006    2007
                                                                                   Fiscal Year



 _____________________
 Note: Fiscal year ends in September. Shaded area represents average historical CPG range.
 CPG is net of credit card fees and repairs and maintenance


                                                                                    16
Current Operating Initiatives Intended to Address Challenging
Environment and Improving Strategic Flexibility

        Challenge                            Key Initiatives / Action Taken
                           Increasing vendor-supported promotional activity
      Consumer
                           Focusing promotions on high-velocity, high-return categories
      Headwinds

                           Accelerated ethanol roll-out
 Margin / Profitability    Fuel price strategy maximizing total gross profit dollars
      Pressure
                           Meaningfully reducing store level and corporate overhead

                           Bolstered liquidity by accessing delayed draw on term loan
                           Substantially reduced non-essential capex
  Financial Flexibility
                           Temporarily suspended share repurchases


                                Return to Growth Focus


 Collectively, We Believe These Actions Have Better Positioned Us to Leverage Our Operating
   Model and Drive Top-line and Earnings Growth when the Market Environment Improves
                     Top-


                                             17
Focus on Reducing Operating Expenses

    Initiative Maximizes Operating Expense Leverage and Better Positions Us for Profitable Growth
                                                               Positions
                                    as Market Conditions Improve

    Reorganized field management structure to streamline operations

        Improved overall quality / efficiency of staffing

    Improved store-level controllable expenses

        Reduced bad check expense

        Lowered cash over and short by moving to prepaid on gasoline

    Tangible financial results achieved, more expected throughout the year

        Reduced store operating expenses in Q3 by $6.4 million or 4.8%

        Reduced corporate overhead spend in Q3 by $4.8 million or 17.6% despite adding 16
         stores

        Lowered FY08 OG&A guidance by $28mm-$33mm from our original FY08 guidance



                                                   18
Lease Finance Obligations Cause Valuation and
Leverage Confusion

   Adjusting EBITDA by Treating Sale-Leasebacks as Operating Leases and Subtracting Sale-
                                Sale-                                               Sale-
               Leaseback Rent Allows for Better Comparison to Other Retailers

 Balance Sheet Data as of 6/26/08
                                                 Reported      Adjustments      Adjusted

    Total Debt (ex. Lease Finance Obligations)        $848                        $848

    Cash                                              ($162)                      ($162)

    Net Debt (ex. Lease Finance Obligations)          $686                        $686

    Lease Finance Obligations                         $462        ($462)              –
    Total Net Debt                                $1,148          ($462)          $686

    Market Cap 8/19/08                                $408                        $408
    Enterprise Value                              $1,556          ($462)         $1,094

    LTM EBITDA as of 6/26/08                          $218         ($46)          $173
    EV / EBITDA Multiple                               7.1x                        6.3x

    Total Net Debt/EBITDA                              5.3x                        4.0x



                                                 19
Meaningful Liquidity / Financial Flexibility

       Meaningful liquidity
                 $162 million in cash-on-hand
                 $225 million revolver – $0 drawn, over $142 million available after LOCs

       Long-term debt profile; earliest maturity is the convertible debt in November 2012

       Covenant-light bank facility – financial flexibility (1)
                 6.5x Adj. Net Debt / EBITDAR Leverage – Currently 5.8x
                 2.25x Interest Coverage – Currently 2.53x




_____________________
Note: Balance Sheet data as of June 26, 2008.
(1) Per credit facility covenant calculations (8x rent methodology).


                                                                       20
Fiscal 2008 Financial Outlook Unchanged

           Full Year Impact of 2007 Acquisitions Driving Revenue Growth in 2008;
         Continuing Discipline on Expenses Should Lower OG&A and Drive Earnings
                                                                          Earnings



 Merchandise revenues expected to grow to $1.62 – $1.65 billion

 Merchandise gross margin expected to be between 36.8% and 37.0%

 Retail gas gallons sold expected to be approximately 2.1 billion gallons

 Retail gas margin expected between 10 and 12 cents per gallon

 Operating, general and administrative expenses expected between $605 –
  $610 million

 Capital expenditures expected to be $90 million



                                           21
Key Investment Highlights

 Leading market positions in attractive Southeastern markets

 Significant scale advantages vs. primary competitors

 Benefiting from consumer trends toward convenience formats

 Leveraging infrastructure to drive profitability and future growth

 Attractive sector growth and consolidation potential



 Strong Cash Flow Generation to Reinvest in Our Business, De-lever and Drive Earnings Growth
                                                          De-




