Burger King 2006 Annual Report Download - page 6

GROW
B K C
W E P L E A S E T H E F R A N CH I S E E S . T HE Y P L E A S E T HE RE S TA U R A N T GU E S T S .
And the world is a better place for it.
FRIENDLY
& FAST
HOT
& FRESH
CLEAN
& SAFE
04
K ING O F T HE WO R L D ! Expanding globally is a major pillar sup-
porting our growth, and we’re giving franchisees the means to take us
there. We’ve lowered the capital needed to open new restaurants by
designing smaller, less-expensive, space-optimized restaurants. And
we’re attracting key franchisees with strong local and financial standing
who can open several profitable restaurants quickly, establishing Burger
King in previously under-penetrated areas.
We’re focusing on areas where Burger King already has infrastructure and
management teams. We’re established in key parts of the Latin America,
Europe, Middle East and Asia Pacific regions and are positioned to grow
the business dramatically with little additional capital. We anticipate more
than 400 restaurant openings worldwide in 2007. Places such as Brazil,
China, Italy, Japan and even North America are highly underrepresented
by Burger King. In short, we’re already wide; now we’re going deep, and we
have the infrastructure and operations in place to seize the opportunities.
Clearly, we have big incentives to foster franchisee success. Our fran-
chisees are our emissaries and our most important customers. Beyond
building restaurant counts, our mission is to increase franchisee profit-
ability. And we’re getting it done. The last 50 restaurants that opened in
the United States and have operated at least a year are earning record-
high average annual sales of more than $1.4 million, which is more than
25 percent higher than our U.S. and worldwide average. And with our
multi-faceted model of operational improvement, product innovation
and outstanding marketing, every uptick in sales can be an exponential
gain in profitability for our franchisees and Burger King.
The world is hungry for more Burger King, and our growth plans are
rising to the occasion. Same-store sales are up, restaurant counts are
moving forward and profitability is growing.
Much of this fiscal strength comes from our business model. Our restau-
rants are 90 percent franchised, which we believe gives us significant
financial stability, a smaller risk profile and inexpensive growth opportu-
nities. We also believe that having such a large percentage of franchised
restaurants generates substantial, consistent free cash flow through
royalties and helps insulate us from regional market factors. It makes
good fiscal sense to operate with a franchise model like ours.
The catch is, of course, it only works if we have outstanding franchisees.
And we do. What’s more, we work hard every day to help our franchisees
reach their goals – in both operating current stores and opening new ones.
We’ve introduced initiatives that lower operational expenses while boost-
ing restaurant efficiency and guest satisfaction. Our global product devel-
opment team works to improve international uniformity and introduce great
new products. Our Clean & Safe, Hot & Fresh and Friendly & Fast opera-
tions platforms help our restaurants operate with consistent procedures
that keep the food delicious, the service excellent and the restaurant
guests coming back. And our guest satisfaction scores are at record levels.
We are improving restaurant-level economics by making our kitchens more
efficient to better serve our guests.
A KINGDOM OF HAPPY,
LOYAL SUBJECTS