                                            22
Reconciliation of Non-GAAP Measures

                                  Adjusted EBITDA/EBITDA Reconciled to Net Income


                                                                                 LTM
                                                                                Jun-08       2007       2006       2005       2004       2003
($ in mm)

  Adjusted EBITDA                                                                $173        $178       $254       $189       $150       $127

Payments made for lease finance obligations                                           46       36         25         24         23         13

Cumulative effect adjustment                                                            -           -          -          -          -      (3)

  Reported EBITDA                                                                $218        $214       $279       $214       $173       $136

Interest expense, net and loss on extinguishment of debt                              (88)     (74)       (56)       (54)       (87)       (60)

Depreciation and amortization                                                        (108)     (96)       (76)       (64)       (61)       (56)

Provision for income taxes                                                             (8)     (17)       (57)       (37)        (9)        (9)

  Net income                                                                         $15      $27        $89        $58        $16        $11




 _____________________
 Note: Fiscal year ends in September. Last twelve months as of June 26, 2008.


                                                                                23
Reconciliation of Non-GAAP Measures

                                  Adjusted EBITDA/EBITDA Reconciled to Cash Flows


                                                                                 LTM
                                                                                Jun-08      2007       2006       2005       2004       2003
($ in mm)

  Adjusted EBITDA                                                                $173       $178       $254       $189       $150       $127
Payments made for lease finance obligations                                           46       36         25         24         23        13
Cumulative effect adjustment                                                           -           -          -          -          -      (3)
  Reported EBITDA                                                                $218       $214       $279       $214       $173       $136
Interest expense, net and loss on extinguishment of debt                             (88)     (74)       (56)       (54)       (87)       (60)
Provision for income taxes                                                            (8)     (17)       (57)       (37)        (9)        (9)
Non-cash stock based compensation                                                      3        4          3             -          -          -
Changes in operating assets and liabilities                                            8        8        (13)        (7)            -     (20)
Non-cash loss on extinguishment of debt                                                -        2          2             -      23          3
Other                                                                                  6        4         (3)        19         17        19
Net cash provided by operating activities                                        $140       $141       $154       $134       $117        $69
Net cash used in investing activities                                           ($150)      ($529)     ($219)     ($166)     ($227)      ($24)
Net cash provided by (used in) financing activities                                  $94    $339        $74        $36       $145        ($14)

 _____________________
 Note: Fiscal year ends in September. Last twelve months as of June 26, 2008.


                                                                                24
The Pantry, Inc.
Morgan Keegan 2008 Equity Conference
         September 5, 2008


                 25

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pantry Morgan_Keegan_2008_Equity_Conference

  • 1. The Pantry, Inc. Morgan Keegan 2008 Equity Conference September 5, 2008
  • 2. Safe Harbor Statement Some of the statements in this presentation constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than those of historical facts included herein, including those related to the company’s financial outlook, goals, business strategy, projected plans and objectives of management for future operations and liquidity, are forward-looking statements. These forward-looking statements are based on the company’s plans and expectations and involve a number of risks and uncertainties that could cause actual results to vary materially from the results and events anticipated or implied by such forward- looking statements. Please refer to the company’s Annual Report on Form 10-K and its other filings with the SEC for a discussion of significant risk factors applicable to the company. In addition, the forward-looking statements included in this presentation are based on the company’s estimates and plans as of the date of this presentation. While the company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. 1
  • 3. Our Business  Leading independently operated convenience store chain in the Southeast and 3rd largest in the U.S.  1,660 stores located across 11 states  Primarily branded Kangaroo Express  Last twelve months as of June 26, 2008 sales of $8.5 billion and LTM EBITDA of $218 million  Stores offer a broad selection of merchandise, motor fuel and food service offerings designed to meet convenience needs of consumers 2
  • 4. Key Investment Highlights  Leading market positions in attractive Southeastern markets  Significant scale advantages vs. primary competitors  Benefiting from consumer trends toward convenience formats  Leveraging infrastructure to drive profitability and future growth  Attractive sector growth and consolidation potential Strong Cash Flow Generation to Reinvest in Our Business, De-lever and Drive Earnings Growth De- 3
  • 5. Attractive Industry Fundamentals U.S. C-Store Sales and Growth (1) C-  Large and rapidly growing sector c te d roje 5.9% ($ in Billions)  Defensive growth characteristics P $727 R= C AG $700 $577 .6% 600 R = 11 $524 l CAG R = 7.0%  Increasing consumer demand for $475 rica 500 $169 Histo CAG Total Historical $160 $395 $145 400 e r $337 smaller-box, fill-in convenience In-Sto $290 $269 $283 $132 300 $234 $116 $186 $109 shopping $174 $112 $166 $104 $409 200 $154 $100 $364 $330 $86 $81 $263 $77 $75 $221 100 $181 $171 $165 $134 $100 $89 $93 $79  Relative to hypermarkets, large 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2011E supermarkets, etc. Gasoline In St ore 5-Year In-Store Sales CAGR vs. Other Sectors (1)(2) In-  Increasing amount of food consumed away-from-home and 7.4% on-the-run 6.0% 6.0% 6.0%  Highly fragmented market with 2.9% ample consolidation opportunities (1.3%) Co venience Drug Sto res Restaurants To tal Retail Gro cery Disco unt _____________________ Sto res Sto res Department (1) Source: NACS 2007 NACS State of the Industry Report and Retail Forward, Inc. Sto res (2) Source: Retail Forward, Inc. CAGR for 5-year period from 2001-2006. 4
  • 6. Leading Convenience Store Retailer Concentrated in the Southeastern United States 1,660 Stores Located in Eleven Southeastern States as of June 26, 2008 Indiana Indiana Arlington Arlington Indianapolis Indianapolis Covington Covington Hampton Hampton Richmond Richmond Frankfort Norfolk Norfolk Frankfort Virginia Virginia Chesapeake Chesapeake Kentucky Kentucky PA0021GM_1.WOR Bowling Green Bowling Green Durham Durham Paducah Paducah Raleigh Raleigh North Carolina North Carolina Nashville Nashville Tennessee Tennessee Columbia Columbia Wilmington Wilmington South South NY0010DP_1.WOR Carolina Carolina Atlanta Atlanta Mississippi Mississippi Georgia Georgia Clinton Clinton Montgomery Montgomery Vicksburg Vicksburg Meridian Meridian Alabama Alabama Jackson Jackson Jacksonville Jacksonville Louisiana Louisiana Tallahassee Tallahassee Daytona Beach Daytona Beach Gulfport Gulfport Baton Rouge Baton Rouge Orlando Orlando St. Petersburg St. Petersburg Tampa Tampa Pantry Store Locations Florida Florida Boca Raton Boca Raton Miami Miami _____________________ Note: Map as of fiscal year ended September 27, 2007. 5
  • 7. Key Markets Possess Highly Attractive Growth Characteristics Core Markets Projected to Experience Rapid Growth Throughout Next Several Years; Next High Degree of Fragmentation Provides Continued Consolidation Opportunities Opportunities Population Growth CAGRs (2005-2015) (1) Market Fragmentation (1) 25.0% Florida North Carolina 21.1% (7,356 stores) (5,447 stores) Pantry 20.0 Pantry >50 Store Operators >50 Store 6% 14% 7% 1 Store Operators 1 Store Operators Operators 31% 15.0% 2-50 Store 21% Operators 15.0 54% 58% 9% 2-50 Store Operators 9.5% 9.1% 9.0% 10.0 South Carolina Tennessee (2,872 stores) (3,697 stores) 5.0 Pantry Pantry >50 Store >50 Store Operators Operators 17% 10% 3% 1 Store 1 Store 17% Operators 0.0 Operators Florida North South Tennessee U.S. 21% 2-50 Store 20% Carolina Carolina 2-50 Store 52% 60% Operators Operators (2) Pantry Stores: 455 388 282 104 1,660 _____________________ (1) Source: U.S. Census Bureau and 2007 NACS State of the Industry Report. (2) Note: Pantry’s store counts as of quarter ended June 26, 2008. 6
  • 8. Strong Track Record of Top Line Growth… Merchandise Revenue Retail Gas Gallons Sold Total Revenue ($ in mm) (Gallons in mm) ($ in mm) $9,000 2,500 $2,000 .9 % $8,502 25 .0 % = 1.8% = 15 ’07 =1 ’07 2,129 – ’07 – 8,000 ’03 ’03 3– $1,640 R ’0 R 2,033 CAG GR CAG $1,576 CA $6,911 2,000 7,000 1,758 1,500 $1,386 $5,962 $1,229 6,000 1,497 $1,170 1,500 1,372 5,000 $4,429 $1,010 1,161 1,000 $3,493 4,000 1,000 $2,750 3,000 500 2,000 500 1,000 0 0 0 2003 2004 2005 2006 2007 LTM 2003 2004 2005 2006 2007 LTM 2003 2004 2005 2006 2007 LTM Fiscal Year Fiscal Year Fiscal Year _____________________ Note: Fiscal year ends in September. Last twelve months as of June 26, 2008. 7
  • 9. …And Substantial EBITDA Generation Gross Profit Reported EBITDA ($ in mm) ($ in mm) ’03-’07 $900 $300 CAGR $279 $826 $811 $779 800 250 11.6% $663 $218 $220 700 $225 $214 $214 $281 $591 600 200 $173 $511 $214 $165 500 $136 150 $145 400 $606 12.5% 300 100 $586 $518 $425 $449 200 $366 50 100 0 0 2003 2004 2005 2006 2007 LTM 2003 2004 2005 2006 2007 LTM Fiscal Year Fiscal Year Merchandise Gasoline _____________________ Note: Fiscal year ends in September. Last twelve months as of June 26, 2008. 8
  • 10. Strong Growth in Merchandise Sales Per Store Improved Store Portfolio and Stronger Consumer Offering Have Driven Increased Average Merchandise Sales per Store Average Merchandise Sales per Store ($ in Thousands) .0 % 6 -’07: R ’0 3 $999 CAG $996 $1,000 $954 950 $898 900 $857 850 $792 800 750 700 2003 2004 2005 2006 2007 LTM Fiscal Year Stores 1,258 1,361 1,400 1,493 1,644 1,660 _____________________ Note: Fiscal year ends in September. Last twelve months for the quarter ending June 26, 2008. 9
  • 11. Consistently Strong Merchandise Margins Superior Merchandise Offering Leads to Above Average Margins Merchandise Gross Margin  Proprietary branded offerings 40.0% 37.4% 37.2% 37.0% 36.6% 36.3% 36.2%  Private label products in high velocity 35.0 categories Industry Avg.(1): 30.6% 30.0  Selective expansion of nationally branded quick service restaurants (QSRs) 25.0  Leveraging scale with merchandise vendors 20.0 2003 2004 2005 2006 2007 LTM Fiscal Year Merch. Comps 2.1% 3.4% 5.3% 4.9% 2.3% N/A _____________________ Note: Fiscal year ends in September. Last twelve months for the quarter ending June 26, 2008. (1) Industry average for 2007 based on the 2008 NACS State of the Industry Report. 10
  • 12. Proprietary Merchandise and Food Service Concepts Drive Revenue and Margins Celeste Candy Lane Bean Street Coffee Grilling Depot & Chill Zone 11
  • 13. QSR Food Service Offering Differentiates Our Stores and Drives Traffic and Margins We Currently Operate 236 Nationally Branded and Proprietary Quick Service Restaurants 12
  • 14. Gasoline Strategy Maximizes Fuel Gross Profit Dollars We Balance Average Gallons Sold Per Store and Gasoline Margins to Maximize Overall Gross Profit Dollars Retail Gasoline Gross Profit $ Average Gallons Sold per Store (Gallons in Thousands) ($ in mm) 1 1 .6 % % 8 .3 ’0 7 = 07 = –’ – 1,400 R ’ 03 $300 R ’0 3 $281 CAG CAG 1,309 1,306 1,300 250 1,242 $225 $220 $214 1,200 200 1,118 $165 1,100 $145 1,026 150 1,000 941 100 900 50 800 700 0 2003 2004 2005 2006 2007 LTM 2003 2004 2005 2006 2007 LTM Fiscal Year Fiscal Year (1) Comps 0.7% 2.0% 4.7% 3.1% 1.0% N/A CPG 12.5¢ 12.0¢ 14.3¢ 15.9¢ 10.9¢ 10.7¢ _____________________ Note: Fiscal year ends in September. Last twelve months for the quarter ending June 26, 2008. (1) Net of credit card fees and repairs and maintenance. Last twelve months excludes per gallon loss on hedging operations in Q2 and Q3 of 1.6¢ and 0.3¢, respectively. 13
  • 15. Recent Inflation and Volatility in Oil and Gas Prices $146.65 $150.00 $5.00 %  3 Months Since Prior to Peak Peak $124.47 125.00 Oil +33% (25%) $109.71 Gas +23% (12%) Avg. Retail Price per Gasoline Gallon 4.00 Avg. Crude Oil Price per Barrel $97.59 100.00 $90.61 $75.13 $70.89 $60.74 $60.13 $70.95 75.00 3.00 $65.44 $63.34 $63.82 $58.74 $53.58 $50.03 50.00 2.00 25.00 0.00 1.00 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 7/11/08Current (Peak) FY2005 FY2006 FY2008 FY2007 Avg. Crude Oil Price per Barrel Avg. Retail Price per Gasoline Gallon Note: Fiscal year ends in September. Graph updated through September 2, 2008. Source: FactSet. Data represent average futures contract price per barrel of light sweet crude and national average retail price per gasoline gallon. 14
  • 16. Gasoline CPG Can Be Volatile on a Quarterly Basis… Recent Margins Impacted by Higher Credit Card Fees and Fuel Maintenance Expenses, Maintenance As Well As Losses on Fuel Hedging Activities in Q2 and Q3 2008 Our Quarterly Retail Gasoline CPG (Net of Credit Card Fees and Repairs and Maintenance) 22.5¢ 21.2¢ 19.4¢ 20.0 17.3¢ 17.5 14.6¢ 15.0 14.0¢ 12.8¢ 12.3¢ 12.5 11.4¢ 11.1¢ 11.0¢ 10.6¢ 10.6¢ 10.5¢ 9.9¢ 0.3¢ 10.0 1.6¢ 10.7¢ 8.6¢ 9.0¢ 7.5 5.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 (1) FY2005 FY2006 FY2007 FY2008 Hedging Loss (1) Net CPG _____________________ Note: Fiscal year ends September. (1) Q2 and Q3 include per gallon loss on hedging operations of 1.6¢ and 0.3¢, respectively. 15
  • 17. …But Annual CPG Tends to Remain Relatively Stable Annual Net CPG Margins Typically Range from 10¢ – 13¢ 10¢ 13¢ 20.0¢ 17.0 15.9¢ 14.3¢ 13.4¢ 14.0 13.2¢ 12.5¢ 12.5¢ 12.8¢ 12.3¢ 12.0¢ 10.9¢ 10.4¢ 11.0 8.0 5.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Fiscal Year _____________________ Note: Fiscal year ends in September. Shaded area represents average historical CPG range. CPG is net of credit card fees and repairs and maintenance 16
  • 18. Current Operating Initiatives Intended to Address Challenging Environment and Improving Strategic Flexibility Challenge Key Initiatives / Action Taken  Increasing vendor-supported promotional activity Consumer  Focusing promotions on high-velocity, high-return categories Headwinds  Accelerated ethanol roll-out Margin / Profitability  Fuel price strategy maximizing total gross profit dollars Pressure  Meaningfully reducing store level and corporate overhead  Bolstered liquidity by accessing delayed draw on term loan  Substantially reduced non-essential capex Financial Flexibility  Temporarily suspended share repurchases Return to Growth Focus Collectively, We Believe These Actions Have Better Positioned Us to Leverage Our Operating Model and Drive Top-line and Earnings Growth when the Market Environment Improves Top- 17
  • 19. Focus on Reducing Operating Expenses Initiative Maximizes Operating Expense Leverage and Better Positions Us for Profitable Growth Positions as Market Conditions Improve  Reorganized field management structure to streamline operations  Improved overall quality / efficiency of staffing  Improved store-level controllable expenses  Reduced bad check expense  Lowered cash over and short by moving to prepaid on gasoline  Tangible financial results achieved, more expected throughout the year  Reduced store operating expenses in Q3 by $6.4 million or 4.8%  Reduced corporate overhead spend in Q3 by $4.8 million or 17.6% despite adding 16 stores  Lowered FY08 OG&A guidance by $28mm-$33mm from our original FY08 guidance 18
  • 20. Lease Finance Obligations Cause Valuation and Leverage Confusion Adjusting EBITDA by Treating Sale-Leasebacks as Operating Leases and Subtracting Sale- Sale- Sale- Leaseback Rent Allows for Better Comparison to Other Retailers Balance Sheet Data as of 6/26/08 Reported Adjustments Adjusted Total Debt (ex. Lease Finance Obligations) $848 $848 Cash ($162) ($162) Net Debt (ex. Lease Finance Obligations) $686 $686 Lease Finance Obligations $462 ($462) – Total Net Debt $1,148 ($462) $686 Market Cap 8/19/08 $408 $408 Enterprise Value $1,556 ($462) $1,094 LTM EBITDA as of 6/26/08 $218 ($46) $173 EV / EBITDA Multiple 7.1x 6.3x Total Net Debt/EBITDA 5.3x 4.0x 19
  • 21. Meaningful Liquidity / Financial Flexibility  Meaningful liquidity  $162 million in cash-on-hand  $225 million revolver – $0 drawn, over $142 million available after LOCs  Long-term debt profile; earliest maturity is the convertible debt in November 2012  Covenant-light bank facility – financial flexibility (1)  6.5x Adj. Net Debt / EBITDAR Leverage – Currently 5.8x  2.25x Interest Coverage – Currently 2.53x _____________________ Note: Balance Sheet data as of June 26, 2008. (1) Per credit facility covenant calculations (8x rent methodology). 20
  • 22. Fiscal 2008 Financial Outlook Unchanged Full Year Impact of 2007 Acquisitions Driving Revenue Growth in 2008; Continuing Discipline on Expenses Should Lower OG&A and Drive Earnings Earnings  Merchandise revenues expected to grow to $1.62 – $1.65 billion  Merchandise gross margin expected to be between 36.8% and 37.0%  Retail gas gallons sold expected to be approximately 2.1 billion gallons  Retail gas margin expected between 10 and 12 cents per gallon  Operating, general and administrative expenses expected between $605 – $610 million  Capital expenditures expected to be $90 million 21
  • 23. Key Investment Highlights  Leading market positions in attractive Southeastern markets  Significant scale advantages vs. primary competitors  Benefiting from consumer trends toward convenience formats  Leveraging infrastructure to drive profitability and future growth  Attractive sector growth and consolidation potential Strong Cash Flow Generation to Reinvest in Our Business, De-lever and Drive Earnings Growth De- 22
  • 24. Reconciliation of Non-GAAP Measures Adjusted EBITDA/EBITDA Reconciled to Net Income LTM Jun-08 2007 2006 2005 2004 2003 ($ in mm) Adjusted EBITDA $173 $178 $254 $189 $150 $127 Payments made for lease finance obligations 46 36 25 24 23 13 Cumulative effect adjustment - - - - - (3) Reported EBITDA $218 $214 $279 $214 $173 $136 Interest expense, net and loss on extinguishment of debt (88) (74) (56) (54) (87) (60) Depreciation and amortization (108) (96) (76) (64) (61) (56) Provision for income taxes (8) (17) (57) (37) (9) (9) Net income $15 $27 $89 $58 $16 $11 _____________________ Note: Fiscal year ends in September. Last twelve months as of June 26, 2008. 23
  • 25. Reconciliation of Non-GAAP Measures Adjusted EBITDA/EBITDA Reconciled to Cash Flows LTM Jun-08 2007 2006 2005 2004 2003 ($ in mm) Adjusted EBITDA $173 $178 $254 $189 $150 $127 Payments made for lease finance obligations 46 36 25 24 23 13 Cumulative effect adjustment - - - - - (3) Reported EBITDA $218 $214 $279 $214 $173 $136 Interest expense, net and loss on extinguishment of debt (88) (74) (56) (54) (87) (60) Provision for income taxes (8) (17) (57) (37) (9) (9) Non-cash stock based compensation 3 4 3 - - - Changes in operating assets and liabilities 8 8 (13) (7) - (20) Non-cash loss on extinguishment of debt - 2 2 - 23 3 Other 6 4 (3) 19 17 19 Net cash provided by operating activities $140 $141 $154 $134 $117 $69 Net cash used in investing activities ($150) ($529) ($219) ($166) ($227) ($24) Net cash provided by (used in) financing activities $94 $339 $74 $36 $145 ($14) _____________________ Note: Fiscal year ends in September. Last twelve months as of June 26, 2008. 24
  • 26. The Pantry, Inc. Morgan Keegan 2008 Equity Conference September 5, 2008 25